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Lacko v. United of Omaha Life Insurance Co.

United States Court of Appeals, Seventh Circuit

June 12, 2019

Shirley Lacko, Plaintiff-Appellant,
United of Omaha Life Insurance Company, Defendant-Appellee.

          Argued November5, 2018

          Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. l:17-cv-02100 - Jorge L. Alonso, Judge.

          Before Bauer, Rovner, and St. Eve, Circuit Judges.


         Shirley Lacko filed suit against United of Omaha Life Insurance Company ("United"), challenging United's denial of her claims for short-term and long-term disability insurance. Those claims were brought pursuant to group insurance policies issued by United to her employer, BKD, Inc., an accounting firm. Specifically, BKD provided two group insurance policies, Group Short Term Disability Insurance Policy No. GUC-ABF3 (the "STD" plan) and the Group Long Term Disability Insurance Policy No. GLTD-ABF3 (the "LTD" plan). Both policies were issued by United, who also served as the claims review fiduciary for claims to STD and LTD benefits.

         Lacko based her claims for STD and LTD benefits on the adverse combination of a number of impairments, including but not limited to gastroparesis, diabetes, rheumatoid arthritis, congestive heart failure, breathing difficulties, anxiety, musculoskeletal impairments, and cognitive difficulties related in part to the medication needed to manage the other conditions. The district court opinion details the extensive medical evidence presented to United in support of Lacko's disability benefits claims. It includes reports from numerous physicians, as well as objective evidence such as MRI, X-ray, and lab reports. An exhaustive recitation of that evidence, however, is unnecessary to resolve the issues presented in this case. Therefore, we will set forth the evidence only to the extent that it is necessary to decide the issues in this appeal and defer to the district court the more extensive recitation.

         Although United initially approved her claims for STD benefits on three occasions for the time period spanning October 12, 2015 through November 22, 2015, it denied STD benefits on June 16, 2016 for the period beyond November 22, 2015, concluding the records failed to demonstrate a change in Lacko's medical condition at the time she stopped working or subsequently. United also denied her claim for LTD benefits. Lacko then filed this action in the district court under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., challenging the denial of LTD benefits, and the denial of STD benefits from the period of November 22, 2015 until December 27, 2015 (at which time LTD benefits would apply). The district court granted summary judgment in favor of United, and Lacko now appeals that decision to this court.


         Lacko began working for the predecessor to BKD in approximately January 1999 and worked until September 25, 2015. She applied for benefits under the STD plan on October 2, 2015. At the time that she ceased working, her position at BKD was that of Senior Manager in the Audit Department, with an annual salary of $93, 250.04.

         The two disability plans covered different time periods. The first 90 days of disability are covered by the STD plan, which in relevant part provides benefits when /'because of an Injury or Sickness, a significant change in Your mental or physical functional capacity has occurred in which: ... You are prevented from performing the Material Duties of Your Regular Job (on a part-time or full-time basis) or are unable to work Full-Time ... ." STD Plan at 27. The STD plan defines "Material Duties" as encompassing "the essential tasks, functions, and operations relating to Your Regular Job that cannot be reasonably omitted or modified," and "Regular Job" is defined as "the occupation You are routinely performing when Your Disability begins." Id. at 28-29.

         The LTD plan applies beyond that 90-day period and includes slightly different requirements. Instead of speaking in terms of the claimant's ability to perform her regular job, the LTD plan provides benefits when the claimant is incapable of the material duties of her regular occupation. Specifically, the LTD plan provides:

Disability and Disabled means that because of an Injury or Sickness, a significant change in your mental or physical functional capacity has occurred in which You are:
(a) prevented from performing at least one of the Material Duties of Your Regular Occupation on a part-time or full-time basis; and
(b)unable to generate Current Earnings which exceed 99% of Your Basic Monthly Earnings due to that same Injury or Sickness. ...
Material Duties means the essential tasks, functions, and operations relating to an occupation that cannot be reasonably omitted or modified. In no event will We consider working an average of more than 40 hours per week in itself to be part of material duties. One of the material duties of Your Regular Occupation is the ability to work for an employer on a full-time basis. ...
Regular Occupation means the occupation You are routinely performing when Your Disability begins. Your regular occupation is not limited to the specific position You held with the Policy-holder, but will instead be considered to be a similar position or activity based on job descriptions included in the most current edition of the U.S. Department of Labor Dictionary of Occupational Titles (DOT). We have the right to substitute or replace the DOT with a service or other information that We determine of comparable purpose, with or without notice. To determine Your regular occupation, We will look at Your occupation as it is normally performed in the national economy, instead of how work tasks are performed for the specific employer, at a specific location, or in a specific area or region.

LTD Plan at 29-31.

         Therefore, Lacko's entitlement to benefits under the LTD plan hinges upon whether Lacko was capable of fulfilling the material duties of her regular occupation. That focus on her occupation sets the stage for a major point of contention in this appeal, which is whether United used an appropriate occupational classification in determining her eligibility for benefits. As we will explore in detail later, United classified her position as that of a Department Manager under the Dictionary of Occupational Titles ("DOT"), but the Social Security Administration (SSA) used a different DOT title in assessing Lacko's claim for benefits, classifying her position as that of an Auditor or Accountant.

         After Lacko's requests for STD and LTD benefits were denied, Lacko requested reconsideration of those determinations from United. With respect to the STD benefits claim, United in that appeal considered the evidence as to her gastroparesis, back pain, and osteoarthritis, and determined that she was capable of performing the duties of her job.

         In appealing the denial of LTD benefits, Lacko provided United with the SSA decision granting benefits, but United again determined that the denial of LTD benefits was appropriate. In its determination denying that appeal regarding LTD benefits, United stated that it had considered her claim that she was disabled due to chronic pain, fatigue, congestive heart failure, hypertension, osteoarthritis, diabetes, asthma, gastroparesis, sleep disturbance, vertigo, vitamin D deficiency, anxiety and depression. United acknowledged that the file revealed a history of back pain and diffuse joint pain complaints, and that MRI studies of the lumbar, thoracic, and cervical spine documented multi-level degenerative changes with disc bulging in some areas. Additionally, it noted that X-rays confirmed arthropathy in Lacko's hands and feet. Accordingly, United determined that she would be restricted to sedentary work activities and should pursue continued treatment for pain management. It also found that her obstructive sleep apnea and the resulting fatigue could also support that limitation to sedentary work, and opined that her chronic obstructive pulmonary disease and asthma would not preclude sedentary work activities. Although it recognized other medical conditions, it did not find that they supported any further limitations. For instance, it recognized that she suffered from diabetes, but held that her diabetes was controlled with treatment and regular visits to her endocrinologist and therefore would not require any restrictions or limitations. It also acknowledged that she was diagnosed with chronic gastritis and with gastroparesis due to diabetes requiring treatment with medications. United found no limitations related to her vertigo or dizziness, or from cardiac conditions or hypertension. Finally, United recognized that symptoms of anxiety, depression and memory loss had been reported. It held that there was no indication of an inability to perform the activities of daily living or of cognitive issues or memory impairment to preclude work activities. United noted that Lacko was evaluated by Dr. Steven Fritz, Psy.D., for a mental residual functional capacity assessment as a part of the Social Security review, and it stated that the evaluation found no evidence of memory impairment or cognitive impairment. United acknowledged that Lacko has multiple medical complaints requiring medication and regular visits to health providers, but tracking the language of the LTD plan, it held that it did not find evidence of a significant change in her physical or mental functional capacity on or around her last date worked to preclude her from continuing to perform the material duties of her regular occupation. It conceded that she had been found disabled by the SSA and was receiving disability benefits but held that the SSA decision did not affect its disability determination, stating only that "[eligibility requirements for Social Security Disability may differ from the eligibility requirements under this policy."


         Lacko subsequently filed this ERISA action seeking STD benefits from November 22, 2015 through December 27, 2015, and LTD benefits thereafter, under § 502 of ERISA, 29 U.S.C. § 1132(a)(1)(B), which provides that "[a] civil action may be brought... by a participant or beneficiary ... to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." The district court granted summary judgment to United.

         First, the court considered the decision as to STD benefits. It held that United denied STD benefits on the basis that there had been no change in Lacko's functional capacity that would prevent her from performing her job. The court found that it was reasonable for United to focus on whether Lacko had experienced a change in medical symptoms, because the plain language of the STD plan requires a change. According to the court, when Lacko was first granted STD benefits by United, it had received medical records from April 2015 that showed Lacko was "feeling good," and records from September 2015 showing that Lacko reported feeling pain all over, thus indicating a "change." Subsequently, United received additional medical records which showed that Lacko had suffered gas-troparesis since at least 2011, and degenerative disc disease from at least 2013, and evidence that she had taken opiates for pain for a decade. The court held that "[g]iven that plaintiff's medical ...

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