Douglas McOsker v. Paul Revere Life Ins ( 2002 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 01-1741
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Douglas McOsker, *
*
Appellant, *
*
v. * Appeal from the United States
* District Court for the Western
Paul Revere Life Insurance Company, * District of Missouri.
*
Appellee. *
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Submitted: December 10, 2001
Filed: February 1, 2002
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Before MORRIS SHEPPARD ARNOLD, BEAM, and RILEY, Circuit Judges.
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MORRIS SHEPPARD ARNOLD, Circuit Judge.
Douglas McOsker, who had been president of Total Copy Systems, claiming
that he was totally disabled due to severe depression, brought this action under
ERISA, see 29 U.S.C. § 1132(a)(1)(B), to recover under a policy that Paul Revere
Life Insurance Company issued as part of an employee benefit plan. The district
court, after a trial to the court, entered judgment in favor of Paul Revere, and
Mr. McOsker appealed. We reverse.
I.
Under the Paul Revere policy at issue, as relevant, Mr. McOsker was totally
disabled if "because of Injury or Sickness" he was "unable to perform the important
duties of [his] Occupation." In 1995, Mr. McOsker produced evidence to Paul Revere
that it accepted as proof that he was totally disabled due to severe depression, and it
paid him corresponding benefits for about two years until it decided that he was no
longer eligible to receive them. The change of mind came after Dr. James
McLaughlin, a psychologist who had been treating Mr. McOsker's depression,
terminated his treatment, having determined that, though Mr. McOsker could not
manage or be responsible for people because of the stress involved, he could
"nevertheless return to work but not at pre-disability level of functioning." A few
months later, Dr. John L. Bean opined to Paul Revere that Mr. McOsker was still
suffering from severe depression and that it was unknown when he could return to
work, but Paul Revere refused to resume payments because the company's medical
staff determined that Dr. Bean's records did not contain any restrictions that would
prevent Mr. McOsker's return to work.
In a de novo review of Paul Revere's decision, see Firestone Tire and Rubber
Co. v. Bruch, 489 U.S. 101, 115 (1989); Galman v. Prudential Ins. Co. of America,
254 F.3d 768, 770 (8th Cir. 2001), the district court held that in order to recover
benefits for total disability under the Paul Revere policy, Mr. McOsker must be
unable to perform any of the important duties of his position; that is, he was obligated
to show that his disability prevented him from performing all of those duties, not just
some of them. While the policy may not say so in ipsis verbis, we think that the
district court's construction of it is the only one that comports with both reason and
authority.
The circumstance that in our minds most plainly supports this interpretation is
that the policy allows for benefits for "Residual Disability" when the insured is
"unable to perform one or more of the important duties" of his or her occupation. It
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is evident to us that a person who can perform some but not all of his or her important
duties has a "Residual Disability" within the meaning of the policy, and that therefore
in order to be eligible for total disability payments a person would be required to
show that he or she was unable to perform any of those important duties. We believe
that it is not otherwise possible to give effect to both parts of the contract.
Such a construction, moreover, conforms with the result reached by other
courts that have been faced with interpreting identical or substantially identical
contract language. See, e.g., Yahiro v. Northwestern Mut. Life Ins. Co.,
168 F. Supp. 2d 511, 517-18 (D. Md. 2001); Dym v. Provident Life and Accident Ins.
Co., 19 F. Supp. 2d 1147, 1149-50 (S. D. Cal. 1998); see also Giampa v. Trustmark
Ins. Co., 73 F. Supp. 2d 22, 27-29 (D. Mass. 1999). We think that it is significant that
Mr. McOsker refers us to no cases holding the contrary.
II.
Having correctly construed the policy, the district court went on to hold that
Mr. McOsker was not totally disabled because he was in fact able to perform some
of the important duties of his position. We review this factual determination for clear
error. See Gander v. Livoti, 250 F.3d 606, 611 (8th Cir. 2001).
We think it important to note in beginning our consideration of the evidence
in this case that Paul Revere's initial determination that Mr. McOsker was totally
disabled was based on Dr. Bean's opinion that, due to major depression, Mr. McOsker
was unable to perform any of a list of important duties that Mr. McOsker had
provided to the doctor. Mr. McOsker listed his duties as sales management, inventory
management, establishing policy, and making administrative decisions, each of which
categories he went on to describe in a detailed way.
The district court, in deciding the matter in Paul Revere's favor, relied heavily
on the fact that when he terminated Mr. McOsker's treatment in 1997 Dr. McLaughlin
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opined that Mr. McOsker "could return to work but not at pre-disability level of
functioning." We note, first, the highly ambiguous character of this opinion:
Dr. McLaughlin might have been saying that Mr. McOsker could not work at his
previous "level" (i.e., in a management capacity), or that he could perform all of his
important duties but not with the same efficiency as before, or that he could perform
some of the important duties of his job. While it is not impossible that
Dr. McLaughlin was intending to say that Mr. McOsker could perform some of the
important duties of his job (which is evidently how the district court interpreted
Dr. McLaughlin's reports), we believe it much more probable that Dr. McLaughlin
meant instead that Mr. McOsker could work in some capacity but not in a managerial
position like the one he previously occupied.
It is important to note that before he discharged Mr. McOsker, Dr. McLaughlin
had been saying at regular intervals for over a year that Mr. McOsker could not return
to the work "at [his] old employment level." When he terminated Mr. McOsker's
treatment, Dr. McLaughlin opined that his patient "cannot manage or be responsible
for people due to severe stress inherent in managerial responsibility." This opinion
does not vary significantly from the opinions that Dr. McLaughlin had already been
rendering and on the basis of which Paul Revere had been paying benefits for some
time, which suggests to us that Mr. McOsker was still totally disabled within the
meaning of the relevant policy at the time that Dr. McLaughlin terminated his
treatment. We are not suggesting that paying benefits operates forever as an estoppel
so that an insurer can never change its mind; but unless information available to an
insurer alters in some significant way, the previous payment of benefits is a
circumstance that must weigh against the propriety of an insurer's decision to
discontinue those payments.
Paul Revere argues that some of the detailed duties that Mr. McOsker had
listed as important to his job did not involve management, but only, for instance,
deciding what inventory to order and making corporate policy. But in our view,
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Dr. McLaughlin's assessment was not merely that his patient was unable to manage
people in a direct way; Dr. McLaughlin was also saying that his patient was unable
to make decisions that affected the future of employees in a significant way. Our
confidence in this interpretation of the doctor's opinion is bolstered by his observation
that Mr. McOsker had expressed regret that "he had run a company in the ground and
he knew that he was responsibile for the employees losing their jobs." It was, in other
words, duties that carried significant consequences for others that Mr. McOsker was
still unable to perform, even after Dr. McLaughlin discharged him; and all of
Mr. McOsker's duties were of that variety.
Paul Revere points to the fact that Dr. McLaughlin said that Mr. McOsker
"could be involved in sales," and it argues that since Mr. McOsker said that "sales"
was one of his job duties, the district court could have reasonably concluded that
Mr. McOsker was not totally disabled. In the first place, the district court did not rely
on this argument to support its conclusion. More important, we are unable to locate
anything in the record to indicate that Mr. McOsker ever said that sales was one of
his important job duties. The list that he provided in support of his initial application,
on the basis of which Dr. Bean had found him totally disabled and Paul Revere had
begun paying benefits, mentioned sales management, not merely sales, as an
important duty.
None of the other evidence relied on by the district court, moreover, it seems
to us, contributes significantly to a conclusion that Mr. McOsker was no longer
totally disabled within the meaning of Paul Revere's policy. While Mr. McOsker's
condition certainly improved, and Dr. McLaughlin concluded that he was no longer
"severely depressed," we think it important to note that, so far as we can discern from
the record, Paul Revere never showed Dr. McLaughlin a list of Mr. McOsker's
important job duties and asked him whether Mr. McOsker could perform any of them.
When one adds to the factual mix Dr. Bean's opinion that Mr. McOsker was still
totally disabled in 1997, after Dr. McLaughlin terminated his treatment, and it was
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Dr. Bean who had had the relevant list of duties before him for some time, we think
it highly probable that Mr. McOsker was still entitled to benefits.
We have recently had occasion to remark that in determining whether an
insurer has properly terminated benefits that it initially undertook to pay out, it is
important to focus on the events that occurred between the conclusion that benefits
were owing and the decision to terminate them. See Walke v. Group Long Term
Disability Ins., 256 F.3d 835, 840 (8th Cir. 2001). When we turn to the record in this
case with that principle in mind, we are left with "a definite and firm conviction that
a mistake [was] committed," United States v. United States Gypsum Co., 333 U.S.
364, 395 (1948), quoted in Lincoln Benefit Life Co. v. Edwards, 243 F.3d 457, 464
(8th Cir. 2001) (per curiam), when the district court found that Mr. McOsker was not
totally disabled and rendered judgment in Paul Revere's favor on that basis.
III.
For the reasons indicated, we reverse the judgment of the district court and
remand for further proceedings not inconsistent with this opinion.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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