Faith Wilczynski v. Kemper National Insurance Companies
Docket: 98-1942
Court: Court of Appeals for the Seventh Circuit; May 26, 1999; Federal Appellate Court
Faith Wilczynski filed a lawsuit against Kemper National Insurance Companies after her long-term disability benefits were terminated on the grounds that she was no longer disabled. Initially, the district court dismissed her complaint for failing to exhaust administrative remedies, but this decision was reversed on appeal, allowing for a trial. Following a bench trial, the district court ruled in favor of Kemper on both the disability benefits claim and a related COBRA claim.
In the appeal, the court reviewed the standard of review for the plan administrator's decisions regarding benefit eligibility. It clarified that unless the plan explicitly grants discretionary authority to the administrator, a de novo standard is applied. The district court had applied an "arbitrary and capricious" standard based on the Kemper Plan's language, which the appellate court found was misinterpreted—leading to the conclusion that a de novo review was indeed appropriate. Nevertheless, the court determined that even under this standard, Kemper's termination of Wilczynski's benefits was justified.
Wilczynski began her employment at Kemper as a manager in 1990, overseeing a team of approximately 40 employees in insurance underwriting, which she described as stressful due to supervisory duties and strict deadlines. The court’s analysis ultimately supported Kemper's decision to terminate her disability benefits based on the evidence presented.
In March 1987, Wilczynski was diagnosed with multiple sclerosis (MS) and experienced related physical issues, including fatigue and loss of strength, after a brief hospitalization for a kidney infection. She informed her employer, Kemper, of her condition, leading to an agreement to reduce her work hours to a flex-time schedule, averaging five to six hours daily for ten months. Her supervisor, Frank Kobel, noted that while her duties remained the same, her work was limited to her available hours, and she received full salary only for the hours worked, with a short-term disability rate for unworked hours.
By July 1991, complications from a pregnancy forced Wilczynski to cease working and enter disability leave, after which she began receiving long-term disability benefits of $2,030 per month. Following the birth of her child in February 1992, her disability status was extended due to worsening MS symptoms, including fatigue, balance issues, and other physical ailments. Wilczynski reported unpredictable symptom severity, with several bad days each month requiring assistance at home, although she could generally function normally on better days.
Under Kemper's Long Term Disability Plan, benefits are available after a 13-week elimination period and require proof of inability to perform job duties for the first 24 months, transitioning to a broader inability to perform any suitable work thereafter. Certification of disability and independent medical examinations are prerequisites for benefits.
From April 1992 to December 1993, eight medical experts evaluated Wilczynski's condition. In April 1992, her treating physician, Dr. Timothy Martin, certified her inability to work due to MS. However, a subsequent independent medical examination by neurologist Dr. Daniel Hier in September 1992 cast doubt on her disability, leading Martin to retract his initial diagnosis after Hier's brief and incomplete evaluation.
Wilczynski engaged Dr. Richard Geiger as her new treating physician, who, after two examinations in September 1992, certified her as disabled but recommended a neurologist for further evaluations. Neurologists Dr. David Markovitz and Dr. Marvin Zelkowitz later certified her disability due to multiple sclerosis (MS) in February and May 1993, respectively, but did not respond to Kemper's requests for reports. Dr. Bruce Cohen conducted a second independent examination on January 5, 1993, concluding that Wilczynski's residual disability was mild, allowing for part-time work with adjusted conditions. On April 22, 1993, Dr. Alexander Kloman was nominated as a third treating physician, certifying Wilczynski’s partial disability but suggesting she could work part-time with accommodations. Dr. Michael Wasserman, in a third independent examination on September 7, 1993, questioned the MS diagnosis and recommended part-time work with gradual hour increases. On December 2, 1993, Kemper terminated Wilczynski's benefits retroactively to September 6, 1993, citing her lack of total disability based on the medical evidence. Although all five treating physicians initially certified her disability, opinions varied: one reversed his assessment, another modified it to partial disability, and two did not fully report their findings. The independent evaluations indicated that Wilczynski was not totally disabled, suggesting her capacity to return to work with limitations.
Wilczynski contends that her treating physicians' opinions should take precedence in evaluating her disability claims. However, the court determined that the opinions of Cohen and Wasserman, which supported the termination of her benefits, were credible and based on adequate expertise. At the time of the benefits termination, two of her treating physicians, including Kloman, indicated she could work part-time. The district court highlighted Wasserman's testimony due to its credibility, although other experts were more pessimistic regarding her condition. Despite Wilczynski's claims that her fatigue, gait disturbance, urinary incontinence, and stress were overlooked, the record shows these factors were documented and considered in assessing her work capacity.
Wilczynski had received benefits for less than 24 months, and her termination was based on her ineligibility under the occupational disability clause of the Plan, which assessed her ability to perform her previous job as CLSU manager. Although that position was eliminated, the court maintained that her ability to perform those duties was the standard for eligibility. Wilczynski testified she could not resume her old job full-time or regularly part-time, citing the unpredictable nature of her medical condition, yet admitted experiencing only five or six bad days a month. She acknowledged that her previous work arrangement allowed her flexibility to manage her health needs.
Overall, there is significant evidence supporting Kemper's assertion that Wilczynski could perform her previous role on a flex-time basis. While the stress of the job and her fluctuating condition posed challenges, the evidence indicates that reasonable accommodations could be made to support her return to work.
Kemper determined that Wilczynski was no longer totally disabled and able to resume her flex-time schedule, providing her with two levels of review to contest this decision. Consequently, Kemper's decision to terminate her benefits was deemed lawful. Following the end of her employment, Wilczynski received a COBRA notice on March 21, 1994, allowing her to continue health insurance at her own expense, with a deadline to elect coverage by May 20, 1994. Although she acknowledged the deadline and was eager to extend her coverage, Wilczynski admitted that she did not send the COBRA election form via certified mail, which was her usual practice for important documents. After calling CobraServ on May 20 to confirm receipt of her form, she learned it had not been received and made no further attempts to provide confirmation of her mailing. The district court highlighted that a timely written election was necessary under COBRA, and Wilczynski's lack of action after the May 20 call led to the conclusion that she failed to meet the election requirements. The court found her evidence unconvincing and affirmed the rejection of her claim. Additionally, the parties stipulated that the operative plan in this case is the Kemper National Insurance Company's Long Term Disability Plan from 1988.
The court found the language in the Summary Plan Description insufficient to grant Kemper discretionary authority in administering claims. The pertinent text indicated that a claim form must be completed and submitted for benefit payment and that confirmation of a continuing disability could be required at reasonable intervals. The court noted that while prior cases established that specific wording is not necessary to confer discretion, at least some leeway in decision-making regarding total disability must be implied. The current plan language lacked comparable terms that would confer such authority on Kemper.
Testimony from Wilczynski revealed her job involved significant walking and standing, with a supervisor's analysis illustrating a requirement for primarily sitting and some standing. Wilczynski's supervisor, Kobel, described efforts to clarify her job description during meetings, noting she received her full salary despite reduced hours. Medical evaluations indicated that Wilczynski's primary complaint of fatigue was not supported by a normal brain MRI. Further tests were suggested to better understand her condition, while an assessment determined she could perform her job but might benefit from reduced physical demands. Kloman asserted no doubt about Wilczynski's Multiple Sclerosis diagnosis, indicating her disability was unlikely to improve. Wasserman's evaluation suggested she could sit for prolonged periods with certain limitations. Both Cohen and Wasserman were qualified neurologists from reputable institutions involved in the assessment of Wilczynski's medical condition.
Wilczynski contests the assertion that Kemper was prepared to accommodate her flex-time schedule indefinitely before her disability leave. She indicated that in late 1990, Kobel warned her about potentially losing her job if she did not return to full-time hours, though Kobel later clarified that he meant she should focus fully on her in-office duties. Wilczynski maintained her flex-time schedule until her disability leave in July 1991, seemingly without objection from Kemper. After her position was eliminated, Kobel informed her of an alternative rating position, which he held open for three to four months despite Wilczynski expressing doubts about her physician's approval to take the role.
Wilczynski argues the district court incorrectly struck the testimony of Leigh Moxley, a vocational rehabilitation consultant who assessed her employability. However, the court's decision is upheld, as Kemper did not consider this evidence in its decision-making process. During cross-examination, Wilczynski initially claimed Kemper did not allow her to work at her own pace but later acknowledged that she worked restricted hours and paced herself from November 1990 to July 1991.
Kemper justified the termination of Wilczynski's benefits by stating she was capable of performing any suitable employment under the general disability clause, which would have been applicable after two years of benefits. Discussions about alternative job options occurred during her leave, and Wilczynski admitted in her EEOC discrimination charge that she could have performed duties as a claim adjuster or rater as of January 3, 1994. This suggests a significant challenge for Wilczynski in proving she was not capable of suitable employment at Kemper.
Consequently, it is unnecessary to address Kemper's argument regarding Wilczynski's failure to exhaust administrative remedies. Additionally, a notice was provided, indicating that an election agreement must be completed and returned within 60 days to maintain coverage; failure to do so would result in loss of rights to continue coverage.
Paul Wilczynski testified that he mailed a letter between May 2 and May 10, 1994. He contends that the district court improperly struck his testimony, which was deemed irrelevant since the information had not been provided to CobraServ. The court refrains from evaluating the evidentiary ruling, stating that the testimony does not enhance Wilczynski's claim. During cross-examination, Wilczynski initially denied having flexibility in her work pace but later acknowledged that she had worked restricted hours and was pacing herself from November 1990 to July 1991. Kemper, in terminating her benefits, argued that she was capable of any suitable employment, referencing the general disability clause, which became applicable after two years of benefits. Wilczynski had discussed potential job options with Kemper, including working from home, and indicated in her EEOC discrimination charge that she could perform the duties of a claim adjuster or rater as of January 3, 1994. While the court does not need to decide on the general disability clause's relevance, it notes that Wilczynski would struggle to prove her incapacity for any suitable employment at Kemper. Additionally, the court finds no need to address Kemper's assertion that Wilczynski did not exhaust her administrative remedies. The notice provided to qualified beneficiaries required them to complete and return an election agreement within 60 days to maintain coverage, emphasizing the importance of adhering to this time frame to avoid losing rights.
