Donna Geiger v. Aetna Life Insurance Company

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 16-2790
DONNA GEIGER,
Plaintiff-Appellant,
v.
AETNA LIFE INSURANCE COMPANY,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 15-cv-3791 — Amy J. St. Eve, Judge.
____________________
ARGUED DECEMBER 5, 2016 — DECIDED JANUARY 6, 2017
____________________
Before WOOD, Chief Judge, EASTERBROOK, Circuit Judge, and
SHADID, District Judge.*
SHADID, District Judge. Plaintiff-appellant Donna Geiger’s
long term disability insurance benefits were terminated after
Aetna Life Insurance Company (“Aetna”), the insurer and ad-
ministrator of her employee welfare benefit plan (“the Plan”),
* Of the Central District of Illinois, sitting by designation.
2 No. 16-2790
found that she no longer met the Plan’s definition of total dis-
ability from any gainful occupation. After unsuccessfully ap-
pealing the termination decision, Geiger brought an action
seeking reinstatement of her benefits in the United States Dis-
trict Court for the Northern District of Illinois. The district
court denied Geiger’s request to conduct limited discovery
and ultimately granted summary judgment in favor of Aetna
and against Geiger, holding that Aetna’s decision was not ar-
bitrary and capricious or a product of a conflict of interest
warranting discovery. We affirm.
I. Background
Geiger was an account executive for Sprint Nextel
(“Sprint”) from 2001 to 2009. As a Sprint employee, she re-
ceived group long term disability insurance coverage under
the Plan issued and underwritten by Aetna. On October 6,
2009, Geiger stopped working at Sprint and claimed short
term disability precipitated by lumbar back pain and an L5-
S1 discectomy from 2007, as well as bilateral ankle pain
caused by avascular necrosis of the talar bones.1 Sprint ap-
proved Geiger’s disability claim later that same month.
Geiger had surgery on both ankles in January 2010 and
underwent a left ankle arthroscopy and full ankle replace-
ment in December 2010. During that time, Aetna determined
that Geiger was disabled from her occupation as an account
executive under the Plan and approved her claim for long
term disability benefits. Aetna reasoned that Geiger was dis-
1A discectomy is a surgical procedure to remove a herniated interverte-
bral disc. Avascular necrosis of the talus is the death of bone tissue in the
back of the foot caused by a lack of blood supply.
No. 16-2790 3
abled from her own occupation “due to bilateral avascular ne-
crosis in ankles, which caused [Geiger] severe pain,” and “she
is unable to perform occupational duties as an account execu-
tive because [she] is unable to do the required walking and
driving for this occupation.” Geiger received benefits in the
amount of $4,012 per month, equal to 50% of her predisability
earnings. Upon her approval for Social Security disability
benefits, this amount was reduced to $784.
The Plan provided Geiger with benefits for up to 24
months if she continued to be disabled from her own occupa-
tion. After 24 months, the Plan requires a claimant to be una-
ble to work at any reasonable occupation, which the Plan de-
fines as “any gainful occupation for which you are, or may
reasonably become, fitted by: education; training; or experi-
ence; and which results in; or can be expected to result in; an
income of more than 60% of your adjusted predisability earn-
ings.”
Aetna reviewed Geiger’s claim as the end of the initial 24-
month period approached and investigated whether she met
the more stringent “any reasonable occupation” definition of
disability. As part of the investigation, Aetna invoked its right
under the Plan to have Geiger examined by a physician of its
choice, and on May 31, 2012, Dr. White examined Geiger and
found her capable of performing sedentary work with mini-
mal walking or standing. Aetna also placed Geiger under sur-
veillance on two occasions in May 2012, where she was ob-
served driving and visiting multiple stores. On August 20,
2012, Aetna informed Geiger that she no longer met the Plan’s
definition of disability and terminated her benefits.
Geiger appealed Aetna’s determination in February 2013.
As part of the review, Aetna obtained peer reviews from two
4 No. 16-2790
independent physicians, Drs. McPhee and Cirincione. Dr.
McPhee concluded that Geiger’s ankle condition would not
preclude her from sedentary work. Dr. McPhee also consulted
Geiger’s anesthesiologist, Dr. Bukhalo, who agreed that Gei-
ger was capable of sedentary work. Dr. Cirincione reached the
opposite conclusion, finding that Geiger could not perform
sedentary work.
On May 1, 2013, Aetna reinstated Geiger’s benefits, find-
ing “sufficient medical evidence to support a functional im-
pairment which precluded the employee from performing the
material duties of her own occupation,” and concluding that
Geiger met the more stringent standard of “being totally dis-
abled from any gainful occupation” necessary to continue
benefits beyond the 24 month period.
Because the Plan required proof of continued disability,
Aetna began a subsequent review of Geiger’s disability claim
in December of 2013 and January of 2014 by conducting phys-
ical activity surveillance on four occasions. The surveillance
videos showed Geiger climbing into and driving an SUV,
shopping at multiple stores, and carrying a bag. Aetna also
requested an “Attending Physician Statement” (“APS”) from
four of Geiger’s physicians, but only Dr. Roy responded. On
January 17, 2014, Dr. Roy completed the APS, confirmed Gei-
ger’s diagnoses, and opined that she was unable to work.
Aetna considered Dr. Roy’s evaluation in conjunction with
the previous peer review reports it received from Drs. White,
McPhee, and Cirincione, and informed Geiger that it had sub-
mitted her medical file claim report for a comprehensive clin-
ical review on April 7, 2014. Aetna first obtained a clinical re-
view from an in-house nurse, Ms. Judy Tierney. Ms. Tierney
No. 16-2790 5
concluded that the record supported Dr. McPhee’s assessment
that Geiger was capable of sedentary work.
On April 24, 2014, Aetna’s in-house vocation consultant,
Janet Clifton, conducted a “Transferrable Skills Assessment”
(“TSA”) to determine whether reasonable sedentary occupa-
tions existed for Geiger. The TSA included occupations within
a 100 mile radius with a mean wage greater than $30.16 per
hour that matched Geiger’s training, education, and work his-
tory. The TSA limited results to jobs with sedentary work for
an 8 hour day, lifting or carrying 10 pounds occasionally, and
standing, walking, or crouching occasionally. Based on the
above criteria, the OASYS software produced two “fair”
matches: Job Development Specialist and Commission Agent.
Ms. Clifton’s TSA concluded that these two occupations
matched Geiger’s capabilities, skills, and reasonable wage,
and that a viable labor market existed.
On May 28, 2014, Aetna informed Geiger that it had again
decided to terminate her long term disability benefits. In-
cluded in the letter was a summary of the surveillance, Dr.
Roy’s APS and the prior independent peer reviews, the com-
prehensive clinical review, and the TSA. Geiger appealed her
termination of benefits on November 21, 2014. In support of
her appeal, Geiger submitted witness statements, medical rec-
ords, and physician reports, including reports from Dr. Feld-
mann, a pain specialist, Dr. Roy, her primary care physician,
and Dr. Foroohar, a neurosurgeon. Dr. Feldmann declined to
opine on Geiger’s functional capacity but noted that Geiger
reported improvements in her physical functioning. Dr. Fo-
roohar reported that Geiger suffered from cervical spondylo-
sis but did not restrict her from working.
6 No. 16-2790
Aetna retained Dr. Gutierrez, a board certified neurosur-
geon, to conduct an independent physician peer review of
Geiger’s claim. On January 20, 2015, Dr. Gutierrez issued an
initial peer review report. As part of his review, Dr. Gutierrez
attempted to contact Drs. Roy, Feldmann, and Foroohar mul-
tiple times, but was unable to reach them. Dr. Gutierrez’s re-
view considered Geiger’s prior medical history relating to her
ankle and spine, video surveillance, reported physical exam
findings and diagnostic testing results. He concluded that
Geiger “does not have any profound functional impairments
that are conclusively shown” and that “the medical documen-
tation supports the claimant could sit, stand, use
hands/arms/fingers to function consistently for 8-hour day.”
On January 21, 2015, Aetna sent Drs. Roy, Feldmann, and
Foroohar the peer review report by Dr. Gutierrez and the sur-
veillance videos and asked them to respond with any points
of disagreement or commentary. Dr. Feldmann provided the
sole response, which stated that Geiger’s activity in the sur-
veillance video was the result of substantial amounts of pain
medication, her restrictions on standing and walking should
be more severe, and the impact of Geiger’s recent cervical
radiculopathy was not addressed in the report.
On February 16, 2015, Dr. Gutierrez completed another
physician review report noting the concerns expressed by Dr.
Feldmann. Dr. Gutierrez unsuccessfully attempted to contact
Dr. Feldmann twice in February 2015. His second report
reached the same conclusion as the first. On February 24,
2015, Aetna informed Geiger that after reviewing her appeal
it agreed with the original decision to terminate Geiger’s ben-
efits.
No. 16-2790 7
On April 30, 2015, Geiger brought an action in the United
States District Court for the Northern District of Illinois seek-
ing reinstatement of her long term disability benefits. Geiger
asserted that Aetna’s decision was arbitrary and capricious
because: (1) her benefits were terminated in the absence of
medical improvement and did not give consideration to her
worsening medical condition when she challenged the benefit
denial; (2) Aetna disregarded the impact of her severe pain on
her ability to work; and (3) Aetna improperly relied on incon-
clusive surveillance evidence. After Plaintiff’s request to con-
duct limited discovery was denied, the parties cross-moved
for summary judgment.
Judge St. Eve denied summary judgment for Geiger and
granted summary judgment for Aetna, finding that Aetna’s
decision was not arbitrary and capricious. Specifically, the
court found that Aetna: (1) minimized any conflict of interest
stemming from its role as both administrator and insurer; (2)
presented sufficient evidence supporting its decision to termi-
nate benefits; (3) properly considered Geiger’s cervical im-
pairment and pain; and (4) properly considered the surveil-
lance video as part of its decision.
II. Discussion
Geiger presents two main issues on appeal: (1) whether
Aetna’s termination and later refusal to reinstate Geiger’s ben-
efits following her appeal was arbitrary and capricious; and
(2) whether the district court abused its discretion in denying
Geiger’s request for discovery.
A. The Arbitrary and Capricious Standard
“Absent special circumstances such as fraud or bad faith,”
ERISA plans that vest the administrator with discretionary
8 No. 16-2790
authority to construe the plan’s terms or determine benefit el-
igibility are reviewed under the arbitrary and capricious
standard. Semien v. Life Ins. Co. of N. Am., 436 F.3d 805, 812 (7th
Cir. 2006). A plan administrator’s decision “may not be
deemed arbitrary and capricious so long as it is possible to
offer a reasoned explanation, based on the evidence, for that
decision.” Id. (quoting Trombetta v. Cragin Fed. Bank for Sav.
Emp. Stock Ownership Plan, 102 F.3d 1435, 1438 (7th Cir. 1996)).
In other words, “the reviewing court must ensure only that a
plan administrator’s decision has rational support in the rec-
ord.” Edwards v. Briggs & Stratton Ret. Plan, 639 F.3d 355, 360
(7th Cir. 2011).
i. The Occupational Assessment and TSA
Geiger first argues that Ms. Tierney’s occupational assess-
ment was arbitrary and capricious because it ignored Dr.
Cirincione’s evaluation and relied on Dr. McPhee’s evaluation.
Ms. Tierney reviewed Geiger’s entire file, including the sur-
veillance, and she acknowledged that Dr. Cirincione’s report
conflicted with Dr. McPhee’s. However, Dr. Cirincione’s re-
port relied on Geiger’s characterization of her ankle as “non-
weightbearing or at least partial weightbearing with cane or
assistive devices.” Surveillance indicated that Geiger did not
use an assistive device and was able to enter and exit an SUV,
shop at multiple locations for extended periods of time, and
carry a shopping bag and purse. Ms. Tierney’s occupational
assessment ultimately found that Geiger’s file and medical
history “would not support impairment greater than the re-
views provided by Dr. McPhee and … Dr. Bukhalo on
4/12/13.” The new surveillance evidence partially corrobo-
rated Dr. McPhee’s report, and refuted Dr. Cirincione’s report.
No. 16-2790 9
Thus, Ms. Tierney’s decision to credit Dr. McPhee’s findings
had rational support in the record.
Second, Geiger asserts that Ms. Clifton’s TSA did not con-
sider the differing medical opinions and identified jobs that
were inconsistent with Geiger’s education, training and expe-
rience. The TSA found at least two sedentary jobs, including
Job Development Specialist and Commission Agent, con-
sistent with Geiger’s skills and functional abilities and ex-
ceeded her wage criteria of $30.16 per hour. The Plan defines
“reasonable occupation” as “any gainful occupation for
which you are, or may reasonably become, fitted by: education;
training; or experience; and which results in; or can be expected
to result in; an income of more than 60% of your adjusted pre-
disability earnings.” (emphasis added).
Geiger argues that the occupational assessment improp-
erly identified two qualifying occupations because she only
had experience as an account manager at Sprint. However, the
italicized language in the previous paragraph requires only
that one “may reasonably become” fitted by education, train-
ing, or experience. Geiger also argues that as an employee
with no prior experience as a job development specialist or
commission agent she would likely earn less than the median
income identified for those jobs. Again, the italicized lan-
guage, “can be expected to result in,” appears to contemplate
that an employee’s income would increase as he or she gains
experience. Ms. Clifton’s TSA had rational support in the rec-
ord.
ii. Geiger’s Termination of Benefits and Appeal
Geiger argues that Aetna’s termination of Geiger’s benefits
was arbitrary and capricious because Aetna relied on the
10 No. 16-2790
same evidence it had previously considered when it rein-
stated her benefits, yet reached the opposite conclusion. Gei-
ger claims that the only new evidence, the December 2013
video surveillance, showed her engaging in the same activi-
ties as in the prior surveillance. In support, Geiger states that,
under this Court’s decision in Leger v. Tribune Co. Long Term
Disability Benefit Plan, “the Plan should not be allowed to re-
litigate what it already decided utilizing previously discred-
ited evidence.” 557 F.3d 823 (7th Cir. 2009).
As discussed above, the new surveillance evidence sup-
ported Dr. McPhee’s report and refuted Dr. Cirincione’s re-
port. As the plan administrator, Aetna was “entitled to seek
and consider new information and, in appropriate cases, to
change its mind.” Holmstrom v. Metro. Life Ins. Co., 615 F.3d
758, 767 (7th Cir. 2010). Leger did not hold that a plan admin-
istrator’s prior determination in favor (or against) a claimant
“operates forever as an estoppel so that an insurer can never
change its mind.” Legar, 557 F.3d at 832 (quoting McOsker v.
Paul Revere Life Ins. Co., 279 F.3d 586, 589 (8th Cir. 2002)). In-
deed, “ERISA does not prohibit a plan administrator from
performing a periodic review of a beneficiary’s disability sta-
tus.” Holmstrom, 615 F.3d at 767.
Geiger also takes issue with Aetna’s appeal review, claim-
ing that Dr. Gutierrez failed to specifically address her cervi-
cal spine impairment. As the district court correctly noted, Dr.
Gutierrez’s initial report detailed Dr. Feldmann’s physical
exam, radiographs, MRI, and electrodiagnostic studies of Gei-
ger’s cervical spine, and explained that Geiger was “recom-
mended for further surgery for multi-level radiculopathy”
and had “a good prognosis for further functional improve-
No. 16-2790 11
ment.” He concluded that Geiger “does not have any pro-
found functional impairments that are conclusively shown”
and that “the medical documentation supports the claimant
could sit, stand, use hands/arms/fingers to function consist-
ently for 8-hour day.” Moreover, Dr. Gutierrez sent his initial
peer review report to Geiger’s physicians and asked them to
respond with any points of disagreement or commentary. Dr.
Feldmann provided the sole response, which stated that Gei-
ger’s activity in the surveillance video was the result of sub-
stantial amounts of pain medication, her restrictions on stand-
ing and walking should be more severe, and the impact of
Geiger’s recent cervical radiculopathy was not addressed in
the report. Dr. Gutierrez completed another physician review
report, which noted the concerns expressed by Dr. Feldmann.
His second report reached the same conclusion as the first.
The district court correctly noted that Dr. Gutierrez
acknowledged, rather than ignored, Geiger’s pain from her
cervical spine condition, but concluded that it would not pre-
vent her from performing sedentary work during an eight
hour workday. Dr. Gutierrez even anticipated further pain
and provided additional limitations to avoid it. In sum,
Aetna’s termination and appeal review articulated “specific
reasons for denial” and afforded Geiger “an opportunity for
full and fair review by the administrator.” Holmstrom, 615 F.3d
at 766 (quoting Tate v. Long Term Disability Plan for Salaried
Emps. of Champion Int’l Corp. No. 506, 545 F.3d 555, 559 (7th Cir.
2008)). Because Aetna’s decision “has rational support in the
record,” its decision was not arbitrary and capricious. Ed-
wards, 639 F.3d at 360.
12 No. 16-2790
B. Geiger’s Request for Discovery
Geiger also argues the district court abused its discretion
in denying Geiger’s request for discovery to depose Dr.
Gutierrez and vocational consultant Clifton. Geiger claims
that allegations in her complaint raised legitimate doubt as to
whether Aetna was acting as a neutral fiduciary and if Aetna’s
medical and vocational consultants presented valid, objective
opinions based on the entire claim record. In her complaint,
Geiger alleged the following demonstrated a conflict of inter-
est sufficient to allow discovery: Aetna’s repeated termination
of her benefits, the termination of benefits on the eve of losing
Social Security dependent benefits, the “deliberate” and “in-
tentionally biased” review by the vocational consultant, and
Dr. Gutierrez’s deliberate disregard of her cervical spine im-
pairment.
A conflict of interest exists when, “as in this case, a plan
administrator has both the discretionary authority to deter-
mine eligibility for benefits and the obligation to pay benefits
when due.” Edwards, 639 F.3d at 364 (quoting Metro. Life Ins.
Co. v. Glenn, 554 U.S. 105, 108 (2008)). In Semien, this Court
held “that discovery in a case challenging the benefits deter-
mination of plan administrators is permissible only in ‘excep-
tional’ circumstances … in which the claimant can ‘identify a
specific conflict of interest or instance of misconduct’ and
‘make a prima facie showing that there is good cause to be-
lieve limited discovery will reveal a procedural defect.’” Den-
nison v. MONY Life Ret. Income Sec. Plan for Emps., 710 F.3d 741,
746 (7th Cir. 2013) (quoting Semien, 436 F.3d at 815)). However,
following the Supreme Court’s decision in Glenn, we recog-
nized “a softening, but not a rejection, of the standard an-
nounced in Semien.” Dennison, 710 F.3d at 747. “[C]onflicts are
No. 16-2790 13
but one factor among many that a reviewing judge must take
into account.” Glenn, 554 U.S. at 116. “It is thus not the exist-
ence of a conflict of interest—which is a given in almost all
ERISA cases—but the gravity of the conflict, as inferred from
the circumstances, that is critical. Marrs v. Motorola, Inc., 577
F.3d 783, 789 (7th Cir. 2009). Conflicts “carry less weight when
the insurer took active steps to reduce potential bias and to
promote accuracy.” Raybourne v. Cigna Life Ins. Co. of New York,
700 F.3d 1076, 1082 (7th Cir. 2012).
Here, the district court found that Aetna minimized any
conflict of interest by implementing multiple safeguards.
First, Aetna obtained numerous independent physician peer
reviews. Second, Aetna and the independent physicians
reached out to Geiger’s own physicians and addressed their
concerns. Third, Aetna sent the surveillance video to Geiger’s
physicians to ensure the video was assessed objectively. Fi-
nally, Aetna previously reversed its own decision and rein-
stated her benefits. The district court found that Aetna’s pro-
cedures were reasonable and sufficiently safeguarded against
a detrimental conflict of interest, and denied Geiger’s request
to conduct discovery. “[T]rial courts retain broad discretion to
limit and manage discovery under Rule 26 of the civil rules.”
Dennison, 710 F.3d at 747. We agree with the district court’s
conflict analysis, and thus find that the district court did not
abuse its discretion in denying Geiger’s request for discovery.
In sum, we find that Aetna’s decision to terminate Geiger’s
long term disability benefits was not arbitrary and capricious,
and the district court did not abuse its discretion in denying
Geiger’s request for discovery. We therefore affirm the judg-
ment of the district court.
AFFIRMED