Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:07-cv-06044-Robert M. Dow, Jr., Judge.
The opinion of the court was delivered by: Hamilton, Circuit Judge.
Before KANNE, WOOD, and HAMILTON, Circuit Judges.
This case illustrates the difficult problems presented by claims for disability insurance by people with serious and painful conditions that do not have objectively measurable symptoms. Plaintiff Lanette Holmstrom worked as a senior training specialist at a large credit management company. She participated in an employee welfare benefit plan administered by defendant Metropolitan Life Insurance Company ("MetLife"). Holmstrom stopped working in January 2000 when she developed a painful nerve condition in her right arm. MetLife began paying disability benefits under an "own-occupation" standard. Three surgeries failed to remedy the condition, and Holmstrom was diagnosed with complex regional pain syndrome ("CRPS").
After Holmstrom's "own-occupation" benefits expired, she submitted a disability claim under the more stringent "any-occupation" definition that applied to longer-term benefits. MetLife approved that claim in July 2002 and began paying benefits. MetLife performed a periodic review in 2005. It determined then that Holmstrom was no longer disabled and terminated her benefits. After MetLife upheld its decision on administrative appeal (Holmstrom's final administrative remedy), Holmstrom filed suit in federal court under the Employee Retirement Income Security Act of 1974 ("ERISA"). See 29 U.S.C. § 1132(a)(1)(B). Holmstrom voluntarily dismissed the action when MetLife offered a second administrative appeal, which yielded the same result. Holmstrom then returned to federal court, filing this second ERISA action to recover benefits. MetLife counterclaimed to obtain a setoff based on disability insurance benefit payments that Holmstrom received from the Social Security Administration. In a careful opinion describing the case as a close one, even under the deferential standard of review, the district court granted summary judgment for MetLife on Holmstrom's claim for benefits and MetLife's counterclaim. Holmstrom v. Metropolitan Life Ins. Co., 615 F. Supp. 2d 722 (N.D. Ill. 2009). Holmstrom appealed.
We respectfully disagree with the district court. We believe that MetLife and in turn the district court gave undue weight to the absence of objective measurements for Holmstrom's impairment. There is ample corroboration that her pain has been genuinely disabling. We also find that MetLife's selective use of evidence and its repeated moving of the targets for the evidence of disability show that MetLife's decision to terminate benefits was arbitrary and capricious. We reverse and order retroactive reinstatement of benefits for Holmstrom, subject to the set-off for Social Security disability insurance benefits she has received. We leave the issues of attorney fees and prejudgment interest to the district court in the first instance.
We take the facts from the administrative record com-piled by MetLife in considering Holmstrom's claim. Holmstrom was employed as a senior training specialist at Experian Information Solutions, Inc. Through this employment, she participated in a group disability insurance plan underwritten and administered by MetLife.
In late 1999, Holmstrom sought the care of Dr. Eric Lomax to treat pain, numbness, and tingling she experienced in her right upper arm. In January 2000, Holmstrom had surgery to remedy a right ulnar nerve compression and neuropathy. The surgery provided little relief, and her symptoms soon worsened. In June 2000, she had another surgery to relieve what was thought to be nerve compression. Her symptoms worsened further after this second procedure, prompting her to visit a pain clinic. The clinic doctors diagnosed CRPS Type I, a chronic neurological syndrome characterized by severe pain.*fn1
In March 2002, Holmstrom underwent a third surgery, which also failed to relieve her symptoms. She saw another pain specialist, Dr. Weber. According to MetLife's records, Dr. Weber "made a definitive diagnosis of... complex regional pain syndrome." It was clear to Holmstrom and her doctors that surgery could do nothing to help her, leaving medication as her only recourse.*fn2 Holmstrom's pain medication regimen has included a variety of powerful drugs, including Amitriptyline, Bextra, Clonidine, methadone, MS Contin, MSIR, Neurontin, Oxycontin, Oxycodone, Oxyfast, Percocet, Topamax, and (prior to its recall) Vioxx.*fn3
Holmstrom's symptoms persisted without improvement for the next three years. MetLife's records from 2003 describe a "high pain med[ication] regimen" causing side effects such as confusion and memory loss, and pain of such intensity that Holmstrom was "considering having nerve severed since all other kinds of pain management techniques have failed." The record reveals no improvement through 2004 and 2005. Dr. Ted Vant, who has been Holmstrom's treating physician from 2004 to the time of this lawsuit, prescribed significant doses of strong medications in an attempt to manage her symptoms.
In early 2000, MetLife approved short-term disability benefits under the plan. After the plan's short-term benefits expired, MetLife found that Holmstrom was still unable to perform her previous job duties, and it approved long-term disability benefits under the plan's "own-occupation" definition. Under the terms of the plan, those benefits expired after 24 months, at which point Holmstrom was required to establish that she was unable to perform the duties of any occupation. Upon the expiration of her "own-occupation" benefits, Holmstrom submitted an "any-occupation" disability claim. MetLife initially denied her claim, but after Holmstrom submitted additional medical evidence, MetLife reversed its decision and approved benefits in July 2002.
At some point during the claim administration, MetLife referred Holmstrom to a service that it retained to help beneficiaries apply for Social Security disability insurance benefits. Holmstrom applied for and qualified to receive these benefits under the Social Security Act.
In August 2005, MetLife performed a periodic review of Holmstrom's benefits and decided to terminate payments to her. The letter announcing the termination indicated that Dr. Thomas, retained by MetLife to perform the review, "determined that there is no medical information to support the restrictions provided by Dr. Vant," Holmstrom's treating physician. The letter added that "medical information no longer supports a severity in your impairment preventing you from doing your [previous] job." The letter told Holmstrom that she could appeal the decision by providing "office notes, physical exam findings, EMG results, MRI results, pain management notes, neurology notes, and/or physical therapy notes."
Holmstrom appealed and provided to MetLife: (1) an August 2005 Functional Capacity Evaluation ("FCE") performed by a physical therapist; (2) a June 2005 Attending Physician Statement completed by Dr. Vant; (3) Dr. Vant's examination notes from July 6, 2004 to July 20, 2005; (4) the results of an August 2004 nuclear bone scan (x-ray images and the analysis of Dr. Kenneth Sato); (5) the results of a May 2005 EMG nerve conduction test (numerical data, graphs, and the analysis of Dr. Gary Klein); (6) the Social Security Administration notice of award; and (7) letters from three family members.
The August 2005 FCE was only one page long and included very little testing of Holmstrom's arm, but it noted that she was "unable to [support any body] weight on hands due to pain." Dr. Vant's detailed, four-page statement included the CRPS diagnosis and concluded that Holmstrom suffered from a "permanent disability" and could perform essentially no hand function. Dr. Vant's examination notes included prescriptions for pain medications such as Amitriptyline, Clonidine, Elavil, Hydrocodone, and "large dose[s]" of methadone. He noted "no real changes," "continue[d] sweating," and "spasm," and said that Holmstrom was "still feeling numb." Dr. Sato's bone scan analysis stated that there was normal blood flow to the arm and that "no abnormalities of either arm, hand or wrist are seen." Dr. Klein's EMG was "negative" in that it "rule[d] out nerve entrapment syndrome", the malady that Holmstrom's doctors had thought she suffered from before her surgeries. Dr. Klein found a "minor" irregularity in the nerves of her forearm and dysesthesia around the right elbow. He otherwise found her nerves to be "absolutely normal" and her "sensory responses [to be] within normal limits," and he noted that her "power is normal [and] [r]eflexes are well preserved." However, regarding her general condition, Dr. Klein stated that "her pain and dysesthesia continue and if anything, are slowly getting worse." The family testimonials described in detail how Holmstrom's condition affected her everyday life and the lives of those around her, including descriptions of her significant pain, physical deficiencies, and compromised mental function from pain medication. The Social Security notice of award stated only that the government had concluded that Holmstrom was totally disabled under its stringent standards.*fn4
MetLife denied the appeal, notifying Holmstrom in a February 2006 letter that summarized the opinion of Dr. Janet Collins, the physician retained by MetLife to perform the medical review. Dr. Collins did not examine Holmstrom. MetLife's letter addressed Holmstrom's claims of intractable pain, significant physical limitations, and cognitive deficiency as identified by Holmstrom and Dr. Vant. MetLife found, however, that the lack of "objective findings to support ongoing total disability" prevented MetLife from determining whether her disability was genuine. MetLife stated that the August 2005 FCE was unreliable based on the "emotional component displayed by Ms. Holmstrom during the exam" and her "inability or unwillingness" to move parts of her body "known not to be affected by her pain complaints," specifically her lumbar spine. MetLife concluded by stating that it could have reached a different decision on disability if Holmstrom had provided another FCE "in order to more precisely quantify appropriate restrictions and limitations" and a "battery" to "assess her neurocognitive status."
Holmstrom then filed suit in federal court. The parties voluntarily remanded the case for a third administrative review. In an effort to comply with the requests of the February 2006 letter, Holmstrom submitted another FCE and the results of a battery of cognitive analysis tests called a Schubert General Ability Battery.
This four-page report on the two-day FCE was much more detailed than the FCE report from 2005. It contained more tests germane to Holmstrom's specific pain complaints. Each test result included detailed numerical data and was specifically interpreted to demonstrate the result's significance with regard to Holmstrom's ability to perform a job in the "sedentary" exertion category (the least demanding, as defined by the Department of Labor). The new FCE concluded that her function was below the sedentary level for most tests involving her hands or arms. To determine endurance and consistency, each test was performed on both days. On the second day, "all measured parameters recorded a reduction of about 20%, with increased pain and discom-fort, placing Mrs. Holmstrom in the low endurance category." The FCE concluded that it could not recommend any path for returning to work given Holmstrom's significantly low function and endurance. The FCE stated that it was conceivable that Holmstrom might "do a minimum amount of work while using vocation-specific voice recognition software... relieving her of the challenges of sitting and typing." If she did so, she could work a maximum of only three hours per day, divided into six sessions of 30 minutes each, and only two to three days per week. The FCE tempered this observation even further, stating that this possible form of part-time work would "depend, however, to a large extent, on her mental and cognitive status, reflecting her mental ability...."
The Schubert General Ability Battery, performed by Dr. Kent Noel, Ph.D., revealed significant cognitive impairment. It found that Holmstrom's intelligence quotient had diminished from 123 in 1991 (as established by the same type of testing) to 104 in 2007. The 2007 results put her in just the fifth percentile among management candidates. Dr. Noel concluded that these results "strongly suggest that Ms. Holmstrom would experience difficulty focusing, retaining, processing, and making decisions. If considered for a return to the workforce, it would be at the most menial level using her physical skills, if these were suitable."
MetLife enlisted Dr. Robert Manolakas and Dr. Carol Walker to consider the new FCE and the Schubert General Ability Battery, respectively. Dr. Manolakas stated that Holmstrom had physical limitations "but not severe limitations." Rejecting the March 2007 FCE, he stated:
the report did not include the raw data or validity observations... so it is unclear on what basis precisely the lack of performance is due to: ie, physical incapacity or poor effort for whatever reason. The language suggests poor effort or endurance, but without the entire report or a repeat study this is not able to be determined for sure.
Dr. Manolakas challenged the diagnosis of CRPS altogether, stating that it had "not been established by the available medical data in [the] file" and "the physical exam findings to support [it] are currently few...."
Addressing Holmstrom's cognitive impairments, Dr. Walker rejected the Schubert General Ability Battery results and Dr. Noel's conclusions:
[H]e is a not a neuropsychologist, but a clinical psychologist, and does not perform neuropsychological evaluations. Dr. Noel has apparently based his opinions on a test that is developed to be used for an estimate of intellectual capacity and one that does not have appropriate measures of symptom validity. Such a measure will not allow an individual to make inferences regarding the person's overall cognitive ability.... [C]hanges in individual performances cannot be determined to be reliable or valid without specific measures of symptom validity.
Dr. Walker found that the medical documentation did not support cognitive impairment.
Before MetLife's final decision, Holmstrom responded to the quoted reports with letters from Dr. Vant and Dr. Noel. Dr. Vant asserted that no objective tests existed for CRPS, and he said that he had observed obvious physical deficits upon examination that were fully corroborated in the detailed FCE. Dr. Vant also added more detail about Holmstrom's right arm range of motion-specifically, how far in each direction she was able move her arm. Dr. Manolakas responded with an addendum to his report in which he acknowledged that Dr. Vant's latest letter offered data of greater, if not dispositive, significance. He stated that the letter, combined with the evidence already in the record, led him to conclude that "more likely than not, the right upper extremity would be limited currently to occasional handling and grasping and fingering, in an eight hour work day, at least. It is up to [MetLife] if they want to consider medical evidence in the letter sufficient to support this restriction of limitation, but I do." Dr. Manolakas added that "an independent physical exam and file review is a higher level of medical evidence... especially in a case such as this," and concluded that "an independent [medical examination] with file review would be in order" for the next step of claims administration. MetLife did not take this recommendation, and no independent examination or review was ever conducted.
Dr. Noel defended his expertise and credentials (specifically, his extensive experience in evaluating cognition for the purposes of workplace function) and the ability of the Schubert General Ability Battery to assess accurately Holmstrom's cognitive deficiencies and their impact on her ability to work. Dr. Walker responded with an addendum stating: "While intellectual assessment is often part of the battery of the neuropsychologist, it is not used alone to make a determination of an individual's abilities." On October 29, 2007, after receiving these additional reports, MetLife again upheld its determination.
Left with no further administrative recourse, Holmstrom filed this lawsuit. MetLife counterclaimed to recover payments it had made that should have been discounted based on the Social Security benefits that Holmstrom had received. In the district court, Judge Dow wrote a detailed opinion granting summary judgment for ...