Court: Court of Appeals for the Third Circuit; November 8, 2009; Federal Appellate Court
Appellant Stephanie Ford challenged the District Court's summary judgment favoring Unum Life Insurance Company regarding her long-term disability claim. Ford, a former radiology clerk at Christiana Health Care System, was involved in a hit-and-run accident on October 28, 2003, and subsequently requested FMLA leave. Although her physician did not clear her to return to work until April 13, 2004, Ford filed a long-term disability claim with Unum, which was denied on March 29, 2004, based on evaluations by Unum’s physicians.
Ford initiated two lawsuits against Unum: one in state court for various damages related to the denial of benefits and a separate federal complaint alleging discrimination. The state lawsuit was removed to federal court, where both cases were consolidated. The District Court dismissed her state law claims, citing ERISA preemption, and later granted partial summary judgment on her federal claims, determining Unum’s denial of benefits was supported by substantial evidence. The only remaining claim was for the wrongful termination of a $75,000 life insurance policy. This claim was also dismissed by the District Court, leading Ford to file a timely appeal.
The appellate court, reviewing the summary judgment under a plenary standard, confirmed that summary judgment is appropriate when no genuine issue of material fact exists. It emphasized that a party opposing summary judgment must provide more than unsubstantiated claims to demonstrate a genuine issue. The court affirmed the District Court's ruling that Ford's state law claims were preempted by ERISA, aimed at establishing a uniform regulatory framework for employee benefit plans.
ERISA's pre-emption provisions, specifically 29 U.S.C. § 1144, establish that regulation of employee benefit plans is a federal matter, meaning Ford's state law claims—breach of contract, negligence, and intentional infliction of emotional distress—are preempted as they relate to an ERISA-governed plan. The District Court's determination that these claims were preempted was correct, following the precedent set in Pryzbowski v. U.S. Healthcare, Inc., where state law claims against insurers for benefit denials were ruled preempted under ERISA.
Ford's discrimination claim against Unum was also deemed non-cognizable since Title VII prohibits discrimination by employers, and Unum does not fit this definition as Ford's employer. Therefore, the District Court appropriately granted summary judgment in favor of Unum on this claim, referencing Walters v. Metro. Educ. Enters., Inc.
Regarding the denial of benefits, the District Court ruled in favor of Unum after determining the appropriate standard of review. Typically, ERISA benefit denials are reviewed de novo unless the plan grants discretion to the administrator, which it did in this case, prompting a review under an arbitrary and capricious standard per Abnathya v. Hoffmann-La Roche, Inc. The District Court initially applied this standard before the Supreme Court's clarification in Metropolitan Life Insurance Co. v. Glenn, which established that abuse of discretion is the correct standard when an administrator has discretionary authority. The District Court also referenced Pinto, which requires a sliding scale for arbitrary and capricious review under conflict of interest circumstances.
The District Court appropriately applied a slightly-heightened arbitrary and capricious standard due to Unum’s status as a sophisticated party familiar with ERISA claims. It found that Unum's denial of Ford’s disability claim was not arbitrary or capricious, as substantial evidence supported the denial. Unum utilized two registered nurses and two physicians to review Ford's medical records, concluding that he had soft tissue injuries, specifically a sprain/strain, with a typical recovery time of six weeks. Unum determined that the treatment provided by Ford’s physician did not align with claims of incapacitating pain, noting that further diagnostic testing, pain management referrals, and stronger pain medication would be expected if such pain existed. Despite Ford’s physician asserting he was disabled until mid-April 2004, Unum rejected this opinion based on inconsistencies with the physician's treatment plan. The court upheld that Unum’s decision was reasonable and supported by substantial evidence, thus not an abuse of discretion.
Regarding Ford's claim of wrongful termination of her insurance policy, the District Court ruled it lacked merit and was preempted by ERISA. The court noted that coverage ended on Ford’s last day of employment, and she failed to apply for extended coverage within the required 45 days. The judgment of the District Court was affirmed. ERISA defines an employee welfare benefit plan as one established by an employer or employee organization to provide benefits in the event of death. The conflict of interest of a plan administrator is just one factor in determining abuse of discretion, and the standards of review under ERISA context are effectively the same as established in Glenn.
