Blickenstaff, Kather v. R.R. Donnelley Dis ( 2004 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-2116
KATHERINE BLICKENSTAFF,
Plaintiff-Appellant,
v.
R.R. DONNELLEY & SONS CO.
SHORT TERM DISABILITY PLAN,
Defendant-Appellee.
____________
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 00-C-983—Sarah Evans Barker, Judge.
____________
ARGUED MAY 18, 2004—DECIDED AUGUST 9, 2004
____________
Before FLAUM, Chief Judge, and KANNE and ROVNER,
Circuit Judges.
KANNE, Circuit Judge. Katherine Blickenstaff primarily
appeals from the district court’s determination that R.R.
Donnelley & Sons Co. Short Term Disability Plan (“Plan”)
did not act arbitrarily and capriciously in terminating her
short term disability benefits and then refusing to reinstate
them on appeal. She also claims that the district court erred
in limiting the evidence at trial and appeals the district
court’s decision to sanction her attorneys under Federal
Rule of Civil Procedure 11. For the reasons we discuss
2 No. 03-2116
below, we affirm the district court’s treatment of trial
evidence and its decision on the merits, but vacate, in part,
the sanctions award.
I. History
A. Short Term Disability Claim Denial
R.R. Donnelley & Sons Co. employed Blickenstaff as a
material handler. Beginning October 1, 1998, Blickenstaff
was covered by the employee benefit plan at issue here,
which provided benefits for short term disability. The short
term disability portion of the Plan was self-funded by
Donnelley, which served as the Plan administrator. A sub-
sidiary of Hartford Life & Accident Insurance Co. served as
the claims evaluator, and, under the terms of the Plan,
“ha[d] full discretion and authority to determine benefits
payable and to construe and interpret all terms and pro-
visions of the Plan in connection with this determination.”
Blickenstaff, under a prior benefits plan, received short
term disability benefits from April 30, 1998 to June 1, 1998
because of lower back pain. She returned to work on June 1,
1998, with the following restrictions: no lifting more than
ten pounds and no prolonged standing (more than two
hours), bending, stooping, crawling, or climbing. Donnelley
accommodated her restrictions and ultimately considered
them, and her accommodated job, to be permanent.
Despite Donnelley’s accommodation, Blickenstaff alleges
that she continued to experience pain while working. She
stopped work in October of 1998 and again applied for short
term disability benefits. Under the Plan, she was entitled
to receive short term disability benefits for twenty-six
weeks if she met the definition of “total disability” through-
out the benefits period:
Total Disability or Totally Disabled means that you are
prevented by:
No. 03-2116 3
1) accidental bodily injury;
2) sickness;
3) Mental Illness;
4) Substance Abuse; or
5) Pregnancy,
from performing the essential duties of your occupation,
or a reasonable alternative offered to you by the Em-
ployer, and as a result, you are earning less than 20%
of your predisability Weekly Earnings. [Emphasis
added].
The Plan initially approved the short term disability
benefits, but terminated them in a letter dated March 18,
1999, nineteen weeks into the benefits period. It based its
decision on new medical evidence, in the form of a functional
capacity evaluation, which indicated Blickenstaff could per-
form her job as accommodated by Donnelley. Blickenstaff
utilized the Plan’s internal appeals process. When it refused
to reinstate her benefits, she sued in state court, alleging
violations of the Employee Retirement Income Security Act
(“ERISA”), 29 U.S.C. §§ 1001, et seq.1 The case was properly
removed to federal district court.
After denying, in part, the Plan’s motion for summary
judgment, see Blickenstaff v. R.R. Donnelley & Sons Co.
1
Hartford, as claims evaluator, collected Blickenstaff ’s medical
information, communicated with her doctors, made all determina-
tions with regard to Blickenstaff ’s benefits eligibility, and com-
municated these decisions to Blickenstaff, all on behalf of the
Plan. Hartford, though, is not a proper party to this action; as we
discuss later, only the Plan is. To avoid confusion, although the
majority of the actions described in this opinion were undertaken
by Hartford, because it was acting as the Plan’s agent, we attri-
bute Hartford’s decision-making process to the Plan and refer only
to the Plan in our recitation of facts.
4 No. 03-2116
Short-Term Disability Plan, No. 00-C-983-B/S, 2001 U.S.
Dist. LEXIS 22895 (S.D. Ind. Dec. 5, 2001), Judge Barker
held a bench trial on March 18, 2002. The sole issue pre-
sented was whether the Plan’s March 1999 termination of
benefits was arbitrary and capricious. The court had previ-
ously found, in its summary judgment ruling, that the Plan
did not act arbitrarily and capriciously in denying Blickenstaff
’s
second internal appeal following the initial decision to
terminate her benefits.2
At trial, Blickenstaff argued, based on one word contained
in the March 18, 1999 letter terminating her benefits, that
the Plan utilized the wrong standard in evaluating her
claim. The letter stated on page three that “[t]he Plan pro-
vides that Hartford would pay benefits if you were prevented
by Disability from doing the essential duties of any occupation
on a full time basis.” [Emphasis added]. Blickenstaff rightly
pointed out that the definition of disability appearing in the
Plan documents defines “total disability” for short term
disability purposes as being prevented from performing the
essential duties of “your” occupation, not “any” occupation
as appeared in the letter. Yet, the letter accurately quoted
the definition of “total disability” on its first page, and goes
on to state, in the sentences immediately following the one
containing the phrase “any occupation:”
[Y]ou are capable of performing the essential duties of
your occupation as a Material Handler as defined by
your employer on January 25, 1999. Therefore, we find
that the medical documentation in your file does not
support your inability to perform your occupation and
2
Blickenstaff challenges both the district court’s summary judg-
ment ruling upholding the Plan’s denial of her second internal
appeal and its bench trial determination that the Plan reasonably
terminated her benefits in the first instance. To aid comprehen-
sion and for organizational ease, the facts relating to the district
court’s summary judgment ruling on the appeal denial will be
recounted later in the opinion when we address the merits.
No. 03-2116 5
no [short term disability] benefits are available beyond
March 14, 1999. [Emphasis added].
In its ruling, the district court did not directly address
Blickenstaff’s claim that the Plan used the wrong disability
definition. Rather, it focused on Blickenstaff’s other ar-
guments that 1) the Plan used the wrong job description in
evaluating her ability to perform her position; 2) the medi-
cal evidence did not support the conclusion that she could
perform the job described in the incorrect job description;
and 3) even if the Plan used the correct job description in
evaluating her claim, the medical records still failed to
support the finding that she could return to work.
Evidence presented at trial showed that, on November 19,
1998, Blickenstaff’s supervisor filled out a physical de-
mands analysis form that was allegedly supposed to de-
scribe the current physical demands of her job (“November
job description”). The Plan requested the November job
description as part of its decision-making process with
regard to covering Blickenstaff’s claim. The November job
description stated that as part of her job as material han-
dler, Blickenstaff was required to lift one-to-ten pounds
constantly (with constantly defined as 67% to 100% of the
workday); eleven-to-twenty pounds frequently (with fre-
quently defined as 34% to 66% of the workday), and twenty-
one-to-fifty pounds occasionally (with occasionally defined
as 0-33% of the workday). The supervisor also recorded that
only 10% of Blickenstaff’s job included sedentary work,
meaning lifting ten pounds maximum, and the other 90% of
her job was light work, defined as lifting twenty pounds
maximum. Blickenstaff correctly pointed out that the
November job description did not comply with her perma-
nent restrictions and argued at trial that to the extent the
Plan believed the job as represented in the November job
description was her job and the job to which she would
return, it was wrong.
6 No. 03-2116
Blickenstaff next argued that the functional capacity eval-
uation, an exam performed by Independence Rehabilitation
on February 16, 1999 at the Plan’s request and upon which
the Plan heavily relied in terminating her benefits (“February
exam”), showed she could not perform her job as outlined in
the November job description. Specifically, the February
exam results showed she could only lift five-to-seven pounds
constantly, seven-to-fifteen pounds frequently, and ten-to-
twenty pounds occasionally. The November job description,
Blickenstaff noted, stated that she needed to lift in excess
of those amounts on a daily basis.
Blickenstaff also argued that even if the Plan utilized the
correct job description—the accommodated job description
in which she never lifted over ten pounds—the February
exam still didn’t support that she could return to work.
Here, she pointed to the fact that the February exam
reported she could only lift five-to-seven pounds constantly,
not ten. The February exam noted, however, that based on
the test results, Blickenstaff could work an eight-hour day
in a light-duty position. Significantly, the February exam
also stated that during the testing, “Ms. Blickenstaff
exhibited symptom/disability exaggeration behavior” and
that certain results “suggest[ed] very poor effort or volun-
tary submaximal effort which is not necessarily related to
pain, impairment or disability.”
Judge Barker did not find any of Blickenstaff’s arguments
persuasive. The judge first determined that the Plan made
its decision based on the accommodated job description, not
the November job description. Donnelley clarified, in a letter
to Hartford dated January 25, 1999, that as of June 1, 1998,
Blickenstaff worked in an accommodated job with the
following restrictions: “refrain from standing more than 2
hours, lifting greater than 10 lbs., bending, stooping, climb-
ing.” The March 18, 1999 letter terminating Blickenstaff’s
benefits specifically cited the January letter and described
Blickenstaff’s job demands in terms of the restrictions listed
No. 03-2116 7
therein.
The judge also confirmed that the accommodated job was
the appropriate one for the Plan to use in its evaluation of
Blickenstaff’s claim because it was the position she held at
the time she sought disability benefits. The judge observed
that when Blickenstaff first appealed the determination
terminating her benefits, she attached the nurse’s note
establishing her June 1 restrictions and acknowledged that
she was working within those restrictions at the time she
sought short term disability benefits in October of 1998. At no
time during the internal appeals process did Blickenstaff
argue that the Plan used the wrong job description or that
she was working outside of the restrictions set down in
June of 1998 and described in the January 25, 1999 letter.
Having found that the Plan made its determination based
on Blickenstaff’s accommodated job, the judge determined
that the Plan did not act arbitrarily and capriciously in
terminating benefits. The judge noted that the Plan for-
warded the February exam—the most recent medical infor-
mation available to it—to Blickenstaff’s treating physician,
Dr. Williams, and asked him whether he agreed with the re-
sults. Dr. Williams responded that he agreed Blickenstaff was
“capable of light work for eight hours a day.” The judge,
equating Blickenstaff’s accommodated job to a light-duty
position, noted that the physician’s affirmance of the
February exam results could reasonably be read to state
that he agreed Blickenstaff could perform the accommo-
dated job. Hence, Judge Barker determined that the Plan
reasonably found that Blickenstaff could perform her oc-
cupation and was thus ineligible for any further short term
disability benefits.
B. Sanctions
The district court granted sanctions against Blickenstaff’s
counsel based on two alleged Rule 11 violations that took place
during the course of the litigation.
8 No. 03-2116
1. Second Amended Complaint
Blickenstaff originally filed her complaint in state court,
alleging ERISA violations against three entities: the Plan,
Donnelley, and Hartford. After the case was removed to fed-
eral district court, Donnelley and Hartford separately
moved to dismiss the complaint against them under Federal
Rule of Civil Procedure 12(b)(6). The Plan also moved to
strike portions of the complaint under Rule 12(f).
On its face, the complaint asserted only a § 502(a)(1)(B)
claim for benefits, which generally is limited to a suit against
the Plan, not an employer like Donnelley or the claims eval-
uator, Hartford. See Neuma, Inc. v. AMP, Inc., 259 F.3d
864, 872 n.4 (7th Cir. 2001) (“We have continually noted
that ‘ERISA permits suits to recover benefits only against
the Plan as an entity.’ ”) (quoting Jass v. Prudential Health
Care Plan, Inc., 88 F.3d 1482, 1490 (7th Cir. 1996)).
Blickenstaff did not dispute that the § 502(a)(1)(B) claim
applied only to the Plan, but argued that the complaint
could be read to assert a § 503(a)(3) breach of fiduciary duty
claim against Donnelley and Hartford.
The district court rejected this argument, found that the
complaint stated only a § 502(a)(1)(B) claim against the
Plan, and dismissed the complaint against Donnelley and
Hartford with prejudice. Importantly, the court stated in a
footnote that “there is no reason to allow Blickenstaff to
amend her complaint to sufficiently allege a [§ 503(a)(3)]
breach of fiduciary duty claim against either Donnelley or
Hartford.” The court also granted, in part, the Plan’s Rule
12(f) motion to strike certain language contained in the
complaint and ordered Blickenstaff to revise the complaint
as outlined in the ruling.
The entry granting the motions to dismiss and granting
in part and denying in part the motion to strike was dated
January 29, 2001. On that same day, allegedly before she
had seen the court’s ruling, Blickenstaff mailed to the court
No. 03-2116 9
a motion to amend her complaint, with a proposed first
amended complaint attached. The first amended complaint
specifically alleged § 503(a)(3) breach of fiduciary duty
claims against Donnelley and Hartford, in addition to the
§ 502(a)(1)(B) claim against the Plan. The motion to amend
was deemed filed with the court on February 2, 2001.
After receiving the district court’s order dismissing the
complaint against Donnelley and Hartford with prejudice
and striking portions of the complaint, Blickenstaff moved
to file a second amended complaint. The second amended
complaint purported to remove the offending language
stricken by the court, but did not remove the § 503(a)(3)
breach of fiduciary duty claims asserted against Donnelley
and Hartford in the first amended complaint. The district
court never ruled on the submission of the first amended
complaint, but did allow Blickenstaff to file the second
amended complaint, specifically noting that it was not
passing on its sufficiency in so doing.
All three defendants again moved under Rule 12(b)(6) to
dismiss the second amended complaint as to Donnelley and
Hartford. They argued that Blickenstaff impermissibly pled
§ 503(a)(3) breach of fiduciary duty claims against
Donnelley and Hartford after the district court had dis-
missed them from the lawsuit with prejudice and after the
court instructed Blickenstaff that she did not have leave to
amend the complaint to assert such claims. Blickenstaff did
not respond to the motion to dismiss, instead addressing the
merits of the breach of fiduciary duty claims in her response
to the defendants’ summary judgment motion, filed after
the motion to dismiss.
The district court, in conjunction with its ruling on the
summary judgment motion, granted the Rule 12(b)(6)
motion on res judicata grounds. It stated:
Here, the Second Amended Complaint plainly realleges
claims against Hartford and Donnelley that we dismissed
10 No. 03-2116
with prejudice in the previous order. Plaintiff has not
responded to Defendants’ Motion to Dismiss and offers no
explanation in the Response to Motion for Summary
Judgment as to why these dismissed claims should be
revived.
Blickenstaff, No. 00-C-983-B/S, 2001 U.S. Dist. LEXIS
22895, at *8-9.
In granting the Plan’s motion for sanctions based on the
above series of events, the district court agreed that
Blickenstaff’s attorneys had violated Rule 11 by amending
her complaint to state claims against parties previously
dismissed with prejudice. The court ordered Blickenstaff’s
attorneys to pay the Plan’s attorneys’ fees and costs in-
curred to “fend off” the prohibited § 503(a)(3) claims in the
second amended complaint.
2. Utschig Affidavit
The case management plan established by the district
court ordered the parties to disclose expert witnesses by
May 8, 2001. On July 23, 2001, after the deadline had
passed, Blickenstaff attached the affidavit of a purported
expert, Leroy H. Utschig, to her response to the Plan’s mo-
tion for summary judgment. The Plan moved to strike it,
and the magistrate judge agreed.
The magistrate judge based her decision on several grounds:
1) that Blickenstaff did not comply with the case manage-
ment plan deadline for expert disclosures and provided no
reason or excuse for this failure; 2) that if a trial should be
held in the case, it would be limited to the administrative
record, of which Utschig’s affidavit was not a part; and 3)
that the affidavit and accompanying report were insuffi-
cient in numerous regards, including their failure to provide
any specific information about Utschig’s professional and
educational background from which the court could de-
No. 03-2116 11
termine his qualifications as an expert. After the magistrate
judge struck the affidavit on October 3, 2001, Blickenstaff
made no further attempts to utilize it in support of her case.
The district court granted sanctions, again in the form of
the Plan’s attorneys’ fees and costs, because it found, in-
correctly, that Blickenstaff had relied on the affidavit in its
summary judgment response after the affidavit had been
stricken from the record.
II. Analysis
A. Evidence at Trial
Blickenstaff’s first argument on appeal, that evidence at
trial was improperly limited to the administrative record,
is baseless. In ruling on the Plan’s motion to strike Utschig’s
expert affidavit offered as part of the summary judgment
briefing, the magistrate judge offered several reasons for
doing so—one of which was that the evidence at trial, should
there be one, would be limited to the administrative record.
Blickenstaff points to that ruling as limiting the evidence
she was allowed to present at trial.
Yet, contrary to what the magistrate judge indicated,
Judge Barker, who presided over the bench trial, denied both
the Plan’s motion to limit evidence at trial to the administra-
tive record (R. at 148) and its motion in limine, presented
the day of trial, requesting the same (R. at 153; Tr. at 5.)
Indeed, Judge Barker specifically allowed Blickenstaff to
attempt to enter the one piece of evidence she offered that
was outside the administrative record—a summary plan
description dated after the date of her disability—through
the plaintiff’s own testimony at trial. After Judge Barker
denied the document’s admission,3 she asked Blickenstaff if
3
Blickenstaff does not specifically challenge Judge Barker’s
decision not to admit the summary plan description.
12 No. 03-2116
there was any further evidence outside of the administra-
tive record she wished to offer. (Tr. at 18.) Her attorney
responded that he would rest on the administrative record
(id.), and he offered no additional documents or testimony.
Because the evidence at trial was not limited to the admin-
istrative record as Blickenstaff inexplicably claims, we can
move swiftly to our examination of the district judge’s de-
termination on the merits.4
B. Merits
1. Benefit Termination Decision
Because this case was tried to a judge, not a jury, our
standard of review is established by Federal Rule of Civil
Procedure 52(a), which provides, “[f]indings of fact, whether
based on oral or documentary evidence, shall not be set aside
unless clearly erroneous . . . .” See Cerros v. Steel Techs., Inc.,
288 F.3d 1040, 1044 (7th Cir. 2002). “Review under the
clearly erroneous standard is significantly deferential, re-
quiring a definite and firm conviction that a mistake has
been committed.” Concrete Pipe & Prods. of Cal., Inc. v.
4
We note that if Judge Barker had limited evidence at trial to
the administrative record, we likely would not have found such a
limitation to be an abuse of discretion. See, e.g., Vallone v. CNA
Fin. Corp., No. 03-2090, 2004 U.S. App. LEXIS 14610, *11-12 (7th
Cir. July 15, 2004) (finding that the district judge appropriately
limited discovery on the plaintiffs’ benefits termination claim to
the administrative record, when such a decision was subject to
deferential review); Perlman v. Swiss Bank Corp. Comprehensive
Disability Protection Plan, 195 F.3d 975, 981-82 (7th Cir. 1999)
(“Deferential review of an administrative decision means review
on the administrative record. We have allowed parties to take
discovery and present new evidence in ERISA cases subject to de
novo judicial decision, but never where the question is whether a
decision is supported by substantial evidence, or is arbitrary and
capricious.”) (internal citations omitted).
No. 03-2116 13
Constr. Laborers Pension Tr. for S. Cal., 508 U.S. 602, 623
(1993), quoted in Am. Nat’l Fire Ins. Co. v. Yellow Freight
Systems, Inc., 325 F.3d 924, 928 (7th Cir. 2003).
We review the district court’s legal determinations de
novo, Am. Nat’l Fire Ins. Co., 325 F.3d at 928; Cerros, 288
F.3d at 1044, applying the arbitrary and capricious stand-
ard of review to the Plan’s benefit eligibility decisions. We
use the arbitrary and capricious standard because the Plan
language provided that Hartford, the claims evaluator
acting on behalf of the Plan, had “full discretion and au-
thority” to determine benefits payable and to construe and
interpret all terms and provisions of the Plan in connection
with this determination, which would include eligibility re-
quirements. See Dabertin v. HCR Manor Care, Inc., No. 03-
1918, 2004 U.S. App. LEXIS 12509, at *10 (7th Cir. June
24, 2004) (“Where an ERISA plan gives the plan adminis-
trator discretion to interpret the plan terms or determine
benefits eligibility, a reviewing court employs the arbitrary
and capricious standard.”). The arbitrary and capricious
standard requires us to give great deference to the Plan’s deci-
sion, which cannot be overturned unless it’s downright
unreasonable. Id. at *11-12.5
5
We pause to note that in support of her claim that she was
entitled at trial to present evidence outside of the administrative
record, and elsewhere in her opening brief, Blickenstaff alleges
that the trial judge was obligated to apply a de novo, as opposed
to an arbitrary and capricious, standard of review to the Plan’s
decision to deny her short term disability benefits. Not only is this
incorrect, it is waived. Blickenstaff herself stated, in response to
the Plan’s summary judgment motion, that the court was to apply
a discretionary standard of review in this case. (R. at 101, p. 2). At
no time thereafter did she press for a de novo standard of
review—not in her response to the Plan’s motion to reconsider the
court’s summary judgment ruling, not at trial, not in her motion
to reconsider the entry after bench trial, nor in her reply supporting
(continued...)
14 No. 03-2116
Blickenstaff first makes the untenable argument that the
district court applied the wrong disability definition,
evaluating her short term disability claim under a standard
that requires her to be unable to perform “any” occupation as
opposed to “her” occupation to receive benefits. Blickenstaff
bases this argument solely on the court’s factual summary
section of its ruling, which states, in pertinent part: “Ms.
Blickenstaff applied for, and received, short term disability
(STD) benefits. In February 1999, she applied for long term
disability (LTD) benefits. The Plan denied her the requested
benefits in a letter of March 18, 1999.” Blickenstaff reads the
last sentence, when it refers to “the requested benefits” to
mean long term disability benefits, and from there theorizes
that the court fundamentally misunderstood the nature of
the extensively litigated case before it to be about the denial
of long term disability benefits under an “any” occupation
standard as opposed to a short term disability benefits case
under a “your” occupation standard.
The body of the court’s opinion, however, belies such a
conclusion; it is evident from the face of the ruling that the
court applied the proper “your” occupation standard. Al-
though it never recites the short term disability definition,
which looks for the employee’s inability to perform the es-
sential duties of his or her specific occupation, the court con-
centrated on what job description the Plan used in reaching
its determination and evaluated whether Blickenstaff’s
accommodated job fell within her medical limitations as
outlined by her healthcare providers. In doing so, the court
obviously applied the job-specific “your” occupation stan-
dard and not the broader “any” occupation standard.
5
(...continued)
that motion. Because she failed to raise this argument at the
district court level, and most especially because she affirmatively
represented the opposite position below, we will not consider it
now. See Williams v. REP Corp., 302 F.3d 660, 666 (7th Cir. 2002).
No. 03-2116 15
Blickenstaff’s other arguments track those made to the
district court at trial—that the Plan utilized the wrong job
description in making its decision and even if it didn’t, the
medical information shows that she could not perform her
accommodated position. Neither has merit.
The district court did not make a factual error in deter-
mining that the Plan compared Blickenstaff’s medical in-
formation with the accommodated job description and not
the November job description. As noted by the district court,
the letter terminating Blickenstaff’s benefits specifically
described her job as the accommodated position, not the
November job description position. And, Blickenstaff ack-
nowledged in her internal appeal that the last job she per-
formed at Donnelley was the accommodated position, not
the one described by the November job description. Even
though the March 18, 1999 termination letter references
the November job description as part of Blickenstaff’s file
and internal notes reveal some confusion over which job
description—the November job description or the accommo-
dated job description—applied, we agree with the district
court that the March 18, 1999 letter exhibits a clear
understanding of Blickenstaff’s position as the accommo-
dated one.
The district court also came to the proper legal conclusion
that the Plan had a reasonable basis for terminating
Blickenstaff’s benefits because the medical evidence indi-
cated she could perform her accommodated position. Com-
paring the results of the February exam, which stated
Blickenstaff could perform light work eight hours a day,
lifting up to seven pounds constantly and up to fifteen pounds
frequently, to her accommodated position, which prohibited
lifting over ten pounds and other strenuous movement, the
Plan reasonably concluded that Blickenstaff was capable of
performing her job.
Blickenstaff counters that because the February exam
indicated she could only lift up to seven pounds constantly,
she was incapable of performing the accommodated posi-
16 No. 03-2116
tion, which maintained a ten-pound lifting restriction. Yet,
there’s no evidence in the record that Blickenstaff actually
lifted ten pounds constantly during the workday, rather
than the seven of which she was capable according to the
February exam. And, Blickenstaff wholly ignores that the
Plan’s decision was further supported by record evidence
showing that her treating physician agreed that she could
perform light work for eight hours a day and that he agreed
with the results of the February exam. Notably, the February
exam indicates that Blickenstaff did not put forth her best
effort during testing, leading to a reasonable inference that
she could perform even more work than that expressed by
the February exam. Cf. Leipzig v. AIG Life Ins. Co., 362
F.3d 406, 409 (7th Cir. 2004) (noting that “insurers . . .
must consider the possibility that applicants are exaggerat-
ing in an effort to win benefits (or are sincere hypochondri-
acs not at serious medical risk)”). The record here leads
firmly to the conclusion that the Plan acted reasonably, and
the judge did not commit reversible error in so finding.
2. Appeal Denial
Blickenstaff also makes an underdeveloped argument that
the district court erred in finding, on summary judgment, that
the Plan acted reasonably in denying her second internal
appeal contesting the termination decision. Blickenstaff
submitted two appeals. Although she does not challenge the
Plan’s determination as to the first appeal, we recount it
briefly to provide context for the second appeal.
Blickenstaff’s first appeal consisted of a letter claiming
she had been diagnosed with fibromyalgia, which she said
would be confirmed by an examination of her medical rec-
ords. The only evidence submitted with the letter was a
copy of her June 1, 1998 note outlining her restrictions,
which, as stated earlier, Blickenstaff represented were in
effect at the time she stopped working in October of 1998.
No. 03-2116 17
In response to the letter, the Plan spoke with Blickenstaff’s
physician, Dr. Williams, about the fibromyalgia diagnosis.
Dr. Williams stated that he was unsure whether Blickenstaff
had fibromyalgia, noting that when he initially started treat-
ing her she just complained of chronic back pain. More re-
cently, he observed, Blickenstaff complained of all the textbook
symptoms of fibromyalgia, but he couldn’t determine whether
they were real or if she had just done a lot of research on
the disease. He reiterated that he continued to agree with
the results of the February exam and that he had no ob-
jective evidence for the Plan in support of her fibromyalgia
claim. The Plan denied the appeal.
Blickenstaff appealed again, this time submitting a May
3, 1999 report from Dr. Acosta-Rodriguez, the physician to
whom Donnelley had referred her in the past and who was
not her own treating physician. His report did not confirm
the fibromyalgia diagnosis, either. In fact, it stated: “When
presented to me the patient states that essentially she has
had chronic back pain since she has last saw me and that
she is sure it is because of the fibromyalgia that I diagnosed
her with. I did not recall ever diagnosing her with
fibromyalgia, I rechecked my notes and found no mention
of fibromyalgia . . . .” The report goes on to state that “[o]n
classic fibromyalgia tender point examination the patient
had only 3 out of 18 spots that were tender consistent with
fibromyalgia.” Dr. Acosta-Rodriguez ultimately diagnosed
her with “very mild thoracic outlet symptoms, very mild fibro-
myositis of the lumbar fascia, more consistent with fascitis
then [sic] fibromyalgia or myofascial pain syndrome.” He noted
that the last diagnosis was based only on Blickenstaff’s sub-
jective complaints of pain and not on any objective findings.
He prescribed seven sessions of physical therapy for the
thoracic outlet symptoms and told her not to return to work
until she completed the physical therapy.
In response to the receipt of this report, the Plan sent Dr.
Acosta-Rodriguez a copy of the February exam and asked if
18 No. 03-2116
he agreed with the results and if not, why not. Dr. Acosta-
Rodriguez responded in writing that he agreed “that the
test appears to be correct in determining that she is able to
carry out her duties in the ‘lite [sic] physical demand’ level
for an eight-hour day.”
About a month after submitting Dr. Acosta-Rodriguez’s
May 3, 1999 report, Blickenstaff sent the Plan another
medical report from a new physician, Dr. Douglas, dated
May 18, 1999, in support of her appeal. He diagnosed her
with chronic intermittent back pain.
The Plan denied her second appeal. It explained that Dr.
Acosta-Rodriguez’s report did not support her claimed diag-
nosis of fibromyalgia and that Dr. Acosta-Rodriguez, like
her treating physician, Dr. Williams, agreed with the re-
sults of the February exam. Because her medical providers
were in accord that she could perform light-duty work and
because the Plan believed that her accommodated job fell
within the confines of light-duty work, the Plan explained
that she did not meet benefit eligibility requirements. It also
noted that the new information provided by Dr. Douglas
would not be considered because it represented her con-
dition as of the date of exam, May 18, 1999, and not the
date of the eligibility determination, March 14, 1999.
Blickenstaff argued, in response to the Plan’s summary
judgment motion, that the Plan acted in bad faith by failing
to consider Dr. Douglas’s May 18, 1999 report diagnosing
her with chronic intermittent back pain and Dr. Acosta-
Rodriguez’s May 3, 1999 report diagnosing her with “very
mild thoracic outlet symptoms.” She insisted that they were
relevant to her condition on March 14, 1999, the date
benefits were terminated, even though the diagnoses took
place close to two months later.
The district court disagreed, employing the deferential ar-
bitrary and capricious standard:
[W]e do not find the decision to exclude evidence amassed
after March 13, 1999, to be downright unreasonable.
No. 03-2116 19
Defendants’ refusal to consider such evidence is rationally
related to the goal of determining Plaintiff’s physical cap-
abilities on the specific dates for which coverage was
sought and ultimately denied. Both Dr. Williams and Dr.
Acosta-Rodriguez indicated that Plaintiff’s [February
exam] accurately reflected her capabilities. Such conclu-
sions naturally reflect Plaintiff’s condition on the date she
underwent examination. Defendants’ refusal to extrapo-
late backward in time from the date of these examinations
to determine Plaintiff’s physical condition two months
earlier was not sufficiently unreasonable to warrant
disruption of the benefits eligibility decision.
Blickenstaff, No. 00-C-983-B/S, 2001 U.S. Dist. LEXIS
22895, at *14.
We review the district court’s grant of summary judgment
on this issue de novo, construing all facts and inferences in
the light most favorable to the non-moving party. Davis v.
Con-Way Transp. Central Express, Inc., 368 F.3d 776, 782
(7th Cir. 2004). As explained earlier, we evaluate the Plan’s
determination under the deferential arbitrary and capri-
cious standard. For an administrative decision to pass
muster under this test, the Plan had to “articulate a
rational connection between the facts found, the issue to be
decided, and the choice made.” Dabertin, No. 03-1918, 2004
U.S. App. LEXIS 12509, at *12.
The district court properly determined that the decision
to deny Blickenstaff’s second appeal was not arbitrary and
capricious. It’s evident from the record that the Plan took
Blickenstaff’s second appeal seriously and examined the
materials she submitted in its support. Yet, Dr. Acosta-
Rodriguez’s report did not show she suffered from fibromyalgia
as she claimed, and he confirmed in writing that she could per-
form light-duty work as found in the February exam. Although
Dr. Acosta-Rodriguez and Dr. Douglas diagnosed Blickenstaff
with medical conditions, we agree with the district court that
20 No. 03-2116
the Plan was not obligated to accept these diagnoses as rele-
vant to her condition as of the March 1999 decision to termi-
nate her benefits. Both diagnoses were made in May, two
months after the Plan’s determination. As observed by the dis-
trict court, it was not unreasonable for the Plan to refuse to
speculate as to whether those diagnoses existed as of the
March decision, especially when Dr. Acosta-Rodriguez specifi-
cally stated, despite his diagnosis, that he believed
Blickenstaff was capable of performing light-duty work eight
hours a day and when Dr. Douglas had no established history
with Blickenstaff.
C. Sanctions
We review a district court’s decision to impose sanctions
under Rule 11 for abuse of discretion. Vollmer v. Selden,
350 F.3d 656, 659 (7th Cir. 2003) (citing Cooter & Gell v.
Hartmarx Corp., 496 U.S. 384, 405 (1990)). “A district court
abuses its discretion in imposing Rule 11 sanctions when it
bases its decision ‘on an erroneous view of the law or on a
clearly erroneous assessment of the evidence.’ ” Milwaukee
Concrete Studios, Ltd. v. Fjeld Mfg. Co., 8 F.3d 441, 448
(7th Cir. 1993) (quoting Cooter & Gell, 496 U.S. at 405).
Blickenstaff argues that the district court’s order dis-
missing, with prejudice, her complaint against Donnelley
and Hartford and stating, albeit in a footnote, that any
amendment would be futile, did not act as a bar to her
reassertion of the breach of fiduciary duty claims in the
second amended complaint. Her position on this issue is
hard to comprehend, but she appears to argue that because
the court specifically found that the breach of fiduciary duty
claims had been inadequately pled, she was free to replead
them against Donnelley and Hartford in later filings. This,
of course, flies in the face of plain words of the order, which
dismisses Donnelley and Hartford from the suit, with
prejudice, and states that “there is no reason to allow
No. 03-2116 21
Blickenstaff to amend her complaint to sufficiently allege a
breach of fiduciary duty claim against either Donnelley or
Hartford.”
Moreover, regardless of its merits, this argument is waived.
See Williams, 302 F.3d at 666 (“A party waives any argu-
ment that it does not raise before the district court . . . .”).
Blickenstaff had an opportunity, upon the original defendants’
motion to dismiss the second amended complaint, to explain
why the breach of fiduciary duty claims were properly in-
cluded despite the court’s prior order. She did not respond,
and the court noted this silence both in its ruling on the
motion to dismiss and in its order granting sanctions. More-
over, in her response to the Plan’s motion for sanctions,
Blickenstaff defended her actions with an argument differ-
ent from the one made here. She argued to the district court
that her second amended complaint was an attempt to show,
purportedly by example, and without explanation, the
reasons why an amended complaint should be permitted.
The argument made below and the argument made here
differ fundamentally: below she admitted that the order
forbade her from amending the complaint, arguing that the
second amended complaint was an attempt to persuade the
court to reconsider its position; here, she insists that the
order did not forbid an amendment at all.
We find that the district court did not abuse its discretion in
granting sanctions for Blickenstaff’s failure, without adequate
explanation, to follow a clear order barring the assertion of
the breach of fiduciary duty claims, necessitating another
motion to dismiss by the original defendants and another
ruling by the district court.
However, the district court erred in evaluating the facts
surrounding Blickenstaff’s use of the Utschig affidavit. It
based its award for sanctions with respect to the Utschig
affidavit on its belief that Blickenstaff relied on the affi-
davit in her response to the motion for summary judgment
after it had been stricken from the record by the magistrate
22 No. 03-2116
judge. The record shows, however, that Blickenstaff submit-
ted the affidavit with her summary judgment response, then
the affidavit was stricken pursuant to the Plan’s motion. The
Plan does not dispute that the district court was mistaken in
the order of events or that Blickenstaff never relied on the
affidavit after it was stricken from the record.
Because the district court made a factual mistake when
evaluating Blickenstaff’s use of the Utschig affidavit and
because it is undisputed that Blickenstaff did not improp-
erly rely on the affidavit once it was stricken, there should
have been no award of sanctions on this issue. We note that
the accounting submitted by the Plan in support of the
sanctions award delineates the time its attorneys spent on the
motion to dismiss the second amended complaint and the
motion to strike the Utschig affidavit. Based on our review
of this accounting, the $943.50 in sanctions levied against
Blickenstaff’s counsel pertaining to the Utschig affidavit
must be vacated. The remaining sanctions award of $1890.00,
attributable to the Plan’s expenses incurred in fending off
the claims against Donnelley and Hartford in the second
amended complaint, is affirmed.
III. Conclusion
We AFFIRM the judgment of the district court that the
Plan did not act arbitrarily and capriciously in terminating
Blickenstaff’s short term disability benefits and in refusing
to reinstate them on appeal. We further AFFIRM the award
of sanctions in the amount of $1890.00; the balance of
$943.50 is VACATED.
No. 03-2116 23
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—8-9-04