Court: District Court, N.D. Alabama; January 12, 2017; Federal District Court
Unum Life Insurance Company of America, as stated on its website, emphasizes financial protection and integrity in its mission. Dr. Arturo Otero has filed an ERISA lawsuit against Unum, alleging that the company failed to uphold its values by denying him disability benefits for which he had paid premiums. Otero claims he is entitled to benefits under a group long-term disability policy from his employer, arguing that Unum waived its right to deem him ineligible for coverage due to his part-time work, as it was aware of this when accepting his premiums. He also contends that Unum did not adhere to proper claims procedures regarding his current claim.
The case raises unresolved questions in the Eleventh Circuit regarding the applicability of waiver in ERISA cases and the correct standard of review in "deemed exhausted" cases when the insurer hasn't exercised its discretion. The court is considering cross motions for judgment on the administrative record, with thorough briefing from both parties.
The court has determined that Dr. Otero is eligible for coverage and is unable to perform his regular duties as a neurologist. However, it has remanded the case to Unum to request Dr. Otero's W-2 forms and calculate whether his earnings decreased by 20% after February 2, 2013, which is a requirement for qualifying as disabled under the policy. Dr. Otero has previously filed a related case against Unum, referred to as "Otero I," and this current case is designated "Otero II." ERISA governs both lawsuits, with Otero having initially claimed full disability benefits in 2005, which were granted for 24 months based on his inability to perform his regular occupational duties due to medical issues.
Dr. Otero's benefits were initially granted due to his inability to perform night call, a key duty of his role as a neurologist. After two years, the eligibility criteria shifted from assessing his capacity for "regular occupation" to evaluating whether he could undertake "any gainful occupation" suited to his qualifications. Gainful occupation is defined as one yielding income at least equal to his disability payment within a year of returning to work. Unum terminated Dr. Otero's benefits on September 28, 2007, claiming he could fulfill the full-time responsibilities of his regular occupation, including night call. Following Dr. Otero's appeal, Unum reinstated his benefits on January 17, 2008, citing supporting evidence from his treatment providers, although the reinstatement letter did not reference the "gainful occupation" definition.
Unum's reversal of the initial decision was based on the need for further information regarding Dr. Otero's limitations, including an independent medical examination, although this rationale was not explicitly stated in the reversal letter. The letter indicated that periodic updates on Dr. Otero's medical status would be necessary to maintain eligibility for benefits. A separate document in Unum's file provided additional rationale for the reversal, highlighting Dr. Otero's extensive work hours and sleep deprivation affecting his health, supported by his cardiologist's restrictions against night call. Vocational assessments acknowledged that night call was a significant duty for neurologists, although there was some disagreement about its necessity in all cases. Unum continued to pay Dr. Otero $10,000 monthly in disability benefits until March 4, 2010. An independent evaluation in June 2008 concluded that he could practice neurology without night or weekend call. By January 2010, Dr. Otero reported to Unum that he was working part-time as a neurologist, conducting limited office-based clinical work without night or hospital call duties.
On March 4, 2010, Unum Lead Disability Benefits Specialist Andrew Hamilton notified Dr. Otero of the termination of his disability benefits, citing that his medical records did not substantiate his inability to work 40 hours weekly, although they recognized restrictions against night and weekend work. Unum determined that Dr. Otero was not disabled under the "any gainful occupation" standard, as he possessed transferable skills enabling him to earn $10,000 monthly as an Insurance Physician or Peer Review Physician, with significantly reduced working hours. This conclusion was supported by a vocational review conducted on March 2, 2010, which did not require board certification as a qualification.
Dr. Otero appealed this decision, and a response from Unum on April 30, 2010, acknowledged that their consulting physician agreed with the part-time work restrictions due to Dr. Otero's health issues. However, Unum maintained that terminating benefits was justified because Dr. Otero could engage in other part-time gainful employment. The communication provided a deadline of May 30, 2010, for Dr. Otero to submit further information and informed him of his right to pursue a civil suit under § 502(a) of ERISA if he disagreed with the outcome.
Dr. Otero subsequently submitted additional documentation, including a letter from his cardiologist, Dr. Kay, emphasizing that increased workload exacerbated his atrial fibrillation and recommending that Dr. Otero's current limited work status should remain unchanged. In response, on May 26, 2010, Unum reiterated that their decision had already been communicated and invited Dr. Otero to request a re-appeal in writing.
Dr. Otero later filed a civil suit challenging Unum's 2010 decision, but the court ruled in favor of Unum on March 30, 2012, concluding that the evidence did not indicate that Unum's determination was incorrect regarding Dr. Otero's capability to perform jobs that met the "any gainful occupation" standard.
Dr. Otero contested his qualifications for jobs identified by a vocational expert at the district court level, asserting he was not board-certified in neurology and presented evidence not included in the administrative record. The court struck the external evidence and determined that Unum, when making its decision, had no indication that the vocational expert's report was inaccurate or that Dr. Otero was incapable of performing the identified jobs. Dr. Otero did not appeal this ruling.
In a subsequent case, Otero II, Dr. Otero argued that Unum had accepted his premiums since April 2010, despite his part-time work, and therefore waived the right to deny coverage based on an alleged failure to meet minimum working hours. He claimed he became disabled again as of February 2013 due to worsened atrial fibrillation. This claim differed from his prior one, focusing on the same condition but under a different standard of disability eligibility, transitioning from "any gainful occupation" to "regular occupation" after two years of payments.
Unum countered that Dr. Otero was ineligible for coverage due to his part-time status and asserted they were unaware of his working hours until his claim was submitted. They maintained that even if eligible, denying his claim was justified because he could perform his regular occupation as a neurologist and did not experience a significant loss in earnings due to his condition.
Key factual details include that after his disability benefits ended in March 2012, Dr. Otero continued part-time work as a neurologist and claimed a deterioration in his health by February 2013. The policy defined his "regular occupation" based on how it is normally performed in the national economy, which typically requires full-time hours, including night call as a substantial duty. Unum's vocational consultants acknowledged varying opinions on the significance of night call to the role.
Dr. Otero has chronic atrial fibrillation, exacerbated by stress, anxiety, and lack of sleep, which his cardiologist, Dr. William Hill, describes as "very severe and incapacitating," rendering him unable to maintain a full-time job. Dr. Otero's symptoms, including weakness and shortness of breath, align with medical literature, and it is clear that he cannot perform any meaningful sustained work. His treatment has involved multiple cardioversion and two ablation procedures to restore heart rhythm. Since February 2013, he has claimed disability due to a deterioration of his condition, undergoing further cardioversion procedures in 2013 and being prescribed a beta-blocker, Sotalol HCL, for management. Dr. Osorio recommends that Dr. Otero lead a non-stressful life and work part-time in a less stressful environment.
Prior to the current claim, Unum had never definitively ruled that Dr. Otero could perform his regular occupation as a neurologist. He had received long-term disability benefits under the "regular occupation" definition until a 2010 decision determined he could engage in a "gainful occupation." Unum's history with Dr. Otero includes multiple determinations, appeals, and federal litigation regarding his disability claims. In a previous case (Otero I), the court ruled in Unum's favor in March 2012, and the administrative record indicated that Dr. Otero had worked part-time as a neurologist from 2005 until the 2010 decision, putting in four hours a day and 16-20 hours a week. Decision-makers in 2010 acknowledged his part-time work. Following the termination of his benefits, Dr. Otero sought clarification on the status of his group policy and premium waivers during his appeal process.
Dr. Otero was confirmed to be working part-time, with a schedule of four hours a day and twenty hours a week, as evidenced by letters from his cardiologists dated early 2010. The appeal regarding his benefits was assigned to Robert Spellman. After his benefits were terminated, Dr. Otero resumed paying premiums under the guidance of Spellman. He inquired multiple times whether he needed to continue premium payments during the appeal, leaving messages for both Spellman and Andrew Hamilton, the decision maker for the termination. On April 2, 2010, Spellman advised Dr. Otero to continue paying premiums to avoid a lapse in coverage.
Throughout the appeal process, Spellman documented Dr. Otero's part-time work status, including a letter acknowledging receipt of the appeal and Dr. Otero’s work schedule. On April 7, 2010, Spellman noted that Dr. Otero was still working part-time and had not applied for social security disability due to his employment status. Further documentation on April 8 and April 12 reiterated Dr. Otero's part-time capabilities according to his cardiologists.
On April 21, 2010, Dr. Alfred Parisi reviewed the appeal and noted that while Dr. Otero had the physical capacity for full-time sedentary work, it was uncertain whether he could sustain it due to potential stress exacerbating his medical condition, specifically atrial fibrillation. Parisi concluded that it could not be determined with reasonable medical certainty that Dr. Otero could maintain such employment, given the risk of increased health issues.
On April 30, 2010, Robert Spellman issued an appeal decision letter to Dr. Otero, highlighting his part-time work status of four hours daily, five days a week, with specific working hours from 9:00-11:00 a.m. and 1:00-3:00 p.m. Unum identified part-time occupations suitable for Dr. Otero, such as Insurance Physician and Medical File Review Physician, requiring 10-16 hours per week for gainful employment, and Peer Review Physician, requiring 5.5-7.6 hours per week. In subsequent court filings (Otero I) during 2011 and 2012, Dr. Otero maintained, supported by his cardiologists, that he was limited to part-time work, and the evidence did not indicate any intention to exceed 20 hours per week. Unum did not assert that he could work full-time, and the occupations identified were all part-time. Dr. Otero's schedule was consistently around 20 hours per week, with six patients seen in each of his two daily sessions, and he often required breaks and occasionally canceled appointments due to symptoms.
Regarding premiums, the administrative record in Otero II showed that Neurology Consultants received monthly premium statements from Unum starting in Spring 2010, which included details about Dr. Otero's coverage and earnings. Initially, during the period he received disability benefits, his premium was listed as "0.00." After the termination of benefits in March 2010, Neurology Consultants sought clarification from Unum about resuming premium payments. Unum instructed Dr. Otero to resume payments on April 2, 2010. The April 2010 premium statement noted a request to add a premium for Dr. Otero, and by May 2010, his premium was updated to $105.00. Unum consistently issued monthly statements detailing Dr. Otero's name and the corresponding premium based on his earnings, and Neurology Consultants continued to submit payments on his behalf.
In March and April 2010, Dr. Otero inquired about resuming premium payments for his coverage, and Mr. Spellman advised him to proceed. However, Unum did not assess Dr. Otero's eligibility for coverage under the Neurology Consultants' group policy until he submitted a new claim in September 2013. Unum's policy is to determine individual employee coverage only upon claim submission, due to the large number of insured employees.
Dr. Otero's disability determination relies heavily on his earnings as a neurologist. From January 2010 to April 2014, his monthly earnings varied, with reported figures of $6,250, $4,167, $4,903, and $4,220 for respective periods. There were no W-2 or K-1 forms provided for 2010-2012, but Unum submitted W-2s for 2010 ($45,500.04) and 2011 ($49,291.71). For 2012, a pay stub indicated a year-to-date earning of $58,831.89. Unum did not receive or request earnings information for 2013 onward since it did not process Dr. Otero's disability claim stemming from February 2013, which would have necessitated a comparison of pre- and post-disability earnings.
On September 6, 2013, Dr. Otero filed a new claim citing a deterioration in his physical condition and claiming difficulty finding employment due to lack of board certification. His attorney requested Unum identify employers offering positions that would disqualify Dr. Otero from receiving disability benefits. Medical records from a February 2013 emergency visit related to heart issues were also submitted. Notably, Dr. Otero's claim letter mistakenly referenced Provident Life and Accident Insurance Company instead of Unum.
Provident Life administers Dr. Otero's individual disability policy separately from Unum, although both companies are affiliated under Unum Group. On September 17, 2013, Unum's Disability Benefits Center, through Carol McCue, acknowledged a claim regarding Dr. Otero's disability denial and forwarded it to the Appeals unit. Despite referencing the incorrect Provident Life policy number, the claim reached the appropriate personnel, specifically Robert Spellman in the Appeals department. Spellman responded on the same date, stating the claim had been closed since 2010 and that Dr. Otero's coverage ceased when he stopped working, without addressing the appeal of the 2010 denial or justifying his claims regarding Dr. Otero's employment status.
On November 22, 2013, Dr. Otero's attorney requested clarification, questioning whether Unum believed that a denied claim precluded future claims, especially as Dr. Otero's health had worsened. The attorney emphasized that Dr. Otero had continued to work part-time and pay premiums. This letter was received by Unum’s Appeals office on December 2, 2013, but Unum did not respond, with Spellman later attributing this lack of response to inadvertence without further explanation. On January 16, 2014, the attorney sent a follow-up letter, reattaching the November 22 correspondence, which was received on January 22, 2014, yet again, there was no response from Unum.
A letter addressed to Mr. Spellman at Unum's Portland, Maine office was received on January 22, 2014, but was misfiled into Dr. Otero's individual disability claim file at Provident Life in Massachusetts. Mr. Spellman claimed that someone other than himself was responsible for the misfiling, yet he provided no supporting documentation, such as proof of the letter's forwarding to Massachusetts or acknowledgment from Provident Life's staff of its receipt. The only stamp on the letter indicated it was received in Portland. Mr. Spellman was unaware of the letter until after Dr. Otero initiated legal action.
On April 3, 2014, Dr. Otero's attorney sent another letter to multiple Unum officials, including Mr. Spellman, attaching a report from Dr. Otero’s physician and proof of premium payments. This letter, stamped received on April 7, 2014, prompted a response from Mr. Spellman on April 9, 2014, in which he requested completed disability claim forms and noted that he had not received the physician's report referenced by the attorney.
After realizing the January 16 letter had been misplaced, there is no record of Unum investigating the error or taking steps to prevent future occurrences. On July 9, 2014, Dr. Otero's attorney submitted completed disability claim forms along with medical documentation indicating Dr. Otero’s recent medical history, including cardioversions and a hospitalization in December 2013.
Dr. Otero has a history of chronic atrial fibrillation (afib) that has worsened, necessitating hospitalization for new medical therapy on December 4 and 5, 2013. He must lead a non-stressful life and work part-time in a less stressful environment to alleviate his symptoms. In a letter dated July 9, 2014, Dr. Otero's attorney disputed Unum's assertion that he could earn similar long-term benefits through other work, emphasizing that he has been unable to secure employment and that his condition has deteriorated, limiting his practice further. The attorney requested benefits dating back to February 2013 when Dr. Otero first met the disability criteria and submitted his claim. The July letter referenced a previous correspondence from September 6, 2013, which had additional attachments.
Mr. Spellman from Unum reported a misfiling error where the July letter was incorrectly placed in Dr. Otero's individual disability claim file with Provident Life instead of his group claim file with Unum. Although the letter was addressed correctly and stamped as received, Mr. Spellman claimed he did not receive it and thus did not respond. There is no documentation supporting his assertion of misfiling, and the records do not indicate that Dr. Otero had any individual claim on appeal. After four months without a response from Unum regarding his claim, Dr. Otero initiated legal action on November 20, 2014.
The group policy issued to Neurology Consultants was amended effective April 1, 2005, applying to disabilities that commence on or after that date. Since Dr. Otero's claim asserted disability beginning in February 2013, the amended policy applies, with relevant provisions included in an appendix. The Department of Labor’s claims-procedure regulation sets minimum requirements for benefit claims, but ERISA does not define the standard of review for eligibility determinations under § 1132(a)(1)(B), as established in Firestone Tire & Rubber Co. v. Bruch.
The standard of review for benefit denials under ERISA within the Eleventh Circuit remains unresolved. The Supreme Court's Firestone decision establishes that a denial should be reviewed de novo unless the benefit plan grants the administrator discretionary authority. If discretion is granted and exercised, the review is under the arbitrary and capricious standard, limited to facts known to the administrator at the time of the decision. In this case, although the ERISA plan granted Unum discretionary authority for benefits determinations, Unum did not respond to a claim submitted in February 2013 or make any determination prior to the claimant filing suit, failing to comply with ERISA's required timeliness for claims. Consequently, under 29 C.F.R. 2560.503-1(Z), the claimant is deemed to have exhausted administrative remedies and can seek judicial remedies, as the plan administrator did not act within the mandated 45 days. The critical issue is determining the appropriate standard of review in cases labeled as "deemed exhausted," where discretion is granted but not exercised. The Eleventh Circuit has highlighted this issue but has not resolved it, noting differing interpretations among circuits regarding whether a deemed denial by an administrator with discretion should receive de novo review instead of a deferential standard. Some courts, such as in Gilbertson and Jebian, have asserted that substantial ERISA violations lead to a de novo review, regardless of the administrator's discretionary authority.
The document addresses the issue of judicial review standards for ERISA benefit denials, emphasizing that courts may not defer to a plan administrator’s post hoc justifications made after litigation begins. It cites various circuit court rulings, indicating a split in opinions regarding the application of the arbitrary-and-capricious standard versus de novo review in cases of deemed denials, where the plan administrator fails to act on a claim. Notably, the Eighth Circuit ruled that a lack of response does not trigger heightened scrutiny unless extreme procedural irregularities are demonstrated. The Eleventh Circuit, in contrast, has not committed to a specific standard regarding deemed denials, prompting a remand for further examination of the issue. The document also references regulatory guidance, stating that if a plan fails to comply with minimum procedural requirements, its denial decision should receive no deference, allowing for de novo review. The court acknowledges that the Department's interpretation of its own regulations, while significant, is not binding if the regulation’s language is clear.
The excerpt addresses the interpretation of regulatory ambiguity concerning the Department of Labor's (DOL) regulations related to ERISA. The Supreme Court case Christensen v. Harris County establishes that the DOL's interpretation is authoritative unless it is “plainly erroneous or inconsistent” with the regulation. The Second Circuit in Halo v. Yale Health Plan affirmed that the DOL's interpretation, particularly as outlined in the regulation's preamble, merits substantial deference due to the regulation's ambiguity.
In contrast, the Eleventh Circuit has not explicitly adopted the DOL's interpretation but has acknowledged it in a specific context regarding "deemed denial" cases, indicating that the DOL's position should not be afforded deference when procedural safeguards are lacking. The court highlights that the Eleventh Circuit recognizes a divergence among circuits on this issue, yet it refrains from taking a definitive stance on the need for deference.
The court concludes that the DOL's regulations, particularly subsection (l), are ambiguous about the standard of review. It aligns with the Second Circuit's interpretation that a claim deemed denied is subject to de novo review, paralleling the notion of being deemed exhausted. The court notes that the DOL's preamble, issued alongside the regulation, reflects the Secretary's intent and warrants greater deference due to the formal notice-and-comment rule-making process. The historical context shows the regulation was enacted to address failures of ERISA plan administrators to comply with claims procedures.
A plan's decision that fails to meet the minimum requirements of a regulation is not entitled to the usual deference given to decisions made after a full and fair review as outlined in section 503 of ERISA. The court finds that the Department's interpretation of its regulation in the preamble is consistent and not plainly erroneous, thereby deserving substantial deference. The court acknowledges ERISA’s dual purposes of facilitating fair enforcement of rights and encouraging plan creation. When plan administrators do not adhere to claims procedures, it skews this balance. The Department asserts that plans should meet articulated standards to qualify for the exhaustion requirement. Compliance allows plans to benefit from deferential review, while non-compliance does not exempt them from paying meritorious claims. The court agrees that this approach aligns with ERISA’s objectives. Unum argues that deviations from claims procedures were inadvertent, but the Second Circuit noted that minor, harmless deviations do not automatically lead to de novo review if the plan’s procedures allow for remediation without prejudice to the claimant. Unum carries the burden of proving that any deviations were indeed inadvertent and harmless, which the court finds they failed to do.
Unum claimed it did not receive Dr. Otero’s attorney-submitted claim form and other documents, despite evidence showing proper mailing and acknowledgment of receipt by the correct office. The court determined that Unum failed to meet its burden of proof, leading to the application of a de novo standard of review rather than deferring to Unum’s non-decision due to time expiration.
In addressing which documents could be reviewed, the court noted it could consider the ERISA administrative record. In a previous case (Otero I), Unum successfully argued that evidence outside the administrative record could not be considered, leading to a motion to strike evidence regarding job availability for Dr. Otero, which was granted.
The court clarified that while Unum disagrees with the de novo review in this case, both parties acknowledged that under this standard, the court could review facts beyond those known to the administrator at the time of the decision. Unum objected to certain factual paragraphs in Dr. Otero's argument for Otero II, asserting they were based on previously excluded exhibits from Otero I. However, the court found that the differing standards of review and the distinct nature of the cases allowed for the consideration of these exhibits in Otero II, concluding that it could evaluate their relevance and materiality.
The claim's classification as either a continuation of the 2005 claim or a separate claim is pivotal. The court has determined it to be a separate claim, assessing it under the “regular occupation” standard, thereby deeming Exhibits 30-36 related to other occupations irrelevant. Unum submitted documents from Dr. Otero's Provident Life claim file not included in the Unum administrative record, such as W-2 forms and a pay stub, which the court will consider in its de novo review alongside any relevant documents provided by Dr. Otero outside the administrative record.
The court clarifies that this case does not review the decision in Otero I, which upheld Unum's denial of Dr. Otero’s long-term disability claim as not being de novo wrong. Res judicata applies here, barring Dr. Otero from claiming he was disabled as defined by Unum's policy as of March 2010 since he did not appeal Otero I. The four elements of res judicata are satisfied: a final judgment on the merits, a competent jurisdiction court decision, and identical parties. The fourth element may also apply if this suit contests the ruling on Dr. Otero’s disability status or his job performance capabilities as of March 2010.
Issue preclusion, or collateral estoppel, comes into play if the current litigation originates from a different cause of action, and the prior judgment only bars issues common to both cases that were adjudicated. For issue preclusion to be valid, the issue must be identical to that in the previous litigation, must have been actually litigated, must have been critical to the prior judgment, and the party against whom it is asserted must have had a fair opportunity to contest it.
Otero I established that Unum's determination regarding Dr. Otero's non-disability as of March 2010 was correct and unappealed, barring any contestation of that issue in subsequent proceedings. The current case pertains solely to Dr. Otero's claim for benefits for a disability starting February 2, 2013, which the court evaluates de novo. Although Dr. Otero claims to accept the prior ruling, his arguments suggest he seeks to treat his 2013 claim as a continuation of the previous claim by presenting supplemental evidence related to his earlier disability. He references his 2005 salary, which is irrelevant since his disability began in 2015 and ended in 2010, as affirmed in Otero I. Additionally, he argues for the application of the “any gainful occupation” standard instead of the “regular occupation” standard applicable for the first two years of any new claim, contradicting the acceptance of the prior ruling that terminated his first claim. Dr. Otero's position may indicate a misunderstanding of the policy's provisions regarding recurrent disabilities.
Unum contends that Dr. Otero’s current claim is for a new disability, not a continuation of the prior claim, thus denying coverage under the policy for 2013. In contrast, Dr. Otero asserts that his claim is for a recurrent disability stemming from the same condition, atrial fibrillation, which worsened in February 2013. The court must determine whether this is a new or recurrent disability according to the policy's definitions. While it is acknowledged that both claims are based on atrial fibrillation, the policy does not automatically categorize all recurrent disabilities under the original claim. Further analysis will be conducted to ascertain if the current claim qualifies as a recurrent disability within the terms of the policy.
A recurrent disability will be treated as part of a prior claim by Unum, allowing an individual to bypass a new elimination period, provided the individual was continuously insured and the recurrent disability occurs within six months of the prior claim's conclusion. Dr. Otero's claim, arising from a worsened condition in February 2013, does not meet this criterion, as it is more than six months after Unum terminated his benefits in March 2010 and following a court judgment in March 2012. Consequently, the court determines this claim is new and not linked to the previous one.
Dr. Otero contends that a specific provision regarding returning to full-time work does not apply to him since he never returned to such work and his disability was continuous. However, the court emphasizes that the heading of a contract section does not limit the explicit language of the text itself. It cites precedent that headings are only interpretive tools for ambiguous language and cannot redefine clear provisions. Hence, the court finds the provision unambiguous and maintains that Dr. Otero’s current claim is a new disability claim under the policy.
Moreover, Unum asserts that since Dr. Otero was working less than the required 36 hours per week at the time of his disability in February 2013, he lacks coverage under the policy. Dr. Otero argues that Unum should be estopped from enforcing this requirement due to its acceptance of premiums while aware of his part-time status.
Dr. Otero contends that Unum was aware of his part-time work status, working less than 36 hours per week, when it accepted his premium payments and is therefore barred from denying his eligibility for coverage based on that requirement. The court notes Unum's argument that Dr. Otero has not properly pleaded his claims of waiver and estoppel, yet acknowledges that Dr. Otero's complaint sufficiently asserts his coverage under the policy and his continuation of premium payments after the termination of his long-term disability benefits. The facts supporting his claims are found within Unum’s administrative records, which should not surprise Unum.
Unum briefly addressed the implications of accepting premiums in its initial brief and offered an alternative argument regarding Dr. Otero's qualification for disability benefits. The court finds no legal authority supporting Unum's claim that Dr. Otero cannot invoke waiver and estoppel, and sees no prejudice to Unum from Dr. Otero's reliance on these theories.
In the context of ERISA, while the Eleventh Circuit has acknowledged equitable estoppel, it has not definitively ruled on the applicability of waiver. Although ERISA preempts state law claims, it does not explicitly address waiver or estoppel under federal common law. The Supreme Court has indicated that federal courts may develop common law to address gaps in ERISA, utilizing state law only if consistent with ERISA's policies. The Eleventh Circuit has established a limited common law doctrine for equitable estoppel under ERISA, applicable when plan provisions are ambiguous and oral interpretations are made. In this case, however, both parties agree that the policy’s requirement concerning 36 hours per week is unambiguous, undermining Dr. Otero's estoppel claim.
The court determines that the plan's 36-hour eligibility requirement and the “What Happens” provision are not ambiguous, leading to the conclusion that the common law doctrine of equitable estoppel under ERISA does not apply. Regarding waiver principles within ERISA, the Eleventh Circuit has not yet established a precedent. In Glass v. United of Omaha Life Ins. Co., the court examined waiver, defining it as the voluntary relinquishment of a known right. It reviewed cases from the Fifth and Seventh Circuits, agreeing with the Seventh Circuit’s reasoning in Thomason, which rejected a waiver argument but acknowledged potential applicability in different circumstances. An example provided involved an insurer accepting premiums while aware of a coverage defense, which could constitute unjust enrichment.
In Glass, the court dismissed the waiver argument, noting the defendant had not attempted to unjustly benefit from accepting premiums from an ineligible claimant and had tried to return the payments upon discovering the error. The court found no evidence that the defendant knowingly accepted premiums from an inactive employee at the critical time. Furthermore, in Witt v. Metropolitan Life Ins. Co., the Eleventh Circuit revisited the waiver issue but again found the waiver argument unsuccessful based on the case facts, specifically noting the plaintiff's attempt to claim a "something-for-nothing" waiver without providing anything in return.
The Eleventh Circuit rejected the plaintiff's claim, stating that there was no evidence that the defendant, Met-Life, received any premiums or benefits from the plaintiff, Witt, between 2009 and 2012. The court noted that while it has not definitively applied waiver in ERISA cases, it previously dismissed a waiver claim where a misrepresentation occurred without the defendant receiving unjust benefits like premiums. In contrast, the current case involves Unum, which instructed Dr. Otero to resume premium payments in 2010 despite knowing he did not meet the eligibility criteria due to insufficient work hours. Unum accepted these payments for several years, thereby unjustly enriching itself, only addressing Dr. Otero's eligibility after he filed a disability benefits claim. Unum contends it was unaware of Dr. Otero’s part-time status when accepting premiums; however, evidence contradicts this claim. Dr. Otero had contacted Unum multiple times, receiving clear guidance from Robert Spellman, an appeals specialist well-informed about Dr. Otero’s work situation. Documentation supports that Spellman and Unum were aware of Dr. Otero's part-time status when advising him to continue paying premiums. The court acknowledges Unum’s position that Dr. Otero should have known his ineligibility under the policy, but finds that Unum's knowledge of his part-time work status at the time of advising premium payments is clear.
Unum contends that Dr. Otero should have been more knowledgeable about his policy's terms than Unum was regarding its coverage requirements, which rendered him ineligible despite accepting his premium payments. The court finds this argument disingenuous and rejects it. Unum also claims that errors by Mr. Spellman and clerical staff cannot create coverage where none exists, citing a policy provision that negates coverage due to clerical mistakes. However, the court notes that Mr. Spellman's advice to Dr. Otero to pay premiums, despite knowing he worked part-time, cannot be dismissed as a clerical error.
The court observes that when Mr. Spellman informed Dr. Otero's attorney of his ineligibility for disability benefits in 2013, he did not offer to refund the premiums, and there is no record of such an offer later. The case differs from the Eleventh Circuit's decision in *Glass*, where the insurance company was unaware of the plaintiff's ineligibility and returned premium payments once the mistake was identified. In contrast, Unum knowingly accepted premiums from Dr. Otero without a clerical error being present.
Additionally, the court notes evidence of unjust benefit to Unum, as it retained premiums without returning them. The precedents indicate that waiver does not apply in ERISA cases where the insurance company misrepresents but does not gain unjust benefits. The Fifth Circuit has recognized waiver in ERISA contexts, such as in *Pitts v. Am. Sec. Life Ins. Co.*, where the insurer was held liable for benefits after accepting premiums despite knowing the necessary conditions for coverage were unmet.
Unum's acceptance of premium payments from Dr. Otero while knowing he was working part-time and ineligible for coverage indicates a waiver of their right to deny coverage based on eligibility requirements. Unum's representative, Mr. Spellman, informed Dr. Otero to continue paying premiums despite knowing his part-time status, which establishes Unum's intentional relinquishment of the plan's eligibility criteria. Consequently, the court finds that Unum cannot assert that Dr. Otero was ineligible for coverage due to not meeting the minimum hours worked after the termination of his disability benefits in March 2010, and thus Dr. Otero is deemed eligible for coverage.
Regarding Dr. Otero’s disability claim as of February 2, 2013, the court must evaluate it as a new claim rather than a continuation of a prior claim, even though it stems from a recurring condition. The policy defines disability as the inability to perform the material and substantial duties of one’s regular occupation due to sickness or injury, along with a 20% or more loss in indexed monthly earnings. Unum contends that Dr. Otero has not demonstrated he was limited in performing the duties of his regular occupation as a neurologist at the time his new disability began. The court notes that the determination should be based on how the occupation of neurology is typically performed in the national economy, rather than how Dr. Otero performed his duties at his specific workplace. Unum's argument relies on a single, unsubstantiated statement regarding Dr. Otero's capability to perform his occupational duties.
Dr. Otero's records indicate he was unable to perform full-time duties as a neurologist as of February 2013 due to his atrial fibrillation, which limited him to working less than 40 hours per week. Unum's assessments highlighted the significance of night call as a material duty for neurologists, with differing opinions on its necessity for the role. Marilyn Howard noted that full-time work requires over 40 hours weekly, aligning with Dr. Otero's condition that prevented such hours. Dr. Osorio, Otero's cardiologist, confirmed that Otero's health necessitated part-time work in a low-stress environment, worsening over the year of treatment. Dr. Otero's work schedule consisted of 16 hours weekly without night call or hospital duties. His serious heart issues, including two cardioversion procedures and a hospitalization in December 2013, supported his need for a reduced workload. Dr. Hill corroborated that Otero's severe symptoms hindered his ability to maintain any full-time job, emphasizing the critical need to limit work and avoid stress to manage his condition. Unum had previously recognized Otero's inability to work full-time as a neurologist, granting him disability benefits in 2005 and 2007.
In 2010, Unum's cardiology consultant supported Dr. Kay's restrictions for Dr. Otero, indicating he could not work night or weekend shifts or exceed 40 hours per week due to his medical condition, specifically atrial fibrillation. In the April 2010 Appeal Decision, Mr. Spellman recognized these part-time work restrictions based on potential health risks. There is no evidence of improvement in Dr. Otero's condition; rather, evidence from Dr. Osorio indicates a deterioration. Consequently, the court concluded that as of February 2, 2013, Dr. Otero was unable to perform the essential duties of a neurologist as defined in the national economy, fulfilling the first element of the disability determination in his Unum policy.
The second element requires a 20% loss of indexed monthly earnings based on Dr. Otero's income from the three years preceding his claimed disability date in February 2013. Unum contends that Dr. Otero has not proven this loss due to a lack of evidence in the administrative record. The necessary W-2 forms for 2012 were not provided, hindering the calculation of his average monthly income, which the policy stipulates should be based on W-2 forms from 2010, 2011, and 2012. Although Dr. Otero submitted some earnings records, the absence of the 2012 W-2 form leaves the calculation incomplete. Additionally, Dr. Otero's assertion that his claim is a recurrence of a pre-2005 disability was previously dismissed by the court. Unum maintains that the burden lies with Dr. Otero to substantiate his claim, including demonstrating the 20% reduction in earnings, which he has not accomplished.
Under ERISA, the plaintiff, Dr. Otero, holds the burden of demonstrating his entitlement to benefits. He submitted premium statements from 2010 to early 2014 indicating his monthly salary, which revealed a decrease in earnings: $6,250 per month in 2010-2012, dropping to $4,167 in late 2012, $4,908 in 2013, and $4,220 in 2014. The statements lack data for March and April 2012, creating uncertainty about a potential 20% decrease in earnings post-February 2013. The court noted that while Unum should use W-2 forms to assess earnings before the alleged disability, it did not specify how to evaluate post-disability earnings. Unum failed to require W-2 forms or address the merits of Dr. Otero's 2013 claim, leading to confusion regarding necessary documentation. The court determined that Unum cannot exploit this confusion and will remand the claim to Unum to obtain the missing W-2 forms and make appropriate calculations regarding Dr. Otero's earnings. The court has already ruled that Unum waived its right to contest Dr. Otero's coverage eligibility based on part-time work and that he has been unable to perform his regular occupation since February 2013. If calculations confirm a 20% decrease in income after that date, Unum is obliged to pay Dr. Otero long-term disability benefits based on his earnings at the onset of his disability, regardless of his part-time work status.
The court will retain jurisdiction and instruct Unum to evaluate Dr. Otero's claim within 45 days, subsequently notifying the court of the outcome. Neurology Consultants is identified as the policyholder and plan administrator, while Unum serves as the benefits administrator. Dr. Otero contends that Unum's acceptance of premium payments despite his part-time work (20 hours per week) impacts his coverage status. Unum highlights various policy provisions that require the policyholder to regularly provide information about eligible employees, coverage changes, and any relevant occupational data. It states that clerical errors by Unum do not affect an employee's eligibility for coverage. The employer acts on its own or as the employee's agent, not as Unum’s agent.
Unum asserts Dr. Otero was ineligible for coverage after March 2010 due to not meeting the minimum weekly work requirement of 36 hours. Coverage ends when an individual is no longer in an eligible group or when active employment ceases, except during covered layoffs or leaves. "Active employment" is defined as working regular hours and performing substantial duties of one's occupation. Unum also claims that Dr. Otero was not disabled as of February 2013, based on its definition of disability, which requires a significant loss of earnings due to illness or injury.
Disability payments from Unum commence after 24 months of payments if an individual is deemed unable to perform any gainful occupation due to the same sickness or injury. Unum may require medical or vocational examinations, which they will fund, and can request these assessments as often as deemed reasonable. Payment calculations involve multiplying monthly earnings by 60%, with a cap of $10,000, and the lower amount will determine the gross disability payment. "Monthly Earnings" is defined as the gross income from the employer prior to disability, averaged over the last three tax years, excluding income from other sources.
An "Elimination Period" must be satisfied before benefits are received, and "Indexed Monthly Earnings" adjusts benefits based on inflation, ensuring they do not decrease. "Gainful Occupation" refers to work that would yield income at least equal to the gross disability payment within a year of returning to work. Key terms include "Material and Substantial Duties," which are essential tasks of the regular occupation, "Recurrent Disability," caused by a worsening of the same condition, and "Regular Occupation," which refers to the job held before disability, evaluated in the context of the national economy.
Payments may cease under several conditions: during the first 24 months if the individual can work part-time in their regular occupation but opts not to; after 24 months if they can work part-time in any gainful occupation but choose not to; upon reaching the maximum payment period; if they are no longer disabled; or if they fail to provide proof of ongoing disability.
Disability earnings must not exceed a specified amount for benefits to continue. In the event of a recurrent disability, Unum will integrate this with a prior claim, avoiding a new elimination period if the individual has been continuously insured and the recurrent disability arises within six months of the prior claim's conclusion. Disabilities arising beyond this six-month window will be regarded as a new claim, subject to all policy terms.
Claims procedures require Unum to notify claimants of decisions within 45 days, extendable by two additional 30-day periods if necessary, with proper notification of the reasons for the delay. If a claim is denied, Unum must provide a detailed notice including reasons for denial, relevant policy provisions, required additional information for claim completion, appeal procedures and time limits, rights to seek further information, and any guidelines used in the determination. Notices may be delivered in written or electronic formats compliant with legal standards.
Unum holds discretionary authority in determining eligibility for benefits and interpreting policy terms. The court conducted a de novo review, considering external materials due to issues with document filing. Evidence indicated that Dr. Otero's condition had not improved since Dr. Hill's 2010 assessment and had likely deteriorated. Cardioversion and cardiac ablation are procedures described for treating abnormal heart rhythms. However, specific details regarding Dr. Otero's salary were not included in the premium statements from Neurology Consultants, and the meaning of "NCV Compensation" remains unclear.
Otero I's administrative record includes a 2013 K-1 form indicating various types of income: $338 as nonseparately stated income, $442 in small business health insurance premiums, $1 in interest income, and $60 in qualified dividends. If the current claim represents a continuation of the disability from 2005, the previous policy language regarding "recurrent disability" would apply. However, the court determined that the current claim is not a continuation, thus the April 2005 policy is applicable. This policy amendment took effect after the disability period litigated in Otero I, leading to a judgment favoring Unum against Dr. Otero regarding the termination of benefits as of March 2010.
For reviewing the plan administrator’s benefits decisions when discretion is granted, the Eleventh Circuit's process involves several steps. Initially, the court applies a de novo standard to assess if the administrator's denial was incorrect. If deemed wrong, the court then checks if the administrator had discretion; if not, it reverses the decision. If discretion was vested, the court evaluates whether reasonable grounds supported the decision, applying a more deferential arbitrary and capricious standard. If no reasonable grounds exist, the decision is reversed; if grounds are present, the court considers any conflict of interest. In the first step, the court is limited to the facts known to the administrator at the time of the decision.
Additionally, the plan administrator must notify claimants of adverse benefit determinations within 45 days of receiving a claim, with a potential 30-day extension if necessary, provided the claimant is informed beforehand. This notification process is outlined in 29 C.F.R. 2560.503-1(f)(3).
Claimants must receive written or electronic notification from the plan administrator regarding any adverse benefit determinations, except in urgent care cases where oral communication is permitted. This notification must clearly outline: 1) the specific reasons for the adverse determination; 2) references to the relevant plan provisions; 3) any additional information needed for the claimant to perfect their claim, along with an explanation of its necessity; 4) the review procedures and time limits, including the claimant's right to pursue civil action under section 502(a) after an adverse decision; and 5) for group health or disability plans, details on any internal rules or criteria relied upon or a notification that such information can be provided upon request.
Amendments to 29 C.F.R. 2560.503, effective January 20, 2001, apply prospectively to claims filed after January 1, 2002, and did not affect Torres’s claim. The amendments reduced the time for administrators to act from 90 to 45 days and modified the "deemed denial" language. The Eighth Circuit's ruling in Seman v. FMC Corp addressed scenarios where administrators fail to make decisions on benefits claims. If an administrator does not respond to a claim, the case must return to them for a decision. Conversely, if an initial denial occurs and the appeal is ignored, the denial can be reviewed judicially under a de novo standard rather than an arbitrary and capricious standard, particularly if the inaction creates serious doubts about the initial decision. This aligns with the Eleventh Circuit's approach in Martinez-Claib, where the lack of action on an appeal was treated as an implicit denial warranting de novo review.
Both parties in the action agreed on the propriety of the de novo standard of review, which led the Eleventh Circuit not to address the applicable standard. The Eleventh Circuit rules state that unpublished opinions are not binding precedent. In the case of Otero I, Exhibits 30-36 included documents from Professional Disability Associates and Medical Director Solutions, which Unum cited as examples of jobs that could yield $10,000 monthly earnings for physicians like Dr. Otero. These exhibits, presented by Dr. Otero to support his summary judgment motion, were not part of his claim file. The administrative record for Otero II would only include these exhibits if the entire Otero I court file was included. The provision regarding prior claims does not apply to Dr. Otero’s 2013 disability claim, as it did not arise within six months of the previous claim's conclusion. The policy specifies coverage only for employees working 36 hours per week or more, with no provisions for disabilities that recur after an employee returns to work for fewer hours. Consequently, without a provision to merge the subsequent claim with the prior one, the two claims must be treated as separate, especially if the new claim starts after six months and the employee is working less than 36 hours per week, leading to a lack of coverage under the policy.
Certain Circuit Courts of Appeal have rejected the application of waiver in ERISA cases, particularly where it would extend coverage to ineligible participants. For instance, in *Juliano v. Health Maint. Org. of N.J. Inc.*, the court found waiver inapplicable when assessing coverage existence. Conversely, *Lauder v. First UNUM Life Ins. Co.* applied waiver, arguing that it did not expand the coverage agreed upon and that the insurer was aware of the plaintiff's disability circumstances. In *White v. Provident Life, Accident Ins. Co.*, the court concluded that ERISA does not recognize waiver or estoppel as valid modifications of ERISA plans.
The court noted that although Unum did not clarify its decision reversal in a 2007 communication to Dr. Otero, an internal memorandum indicated an ongoing investigation into his disability entitlement. After concluding in 2007 that Dr. Otero qualified for benefits under the "regular occupation" standard, Unum later assessed entitlement using the "gainful occupation" standard without a new determination.
Unum contended that the court's review should be confined to its administrative record, a stance the court has previously dismissed. Unum introduced additional documents, including a declaration and wage information, to argue that Dr. Otero did not demonstrate a 20% income reduction after February 2, 2013. However, the court observed discrepancies between wage figures provided by Unum and Dr. Otero’s W-2 forms, noting that Unum's total for three years did not align with the individual wage amounts. Additionally, the comparison of wages on premium statements with W-2 forms suggested inconsistencies, as the premium statement wages were significantly higher than those reported on the W-2 forms. The court acknowledged these discrepancies without clarifying their cause.
