Doyle v. Paul Revere Life Insurance

United States Court of Appeals

For the First Circuit

No. 97-1275

ROBERT DOYLE,

Plaintiff, Appellee,

v.

THE PAUL REVERE LIFE INSURANCE COMPANY,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Patti B. Saris, U.S. District Judge]

Before

Stahl, Circuit Judge,

Aldrich and Coffin, Senior Circuit Judges.

Joseph M. Hamilton with whom Mirick, O'Connell, DeMallie & Lougeewas on brief for appellant.

Mark T. Collins for appellee.

June 2, 1998

ALDRICH, Senior Circuit Judge. Plaintiff-appellee

Robert Doyle, as an engineer at Textron, Inc., was insured for

long term total disability benefits under a group policy issued

to Textron by defendant-appellant Paul Revere Life Insurance

Company (Paul Revere) pursuant to an employee welfare benefit

plan. The plan is subject to the Employee Retirement and

Income Security Act (ERISA), 29 U.S.C. 1001, et seq.; the

policy was managed by Paul Revere. After Doyle ceased work in

December 1989, he applied for and received interim benefits.

Paul Revere discontinued them on March 27, 1991 when it found

him not totally disabled, and therefore ineligible, and it

rejected his later appeal. The principal issue here is whether

the district court erred in denying Paul Revere's motion for

summary judgment and, instead, entering summary judgment for

Doyle. We reverse.

Review

We review the district court's grant of summary

judgment de novo. See Grenier v. Cyanamid Plastics, Inc., 70

F.3d 667, 671 (1st Cir. 1995); Allen v. Adage, Inc., 967 F.2d

695, 699 (1st Cir. 1992). Our first question is Paul Revere's

authority to determine eligibility. The parties agree that it

had discretion. Normally this means that its decision must be

upheld unless "arbitrary, capricious, or an abuse of

discretion." Diaz v. Seafarers Int'l Union, 13 F.3d 454, 456

(1st Cir. 1994); see also Firestone Tire & Rubber Co. v. Bruch,

489 U.S. 101, 111-15 (1989); Recupero v. New England Tel. &

Tel. Co., 118 F.3d 820, 828 (1st Cir. 1997). This standard

means that its decision will be upheld if it was within Paul

Revere's authority, reasoned, and "supported by substantial

evidence in the record." Associated Fisheries of Maine, Inc.v. Daley, 127 F.3d 104, 109 (1st Cir. 1997) (Administrative

Procedure Act). Substantial evidence, in turn, means evidence

reasonably sufficient to support a conclusion. Sufficiency, of

course, does not disappear merely by reason of contradictory

evidence. See Sprague v. Director, O.W.C.P., 688 F.2d 862,

865-66 (1st Cir. 1982); see also Sandoval v. Aetna Life & Cas.

Ins. Co., 967 F.2d 377, 382 (10th Cir. 1992); Jett v. Blue

Cross & Blue Shield of Alabama, Inc., 890 F.2d 1137, 1140 (11thCir. 1989).

This deferential standard may not be warranted,

however, when a conflict of interest exists, such as when the

policy manager has a personal interest contrary to the

beneficiary's. In this case, any award of benefits would come

out of Paul Revere's own pocket. Plaintiff notes, also, that

Paul Revere was a Textron subsidiary. However, here we suggest

an important competing motive: having a benefit plan is to

please employees, not to result in the employer's bad

reputation. See Van Boxel v. Journal Co. Employees' Pension

Trust, 836 F.2d 1048, 1051 (7th Cir. 1987). Indeed, we venture

that an employer would not want to keep an overly tight-fisted

insurer. The conflict is not as serious as might appear at

first blush.

The question comes as to how this should be handled.

The circuits have varied from giving the manager no deference,

see Armstrong v. Aetna Life Ins. Co., 128 F.3d 1263, 1265 (8thCir. 1997) (2-1 decision; reh'g and suggestion for reh'g en

banc denied), to shifting the burden of exoneration to the

insurer, see Brown v. Blue Cross & Blue Shield of Alabama, 898

F.2d 1556, 1566 (11th Cir. 1990), cert. denied, 498 U.S. 1040

(1991), to applying a sliding scale involving "careful judicial

scrutiny to make sure the[] action was reasonable," Van Boxel,

836 F.2d at 1053.

There are advantages in having a simple procedure, cf.Sandoval, 967 F.2d at 380, which the Armstrong approach

forecloses despite the parties' agreement to accept the

insurer's discretion. The Massachusetts district court has

prophesied that in case of conflict our court would merely

"giv[e] 'more bite' to the arbitrary and capricious standard."

Doe v. Travelers Ins. Co., 971 F. Supp. 623, 630 (D. Mass.

1997). We so do, interpreting "more bite" as adhering to the

arbitrary and capricious principle, with special emphasis on

reasonableness, but with the burden on the claimant to show

that the decision was improperly motivated. Cf. Sullivan v.

LTV Aerospace & Defense Co., 82 F.3d 1251, 1255 (2d Cir. 1996).

To do more would sacrifice the advantages of the offered

arrangement. Doyle has made no showing except to point out the

subsidiary relationship and the fact that Paul Revere decided

which claims it would pay, which is not enough.

This leaves our question not which side we believe is

right, but whether Paul Revere had substantial evidentiary

grounds for a reasonable decision in its favor. We first

review the policy, and after, the evidence.

The Policy

An employee is eligible for benefits under the policy

if "totally disabled from any occupation."

Totally disabled from any occupation, or total

disability from any occupation means:

1. because of injury or sickness, the

employee is completely prevented from

engaging in any occupation for which he

is or may become suited by education,

training or experience . . . .

(emphasis added).

We, of course, agree that such "'general' disability provisions

should not be construed so literally that an individual must be

utterly helpless to be considered disabled." Hammond v.

Fidelity & Guar. Life Ins. Co., 965 F.2d 428, 431 (7th Cir.

1992). How far from that has been variously, and perhaps even

irreconcilably, described. See, e.g., id. (unable to "perform

all the substantial and material acts necessary to the

prosecution of some gainful business or occupation");

Vanderklok v. Provident Life & Accident Ins. Co., 956 F.2d 610,

615 (6th Cir. 1992) (unable to "pursue 'gainful employment in

light of all the circumstances.'" (citation omitted)); Torix v.

Ball Corp., 862 F.2d 1428, 1431 (10th Cir. 1988) ("inability to

follow any occupation from which [the claimant] can earn a

reasonably substantial income rising to the dignity of an

income or livelihood"); Helms v. Monsanto Co., 728 F.2d 1416,

1420 (11th Cir. 1984) (same); Boss v. Travelers Inc., 4 N.E.2d

468, 296 Mass. 18, 22 (1936) (unable to "perform[] remunerative

work of a substantial and not merely trifling character"

(quotations and citation omitted)). In addition to "totally

disabled," we note the policy reads "completely prevented," a

further emphasis. Within reason, Paul Revere's discretionary

power includes not only factual findings as to plaintiff's

condition, but interpretation of policy terms. See Allen, 967

F.3d at 697; cf. Marecek v. BellSouth Servs., Inc., 49 F.3d

702, 705 (11th Cir. 1995).

The Evidence

In favor of Paul Revere is the following. Paul Revere

sent Doyle to a neurosurgeon, Dr. Bruce Cook, in October 1990

for an Independent Medical Examination. It provided Dr. Cook

with medical information from its files and a description of

Doyle's job, and also asked Doyle to provide Dr. Cook with "any

other information that pertains to your condition." Asked to

determine Doyle's medical restrictions and assess their effect

on his ability to do his job at Textron, Dr. Cook said, "I do

not think that the mild residual myelopathy impairs him from

either the written or verbal description that I was given."

Acknowledging Doyle's "pain syndrome," he offered that

treatment should focus on adjusting Doyle's physical position

at work to reduce strain on his neck, and he recommended

supervision by an occupational therapist. He concluded, "His

restrictions in work would be predominantly in the physical

realm where he should not do any lifting, bending or stretching

and should be able to change positions on a frequent basis."

Apparently on Dr. Cook's advice, Paul Revere had Doyle

meet with Brian Delahanty, a rehabilitation consultant, in

January 1991. Delahanty had information about Doyle's previous

work history, education (college degrees in engineering and

business management), medical history, and "expressed current

functioning levels." Delahanty concluded that, although Doyle

was pessimistic, "Various job modifications are available that

would allow Mr. Doyle to perform computer related employment

utilizing his engineering skills," and he contemplated Doyle

returning to work at Textron in a modified position.

On Delahanty's recommendation, Paul Revere had Doyle

undergo a Physical Capacity Evaluation in February 1991 at the

New England Rehabilitation Center of Southern New Hampshire

(NERC). A physical therapist and an occupational therapist,

asked to determine his ability to do his former job, assessed

Doyle over the course of three hours. Among other details,

they documented his expressed functional tolerances: 30-60

minutes for sitting (45 observed); 10 minutes for standing (15

observed); one third mile for walking; 15 miles for driving;

and 15-20 miles for car riding. After describing other

limitations, many due to pain, they concluded that Doyle had a

"sedentary work capacity" at that time and recommended a

"comprehensive pain program" involving various therapies in

order to "facilitate a gradual return to work" in his former

position. They also recommended that Doyle have a "job site

visit to alter or adjust the environment to facilitate proper

body positioning thus decreasing [his] pain and allowing [him]

to return to work part time."

Following up the NERC report, Delahanty contacted Doyle

to discuss work and rehabilitation options, including the

recommended "pain program." (Paul Revere previously had agreed

to continue benefits for six months while Doyle participated in

rehabilitation.) Doyle repeatedly expressed resolute pessimism

as to his ability to work or even to attempt rehabilitation.

Although it is true, as Doyle said much later, that he never

expressly declined it, both Delahanty and Paul Revere

understood him to refuse to participate. The record, on the

whole, supports them. Although the policy did not require Paul

Revere to rehabilitate Doyle, its willingness to do so bolsters

its overall reasonableness.

On the basis of this evidence, Paul Revere found Doyle

not totally disabled and discontinued benefits in March 1991.

We accept that the evidence sufficiently supports the

conclusion that Doyle, fifty-four years old, college educated

in both engineering and business management, and most recently

working as a senior engineer for a major defense contractor,

was not "totally disabled from any occupation" because he

retained a "sedentary" work capacity and a potential for

further rehabilitation that Paul Revere was willing to pursue

with a combination of jobsite restructuring, further therapy,

and decreased hours. That his capacity, initially at least,

may have been limited to part-time work does not require

concluding otherwise. Cf. August v. Offices Unlimited, Inc.,

981 F.2d 576, 582 (1st Cir. 1992) (implying that total

disability means inability to work either part-time or full-

time); Marecek, 49 F.3d at 705 (finding that part-time work

capacity precluded total disability status); Simari's Case, 414

N.E.2d 629 (Mass. App. Ct. 1981) (workmen's compensation)

(noting that one who was capable of "light part-time sedentary

work" and who could, with treatment, resume full-time work was

not permanently and totally disabled).

Conclusion

The collection of conflicting expert opinions is on the

whole equivocal, the fault of Paul Revere, whose practice was

to ask about limitations on claimant's ability to do his

present job, not "any occupation." Nevertheless, we believe we

have recited an ample basis within a reasonable interpretation

of the policy terms. One interesting circumstance is the

opinions, given prior to termination of benefits, in which Dr.

Donald Pettit (Doyle's treating physician) maintained the

totality of Doyle's disability, coupled with assurances that he

saw no hope for the future, contrasted with his finding in

September 1993 effectively conceding at least half-time work

capacity. It is true, of course, that Paul Revere did not have

the latter information in March 1991, and that this described

Doyle's condition two and a half years later, but, by

confirming, it does lend color to the earlier appraisals relied

upon by Paul Revere.

It is a matter of judgment, but we have given much

thought to the record appertaining to Doyle's submissions

before termination of benefits in March 1991, including the

careful opinion of the district court, as to which, however,

see Review, supra, and we conclude in favor of defendant. Paul

Revere's denial was reasonably supported by substantial

evidence. The court erred by not granting summary judgment on

Count I in its favor. This, automatically, ends the case for

later years.

The summary judgment for Doyle is reversed; judgment to

be ordered for Paul Revere.

- Dissent follows -

COFFIN, Senior Circuit Judge, dissenting. My problem

with the court's resolution lies not in its choice of standard

of review but in its reading of the evidence from which it

concludes that "Paul Revere's denial was reasonably supported

by substantial evidence."

I begin with the court's reading of the report of Dr.

Cook, a neurosurgeon. The essence of the doctor's conclusions

is the following:

It is my feeling that the decompressive

surgery in his neck has been successful in

relieving pressure of the spinal cord and

allowing a partial though incomplete recovery

of spinal cord function. Mr. Doyle now has a

chronic pain problem associated with

immobility in the neck. I do not think that

the mild residual myelopathy impairs him from

either the written or verbal description that

I was given. I think that his disability

centers around a chronic pain syndrome. The

only measurable aspect of this is the

associated immobility in the neck which is

rather severe and detailed above. I do not

think that any further testing is required to

better elucidate the problem.

The various positions required of Mr.

Doyle in order to perform his work, especially

at the computer terminal, seem to exacerbate

the pain that he has been having and, by his

description, have made work intolerable to

him. I think that any attempt at treatment

would have to revolve around addressing these

issues and seeing if there is any adjustment

that can be made in his position of work to

diminish the strain on the neck.

Appendix p. 127. My reading of these conclusions is that (1)

Doyle has two sources of disability: residual myelopathy [or

constriction of the spinal cord] and chronic pain syndrome; (2)

the former does not impair him from the written or verbal

description of his work; (3) but his disability "centers around

a chronic pain syndrome," of which a measurable aspect was his

rather severe neck immobility; and (4) any treatment would have

to address the pain problem and see if any adjustment in work

position can diminish the strain on his neck.

The court, in my view, downplays the impact of pain by

saying that the pain syndrome was acknowledged, rather than

that Doyle's disability "centers" around it. The doctor's

conclusion based on the residual myelopathy is not a conclusion

as to his total disability. In addition, I read the doctor's

recommendations as to treatment as essential steps to the

diminishment of pain, the center of his disability. I further

see no suggestion in the record that the doctor, or in fact any

other doctor, felt that Doyle was fabricating or exaggerating

his pain. Dr. Cook's conclusion that work restrictions would

be in the realm of lifting, etc., was necessarily contingent on

the amelioration of pain.

I also have a different understanding of what

rehabilitation consultant Delahanty said in his first letter in

January, 1991. Doyle, he acknowledged, had been "an outstanding

employee." He also wrote that Doyle "present[ed]" to him "an

extremely disabled state with limited insight as to returning

to competitive employment." Delahanty passed no present

judgment on Doyle's disability. Delahanty recognized that all

his information had come from Doyle and that a Physical

Capacities Evaluation was needed to establish "some base line

functionary levels."

In other words, I read Delahanty's conclusion that

"various job modifications are available . . ." to depend on

some ascertainment of what Doyle could really do. I see

nothing to suggest that Delahanty "contemplated Doyle returning

to work at Textron in a modified position" in the sense that he

thought Doyle was at that time able to return to work.

The third piece of evidence relied on by the court was

the Physical Capacity Evaluation of the New England

Rehabilitation Center. After stating that, during the three-

hour evaluation, Doyle "was limited in his activities due to

poor endurance, pain, pain behaviors and decreased tolerance,"

its concluding paragraph stated:

At this time, [patient] presents with a

sedentary work capacity. To facilitate a

gradual return to work, [patient] may benefit

from a comprehensive pain program involving

Psychology, Occupational Therapy, Physical

Therapy and Biofeedback for symptom control,

pain management strategies and reeducation as

well as to increase functional status. If

[patient] were to do well with the above, it

is recommended that [patient] have a job site

visit to alter or adjust the environment to

facilitate proper body positioning thus

decreasing [patient's] pain and allowing

[patient] to return to work part time.

Appendix p. 168.

The court's summary gave, in my view, short shrift to

the report of pain, with no suggestion of contrivance on the

part of Doyle, and again overlooked the conditional nature of

the Center's assessment of "a sedentary work capacity." The

"comprehensive pain program" was not merely to facilitate a

"gradual return to work" in the sense of easing the return, but

its success was a precondition. "If [patient] were to do well

with the above," then a job site visit to help body positioning

would be the next step to "decreas[e] [patient's] pain and

allow[] [patient] to return to work part time."

My reading of these three reports supports the

conclusion that Doyle's spinal cord was not damaged such that

it constituted a barrier to his being able to do part time,

sedentary work of a nature suited to his background. But there

was no discounting of the obstacle of pain as a barrier which

would have to be surmounted. A comprehensive many-faceted pain

program involving psychology, therapy, pain management

strategies, and reeducation was recommended. Only if this had

some success was even a return to part time work envisaged.

This, in my opinion, is not substantial evidence supporting

Paul Revere's denial.

I would add two other pieces of evidence bearing on

arbitrariness, or failure to act rationally. On March 27,

1991, the rehabilitation consultant Delahanty wrote Paul Revere

about discussing with Doyle the possibility of pursuing the

Center's recommendation of what he referred to as "therapeutic

options, including work hardening." He reported Doyle's

statement that his physician felt that he was "not a vocational

rehabilitation candidate," and that "it would be necessary for

him to further discuss with his physician the possibility of

any therapeutic options . . . ."

Notwithstanding this statement, the consultant made no

recommendation to follow up the Center's suggestion or in any

other way to address the pain problem. On the same day that

Delahanty made his written report, Paul Revere wrote its letter

denying Long Term Disability Benefits. There was no mention of

discussing the details of a comprehensive pain program with

Doyle's treating physician. It referred to the reports of both

Dr. Cook and the Center as "support[ing] your ability to perform

sedentary work," with no mention of a precondition that the pain

barrier must first be surmounted.

I make one final observation. I recognize, as does the

court in its footnote 4, that Social Security Administration

awards of disability benefits based on an inability to engage

in substantial gainful employment are not of binding effect on

disability insurers. But, in Doyle's Social Security decision,

the evidence of his "non-exertional limitations" (i.e., pain-

related limitations) was found to trump what would otherwise be

a capacity to engage in sedentary work. It was consistent with

and supportive of my reading of the Cook and Center reports.

Ignoring it in this case seems to me another indication of

arbitrariness.

If indeed the court's conclusion, affirming the denial

of benefits, is commanded by law, an insurer may not only

choose between doctors but may selectively read medical reports

from the same doctors or evaluators, selecting those parts

which support its action and ignoring those which do not. If

this can be equated with "substantial evidence," I think that

the administration of total disability policies is very

substantially review-free.

I respectfully dissent.