Terri Truitt, the plaintiff, claimed her back, leg, and foot pain prevented her from working as an attorney, leading to her receipt of long-term disability benefits from Unum Life Insurance Company. Years later, Unum received emails from a former companion indicating Truitt engaged in activities, such as international travel, inconsistent with her disability claims. Based on this information, Unum denied her claims and sought over $1 million in reimbursements. Although the district court found substantial evidence supporting Unum's denial, it deemed the denial procedurally unreasonable and an abuse of discretion, primarily because Unum failed to adequately consider the source of the emails.
However, the appellate court clarified that it has not imposed a duty on plan administrators to investigate evidence sources in ERISA cases and that the claimant bears the burden of discrediting the evidence used by the administrator. The court ultimately reversed the district court's ruling, concluding that Unum did not act arbitrarily or capriciously in its decision. Truitt had worked as a partner specializing in international oil and gas litigation and claimed to have experienced disability since 1999, officially ceasing work in 2002. Unum initially awarded her benefits in 2003 but required updated medical documentation for continued eligibility. Despite evidence supporting her claimed disability from medical professionals, the ongoing review also revealed inconsistencies with her claims.
Surveillance footage captured Truitt engaging in various physical activities, including walking, driving, and lifting items, which raised questions about her claimed physical limitations. An Independent Medical Examination (IME) by orthopedic surgeon Michael Graham indicated Truitt had little to no physical impairment. Unum, the insurance provider, continued to pay her benefits despite inconsistencies between her reported symptoms and observable activities. An evaluation by occupational therapist Steven Clark revealed inconsistencies in Truitt’s physical abilities, suggesting her condition improved when she was unaware of being observed. Truitt contested these findings, claiming pain from the evaluation resulted in significant bed rest. Additional surveillance showed her performing tasks such as removing items from her vehicle and cleaning.
In a subsequent IME, physician Aaron Levine concluded that although Truitt experienced disc degeneration, her perceived disability exceeded her actual physical findings, indicating no objective reason to prevent her from performing sedentary work. Unum ultimately terminated her benefits in August 2006, citing a lack of objective evidence supporting her inability to work as a trial attorney. Truitt appealed, arguing Unum did not fully consider her job's demands, particularly extensive travel. A vocational assessment by Richard Byard found that while her job did not require strenuous physical motions, the travel demands would exceed her capacity due to the need for frequent posture changes. Following Byard’s evaluation, Unum reinstated Truitt's benefits in July 2007, requiring her to provide periodic medical updates for continued eligibility. Concurrently, an individual named Andrew Mark Thomas contacted Unum, claiming a personal history with Truitt and alleging he possessed evidence contradicting her disability claims.
Thomas contacted Unum, requesting six times the current monthly payments made to Truitt in exchange for evidence that Truitt was receiving disability payments under false pretenses. He stated it was a one-time offer. Unum declined to pay for fraud-related information but indicated Thomas could provide information voluntarily. Subsequently, Thomas submitted over 600 pages of emails from March 2005 to July 2007, revealing that despite claiming disability, Truitt engaged in extensive travel, including trips to various locations such as Amarillo, Oklahoma City, New York City, and several international destinations, such as Mexico, Jamaica, Guatemala, and multiple European countries. Specific emails indicated her active travel plans and hotel reservations, contradicting her claims of being unable to work due to disability. Notable dates include her writing about travels to New York and plans for trips to Ireland and Russia, as well as multiple itineraries and eTickets confirming her travels throughout the specified period.
Truitt's emails reflect her participation in various physically demanding activities and legal work, suggesting she may have misled Unum regarding her capabilities. Notable activities include dancing, maintaining a property, extensive cleaning, and picking up trash, alongside travel to Guatemala and Europe, indicating significant physical exertion. Legal references include preparations for hearings, trials, and case management, with an emphasis on her commitment to her legal practice despite planning international travel. Truitt's correspondence reveals that she was aware of surveillance from Unum and expressed concerns about her claims being affected by her activities. An October 2005 email mentions injuries from a fall, while a March 2009 letter from Unum highlights their awareness of her ongoing legal practice and extensive travel, suggesting inconsistencies in her reported limitations.
Unum suspended Truitt’s disability benefits pending an investigation into her claim. They indicated a willingness to reconsider if she provided additional supporting information. Truitt submitted a three-page affidavit detailing her assault by Thomas, who she claimed had malicious intentions towards her and Unum. She characterized an email from Thomas as a threat to provide false information to Unum regarding alleged fraud. Along with her affidavit, Truitt included documentation of Thomas's guilty plea for assaulting her.
Unum's physician, Suzanne Benson, reviewed Truitt’s file and found insufficient clinical evidence to support her claimed disability, noting that her reported activities contradicted her claims of limitation. An additional review by physician Malcolm McPhee confirmed that evidence suggested Truitt was functioning at a light physical activity level. Vocational consultant Anthony Morin concluded that Truitt could perform her job duties.
On October 27, 2009, Unum notified Truitt of the termination of her benefits. The termination was based on discrepancies between her statements and evidence gathered, including travel records showing international travel contrary to her claims of worsening condition and bed rest. Surveillance footage further contradicted her assertions of incapacity. Unum concluded that Truitt was not disabled under the terms of her plan due to evidence demonstrating her ability to engage in extensive travel and other activities, including practicing law.
Unum informed Truitt that she owed over $1 million in reimbursements for benefits wrongfully received between March 2005 and August 2007. In response, Truitt submitted a thirty-one-page administrative appeal, contesting the termination of her benefits. While acknowledging her international travel, she criticized the reliability of surveillance videos and emails, claiming the information from a person named Thomas was biased and not a valid basis for denying benefits. Truitt included expert reports supporting her appeal; insurance claims expert Ted Marules argued that Unum's denial was based on a biased interpretation of her medical information and job responsibilities. Rehabilitation counselor Barbara Dunlap noted that recreational travel does not equate to business travel, while electronics expert Dennis Chevalier expressed skepticism about the reliability of information obtained from emails.
Unum reviewed Truitt's appeal and reaffirmed its decisions, with vocational expert Byard stating that Truitt’s extensive recreational travel demonstrated her capability for business travel, countering Dunlap's claims. Physician Andrew Krouskop concluded that no further restrictions were warranted given Truitt's conditions. In July 2010, Unum upheld its denial of benefits and sought reimbursement, arguing that Truitt failed to prove any manipulation of the email evidence.
Truitt subsequently filed a lawsuit alleging wrongful termination of benefits, while Unum counterclaimed for the recovery of overpayments. The district court ruled in favor of Truitt, stating that although Unum's administrative process was not limited to legally admissible evidence, its reliance on Thomas's emails was arbitrary. The court also found that Unum had not proven Truitt’s statements were false, rejecting Unum's counterclaim. Unum appealed, raising two key issues: whether the plan administrator abused its discretion in denying benefits and whether Truitt must reimburse the alleged overpayments.
Unum's denial of benefits is reviewed de novo, meaning the court assesses the situation independently, considering whether the ERISA plan administrator abused its discretion. The district court concluded that Unum had discretionary authority to interpret the plan and render benefit decisions, necessitating a review for abuse of discretion. An administrator's decision is deemed abusive if it is arbitrary or capricious, characterized by a lack of rational connection between the facts and the decision. There must be concrete evidence in the administrative record that supports the denial.
The review process is not overly complex; it only requires the decision to fall within a reasonable range. The court also considers any potential conflicts of interest, particularly if the administrator evaluates and pays benefits claims. Such conflicts are one of many factors to assess, with their significance varying based on the specifics of the case, especially if there is evidence of biased decision-making.
In this case, the district court found substantial evidence supporting Unum’s decision to deny benefits to Truitt and noted that there was no dispute regarding whether Unum provided a 'full and fair review' of her claim. The appeal focuses on whether Unum abused its discretion in denying benefits, with procedural unreasonableness as a potential factor in the review of the administrator's decision.
The district court recognized that Unum's administrative process is not confined to legally admissible evidence. However, it found that Unum failed to investigate the accuracy of information from emails and did not adequately consider the source of that information, which led to an arbitrary and capricious reliance on those emails. This situation reflects the concept of "procedural unreasonableness," as outlined in the Supreme Court's Glenn decision, where a plan administrator's contradictory actions suggested a lack of reasonableness in decision-making. The court also referenced Schexnayder v. Hartford Life, which established that procedural unreasonableness may warrant greater scrutiny of a conflict of interest when evaluating a plan administrator's decision. Additionally, Crowell v. CIGNA further asserted that procedural unreasonableness influences how much weight is given to a conflict of interest, though it does not serve as an independent basis for finding an abuse of discretion.
The district court did not clarify whether it viewed procedural unreasonableness as a standalone basis for determining Unum's abuse of discretion, leading to an error in treating it as more than a factor in assessing Unum’s conflict. Specifically, the court's determination of procedural unreasonableness was partly based on Unum's alleged failure to investigate the accuracy of email information. However, this imposition of a duty to investigate contradicts the unanimous en banc ruling in Vega v. National Life Ins. Services, which held that a plan administrator cannot be required to conduct a reasonable investigation when denying benefits, especially in the context of a conflict of interest.
The en banc court emphasized that the burden should not rest solely on the administrator to gather evidence for a claim, especially when the claimant may have relevant information readily available. The focus should be on the adequacy of the record supporting the administrator's decision rather than the reasonableness of their investigation. This approach prevents district courts from conducting additional fact-finding and encourages both parties to compile supporting evidence effectively at the administrative level. Subsequent cases have reiterated that a conflicted administrator does not have a duty to reasonably investigate claims, as seen in Gooden v. Provident Life. The court found that Unum did not violate any investigative duty because such a duty does not exist.
Additionally, the district court criticized Unum for failing to consider the source of the information it evaluated. However, no precedent was found imposing an affirmative duty on plan administrators to weigh the source of evidence. The case cited by the district court, Pierre v. Connecticut General Life Insurance Co., actually supports that hearsay alone cannot validate a decision unless it has reliability indicators. The court concluded that the administrator's decision was based on corroborating evidence, thus not constituting an abuse of discretion.
In the context of ERISA, the plan administrator is required to engage in a thorough administrative process to evaluate evidence supporting a denial of benefits, which includes scrutinizing issues such as inauthenticity, contradiction, unreliability, and bias. The administrator must specify reasons for denying benefits, allowing the claimant to challenge this evidence, particularly its sources. Claimants are expected to cooperate in providing relevant information, as it is deemed inefficient for the administrator to seek it without such cooperation.
In this case, Unum identified evidence against Truitt's claim, including emails indicating her engagement in activities inconsistent with her claimed disability, surveillance footage showing her physical capabilities, and evaluations from medical professionals suggesting limited objective support for her claims of pain. Truitt presented rebuttal evidence, including an affidavit alleging that an individual threatened to provide false information to Unum and documents regarding that individual's criminal history. Unum reviewed this rebuttal and ultimately rejected it after consulting additional medical experts, reaffirming that the original evidence still justified its decision to deny benefits.
Truitt argued that she could not adequately challenge Unum’s evidence due to difficulties in obtaining information about the denial; however, Unum countered that the decision to terminate benefits was made after providing Truitt with her file, and her appeal occurred several months later.
Unum responded to Truitt's challenge regarding the authenticity of emails by asserting that Truitt failed to provide evidence of manipulation or tampering. The emails, which included personal discussions and details relevant to Truitt's disability claim, were deemed credible due to their thoroughness and the deference given to plan administrators. Truitt did not present evidence that the emails were forged or hacked, nor did she refute the activities described in them, such as extensive international travel and physical tasks. Although she claimed that Mr. Thomas threatened to provide false information, her general denial did not sufficiently counter the email evidence.
Expert reports submitted by Truitt argued for the unreliability of conversational emails but did not identify specific discrepancies in the emails' authenticity. The emails were considered authentic, spanning over 600 pages and including travel-related documents, and their timeline was consistent with Truitt's claim file. The court noted that the emails met reliability indicators and concluded that Unum's reliance on them was not an abuse of discretion.
The district court, however, found that even if the emails were accepted as valid, Unum’s determination that Truitt could perform her occupation was arbitrary. It suggested that Truitt's leisure travel did not equate to the demands of business travel, implying that the nature of her activities did not adequately demonstrate her capability to work.
Findings challenge the district court’s assertion of substantial evidence supporting Unum’s denial of benefits. Key evidence, beyond emails, was identified by the plan administrator, including surveillance videos and medical records. While the court refrains from replacing the plan administrator's judgment, it acknowledges significant evidence in the administrative record backing the denial. Notably, Truitt's travel activities, documented in her emails, demonstrate her capability for extensive business travel, countering her claims of disability. Medical experts corroborated that her travel experiences indicated a tolerance for prolonged sitting and did not necessitate frequent posture changes.
Additionally, surveillance footage depicted Truitt engaging in various physical activities, including lifting and carrying items, while her emails reflected significant physical exertion, such as managing her property and cleaning for extended periods. Medical assessments concluded that Truitt exhibited minimal physical impairment and could fulfill her job responsibilities.
The analysis then shifts to Unum's structural conflict of interest, as established by the district court, which recognized Unum’s dual role in determining and paying benefits. This conflict is considered in evaluating whether it led to an abuse of discretion in claims administration.
Unum is acknowledged to have a history of biased claims administration and a structural conflict of interest, as recognized in Glenn v. MetLife. However, the district court improperly emphasized this conflict, relying on past cases from 2007 to 2010, including Burton v. Unum Life Ins. Co., which indicated that Unum had implemented new claims-handling practices to address its past biases. The Burton decision specifically noted that Unum's practices had improved to the extent that bias should not be assumed in every claim denial. Subsequent cases have also acknowledged these enhancements.
A thorough review of the administrative record indicated no significant likelihood that Unum’s conflict affected its decision regarding Truitt’s benefits. Unum conducted an extensive investigation into Truitt’s disability, engaging multiple medical and vocational experts, and provided opportunities for Truitt to present evidence supporting her claim. Unum's initial restoration of Truitt's benefits further demonstrated its careful consideration of her claim.
Despite acknowledging Unum's structural conflict, the evidence, including surveillance videos, medical records, and emails, substantiated Unum's decision that Truitt was not disabled under the plan's terms. Consequently, the structural conflict was outweighed by substantial evidence supporting Unum's decision. The court concluded that Unum had no affirmative duty to investigate the source of the emails and that Truitt failed to discredit Unum’s evidence during the administrative process. Ultimately, the district court's emphasis on Unum's conflict was deemed improper, and it was determined that Unum did not abuse its discretion in its decision-making.
Unum filed a counterclaim for over $1 million in benefits it alleged Truitt fraudulently obtained. The district court ruled that Truitt did not defraud Unum, primarily because Unum failed to demonstrate reliance on Truitt’s representations, applying Texas law in its analysis. Unum contested this application of Texas law, and the court agreed that federal common law governs the counterclaim under ERISA, as ERISA does not specify how a plan administrator recovers fraudulently obtained benefits. The court referenced previous rulings establishing that federal common law fills gaps in ERISA's text, and noted that reliance is not a required element of fraudulent misrepresentation under federal law.
The district court's conclusion that Truitt did not defraud Unum was influenced by its finding that Unum’s reliance on various consultants and experts negated its fraud claim. The court also pointed out that the district court's dismissal of the reliability of certain emails as evidence was potentially flawed, as those emails appeared credible and aligned with Truitt’s claims.
Consequently, the appellate court vacated the district court’s ruling that Truitt did not fraudulently obtain benefits, reversed the finding that Unum wrongfully denied benefits, rendered judgment for Unum, and remanded for further proceedings. Additionally, the court vacated the award of attorney's fees to Truitt, also remanding that issue for reconsideration.
