Appeal from the United States District Court for the Southern District of Illinois. No. 05 C 445-Michael J. Reagan, Judge.
The opinion of the court was delivered by: Flaum, Circuit Judge
Before FLAUM, EVANS, and TINDER, Circuit Judges.
Plaintiff Lisa Pakovich brought an ERISA suit after Defendant Broadspire Services determined she was no longer entitled to long term disability benefits. The lower court found in Pakovich's favor, determining that Broadspire had unreasonably concluded that Pakovich was able to perform the essential functions of her sales position with Verizon Wireless, the standard for receiving disability benefits for the first 24 months ("own occupation" standard). The district court went further, however, and also determined that Pakovich was not entitled to disability benefits beyond the 24 month mark, where benefits were only available if Pakovich was disabled from all occupations ("any occupation" standard). Pakovich appeals this latter ruling, arguing that the district court's decision should be reversed and her benefits reinstated. For the following reasons, we vacate that portion of the district court's decision appealed by Pakovich, with orders that the determination of long term disability under the "any occupation" standard be remanded to the Plan Administrator.
Pakovich worked as a retail sales representative for Verizon and applied for long term disability benefits in September 2002 following a series of back surgeries. At the time, the long term disability plan ("the Plan") was administered by Kemper National Services, which in October 2002, found Pakovich to have been disabled as of July 17, 2002. Under the long term disability policy's terms, benefits for the first 24 months were based upon Pakovich's inability to perform "the Essential Functions of [her] Regular Occupation," with continuing benefits beyond the 24 month mark depending upon Pakovich being "prevented from performing the Essential Functions of any Gainful Occupation that [her] training, education and experience would allow [her] to perform." The policy also provided that any benefits paid out by the Plan would be offset by the receipt of Social Security benefits. In November 2003, Pakovich was found to be "totally disabled" by the Social Security Administration, and thus was approved for Social Security benefits retroactive to July 2002. By the end of 2003, Broadspire was administering the Plan.
Between February 2002 and March 2004, Pakovich was examined by a host of different physicians, some of whom noted that Pakovich was only capable of performing sedentary work. The records from these examinations were then reviewed by physicians selected by Broadspire. In February 2004, Pakovich received a letter from Broadspire indicating that, based upon the information at its disposal, it did not appear that Pakovich was disabled under the Plan's "own occupation" standard. She also received a separate letter the same day informing her that Broadspire would be conducting an evaluation in the future to determine whether Pakovich would continue to qualify for long term disability after July 17, 2004 under the "any occupation" standard. This "any occupation" evaluation, however, never occurred. Instead, on April 22, 2004, Pakovich was informed by letter that after reviewing all her medical documentation, Broadspire had concluded that she was no longer disabled under the "own occupation" standard and that her benefits would be discontinued after April 30, 2004. Pakovich appealed the decision, and on June 22, 2004, was awarded further benefits from May 1 until May 14, 2004 due to a recent knee surgery, but nothing beyond that date. Pakovich then brought suit in federal court pursuant to Section 502(a) of the Employee Retirement Income Security Act of 1974 ("ERISA"), challenging Broadspire's termination of her benefits.
In November 2006, the district court issued a memorandum and order on Pakovich's Motion for Judgment under FED. R. CIV. P. 52 and Broadspire's Motion for Summary Judgment. The court concluded that Broadspire's decision to terminate Pakovich's long term disability benefits was arbitrary and capricious. The district court noted that many physicians had determined that Pakovich was only capable of performing sedentary work, and found that Broadspire had unreasonably characterized Pakovich's current position as one involving "light work," when by Defendant's own analysis of the position, it entailed lifting requirements near the high end of what is classified as "medium work."*fn1
The district court's entry of judgment in Pakovich's favor regarding her qualification for disability benefits under the "own occupation" standard, however, did not end the matter. Instead, the district court then went on to determine for itself whether Pakovich was also entitled to benefits under the "any occupation" standard. The court, in a brief paragraph, stated that the evidence in the record indicated that Pakovich could perform at least sedentary work, and accordingly, found that Pakovich did not qualify for disability benefits after July 2004, and thus entered judgment for Broadspire on that issue. In sum, these two rulings meant that Pakovich was entitled to disability benefits from Broadspire between May 14, 2004 and July 16, 2004.
Following this Memorandum and Order, Pakovich filed a Motion to Alter or Amend the Judgment under FED. R. CIV. P. 59(e). In her motion, she argued that Broadspire never addressed her qualification for benefits under the "any occupation" standard, and moreover, that the district court's finding that she could perform sedentary work still did not mean that it had been found that there was an occupation she could hold that would comport with her "training, education and experience," as required by the Plan documents. Pakovich then asked that the district court reinstate her benefits. The district court denied this motion, stating that Pakovich was now proceeding with a new argument not fully presented originally, and explaining that the record indicated that Pakovich had the "training, education and experience" to perform sedentary work. This appeal followed.
Pakovich appeals the district court's finding that she was not disabled from all occupations, as required by the Plan in order to receive disability benefits beyond 24 months. As a preliminary matter, the parties dispute the proper standard of review concerning this issue. Pakovich asserts that the standard should be that for a motion for summary judgment, while Broadspire claims that the standard of review for judgment on the record under FED. R. CIV. P. 52 controls. This dispute stems from the procedural posture below-Broadspire initially filed a motion for summary judgment, which Pakovich responded to with her own motion for judgment under Rule 52. The district court made clear, however, that it would "decide this matter on the pending cross motions pursuant to Rule 52 for judgment on the Administrative Record." Accordingly, because we are reviewing the district court's judgment on a Rule 52 motion, we review any findings of fact or fact-law application for clear error. Sehie v. City of Aurora, 432 F.3d 749, 751 (7th Cir. 2005). The additional deference shown by this Court when reviewing the district court's factual findings under Rule 52, however, has no bearing on this particular case, since our decision rests purely on legal conclusions, which we review de novo. Id.; compare with Reich v. Ladish Co., 306 F.3d 519, 522 (7th Cir. 2002) ("We review the district court's grant of summary judgment de novo.").
The focus of Pakovich's appeal is on her contention that ERISA requires plans to provide beneficiaries with the specific reason for denying benefit coverage, and that because the Plan itself did not provide a reason why she was not entitled to benefits under the "any occupation" standard, the district court erred in finding for Broadspire on this issue. Broadspire, however, claims that Pakovich waived this issue below. Although the district court, when addressing this claim as part of Pakovich's Rule 59(e) motion, also apparently viewed this argument as waived, we do not find this to be the case. Pakovich, in her Rule 52 motion and response to Broadspire's motion for summary judgment, stated that she was also entitled to her "any occupation" benefits because ERISA required that the Plan give all the reasons for her denial, and she was only given the reason for denial under the "own occupation" standard. Although Pakovich developed this argument more fully in her Rule 59(e) motion, contrary to the district court's waiver statement in its order on that motion, Pakovich's argument was sufficiently developed in her original motion that the district court felt compelled to address the claim (albeit in a footnote) in its Rule 52 order.
We now turn to the substance of Pakovich's claim. Her argument rests upon ERISA's requirement that every plan must "provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific rea- sons for such denial." 29 U.S.C. § 1133(a); see 29 C.F.R. § 2560.503-1(g) (accompanying federal regulations); see also Schneider v. Sentry Group Long Term Disability Plan, 422 F.3d 621, 627-28 (7th Cir. 2005) (discussing these statutory and regulatory requirements). Pakovich thus contends that in order for her disability benefits to be denied beyond the 24 month mark under the "any occupation" standard, it was necessary for Broadspire to provide specific reasons why she was not deemed to be ...