Robert George v. Reliance Standard Life Ins Co.

Case: 14-50368 Document: 00512903883 Page: 1 Date Filed: 01/15/2015

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-50368 United States Court of Appeals

Fifth Circuit

FILED

ROBERT GEORGE, January 15, 2015

Lyle W. Cayce

Plaintiff - Appellant Clerk

v.

RELIANCE STANDARD LIFE INSURANCE COMPANY,

Defendant - Appellee

Appeal from the United States District Court

for the Western District of Texas

Before KING, DENNIS, and CLEMENT, Circuit Judges.

EDITH BROWN CLEMENT, Circuit Judge.

Appellant Robert George (“George”) appeals from the district court’s final

judgment affirming the decision of the ERISA 1 plan administrator in relevant

part. For the reasons explained below, we REVERSE and RENDER judgment

for George. We REMAND the case to the district court to determine the amount

of benefits to award to George.

1 Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq.

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FACTS AND PROCEEDINGS

George served as a helicopter pilot in the United States Army. In 1985

George was injured in a helicopter crash, and doctors were forced to amputate

one of his legs at the knee. George retired from military service in 1987. After

retiring, George began flying helicopters for PHI, Inc. (“PHI”). PHI purchased

a long-term disability insurance policy (the “Policy”) for George from Appellee

Reliance Standard Life Insurance Co. (“RSL”). George flew for PHI for more

than twenty years. But in 2008 he began experiencing severe pain at the site

of his amputation, which prevented him from safely wearing his prosthetic

limb. As a result, he was no longer able to operate the foot controls of a

helicopter, and he was forced to retire from flying. At that time, he was earning

$75,495 per year. George filed a claim for long-term disability benefits with

RSL.

The Policy contains two definitions of “Totally Disabled” and “Total

Disability,” which apply during different time periods. 2 During “the first 24

months for which a Monthly Benefit is payable,” these terms mean that the

insured “cannot perform the material duties of his/her Regular Occupation.”

After the first 24 months, these terms mean that the insured “cannot perform

the material duties of any occupation which provides substantially the same

earning capacity.” The Policy also contains a relevant limitation provision (the

“Exclusion Clause”). The Exclusion Clause provides that “Monthly Benefits for

Total Disability caused by or contributed to by mental or nervous disorders will

not be payable beyond an aggregate lifetime maximum duration of twenty-four

(24) months.” The Policy defines “Mental or Nervous Disorders” to include

“anxiety disorders” and “mental illness.” 3

2We will use the terms “Totally Disabled” and “Total Disability” interchangeably.

3We will use the term “mental disability” when we refer to the “Mental or Nervous

Disorders” identified in the Policy.

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RSL denied George’s claim for long-term disability benefits in a series of

letters. RSL’s findings and conclusions, and George’s objections, can be

summarized as follows. First, RSL found that George was “capable of

sedentary exertion work with the ability to stand and stretch, with permanent

restrictions to standing, lifting, carrying or over head work,” and that George

could work as a “Protective-Signal Operator; Crew Scheduler; and Aircraft-Log

Clerk.” 4 Because George could fulfill the duties of the alternative occupations,

RSL determined that George was not Totally Disabled under the definition of

that term that applied after 24 months. George responded by arguing that

“none of the identified positions pa[id] anywhere close to the salary he was

making” when he stopped flying for PHI. As proof of his contention, George

attached printouts from the website “SimplyHired.com,” which showed that

the average salaries for the positions identified by RSL were $36,000, $40,000,

and $28,000 respectively. RSL dismissed George’s evidence because it “[could

not] ascertain if these materials were prepared by vocational expert[s],” “the

Internet papers all stem[med] from the same website, versus as deriving from

differing sites and being compared and contrasted by an expert,” and George

failed to attach “any labor market studies completed to substantiate [his]

argument.”

Second, RSL determined that George’s “psychiatric conditions of

depression and post traumatic stress disorder (‘PTSD’) ‘contributed to’ his

overall impairment status” since his retirement in 2008. Thus RSL determined

that George’s claim for long-term disability benefits was “subject to a

Maximum Duration of Benefits of twenty-four (24) months” under the

Exclusion Clause. George contended that, “[c]onsidering only his physical

ailments and impairments, the record is clear that [he] cannot continue his

4 We will refer to these occupations as the “alternative occupations.”

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usual occupation or engage in an occupation that pays substantially the same

as his usual occupation.” Accordingly, George asserted that “a mental/nervous

issue, if any, does not contribute to [his] disability.”

George sought review of RSL’s decision in the district court under 29

U.S.C. § 1132(a)(1)(B). The parties agreed that the Plan’s language granted

RSL discretionary authority to determine eligibility and to construe the terms

of the Plan. Thus the district court reviewed RSL’s decision under the abuse of

discretion standard. The district court held that the evidence supported RSL’s

determination that George’s depression and PTSD contributed to his Total

Disability. Based on this finding, the district court held that RSL did not abuse

its discretion by determining that the Exclusion Clause limited George’s right

to benefits. The district court did not reach the question whether George was

Totally Disabled under the Policy.

STANDARD OF REVIEW

On appeal from a bench trial, this court “review[s] the factual findings of

the trial court for clear error” and “conclusions of law de novo.” LeTourneau

Lifelike Orthotics & Prosthetics, Inc. v. Wal-Mart Stores, Inc., 298 F.3d 348,

350 (5th Cir. 2002). “Under de novo review, we apply the same standard to the

Plan Administrator’s decision as did the district court.” Holland v. Int’l Paper

Co. Ret. Plan, 576 F.3d 240, 246 (5th Cir. 2009). “[W]hen an administrator has

discretionary authority with respect to the decision at issue, the standard of

review should be one of abuse of discretion.” Vega v. Nat’l Life Ins. Servs., Inc.,

188 F.3d 287, 295 (5th Cir. 1999) (en banc), overruled on other grounds by

Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008). The parties do not dispute

that RSL had discretionary authority with respect to the benefits

determination at issue here.

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An ERISA claimant bears the burden to show that the administrator

abused its discretion. See Anderson v. Cytec Indus., Inc., 619 F.3d 505, 512-13

(5th Cir. 2010). “A plan administrator abuses its discretion where the decision

is not based on evidence, even if disputable, that clearly supports the basis for

its denial.” Holland, 576 F.3d at 246 (internal quotation marks omitted).

Similarly, a decision constitutes an abuse of discretion “only if it is ‘made

without a rational connection between the known facts and the decision or

between the found facts and the decision.’” Truitt v. Unum Life Ins. Co. of Am.,

729 F.3d 497, 508 (5th Cir. 2013) (quoting Meditrust Fin. Servs. Corp. v.

Sterling Chems., Inc., 168 F.3d 211, 215 (5th Cir. 1999)).

DISCUSSION

I.

We first consider whether we should decide this case on the ground that

George failed to carry the burden to show his right to benefits.

Neither party cites a controlling opinion that holds that a claimant bears

the burden to show a right to benefits during the initial claims proceeding. 5

During oral argument, however, George’s counsel conceded that George bore

the initial burden to show a right to benefits. Thus we assume without deciding

that George bore this burden.

Nevertheless, we hold that we are limited to considering whether the

record supports the reasons that RSL provided to George during the claims

proceeding. See Spradley v. Owens-Ill. Hourly Emps. Welfare Benefit Plan, 686

F.3d 1135, 1140 (10th Cir. 2012) (holding same); cf. Truitt, 729 F.3d at 510

5 RSL cites Ellis v. Liberty Life Assurance Co. of Boston, 394 F.3d 262, 273 (5th Cir.

2004), to support its argument that George bears the burden of proof to show that he is

entitled to benefits. Ellis does not support that proposition. Instead, Ellis states that, in order

to successfully appeal an administrator’s denial of a claim, a claimant must do more than

show that there is substantial evidence to support his claim. The claimant must show that

substantial evidence does not support the administrator’s position. See id.

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(holding that our review of an administrator’s decision to deny benefits

“focus[es] on whether the record adequately supports the administrator’s

decision” (emphasis added) (quoting Vega, 188 F.3d at 298)). Allowing plan

administrators to offer new justifications for a denial after the claims process

has ended would undermine the claims system that Congress envisioned when

it drafted ERISA’s administrative review provisions. See 29 U.S.C. § 1133

(requiring administrator to give clear notice and providing for administrative

review); 29 C.F.R. § 2560.503-1(g) (same); Spradley, 686 F.3d at 1140 (noting

that Congress’s purposes, as expressed in these provisions, would be

undermined if administrators could add new rationales to support decision

after claims process ends). “A plan administrator may not treat the

administrative process as a trial run and offer a post hoc rationale in district

[or circuit] court.” Spradley, 686 F.3d at 1140-41 (internal quotation marks

omitted).

RSL did not deny George’s claim because he failed to carry his burden.

RSL denied his claim because it determined that there was sufficient evidence

in the record to show that he was not Totally Disabled and that, even if he was,

a mental disorder contributed to this Total Disability. Because RSL denied

George’s claim on these grounds, those reasons will be the focus of our review.

Accordingly, we decline to consider whether George carried his burden

to show a right to benefits.

II.

A.

George does not dispute the administrator’s finding that he could

perform sedentary work, or that he could work in the alternative occupations.

Instead, George argues that there is no evidence in the record showing that

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those occupations would provide substantially the same earning capacity that

he enjoyed as a helicopter pilot. 6

Under ERISA, an administrator abuses its discretion when there is not

“substantial evidence” in the record to “support [its] decisions, including those

to deny or to terminate benefits.” Ellis v. Liberty Life Assurance Co. of Bos.,

394 F.3d 262, 273 (5th Cir. 2004). RSL rejected George’s claim because: (1) it

determined that he was “capable of sedentary exertion work,” (2) its vocational

expert had determined that George could work as a “Protective-Signal

Operator; Crew Scheduler; and Aircraft-Log Clerk,” and (3) it had therefore

determined that George was not Totally Disabled under the Policy. We

consider whether the facts asserted by RSL provide substantial evidence for

its determination that George was not Totally Disabled.

We hold that RSL abused its discretion when it determined that George

was not Totally Disabled. RSL fails to cite any evidence in the record that

supports its conclusion that George’s ability to perform sedentary work, and to

work in the alternative occupations, would allow George to obtain

“substantially the same earning capacity” that he obtained as a pilot. In our

independent review of the record, we have also been unable to locate any

evidence that supports RSL’s conclusion.

To the contrary, the record suggests that RSL has attempted to ignore

the Policy’s similar income requirement. For example, RSL failed to mention

the similar income requirement when it described the nature of its inquiry into

George’s claim. RSL stated that “[t]he purpose of [its] review was to determine

if the medical data documents the presence of a physical condition that would

6 As we explained above, after RSL pays disability benefits for 24 months, the

definition of Total Disability and Totally Disabled changes to ask whether the claimant can

“perform the material duties of any occupation which provides substantially the same

earning capacity.”

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limit Mr. George’s ability to perform any occupation for which he is

vocationally suited, as is required by the group policy after benefits have been

paid for twenty-four (24) months.” RSL’s refusal to consider George’s evidence

also suggests that RSL preferred to ignore the similar income requirement. In

its letter to George, RSL suggests that only a report from a vocational expert

could persuasively show that George was Totally Disabled under the Policy.

But we have never required either an administrator or a claimant to hire a

vocational expert to support its case. RSL then stated that it would continue

to rely on its own expert’s report, which was prepared by a qualified vocational

specialist. This argument is a red herring: Even if RSL’s report was prepared

by an expert, RSL failed to argue in its letter to George, and never argued

before this court, that the expert report contained any evidence that George

could earn a substantially similar salary in another occupation.

RSL maintains that Duhon v. Texaco, Inc., 15 F.3d 1302 (5th Cir. 1994),

and Cochran v. Hartford Life & Accident Insurance Co., No. 09-cv-11752, 2010

WL 259047 (E.D. Mich. Jan. 20, 2010), show that it did not abuse its discretion.

Those cases are easily distinguishable. In Duhon, the relevant contract

provided that the claimant was not disabled if he could work in “any job.” See

Duhon, 15 F.3d at 1307. The contract did not contain a similar salary

requirement. 7 In Cochran, the contract contained a similar income

requirement, but the ERISA administrator proffered evidence that other

7 Additionally, in Duhon, this court’s opinion turned in part on the “common—and

uncontested—truth” that “people in their sixties and seventies who have similar physical and

job limitations established by this record are employed and employable throughout the

workplace today.” Id. at 1308. We emphasized, however, that courts must consider ERISA

disputes on a case-by-case basis. Id. at 1309. Considering the facts in this case, we note that

it is neither commonly known, nor uncontested, that a person with George’s education,

experience, and a disability can earn $75,000 in a new career.

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occupations “met the earning requirements under the Plan.” Cochran, 2010

WL 259047, at *8.

There is no evidence in the record that shows that George could earn a

substantially similar salary in another position. Thus there is no rational

connection between the fact that George can do sedentary work, including the

alternative occupations, and the conclusion that George could earn a

substantially similar salary in any alternative position. Accordingly, we hold

that RSL abused its discretion when it determined that George was not Totally

Disabled.

B.

The district court held that RSL did not abuse its discretion when it

determined that a mental disorder contributed to George’s Total Disability.

George argues that there is no evidence in the record to show that, absent his

mental or nervous conditions, he could earn substantially the same amount in

another occupation. RSL maintains that it did not abuse its discretion because

George failed to show that he was “physically unable to perform the duties of

any occupation.” We consider whether there is a rational connection between

the facts asserted by RSL and its decision that George’s depression and PTSD

contributed to his Total Disability. 8

George concedes that his physical disabilities may allow him to perform

some sedentary jobs, and neither party disputes that George is no longer

physically capable of working as a helicopter pilot. Thus, the record supports

the conclusion that George was physically capable of performing at least some

8 “Because the parties have not briefed whether [RSL’s] decision was ‘legally correct,’

but rather debate whether the benefits denial ultimately was an ‘abuse of discretion,’” we

need not decide whether RSL’s interpretation of the Policy was “legally correct.” McCorkle v.

Metro. Life Ins. Co., 757 F.3d 452, 457 n.10 (5th Cir. 2014). Instead, we decide whether RSL’s

benefits determination is arbitrary under the terms of the Policy.

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sedentary jobs, while there is no evidence to support the conclusion that he was

physically capable of doing anything more.

There is evidence in the record, however, that George’s depression and

PTSD impaired his ability to hold down a job. Based on this evidence, RSL

determined that George’s mental disabilities “‘contributed to’ his overall

impairment status,” and that he was thus barred from receiving benefits by

the Exclusion Clause. We must decide whether there is substantial evidence

in the record to support RSL’s determination.

This court has never considered the meaning of the phrase “caused by or

contributed to by” in a similar exclusion clause, but other federal circuit courts

have done so. Each of those courts has interpreted the “caused by or

contributed to by” language to exclude coverage only when the claimant’s

physical disability was insufficient to render him totally disabled. 9 In other

words, those courts have asked whether the mental disability is a but-for cause

of the total disability. See Black’s Law Dictionary 265 (10th ed. 2014) (defining

“but-for cause” as a “cause without which the event could not have occurred”).

We agree with this interpretation of the relevant language. We are further

9 See Eastin v. Reliance Standard Life Ins. Co., No. 13-6247, 2014 WL 3397141, at *2

(6th Cir. July 10, 2014) (per curiam) (explaining that administrator did not abuse discretion

where evidence showed that claimant “was not totally disabled as the result of a purely

physical condition”); Maurer v. Reliance Standard Life Ins. Co., 500 F. App’x 626, 628 (9th

Cir. 2012) (reasoning that administrator did not abuse discretion where there was evidence

showing that “in the absence of any mental or nervous disorder, Plaintiff would be physically

capable of working”); Gunn v. Reliance Standard Life Ins. Co., 399 F. App’x 147, 153 (9th Cir.

2010) (affirming administrator’s denial of benefits because there was evidence showing that

claimant’s physical disability “alone was not disabling, and that, but for his psychiatric

mental and nervous disorders, he would be able to work”); cf. Michaels v. The Equitable Life

Assurance Soc’y of U.S. Emps., Managers, and Agents Long-Term Disability Plan, 305 F.

App’x 896, 898, 907-08 (3d Cir. 2009) (reasoning that exclusion clause, which barred coverage

if “the disability arises from or on account of . . . a mental condition,” would not apply if “the

claimant can demonstrate that his physical disability independently precludes him from

engaging in any gainful occupation”).

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persuaded that this interpretation is correct by the fact that RSL has itself

advocated this interpretation in past litigation. See Gunn, 399 F. App’x at 151

(explaining that RSL’s position was that “the language of the mental illness

exclusion required Gunn to show that he was totally disabled solely due to his

physical condition stemming from his multiple sclerosis, without taking into

account the disabling effects of any mental or nervous disorders”). Thus we

consider whether George’s physical disabilities were independently sufficient

to render him Totally Disabled.

The record shows that George’s physical disabilities placed a firm ceiling

on his vocational prospects. 10 Even if George were completely healed of his

mental disabilities, he would still be limited to sedentary jobs. And as we

explained above, there is no evidence in the record that George could have

earned a salary in a sedentary job that was substantially similar to the one he

earned as a helicopter pilot. Thus there is no rational connection between the

fact that George’s mental disabilities may have impaired his ability to hold

down a sedentary job, and the conclusion that his mental disabilities caused or

contributed to his Total Disability.

Accordingly, we hold that RSL abused its discretion when it determined

that the Exclusion Clause limited George’s right to benefits. We further hold

that the district court erred when it affirmed RSL’s determination on this

basis.

CONCLUSION

For the reasons explained, we REVERSE the district court’s judgment

for RSL; RENDER judgment for George; and REMAND the case to the district

During the claims process, RSL repeatedly referred to an independent medical

10

examiner’s statement that “[w]ithout psychiatric factors,” George “would be able to return to

work at a light physical demand level type assignment.” RSL appears to have treated “light

physical demand” as a synonym for “sedentary work.”

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court to determine the amount of benefits to award to George. The court may

also consider whether George is entitled to other relief, including prejudgment

interest, attorney’s fees, and expenses. Cf. Alexander v. Hartford Life & Acc.

Ins. Co., 347 F. App’x 123, 126 (5th Cir. 2009) (per curiam) (reversing

administrator, rendering judgment for claimant, and remanding for damages

determination).

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KING, Circuit Judge, dissenting:

I agree with the majority’s analysis contained in Sections I and II.A of

its opinion. However, I respectfully dissent from its judgment, as I disagree

with the majority’s conclusion in Section II.B that RSL abused its discretion

when it determined that George’s disability was “caused by or contributed to

by” a mental disorder.

The majority concedes that “George’s depression and PTSD impaired his

ability to hold down a job.” In my view, this should end the inquiry. Based on

this impairment, it was more than reasonable for RSL to conclude that

George’s mental conditions at least contributed to his disability, thus triggering

the exclusion. The majority not only disagrees with this conclusion, but also

determines—as it must, in order to reverse the judgment of the district court—

that RSL abused its discretion in reaching it. Given that “[o]ur review of the

administrator’s decision . . . need only assure that the administrator’s decision

fall somewhere on a continuum of reasonableness—even if on the low end,”

Holland v. Int’l Paper Co. Ret. Plan, 576 F.3d 240, 247 (5th Cir. 2009) (internal

quotation marks omitted), it is difficult to comprehend how the majority

arrived at this result.

The majority reasons that, “[e]ven if George were completely healed of

his mental disabilities, he would still be limited to sedentary jobs,” noting that

“George’s physical disabilities placed a firm ceiling on his vocational

prospects.” I do not disagree with these points. I do disagree, however, that

these facts compel the conclusion that the mental disorder exclusion is

inapplicable. The majority relies on a “but-for cause” interpretation of the

exclusion that is supported only by dicta contained in several cases outside of

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this circuit. 1 Under the construction adopted by the majority, where physical

symptoms independently render a person disabled, a mental disorder—no

matter its severity—can never cause or contribute to that person’s disability. 2

This “but-for cause” test appears to be at odds with the plain language of the

exclusion, which applies where the disability is “caused by or contributed to by”

a mental disorder. (emphasis added). The majority’s reading also assumes a

certain order of operations—that we first look at the extent of the physical

symptoms before considering whether the mental condition causes or

contributes to the disability. I see nothing in the policy to support such an

analysis of what is, after all, an exclusion.

Moreover, because—as the majority recognizes—George has not

challenged whether RSL’s interpretation was “legally correct,” we are limited

to deciding whether RSL’s decision constituted an abuse of discretion. At the

very least, it was reasonable for RSL to determine that George’s severe mental

conditions contributed to his disability, particularly in view of the fact that

George’s own doctor so opined. Cf. Morris v. Standard Ins. Co., No. CIV. 98-

1 I say “dicta” because in each of the cases cited by the majority, the court affirmed the

insurer’s denial of benefits on the basis of the mental disorder limitation. See Eastin v.

Reliance Standard Life Ins. Co., No. 13-6247, 2014 WL 3397141, at *2 (6th Cir. July 10, 2014);

Maurer v. Reliance Standard Life Ins. Co., 500 F. App’x 626, 627–28 (9th Cir. 2012); Gunn v.

Reliance Standard Life Ins. Co., 399 F. App’x 147, 153 (9th Cir. 2010); Michaels v. The

Equitable Life Assur. Soc’y of U.S. Emps., Managers, & Agents Long-Term Disability Plan,

305 F. App’x 896, 907–08 (3d Cir. 2009) (remanding to allow insured to demonstrate extent

of physical disability). Those courts did not have the occasion to address the question at issue

here—i.e., whether a disability can be “caused or contributed to by” a mental disorder where

physical symptoms independently render the claimant totally disabled.

2 The majority implies that RSL itself adopted this “but-for cause” construction,

quoting a portion of its brief in which it argued that George “had to prove that he was

physically unable to perform the duties of any occupation.” However, RSL alternatively

argued that “[n]otwithstanding [George’s ability to] perform[] the material duties of several

different alternative occupations, the district court did not err when it concluded that the

evidence supports [RSL’s] determination that George’s [PTSD] and depressive disorder

contribute to his total disability.” (internal quotation marks omitted).

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992-HU, 1999 WL 820202, at *5 (D. Or. Sept. 21, 1999) (concluding that plan

limitation for a disability “caused or contributed to by a mental disorder”

applied where the plaintiff “suffer[ed] from physical and mental disorders

which . . . affected her ability to perform the material functions of her job,”

because “[w]hether plaintiff suffered a distinct and separate physical disability

is immaterial under the [limitation’s] language”).

Accordingly, I would hold that RSL did not abuse its discretion in

applying the mental disorder exclusion to George’s claim. It is a dreadful

result, driven by a dreadful provision in the policy. The more serious a

claimant’s physical problems (and resulting employment problems), the more

likely he is to suffer from a “mental disorder” (e.g., depression), just at the time

when he most needs the coverage otherwise afforded by a policy like this. But

we are bound by RSL’s decision applying the exclusion, which was within its

discretion. Because I would affirm the judgment of the district court on this

basis, I respectfully dissent.

15