United States District Court, Central District of Illinois, Springfield Division
March 18, 1999
LUTHER C. REAGAN, PLAINTIFF,
FIRST UNUM LIFE INSURANCE COMPANY, DEFENDANT.
The opinion of the court was delivered by: Richard Mills, District Judge.
The ERISA plan administrator's decision to discontinue Reagan's monthly
long term disability payments was neither arbitrary nor capricious.
Therefore, the Court must affirm his decision.
Luther C. Reagan began working for Foreign Credit Insurance Association
("FCIA") as a senior marketing representative in 1987. As part of its
employee benefits package, FCIA provided its employees with a group long
term disability plan.*fn2 FCIA's group long term disability plan was
underwritten and provided by First UNUM Life Insurance Company ("UNUM").
This group long term disability plan provided in relevant part:
"Disability" and "disabled" mean that because of
injury or sickness:
1. the insured cannot perform each of the material
duties of his regular occupation; and
2. After benefits have been paid for 24 months, the
insured cannot perform each of the material duties
of any gainful occupation for which he is
reasonably fitted by training, education, or
experience;. . . .
The group disability plan provided long term disability benefits for
eligible employees who met the plan's requirements:
When the Company receives proof that an insured is
disabled due to sickness or injury and requires the
regular attendance of a physician, the Company will
pay the insured a monthly benefit after the end of the
elimination period. The benefit will be paid for the
period of disability if the insured gives to the
company proof of continued:
1. disability; and
2. regular attendance of a physician.
The proof must be given upon request and at the
On November 2, 1987, Reagan completed a disability benefits application
in which he stated that he was a marketing representative, disabled due
to a heart condition. On November 5, 1987, Dr. Karl Laping filled out a
doctor's statement in support of Reagan's application for disability
Therein, Dr. Laping diagnosed Reagan as suffering from
angina pectoris, cardiac arrhythmia, chest wall pain, anxiety attacks,
depression, and shortness of breath. Dr. Laping indicated that Reagan was
incapable of performing any work but that he expected a fundamental
change in Reagan's condition in the future. In addition, Dr. Laping noted
that Reagan's current occupation could be modified to allow him to
perform his work with his impairments. Finally, Dr. Laping recommended
that Reagan undergo vocational counseling and/or retraining. Based upon
his application and Dr. Laping's statement, UNUM began making monthly
long term disability payments to Reagan.
On July 29, 1988, Dr. Laping completed another statement regarding
Reagan's medical condition. In this statement, Dr. Laping indicated that
Reagan's medical condition had improved, noting a slight limitation in
cardiac function and no mental impairments. Dr. Laping asserted that
Reagan was not totally disabled from either his own occupation or from
any other work.
Nevertheless, on August 22, 1988, Reagan completed a supplemental
application for long term disability benefits. In this supplemental
application, Reagan asserted that he was still totally disabled due to his
chest pain and asserted that he was still unable to work. He also
indicated that he had filed for Social Security benefits in May 1988.
However, on September 27, 1988, the Social Security Administration
notified Reagan that his benefit's claim had been denied because it
"determined that [his] condition does not keep [him] from working."
On January 24, 1996, Dr. Laping completed a physical capacities
evaluation form for Reagan in which Dr. Laping indicated that Reagan
could work from six to eight hours per day. On February 21, 1996, Dr.
Laping completed a physician's statement for Reagan. Therein, Dr. Laping
stated that Reagan suffered from unstable angina pectoris but that there
were no secondary conditions contributing to the disability. Dr. Laping
wrote that Reagan had a slight limitation in his functional capacity with
a Class 2 cardiac limitation under which a patient is comfortable in the
performance of ordinary, light, daily activities. Dr. Laping also noted
that Reagan's only restriction was that he should not do heavy lifting
greater than 25 pounds but that there were no limitations on what he
could do regarding his ability to work.
On July 23, 1996, UNUM's in-house cardiologist, Dr. Karen Kurkjian,
reviewed Reagan's medical file. Dr. Kurkjian asserted that the medical
tests revealed that Reagan's arteries, hemodynamics, and EF were normal
and that there was no evidence of spasm. Based upon Reagan's medical
file, Dr. Kurkjian concluded that "there is no evidence of any cardiac
disease at all from the medical submitted and no reason for any R and L's
[Restrictions and Limitations] and this appears to be supported by [Dr.]
On July 24, 1996, UNUM requested additional information from Dr. Laping
regarding Reagan's medical condition. Specifically, UNUM asked Dr. Laping
whether he disagreed with any of Dr. Kurkjian's conclusions and asked him
to provide his own current diagnosis of Reagan, how he arrived at that
diagnosis, whether Reagan had any current restrictions and limitations,
and how those limitations and restrictions, if any, prevented
him from working on a full-time basis. On August 1, 1996, Dr. Laping
responded to UNUM's request. Therein, Dr. Laping did not disagree with
Dr. Kurkjian's conclusions, nor did he list any restrictions or
limitations on Reagan's ability to work. In fact, Dr. Laping asserted
that "He [Reagan] stated that he works a half day or a whole day
depending on how engaging his job is for the day." Based upon Dr.
Laping's response and her own review of Reagan's medical file, Dr.
Kurkjian concluded on August 28, 1996, that the "[e]vidence does not
support lack of FT [full-time] work capacity."
On September 5, 1996, Reagan completed a written statement for UNUM. In
his statement, Reagan asserted that he was buying out his partner in
their corporation, LDS. Reagan claimed that he spent an average of three
to eight hours per day and five days per week working at the office. In
addition, Reagan indicated that it was his intention to build LDS's
business and income after completing the buy out. Reagan wrote that he
earned a total monthly income of $350.00 from LDS. He also indicated that
he could walk at a slow pace for a couple of blocks before he gets chest
pain; then, he must stop and rest. If his pain is not relieved by rest, he
uses a transderm-nitro patch. Finally, Reagan asserted that he used an
exercise bike at the office and that his use varied from a couple times a
day to weekly.
On October 11, 1996, UNUM informed Reagan that it would be unable to
extend further benefits to him based upon the lack of medical evidence
supporting his disability.*fn4 On March 19, 1997, rehabilitation
consultant Roberta Violetta conducted a vocational assessment of Reagan.
Ms. Violetta concluded that Reagan's more recent work experiences, which
included several positions requiring only sedentary to light exertion,
existed in the general economy and were appropriate for him in terms of
his training, education, and experience as well as his particular medical
restrictions and limitation.*fn5
On March 28, 1997, UNUM informed Reagan's attorney that after reviewing
the denial of Reagan's claim, its position regarding the discontinuation
of Reagan's benefits remained unchanged. That same day, UNUM asked Dr.
Kurkjian to review Reagan's most recent medical documentation. On June
2, 1997, Dr. Kurkjian opined that
there is a marked lack of any objective evidence
supporting impairment from any of the above;
specifically, there are no PFT's on file, no holter
monitors demonstrating significant dysrhythmia, no
evidence of HTN [hypertension] of DM [diabetes
mellitus] with severe lack of control to provide
impairment, no stress testing demonstrating reduced
functional capacity and/or ischemia, and no CAD
[coronary artery disease] documented via cardia cath.
R & L's are not supported ie no objective evidence,
only subjective complaints with prior negative
On July 23, 1997, UNUM's quality review upheld the denial of Reagan's
On November 25, 1997, Dr. Irving Schwartz, a cardiologist, assessed
Reagan's medical condition and found "[c]hronic chest pain, anginal in
nature without objective evidence at the present time."*fn6 On April
20, 1998, Dr. Schwartz wrote a progress report on Reagan's medical
condition opining that the "[p]atient in the past not representative of
ischemic heart disease, though increasingly his risks
at this time are substantial." On October 31, 1997, Dr. Schwartz
performed a stress echo test on Reagan and concluded: "1) Equivocal
dobutamine EKG. . . . 2) Positive for patient's atypical angina type
pain. 3) Good left ventricular function without evidence of induceable
ischemia by echocardiograph criteria." On April 21, 1998, Dr. Schwartz
To whom it may concern: Mr. Reagan has been suffering
from chronic chest pain with features typical of
coronary ischemia for many years. However, inability
to demonstrate active coronary artery disease is a
drawback here. Nevertheless, patient finds it quite
debilitating and has been unable to perform many
tasks, particularly stressful situations. At present
his risks for cardiovascular disease have increased
significantly and he continues to follow with me for
Because UNUM discontinued paying him disability benefits, Reagan filed
a Complaint seeking back pay and reinstatement of his monthly disability
payments. Reagan alleged that UNUM wrongfully terminated his long term
disability benefits as of October 11, 1996, after it had paid him more
than two years of benefit payments.
II. STANDARD OF REVIEW
Before turning to the merits of UNUM's motion, the Court must resolve
two issues. First, the Court must determine the proper standard of review
to be applied in reviewing the plan administrator's decision to
discontinue Reagan's monthly benefits. Second, the Court must decide the
proper scope of the Court's review. Specifically, the Court must determine
whether its review is limited to the administrative record before the
plan administrator when he made his decision to discontinue Reagan's
benefits, or whether the Court may consider medical evidence accumulated
after the plan administrator had made his decision. Once the Court has
decided these two issues, UNUM's motion is easily resolved.
The United States Supreme Court has held "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." Firestone Tire and Rubber Co. v. Bruch,
489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); see also Ramsey
v. Hercules, Inc., 77 F.3d 199, 202 (7th Cir. 1996). The long term
disability plan at issue provided that UNUM would pay a monthly benefit
"[w]hen the Company receives proof that an insured is disabled due to
sickness or injury and requires the regular attendance of a physician. .
. ." The United States Court of Appeals for the Seventh Circuit has
opined that arbitrary and capricious is the proper standard of review to
be applied in cases involving language similar to that found in the
instant plan. E.g. Patterson v. Caterpillar, Inc., 70 F.3d 503, 505 (7th
Cir. 1995); Donato v. Metro. Life Ins. Co., 19 F.3d 375, 379 (7th Cir.
1994); Bali v. Blue Cross and Blue Shield Ass'n, 873 F.2d 1043, 1047 (7th
In fact, the United States District Court for the Northern District of
Illinois has found, after examining in other cases the exact language
found in this insurance policy, that arbitrary and capricious is the
proper standard of review to be applied to the plan administrator's
decision to deny benefits. See Infantino v. Waste Management, Inc.,
980 F. Supp. 262, 266 (N.D.Ill. 1997); see also Perlman v. Swiss Bank
Corp. Comprehensive Disability Protection Plan, 979 F. Supp. 726, 729
(N.D.Ill. 1997). In the face of this overwhelming authority, Reagan
"reluctantly agrees" that the applicable standard of review in the case
sub judice is arbitrary and capricious. Therefore, arbitrary and
capricious is the standard of review which the Court will apply.
As for the scope of review, that issue goes hand-in-hand with the
one. Bollenbacher v. Helena Chem. Co., 926 F. Supp. 781, 788 (N.D.Ind.
1996). The Court believes that it has the authority to consider evidence
not presented to the plan administrator only if it is applying a de novo
standard of review, and even then, it should do so sparingly. See Casey
v. Uddeholm Corp., 32 F.3d 1094, 1099 n. 4 (7th Cir. 1994) (citing cases)
(holding that although the court has the authority to review facts not
before the plan administrator, the court should use that authority
sparingly); see also Ramsey, 77 F.3d at 204 (holding that "[t]he key
question is whether the administrator has discretion under the plan.").
Because the Court will apply a deferential standard of review in
examining the plan administrator's decision, the Court will limit its
review to the record which was before the plan administrator at the time
when he decided to discontinue Reagan's monthly benefits, i.e., October
11, 1996. Having resolved these two issues, the Court turns to the
substance of UNUM's motion.
Reagan argues that UNUM's motion should be denied because there are
genuine issues of material fact which prevent the Court from entering
summary judgment against him. Specifically, Reagan asserts that his
medical condition did not improve from the time he first filed an
application for long term disability benefits until the time when his
benefits were terminated. In fact, Reagan claims that his medical
condition has steadily declined over the past few years. Thus, Reagan
argues that because he was disabled when he first filed his claim, and
because his medical condition has not improved, he must still be
considered to be disabled today.
Reagan also asserts that the plan administrator relied heavily upon the
opinion of Dr. Kurkjian in deciding to terminate his benefits. However,
Reagan claims that the Court should give Dr. Kurkjian's opinion little,
if any, weight because, as an in-house cardiologist for UNUM, she is
partial and is, at least to some degree, biased toward UNUM. Finally,
Reagan argues that the fact that UNUM attempted to "buy him out" by
offering him a lump sum monetary settlement establishes that it knows
that he is still disabled as defined under the insurance policy and is
entitled to monthly disability benefit payments.
UNUM argues that the medical evidence which its plan administrator had
before it clearly shows that Reagan was not "disabled" as that term is
defined under the insurance policy. Thus, the Court cannot say that its
decision to terminate Reagan's benefits was arbitrary or capricious.
Moreover, UNUM asserts that Dr. Kurkjian based her opinion regarding
Reagan's medical condition on his medical file, not on any bias or
prejudice toward it. Finally, UNUM claims that the fact that it may have
offered Reagan a lump sum settlement is irrelevant.
Reagan's last two arguments deserve little attention. Although the
partiality of a plan administrator and of a physician upon whose opinion a
plan administrator relied is a factor which the Court may consider,
Chalmers v. Quaker Oats Co., 61 F.3d 1340, 1344 (7th Cir. 1995), the
Court finds no evidence that Dr. Kurkjian's opinion was swayed by any
bias or prejudice toward UNUM. In fact, although given the opportunity to
do so, Dr. Laping (Reagan's personal physician) did not contradict or
disagree with Dr. Kurkjian's assessment of Reagan's medical prognosis and
restrictions and limitations. Moreover, Dr. Laping agreed that
cardiologists, like Dr. Kurkjian, have more insight into the nature of
Reagan's chest pain and heart condition than he does.
As for Reagan's assertion that UNUM's settlement offer lends credence
to his claim, the Court need look no further than to Federal Rule of
Evidence 408. Rule 408 provides:
Evidence of (1) furnishing or offering or promising to
furnish, or (2) accepting or
offering or promising to accept, a valuable
consideration in compromising or attempting to
compromise a claim which was disputed as to either
validity or amount, is not admissible to prove
liability for or invalidity of the claim or its
Id.; see also New Burnham Prairie Homes, Inc. v. Village of Burnham,
910 F.2d 1474
, 1482 (7th Cir. 1990) (holding that "Federal Rule of
Evidence 408 authorizes the district court to exclude settlement
letters."); see also Kritikos v. Palmer, Johnson, Inc., 821 F.2d 418
(7th Cir. 1987) (holding that the objective of Rule 408 is to encourage
settlements). Thus, whether or not UNUM made Reagan a settlement offer is
irrelevant and does not preclude summary judgment.
Finally, the Court cannot say that UNUM's plan administrator's decision
to discontinue Reagan's monthly long term disability payments was either
arbitrary or capricious. Under the arbitrary and capricious standard, the
administrator's decision is to be upheld as long as the decision is based
upon a reasonable interpretation of the plan's language and the evidence.
Daill v. Sheet Metal Workers' Local 73 Pension Fund, 100 F.3d 62, 67-68
(7th Cir. 1996); Russo v. Health, Welfare & Pension Fund; Local 705,
Int'l Broth. of Teamsters, 984 F.2d 762, 765 (7th Cir. 1993). Several
factors are to be weighed under the arbitrary and capricious standard:
"the impartiality of the decisionmaking body, the complexity of the
issues, the process afforded the parties, the extent to which the
decisionmakers utilized the assistance of experts where necessary, and
finally the soundness of the fiduciary's ratiocination." Chalmers, 61
F.3d at 1344; Exbom v. Central States, Southeast and Southwest Areas
Health and Welfare Fund, 900 F.2d 1138, 1142 (7th Cir. 1990).
Here, the above-factors weigh in UNUM's favor. When UNUM's plan
administrator decided to terminate Reagan's benefits, he had before him
the following evidence to support his conclusion: (1) the fact that Dr.
Kurkjian could find no objective evidence that Reagan suffered from any
cardiac disease; (2) the fact that neither Dr. Kurkjian nor Dr. Laping
believed that any restrictions or limitations upon Reagan's work capacity
were necessary; (3) the fact that Reagan had worked full time at various
jobs (sometimes on a full time basis) during the same period in which he
claim to be disabled; (4) the fact that the Social Security
Administration had found that Reagan was not disabled under the Social
Security Act; and (5) the fact that Reagan had worked in several
positions which were suitable for his medical condition, were available in
the general economy, and were appropriate in terms of his training,
education, and recent work experience. Based upon this evidence, the
Court cannot say that UNUM's decision to terminate Reagan's disability
payments was arbitrary, capricious, or unreasonable. See Mers v. Marriott
Int'l Group Accidental Death and Dismemberment Plan, 144 F.3d 1014, 1021
(7th Cir. 1998) (holding that when applying an arbitrary and capricious
standard of review, the court's role is to determine whether the plan
administrator's decision was "completely unreasonable").
To the extent that Drs. Kurkjian and Laping disagree regarding Reagan's
medical condition and ability to work, such a disagreement does not
support a finding of arbitrary and capricious*fn7. In fact, reasoned
differences among qualified medical experts preclude such a finding. See
Smith v. Office of Civilian Health and Med. Program of Uniformed Servs.,
97 F.3d 950, 959 (7th Cir. 1996) (holding that "[w]idespread disagreement
among qualified medical experts over a medical issue virtually precludes
a reviewing court from concluding that an agency decision that agrees
with one side is arbitrary or plainly wrong, even if the court finds
other views more persuasive."); see also Ladd v. ITT Corp., 148 F.3d 753,
756 (7th Cir. 1998) (opining that if a doctor gives his reasons for
disagreeing with the opinions of other medical providers, the court must
affirm the plan administrator's decision under the deferential
standard). Drs. Kurkjian and Laping provided reasoned medical expert
opinion regarding Reagan's medical condition, and UNUM's plan
administrator did not err in relying upon the one while excluding the
other. See Trombetta v. Cragin Fed. Bank for Sav. Employee Stock
Ownership, 102 F.3d 1435, 1438 (7th Cir. 1996) (holding that 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.").
Furthermore, Reagan's assertion that because he was considered to be
disabled in 1987, and because his condition had not improved, he must
still have been considered to be disabled, as defined by the insurance
policy, in 1996 and today neglects the plain language of the policy. See
Daill, 100 F.3d at 68 (holding that a termination of an ERISA plan's
benefits must be based upon the plan's terms and language); see also
Russo, 984 F.2d at 765 (same). UNUM's plan provided that after two
years, a claimant would be considered to be disabled and would continue
to receive monthly disability payments only if he "cannot perform each of
the material duties of any gainful occupation for which he is reasonably
fitted by training, education, or experience. . . ." (emphasis added).
Both Reagan and Dr. Laping have admitted that Reagan has had other
substantial gainful employment during the period in which he has been
collecting disability benefit payments from UNUM. In fact, Reagan has
worked up to 8 hours a day, 5 days a week during this time period.
In addition, after conducting a vocational assessment on Reagan,
rehabilitation consultant Roberta Violetta concluded that Reagan's more
recent work experiences, which included several positions requiring only
sedentary to light exertion, existed in the general economy and were
appropriate for him in terms of his training, education, and experience as
well as his particular medical restrictions and limitation*fn8.
Specifically, Ms. Violetta pointed to Reagan's former positions as a
telephone solicitor, a sales clerk, an insurance agent, a credit and
collection manager, and a telephone service sales representative in
support of her conclusion. Thus, it is clear that Reagan could and can
perform substantial gainful employment for which he is reasonably fitted
by training, education, or experience.
Accordingly, the Court finds that there are no genuine issues of
material fact to be decided by the trier of fact and that UNUM is
entitled to judgment as a matter of law.*fn9
Ergo, First UNUM Life Insurance Company's Motion for Summary
Adjudication on the Administrative Record, or Alternatively, for Summary
Judgment is ALLOWED. Accordingly, pursuant to Federal Rule of Civil
Procedure 56, summary judgment is hereby entered in favor of First UNUM
Life Insurance Company and against Luther C. Reagan.