Waugh v. Williams Companies, Inc. Long Term Disability Plan

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS April 23, 2009
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
VICKIE WAUGH,
f/k/a VICKIE MAYS,
Plaintiff-Appellant,
v. No. 08-5123
(D.C. No. 4:07-CV-00446-CVE-SAJ)
THE WILLIAMS COMPANIES, INC. (N.D. Okla.)
LONG TERM DISABILITY PLAN,
Defendant-Appellee.
ORDER AND JUDGMENT *
Before LUCERO, PORFILIO, and ANDERSON, Circuit Judges.
Vickie Waugh, previously employed by The Williams Companies, Inc.
(TWC), appeals the district court’s order upholding the decision of the
administrator of TWC’s Long-Term Disability Plan (Plan) to terminate her
benefits. She also appeals the court’s denial of her motion for new trial.
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Ms. Waugh argues that the district court failed to appreciate and apply the full
import of the Supreme Court’s decision in Metropolitan Life Insurance Co. v.
Glenn, 128 S. Ct. 2343 (2008). She believes Metropolitan Life substitutes “all of
the artificial rules of evidence heretofore applied in ERISA claims review
litigation for a much fairer no-nonsense review of the record as a whole.” Aplt.
App., Vol. 1 at 183. We hold Metropolitan Life is inapposite and affirm.
The Plan provides a two-tier system for the provision of benefits when an
employee is “totally disabled.” During the first twenty-four months following the
commencement of benefits, an employee is totally disabled, by policy definition,
essentially if unable to perform his or her job or some reasonable alternative
employment with TWC. After the first twenty-four months, however, an
employee can retain totally disabled status only if he or she is unable “to engage
in any gainful occupation for which he or she is reasonably fitted by education,
training or experience, as determined by the Plan Administrator. Id., Vol. 3
at 328. The Plan also requires participants receiving disability payments to
provide current medical information at least once every two years. Failure to do
so could result in termination of benefits.
Ms. Waugh, who worked for TWC for twenty-two years in various
computer-related jobs, developed carpal tunnel syndrome in the 1990s. Kemper
National Services, Inc. (Kemper), the claims administrator for the Plan,
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determined that, effective, July 27, 1999, Ms. Waugh was totally disabled. 1 In
February 2002, Kemper initiated a review of Ms. Waugh’s disability claim to
determine whether she was still eligible for benefits under the second tier total
disability definition. After receiving updated medical documentation and
obtaining a peer review from Lawrence Blumberg, M.D., Kemper sent Ms. Waugh
a letter describing the doctor’s findings and informing her the records she
provided did not support continuance of her disability benefits. Kemper,
however, granted her thirty days within which to submit additional objective test
results requested by Dr. Blumberg.
Following the submission of that documentation and another review by
Dr. Blumberg, Kemper informed Ms. Waugh she did not qualify for permanent
disability and her benefits would be terminated. Ms. Waugh administratively
appealed this finding, submitting for Kemper’s consideration one more medical
record and a partially favorable benefits determination by the Social Security
Administration. After two more peer reviews by a second and a third physician,
1
TWC’s Board of Directors was responsible for appointing a Benefits
Committee which, in turn, appointed an Administrative Committee to serve as the
Plan Administrator. The Administrative Committee, in turn, delegated full
discretionary authority to Kemper to interpret the Plan, obtain the participant
information necessary to administer the Plan, make benefit determinations under
the Plan, and conduct the first level of administrative appeals from those
determinations. The Administrative Committee, however, retained the authority
to hear and decide the second and final level of administrative appeals. The
Administrative Committee was not compensated for its service and there was no
evidence presented that Kemper’s compensation was tied to the amount of claims
approved or denied.
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both of whom agreed with Dr. Blumberg’s assessment, Kemper denied
Ms. Waugh’s first-level appeal.
Ms. Waugh then filed a second-level appeal with the Administrative
Committee, but presented no additional arguments or medical records. Following
further review by a fourth physician, who agreed with the other three, the
Administrative Committee upheld the denial of benefits. Ms. Waugh challenged
the denial of the second-level appeal, but the Administrative Committee affirmed
its denial. Ms. Waugh subsequently filed her complaint for review in district
court.
To consider Ms. Waugh’s contention that the district court misapplied
Metropolitan Life, we must first examine the standard of review that was applied.
ERISA allows plaintiffs to sue in federal court to “recover
benefits due . . . under the [healthcare] plan, to enforce . . . rights
under the terms of the plan, or to clarify . . . rights to future benefits
under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). But the
ERISA statute does not specify the judicial standard of review. The
Supreme Court closed the lacuna in 1989, holding in Firestone Tire
and Rubber Co. v. Bruch, 489 U.S. 101, 109 . . . (1989), that a denial
of benefits challenged under § 1132(a)(1)(B) “is to be reviewed
under a de novo standard, unless the benefit plan gives the
administrator or fiduciary discretionary authority to determine
eligibility for benefits or to construe the terms of the plan.” Id.
at 115 . . . . If the plan does explicitly confer discretionary authority
on an administrator with so-called Firestone language, courts must
review benefit determinations under an “arbitrary and capricious”
standard.
Geddes v. United Staffing Alliance Employee Med. Plan, 469 F.3d 919, 923
(10th Cir. 2006) (alteration in first sentence in original). Recognizing that the
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district court reviewed the benefits decision in this case under the arbitrary and
capricious standard, Ms. Waugh argues the court committed an error of law by
failing to apply Metropolitan Life, which she interprets as requiring de novo
review of the denial of benefits. Our review is therefore plenary. Sandoval v.
Aetna Life & Cas. Inc. Co., 967 F.2d 377, 380 (10th Cir. 1992) (holding that this
Court has plenary review regarding a district court’s legal conclusions).
There are two problems with this approach. First, the issue decided in
Metropolitan Life was how a court should review a discretionary benefit decision
of a plan administrator when that individual has a conflict of interest 128 S. Ct.
at 2350. The Court did not broaden the standard of review as argued by Ms.
Waugh. Second, in the district court Ms. Waugh not only failed to contend the
Plan Administrator was conflicted, she also conceded that fact.
Not to be denied, Ms. Waugh asserts: “[t]hat concession now appears ill
advised and it may be proper to remand this case to allow Plaintiff to develop
whether the Defendant is operating under [such a conflict of interest].” Aplt.
Opening Br. at 52. In effect, she asks us to overlook the impediment to her
appeal. However, “[w]e exercise our discretion to review issues not raised below
‘only in the most unusual circumstances[] . . . [and] where the argument involves
a pure matter of law and the proper resolution of the issue is certain.’” York v.
City of Las Cruces, 523 F.3d 1205, 1212 (10th Cir. 2008) (all but first alteration
in original) (quoting United States v. Jarvis, 499 F.3d 1196, 1202 (10th Cir.
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2007)). Because this case does not meet those standards, we reject her request.
But were we to overlook the absence of evidence the Plan Administrator was
burdened by a conflict of interest, Ms. Waugh still would not prevail.
Essentially, Ms. Waugh contends that after Metropolitan Life a reviewing
court must give no deference to a plan administrator’s discretionary benefits
determination. She assumes the Court’s concern with a fiduciary’s conflict of
interest provides a license for courts to review all the beneficiary’s medical
evidence and reach a de novo determination whether benefits should have been
granted. According to Ms. Waugh, no longer may decisions “be upheld even if on
the lower end of reasonableness.” Aplt. Opening Br. at 51. She asserts
Metropolitan Life vests courts with authority to reverse a plan administrator’s
decision even if that decision is reasonable and supported by substantial
evidence. 2 The Court had no intention of mandating de novo review of these
discretionary decisions. See Metro. Life Ins. Co., 128 S. Ct. at 2350 (stating that
Firestone did not change the standard of review “from deferential to de novo” and
that the Court would not “overturn Firestone by adopting a rule that in practice
could bring about near universal review by judges de novo”). We therefore affirm
2
Creatively, she posits that the level of deference a court should give a plan
administrator’s decision is the same deference that a football official reviewing an
instant replay in a booth should give to a call made by the on-the-field official.
Aplt. Reply Br. at 19-20. That is, of course, no deference.
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the district court’s order upholding the Plan Administrator’s termination of
benefits and turn to the court’s denial of Ms. Waugh’s motion for new trial.
A district court’s denial of a motion for a new trial is reviewed
for an abuse of discretion. The ruling will be reversed only if the
district court made a clear error of judgment or exceeded the bounds
of permissible choice in the circumstances. When the district court’s
decision turns on an issue of law, however, its determination on that
question is reviewed de novo.
Skaggs v. Otis Elevator Co., 164 F.3d 511, 514 (10th Cir. 1998) (citations and
quotation omitted). Under Federal Rule of Civil Procedure 59(a)(1)(B), following
a nonjury trial the district court may grant a new trial on some or all of the issues
“for any reason for which a rehearing has heretofore been granted in a suit in
equity in federal court.” Further, under Rule 59(a)(2), “[a]fter a nonjury trial, the
court may, on motion for a new trial, open the judgment if one has been entered,
take additional testimony, amend findings of fact and conclusions of law or make
new ones, and direct the entry of a new judgment.” The district court, observing
that “[t]he purpose of a Rule 59(a)(2) motion ‘is to correct manifest errors of law
or fact, or, in some limited situations, to present newly discovered evidence,’”
Aplt. App., Vol. 1 at 224 (quoting Lyons v. Jefferson Bank & Trust, 793 F. Supp.
989, 991 (D. Colo. 1992)), denied her motion because Ms. Waugh “is not seeking
to [do either], but instead is attempting to advance arguments she could have
readily asserted before.” Aplt. App., Vol. 1 at 226. Because Ms. Waugh makes
no argument that Rule 59(a)(2) gives a district court authority to address issues
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not previously raised, we see no abuse of discretion in the denial of the motion
for new trial.
The judgment of the district court is AFFIRMED.
Entered for the Court
John C. Porfilio
Circuit Judge
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08-5123, Waugh v. The Williams Company
LUCERO, J., joining in the result.
My reading of the plaintiff’s claims, as discussed in the parties’ briefs,
differs from that of my respected majority colleagues. That disagreement does
not affect the ultimate disposition of the case. I join in the result.