Opposition Brief — Baida v. First Unum Life Insurance Company (No. 07-1232)

. > (| FILED

No. 07-1232 JUN ] 5 2098

OFFICE OF THE CLERK

In The SUPREME COURT, U.S.

Supreme Court of the Anited States

&

v

JOANNA BAIDA,

Petitioner,

v.

FIRST UNUM LIFE INSURANCE COMPANY;

DIVERSIFIED AGENCY SERVICES

GROUP BENEFIT PLAN,

Respondents.

¢

On Petition For Writ Of Certiorari

‘To The United States Court Of Appea!s

For The Ninth Circuit

¢

RESPONDENTS’ BRIEF IN OPPOSITION

¢

DONALD J. SAPALA EDITH SANCHEZ SHEA

FIRST UNUM LIFE Counsel of Record

INSURANCE COMPANY BURKE, WILLIAMS &

1 Fountain Square SORENSEN, LLP

Chattanooga, TN 37402 444 South Flower Street

Telephone: (423) 294-4479 Suite 2400

MaRK E. SCHMIDTKE Los Angeles, CA 90071-2953

OGLETREE, DEAKINS, NASH, Telephone: (213) 236-0600

SMOAK & STEWART, P.C.

20 South Clark Street

Chicago, [L 60603

Telephone: (312) 558-1220

Counsel for Respondents

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

ll

TABLE OF CONTENTS

Page

PARTIES TO THE PROCEEDING AND DIS-

CLOSURE STATEMENT .......ccsccsesesesesessceveerssess i

RESPONDENTS’ BRIEF IN OPPOSITION .......... 1

inh ios ergs damincokdicewaeades anunbadineneeti 3

COUNTERSTATEMENT OF THE CASE. ............. 3

TIT TS AL IIE 3

PPOCOOEINES TOIOW 6....00ccccsscvesiseccvccvessoseceerses 11

REASONS FOR DENYING THE PETITION ....... 14

A. The Standard Applied By The Ninth Circuit

Is Not Inconsistent With Firestone ............. 14

B. Review Is Not Required Because Of This

Court’s Pending Decision In MetLife v.

RE iinckisk cs swcrdetnnacetbuencn anesavenadscheinedamane 16

iil

TABLE OF AUTHORITIES

Page

FEDERAL CASES

Abatie v. Alta Healt & Life Insurance Co., 458

Fk FIO (BER Cr, BOG) vccsicenscensevsssessenesesverees passim

Alford v. DCH Foundation Group Long Term

Disability Plan, 311 F.3d 955 (9th Cir. 2002)......... 12

Desrosiers v. Hartford Life and Acc. Co., 515

DE CI Cas BI ein cecivhinssarvecuceciveneadverrabeasscones 12

Firestone Tire & Rubber Co. v. Bruch, 489 U.S.

Re iis cteidiitinccbberdcdataslininia sess passim

Jebian v. Hewlett-Packard Co. Employee Bene-

fits Or. Income Prot. Plan, 349 F.3d 1098 (9th

te) ARRAS EDs eR evn Servet EA eek 15

Jordan v. Northrop Grumman Corp. Welfare

Benefit Plan, 370 F.3d 869 (9th Cir. 2004)............. 12

MetLife (Metropolitan Life Insurance Company) v.

Glenn, 128 S. Ct. 1117 (2008)................ il, 2, 16, 17, 18

Rush Prudential HMO, Inc. v. Moran, 536 U.S.

I icra ct sitiek peiheslic deine te ean lamctaacaesnines 15

Williams v. Aetna Life Insurance Co., 509 F.3d

Be es EE sisi erecaciersen cena snentlavaanoenseiien 12

FEDERAL STATUTES

, ROR Tea ey | Seems tire mien ee ree near ron ete 3

ERISA, 29-U SC. $ EASA a ENB) ..0.0.....ccccccsscccccececess 11

1

RESPONDENTS’ BRIEF IN OPPOSITION

Neither of the arguments set forth by Petitioner

supports certiorari review and no basis for certiorari

is presented by this case. First, Baida’s argument

that the Ninth Circuit’s decision is not consistent

with Firestone Tire & Rubber Co. v. Bruch, 489 U.S.

101 (1989), is irrelevant because the decision below

applied a standard that was at least as stringent as

the standard called for in Firestone. Firestone holds

that when ERISA claim administrators with discre-

tionary authority also labor under a conflict of

interest, the conflict is “weighed as a ‘facto[r] in

determining whether there is an abuse of discretion.’”

Firestone, 489 U.S. at 115. In this case, the Ninth

Circuit assumed that a conflict existed, applied a

heightened and skeptical review of the record as a

result of the conflict, and concluded that the record

did not reveal any abuse of discretion. (App. 5’, citing

Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955

(9th Cir. 2006).)

Baida’s second argument, that review is war-

ranted in light of this court’s upcoming decision in

MetLife (Metropolitan Life Insurance Company) v.

Glenn, 128 S. Ct. 1117 (2008), is also meritless. In

Glenn, this court certified two questions for review:

(1) whether the fact that an ERISA claim administra-

tor is also the funding source for benefits constitutes

a conflict of interest; and (2) how a conflict should be

' References are to Appendix to Petition for Writ of Certiorari.

2

taken into account on judicial review of a discretion-

ary benefits decision. Here, the Ninth Circuit treated

Unum as a conflicted claim administrator and still

ruled in its favor, making the first question in Glenn

irrelevant to this case. Moreover, the second question

is also irrelevant, because the heightened degree of

scrutiny applied to Unum’s decision in this case is at

least as unfavorable to Unum as the levels of judicial

review proposed by both the respondent and the

United States in Glenn. In short, unless this court

takes a position in Glenn that goes beyond the posi-

tions of the respondent and the government in that

case, essentially wiping out discretionary review in the

insured benefit plan context, further review in this

case would be pointless.

Finally, given the evidentiary record and the

detailed findings by the district court in this case, if

Unum had a conflict of interest, such a conflict did

not affect the benefit determination and there is no

reason for this court to review the conflict of interest

issue. The evidentiary record shows that Unum gave

Baida (and her attorneys) multiple opportunities to

submit information to support her claim and even

sought to investigate an alternate potential basis for

her claim. Unum thoroughly reviewed and considered

all of the information submitted by Baida and it

obtained independent medical reviews of the claim by

a qualified specialist. Accordingly, there is no reason

for this court to address the conflict of interest issue

in this case and the petition should be denied.

¢

3

JURISDICTION

This court has discretionary jurisdiction to re-

view decisions by the federal courts of appeals. 28

U.S.C. § 1254(1). For the reasons set forth herein,

Respondents submit that this court should not exer-

cise that jurisdiction.

ry

Vv

COUNTERSTATEMENT OF THE CASE

Factual Findings’

Baida submitted a claim for total disability

benefits in September 2000 to the Plan maintained by

her employer and funded by a group disability insur-

ance policy issued by Unum. She claimed that she

had been diagnosed with lupus and that she was

totally disabled from her work as a senior account

executive at a public relations firm (Porter Novelli) in

New York City due to symptoms of rash, arthritis,

and fatigue, which she attributed to lupus. Baida

relocated from New York to California and her at-

tending physician opined that Baida would be dis-

abled from her usual work for three months. (She was

twenty-nine years old at the time of the submission of

her claim.) (R. App. 3.)

The Plan defines “total disability” as being “lim-

ited from performing the material and substantial

* The district court’s findings of fact are attached in Re-

spondents’ Appendix (“R. App.”).

4

duties of your regular occupation due to your sickness

or injury” and having “a 20% or more loss in your

indexed monthly earnings due to the same sickness

or injury.” If the insured is able to work part-time, the

policy provides for partial disability benefits based on

loss of income. The Plan also provides that a disabil-

ity period ends when “you are able to work in your

regular occupation on a part-time basis but you

choose not to.” Finally, the Plan defines “regular

occupation” as “the occupation you are routinely

performing when your disability begins. Unum wiil

look at your occupation as it is normally performed in

the national economy, instead of how the work tasks

are performed for a specific employer or at a specific

location.” (R. App. 2.)

Based on an initial nurse review, Unum began

payment of Baida’s claim following the ninety-day

elimination period required by the policy and deter-

mined that it would conduct a further evaluation

after several months.

In August 2001, a further medical review deter-

mined that updated records were needed from Baida’s

attending physician, as well as records of psychiatric

treatment referenced in the medical records. In

response to Unum’s request for psychiatric records,

the only “record” received was a letter co-authored by

Baida’s treating psychologist and psychiatrist. Al-

though the letter noted that Baida had been seen for

therapy in thirty-one sessions and for medication

management about six times, no records of any

treatment were provided. (R. App. 4.)

5

The following month Baida and Unum began

discussing the possibility of Baida’s returning to work

in 2002. Unum assisted Baida in drafting a proposal

for freelance employment and communicated with her

attending physician, Eugene Boling, M.D., to obtain

his input regarding occupational rehabilitation. A

further medical review concluded that Baida’s records

did not support any significant limitations and that

Baida should be able to participate in a return-to-

work program. (R. App. 5.)

On or about January 18, 2002, Unum received a

letter and an Estimated Functional Abilities Form

from Baida’s treating physician, Dr. Boling, who

approved Baida’s participation in the return-to-work

program. Dr. Boling agreed with Unum’s suggestion

that Baida begin working three five-hour days and

then gradually increase to eight-hour days. He sub-

mitted a form stating that Baida could perform four

hours of sedentary activity, two hours of light activity

and two hours of medium activity in a work day. (R.

App. 5.)

Baida received benefits during her participation

in the return-to-work program from January 2002 to

July of 2002. At the end of that period, she said that

she had performed “freelance p.t. [part-time] work

(when available),” but that her physical and mental

limitations did not allow for full-time work, and that

having good and bad days made it difficult to keep a

schedule. An accompanying medical record note from

Dr. Boling revealed that Baida had just married and

taken a one-week honeymoon to Jamaica. It also noted

6

that she had been stressed in part by “trying to start

up some business through home.” Dr. Boling went on

to note: “Is having ongoing joint pain, but has been

able to get back to doing work at home, although at

limited hours of 10-12 hours per week.” Dr. Boling

submitted another form, again stating that Baida

could perform four hours of sedentary activity, two

hours of light activity and two hours of medium

activity in a work day. (R. App. 5-7.)

Unum had the new claim documents reviewed by

its Medical Director, Tanya Mack Horne, M.D. Dr.

Horne opined that, although Baida experienced

periods of fatigue, her ability to work at home should

allow her to pace herself and rest as needed. She

noted that Baida’s restnetions and limitations had

not changed since January 2002, when her physician

approved her participation in the return-to-work

program. Unum also had Baida’s new claim reviewed

by a rehabilitation counselor who opined that Baida

would be able to perform her occupational duties

within the restrictions and limitations presented by

her attending physician.

Based on the medical and vocational reviews,

Unum advised Baida that it had determined that she

was no longer entitled to benefits. Unum also in-

formed Baida that if she wished to appeal the denial

of her claim, she should submit a written request and

any new information she would like considered

within ninety days. (R. App. 7.)

7

Baida appealed the denial of her claim and

submitted a new form from Dr. Boling stating that

she was limited to only four hours of sedentary activ-

ity per day and no more than fifteen hours per week.

The appeal documents were reviewed by Medical

Director Dr. Horne who found no basis for Dr. Boling’s

change in opinion that Baida could not perform light

or moderate activity, when he had previously opined

on two occasions that she could perform up to four

hours of light/moderate activity, in addition to four

hours of sedentary activity. (R. App. 8.)

Upon review of the appeal by its Quality Per-

formance Support Unit, Unum decided to have

Baida’s claim reviewed by an independent rheuma-

tologist.’ It informed Baida that an independent

review would be conducted and it sought the opinion

of an independent rheumatologist, Micha Abeles,

M.D. (Dr. Abeles is an Associate Professor of Medicine

at the University of Connecticut, a fellow of the

American Board of Rheumatology, and has published

extensively regarding rheumatological conditions,

including lupus and fibromyalgia.) Dr. Abeles re-

viewed the medical information and opined that

Baida’s claim of total disability was not supported.

Specifically, Dr. Abeles found: “Ms. Rice* appears to be

a patient with a functional somatic disorder. ... There

* Unum also provided Baida with a complete copy of her

disability claim file and a copy of the group LTD policy at her

request.

* Prior to her marriage, Baida was known as Joanna Rice.

8

is no evidence for active SLE’.... There is no evi-

dence in the clinical notes that allow an objective

reader to conclude that disability exists. Complaints

of fatigue are the patient’s major complaint; yet,

fatigue is not presently addressed (e.g., by psychiatric

evaluation, use of anti-depressants such as SSRIs, or

use of energizing medications as Provigil).” Dr. Abeles

also noted that there was no evidence of a current

SLE diagnosis. With regard to the limitations pro-

vided by Dr. Boling, Dr. Abeles stated: “Dr. Boling

does fill out an estimated function ability form: He

eventually changes it. It’s unclear how Dr. Boling was

able to conclude the limitations he placed on Ms. Rice

from his notes. There is no documentation that indi-

cates any major functional process problem.” (R. App.

9.)

On March 14, 2003, Unum advised Baida that

her appeal was denied because the information

gathered on her claim, including the report of Dr.

Abeles, indicated that she was not totally disabled

under the terms of her policy. Unum also noted that

while it had requested psychiatric treatment records

several times, such records had never been received.

Finally, Unum advised Baida that it would forward

Dr. Abeles’ report to her treating physician, Dr.

Boling.

At Baida’s request, Unum agreed to provide an

extension of time for Baida to provide additional

* SLE refers to systemic lupus erythematosus.

9

information for further consideration. Baida retained

counsel and submitted a further appeal on May 30,

2003. Included with this second appeal was a letter

from Dr. Boling stating, for the first time, that the

forms he had submitted in January 2002 and July

2002 were incorrect and that although he had previ-

ously stated that Baida could engage in four hours of

sedentary activity, two hours of light activity and two

hours of medium activity daily, he had actually meant

that she could engage in four hours of sedentary

activity only. Dr. Boling also responded to Dr. Abeles’

report and opined that Baida could not work “full

time in her fast-paced occupation.” However, he also

opined that Baida could work part-time and that

“Joanna’s freelancing work is well-suited to her

limitations, since she can control her workload and

work from home, resting as needed.” Baida’s second

appeal also included a report from Daniel Wallace,

M.D., which was based on a single visit with Baida.

Dr. Wallace opined that Baida had SLE, severe fi-

bromyalgia, and steroid dependence and that she was

disabled due to the effects of her treatment. Dr.

Wallace also opined that Baida had a “labile emo-

tional state.” (R. App. 10-11.)

The additional medical information submitted by

Baida was sent to the independent rheumatologist,

Dr. Abeles, for further review, but Dr. Abeles did not

find the new information to be supportive of total

disability. Medical Director Dr. Horne also reviewed

the information and opined that Dr. Abeles had made

valid and reasonable findings. (R. App. 11.)

10

Prior to the second appeal, Baida also submitted

a brief letter from a treating psychologist, Enid

Richey, Ph.D., who opined that Baida had Major

Depression and Anxiety. No treatment records were

sent with the psychologist’s one-paragraph letter,

although those records had previously been re-

quested. Despite the failure to provide treatment

records, Unum referred Dr. Richey’s letter, along with

the letter previously received from Baida’s psycholo-

gist and psychiatrist in October 2001, to Thomas M.

Pendergrass, R.N., Ph.D., for review. Dr. Pendergrass

found that the available data did not suggest or

describe psychiatrically based restrictions and limita-

tions. (R. App. 11-13.)

After these reviews, Unum advised Baida of its

determination that its prior decision was appropriate

and that her second appeal was denied. Unum ex-

plained that the additional medical information

provided had been reviewed and evaluated but that

the information submitted did not support a claim of

total disability. Unum again invited Baida to provide

the missing records pertaining to her psychiat-

ric/psychological treatment and it advised her that it

would keep her claim open for another 30 days to give

her the opportunity to provide that information. (R.

App. 12.)

Baida’s counsel and Dr. Wallace submitted fur-

ther correspondence disagreeing with Unum’s deci-

sion, but no _ records regarding mental health

treatment were provided. Further medical and psy-

chological reviews were conducted to address the

11

correspondence received from Baida’s counsel and Dr.

Wallace. However, the reviews did not find any basis

to alter the decision on Baida’s claim. The medical

review indicated that Dr. Wallace’s notes seemed to

“focus on the insured’s psychological response to her

steroid therapy.” However, no records had ever been

submitted to support a psychological aspect to Baida’s

claim and a review by Psychologist Dr. Pendergrass

noted that the limited information provided did not

support a claim of disability.

On September 30, 2003, Baida was advised,

through her counsel, that Unum’s decision remained

unchanged and that the denial ot .he claim had been

upheld. On October 29, 2003, Baida’s counsel submit-

ted a copy of a Social Security Notice of Award letter.

No further information regarding the basis for the

award was provided and Unum did not change its

decision. (R. App. 12-13.)

Proceedings Below

Baida filed an action for judicial review of

Unum’s benefit determination pursuant to ERISA, 29

U.S.C. §1132(a)(1B). Because the benefit plan

granted discretion to Unum to make the determina-

tion at issue, the district court ruled that it would

apply a deferential standard in reviewing Unum’s

determination. (App. 13 (denying Baida’s motion for

de novo review).) However, applying Firestone, the

district court also noted:

12

“(I]f a benefit plan gives discretion to an ad-

ministrater or fiduciary who is operating un-

der a confhec of interest, that conflict must

be weighed as a ‘facto[r] in determining

whether there is an abuse of discretion.’”

(App. 12 (quoting Firestone Tire & Rubber Co., 489

U.S. at 115, quoting Restatement (Second) of Trusts

§ 187, Comment d (1959)).)

In the courts of the Ninth Circuit, as elsewhere,

many ERISA benefit disputes involving an abuse of

discretion standard of review are decided based on

cross-motions for summary judgment. See, e.g., Jor-

dan v. Northrop Grumman Corp. Welfare Benefit

Plan, 370 F.3d 869 (9th Cir. 2004), Alford v. DCH

Foundation Group Long Term Disability Plan, 311

F.3d 955 (9th Cir. 2002), Desrosiers v. Hartford Life

and Acc. Co., 515 F.3d 87 (1st Cir. 2008), Williams uv.

Aetna Life Ins. Co., 509 F.3d 317 (7th Cir. 2007).

However, in this case, the district court denied the

parties’ cross-motions for summary judgment, finding

that there were triable issues of fact with respect to

whether Unum abused its discretion. The district

court then considered the parties’ trial briefs and

conducted a bench trial during which the court asked

multiple questions of both parties over approximately

three hours. The district court then made detailed

factual findings and determined that Unum’s decision

that Baida was not disabled was supported by the

record and did not constitute an abuse of discretion.

(App. 16.)

13

The Ninth Circuit affirmed in an unpublished

decision filed on December 20, 2007.° The court held

that the abuse of discretion standard of review ap-

plied pursuant to Firestone Tire & Rubber Co. uv.

Bruch, supra, 489 U.S. 101, 115 and Abatie v. Alta

Health & Life Ins. Co., supra, 458 F.3d 955, 963.

(App. 2-3.) The court also assumed that Unum had a

conflict of interest by virtue of its dual role as plan

insurer and decision maker and held that the district

court’s review was sufficient even if the court applied

“the more heightened, skeptical abuse of discretion

review required by Abatie,” which holds “that the

abuse of discretion standard of review will be more

skeptical when a conflict of interest or procedural

violation is involved.” (App. 5 (citing Abatie, 458 F.3d

at 967-68).) The court further concluded that “(t]he

record demonstrates that the district court carefully

considered the facts and circumstances of the case

before adopting its findings of fact. Additionally,

Baida has not demonstrated any clear error in the

district court’s factual findings.” (App. 6.)

¢

* The Ninth Circuit noted that its disposition “is not

precedent except as provided by 9th Cir. R. 36-3,” which provides

in pertinent part “[u)npublished dispositions and orders of this

court are not precedent except when relevant under the doctrine

of the law of the case or rules of claim preclusion or issue

preclusion.” (App. 1.)

14

REASONS FOR DENYING THE PETITION

A. The Standard Applied By The Ninth Cir-

cuit Is Not Inconsistent With Firestone

In Abatie v. Alta Health & Life Ins. Co., 458 F.3d

955 (9th Cir. 2006) (en banc), the Ninth Circuit held

that (a) there is an inherent conflict of interest where

a claim administrator fulfills dual roles as decision

maker and as payer of benefits; and (b) a reviewing

court should consider this conflict, as well as other

surrounding circumstances, when determining how

much deference to grant to the decision under review.

Id. at 967-68. Abatie rejected, as did this court in

Firestone, supra, any rule that would cause the

judicial review standard to default to de novo in the

face of such a conflict. Jd. In the present case, the

Ninth Circuit applied Abatie, although that case was

not decided until after the district court ruling.

The standard applied by the Ninth Circuit is at

least as stringent as the standard required by Fire-

stone. In Firestone, this court held that the conflict of

interest “must be weighed” as a factor in determining

whether a claim administrator’s decision constitutes

an abuse of discretion. Firestone, 489 U.S. at 115. The

Ninth Circuit applied Abatie, supra, and held that

Abatie called for a “more heightened, skeptical abuse

of discretion review” than would otherwise apply in

the absence of a presumed conflict. (App. 5 (citing

Abatie, 458 F.3d at 967-968).) It determined: “(t]he

record demonstrates that the district court carefully

considered the facts and circumstances of the case

15

before adopting its findings of fact” and that the

district court’s review satisfied the heightened level of

review requirement set forth in Abatie. (App. 5-6.)

The Ninth Circuit’s decision is supported by the

record, which documents the extensive review con-

ducted by the district court in this case. In many

cases governed by ERISA, judicial review involves

consideration of simultaneously filed opening and

responsive briefs. In contrast, the district court

reviewed nine briefs and supporting documents

(including evidence outside the administrative record)

pertaining to the parties’ cross-motions for summary

judgment, heard argument on those cross-motions,

considered trial briefs filed by the parties and con-

ducted extensive questioning of both counsel regard-

ing their clients’ respective positions over the course

of the bench trial. The district court demonstrated

that it reviewed the record with a peeled judicial eye

and its extensive review led it to conclude that

Unum’s decision was supported by the evidence and

did not constitute an abuse of discretion. See Rush

Prudential HMO, Inc. v. Moran, 536 U.S. 355, 384 n.

15 (2002). The Ninth Circuit ruled that the record

supported the district court’s decision and showed

that Unum had engaged in an “ongoing, good faith

exchange of information” with Baida. (App. 5 (citing

Jebian v. Hewlett-Packard Co. Employee Benefits Or.

Income Prot. Plan, 349 F.3d 1098, 1107 (9th Cir.

2003).) Given that the standard applied in this case

was at least as stringent as the Firestone standard,

and that the Ninth Circuit still held that Unum’s

16

decision was not an abuse of discretion, the decision

below was not inconsistent with Firestone, or if it

was, any error was harmless and there is no basis for

review by this court. |

B. Review Is Not Required Because Of This

Court’s Pending Decision In MetLife v. Glenn

Baida’s second argument, that certiorari is

warranted to address issues already under considera-

tion in MetLife (Metropolitan Life Insurance Com-

pany) v. Glenn, 128 S. Ct. 1117 (2008), is also meritless.

This court certified two questions for review in

Glenn: (1) whether the fact that an ERISA claim

administrator is also the funding source for benefits

constitutes a conflict of interest; and (2) how a conflict

should be taken into account on judicial review of a

discretionary benefits decision. This case is not an

appropriate vehicle for certiorari on either issue.

With respect to the first question in Glenn, after

Abatie the Ninth Circuit presumes the existence of a

conflict where the decision maker also pays claims

out of its own pocket. In those situations, the decision

of a claim administrator is viewed with skepticism.

Abatie, supra, 458 F.3d at 968. Pursuant to Abatie, the

Ninth Circuit treated Unum as a conflicted adminis-

trator and applied the heightened degree of scrutiny

required by Abatie. (App. 2 (referring to “Unum’s

inherent, structural conflict of interest of both mak-

ing decisions on claims and paying claims with its

own funds”).) In deciding Glenn, this court may or

17

may not presume the existence of a conflict. However,

because the Ninth Circuit presumed the existence of a

conflict in this case and ruled in favor of Unum anyway,

this court’s decision with respect to the first issue in

Glenn will have no impact on the result in this case.

With respect to the second question certified in

Glenn, both the respondent and the United States, in

support of the respondent, cite to Abatie as consistent

with this court’s mandate in Firestone and as a stan-

dard that allows for consideration of a conflict of

interest without disregarding the discretionary

authority granted to claim administrators. Abatie is

cited by the respondent in Glenn as providing a

“useful analytical structure” to determine the degree

of scrutiny required in cases involving conflicted claim

administrators. (See Glenn Respondent’s Brief, 2008

WL 809104 at *48.) Adbatie is cited by the United States

to support its contention that the appropriate standard

of review to be applied to decisions made by conflicted

claim administrators may involve careful scrutiny. (See

Glenn U.S. Brief, 2008 WL 859356 at *26-*27.) Specifi-

cally, the United States cites to Abatie’s holding that

“‘lalbuse of discretion review applie(s] to a discretion-

granting plan even if the administrator has a conflict of

interest,’ but that review must be ‘informed by’ the

administrator’s conflict of interest.” (Jd. at *26, quoting

Abatie, supra, 458 F.3d at 965.)

In the present case, both the district court and

the Ninth Circuit applied the “more heightened,

skeptical abuse of discretion review” required by

Abatie and advocated by the respondent and the

18

United States for adoption by this court in Glenn.

While Unum contends that the Abatie standard

should not guide the result in Glenn, the fact is that

in this case the Ninth Circuit applied a review stan-

dard that met or exceeded the standard argued by the

respondent and the United States in Glenn and still

found in Unum’s favor. Unless this court adopts an

even stricter standard, the decision in Glenn will not

have any impact on the result in this case.’

Finally, the conflict of interest issue under review

in Glenn is nothing more than a red herring in this

case because, regardless of how the deferential review

standard is affected by such a conflict, it will not’

change the result in this case. Both the district court

and the Ninth Circuit applied a thorough and skepti-

cal review of the record and both ruled that their

review showed that the decision on Baida’s claim was

well supported and that Unum had not abused its

discretion. The decision that Baida was not disabled

was supported by the opinion of an independent

Board-certified rheumatologist and withstood a

heightened degree of scrutiny. Baida and her counsel

were given ample opportunity to submit information

in support of her claim and Unum properly consid-

ered and evaluated all of the information submitted

* A more stringent standard would essentially wipe out

deferential review in the face of a structural conflict of interest.

This is exactly the position that the Third Circuit took in

Firestone. This Court expressly rejected such a position when it

overturned that decision. 489 U.S. at 115.

19

on the claim. Indeed, the record shows that rather

than evincing a bias in favor of denial, Unum at-

tempted (repeatedly) to obtain the records from

Baida’s mental health treatment to determine if there

was an alternative basis for her claim; it was pre-

vented from doing so by Baida’s refusal to release her

records. Accordingly, this case does not warrant

review.

CONCLUSION

For the foregoing reasons, it is respectfully

submitted that the Petition for Writ of Certiorari

should be denied.

Respectfully submitted,

DONALD J. SAPALA EDITH SANCHEZ SHEA

FIRST UNUM LIFE Counsel of Record

INSURANCE COMPANY BURKE, WILLIAMS &

1 Fourtain Square SORENSEN, LLP

Chattanooga, TN 37402 444 South Flower Street

Telephone: (423) 294-4479 Suite 2400

MARK E. SCHMIDTKE Los Angeles, CA 90071-2953

OGLETREE, DEAKINS, NASH, Telephone: (213) 236-0600

SMOAK & STEWART, P.C.

20 South Clark Street

Chicago, IL 60603

Telephone: (312) 558-1220

Counsel for Respondents

App. 1

GALTON & HELM LLP

ROBERT F. KEEHN, State Bar No. 115848

EDITH S. SHEA, State Bar No. 177578

KEIKO J. KOJIMA, State Bar No. 206595

500 South Grand Avenue, Suite 1200

Los Angeles, California 90071-2624

Telephone: (213) 629-8800

Facsimile: (213) 629-0037

Attorneys for Defendants

First UNUM Life Insurance Company and

Diversified Agency Services Group Benefit Plan

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA,

WESTERN DIVISION

JOANNA BAIDA, CASE NO. CV 03-9345

ca GPS (CWx)

Plaintif, [Transferred to Judge

vs. George P. Schiavelli]

FIRST UNUM LIFE [PROPOSED] FINDINGS

INSURANCE COMPANY, |OF FACT, CONCLUSIONS

et al., OF LAW AND JUDGMENT

Defendants. (Filed Nov. 22, 2005)

FINDINGS OF FACT

1. Diversified Agency Services Group Benefit Plan is

an employee welfare benefit plan, sponsored by

Omnicom Management Inc. The Plan was funded in

part by a group contract of long-term disability insur-

ance, Policy No. 548712001, issued to Omnicom

App. 2

Management Inc. by UNUM. (Administrative Record

(“A.R.”] UASP00055-UASP00001)

2. The Plan provides disability benefits of 60% of

monthly earnings, up to a maximum of $15,000 per

month. The Plan also provides that benefits will be

reduced by deductible sources of income, including

Social Security disability income benefits. For dis-

abilities beginning before the age of 60, the maximum

benefit period is to age 65. However, “[dlisabilities

due to mental illness have a limited pay period up to

24 months.” (A.R. UASP00035)

3. The Plan defines “total disability” as being “lim-

ited from performing the material and substantial

duties of your regular occupation due to your sickness

or injury” and having “a 20% or more loss in your

indexed monthly earnings due to the same sickness

or injury.” (A.R. UASP00040)

4. Ifthe insured is able to work part-time, the policy

provides for partial disability benefits based on loss of

income. (A.R. VASP00039)

5. The Plan provides that a disability period ends

when “you are able to work in your regular occupa-

tion on a part-time basis but you choose not to.” (A.R.

UASP00035)

6. “Regular Occupation” is defined as “the occupa-

tion you are routinely performing when your disabil-

ity begins. UNUM will look at your occupation as it is

normally performed in the national economy, instead

App. 3

of how the work tasks are performed for a specific

employer or at a specific location.” (A.R. VASP00022)

7. The Plan provides that “[w]hen making a benefit

determination under the policy, UNUM has discre-

tionary authority to determine your eligibility for

benefits and to interpret the terms and provisions of —

the policy.” (A.R. UASP00020, UASP00044)

8. BAIDA submitted a claim for total disability

benefits in September 2000. She claimed that she had

been diagnosed with lupus in 1997 and that she was

totally disabled from her work as a senior account

executive at a public relations firm (Porter Novelli) in

New York City due to symptoms of rash, arthritis,

and fatigue, which she attributed to lupus. BAIDA’s

attending physician, Lisa R. Sammaritano, M.D.,

opined that BAIDA would be disabled from her usual

work until December of 2000. (A.R. UACL00002,

UACL00011, UACL00010, UACL00161, UACLO00016,

UACL00013-UACL00012, VACL00009-UACL00004)

9. In October 2000, UNUM learned that BAIDA had

relocated from New York City to Ontario, California.

In a telephone interview, BAIDA told UNUM that her

new doctor in California, Kenneth Kalunian, M.D.,

was reducing her medications and wanted to take her

off steroids completely. (A.R. VACL00851-UACL00850)

10. As part of its investigation of the claim, UNUM

obtained medical records from Dr. Kalunian and

Dr. Sammaritano and from BAIDA’s treating derma-

tologist, Dr. Howe. (A.R. UACL00019-UACL00028,

App. 4

UACL00039, UACL00096-UACL00307, UACL00312-

UACL00318)

11. An initial medical review indicated that the

diagnosis of Systemic Lupus Erythomatosis (SLE)

was supported by the clinical findings and it was

recommended that records be obtained after four

or five months to assess BAIDA’s status. (A.R.

UACL00334-UACL00332, UACL00326)

12. The recommendation to further evaluate the

status of BAIDA’s condition after several months was

consistent with BAIDA’s own treating physician’s

estimate that she would be able to return to work

three months after filing her claim. (A.R. UACL00161)

13. Based on its initial medical review, UNUM

began payment of BAIDA’s claim following the 90-day

elimination period required by the policy. (A.R.

UACL00337-UACL00335)

14. BAIDA submitted supplemental claim statements

and attending physician statements from Dr. Kalunian

and UNUM continued to pay her claim. (A.R.

UACL00359-UACL00357, UACL00374-UACL00370)

15. In August 2001, a further medical review was

conducted and it was determined that updated re-

cords were needed from BAIDA’s attending physician

as well as records from psychiatric treatment refer-

enced in the medical records. (A.R. UACL00388-

UACL00390)

App. 5

16. In response to UNUM’s request for psychiatric

records, the only “record” received was a letter, co-

authored by Enid Richey, Ph.D. and John Ursino,

M.D. Although the letter noted that BAIDA had

been seen for therapy in 31 sessions and for medica-

tion management about six times, no records of

any treatment were provided. (A.R. UACL00394-

UACL00393)

17. In September 2001, BAIDA and UNUM began

discussing the possibility of BAIDA’s returning

to work in 2002. (A.R. UACL00392, UACL00845,

UACL00397)

18. In November 2001, Lady Jackson, UNUM’s

Senior Vocational Case Manager, spoke by telephone

with BAIDA regarding her possible return to work.

(A.R. VACL00401-UACL00399)

19. To facilitate an appropriate return to work

program for BAIDA, UNUM contacted BAIDA’s prior

employer in New York to discuss freelance opportuni-

ties and assisted BAIDA in drafting a proposal for

freelance employment with her former employer. (ALR.

UACL00398, UACL00684, UACL00450-UACL00451,

UACL00412-UACL00405, UACL00421)

20. UNUM also contacted BAIDA’s newest attend-

ing physician, Eugene Boling, M.D., to obtain his

input regarding occupational rehabilitation. (A.R.

UACL00433)

21. A further medical review on December 14, 2001

indicated that the current medical records did not

App. 6

support any significant physical or psychiatric limita-

tions and that BAIDA should be able to participate

in a return-to-work program. (A.R. UACL00419-

UACL00418)

22. On or about January 18, 2002, UNUM received

a letter and Estimated Functional Abilities Form

from BAIDA’s treating physician, Dr. Boling, who

opined that BAIDA’s symptoms were attributable to

both SLE and fibromyalgia, but approved BAIDA’s

participation in the return-to-work program. (A.R.

UACL00524-UACL00523, UACL00527, UACL00525-

UACL00526)

23. Dr. Boling agreed with UNUM’s suggestion that

BAIDA begin working three five-hour days and

then gradually increase to eight-hour days. (A.R.

UACL00527)

24. The form submitted by Dr. Boling indicated that

BAIDA could perform four hours of sedentary activity,

two hours of light activity and two hours of medium

activity in a work day. (A.R. UACL00526)

25. At the end of January 2002, UNUM and BAIDA

reached an agreement whereby she would receive

benefits for six months, through June 30, 2002,

during which time she would participate in a return-

to-work program. Under the agreement, if BAIDA

wanted to continue her claim of disability after June

2002, she would notify UNUM and her claim would

be considered. (A.R. VACL00679-UACL00677)

App. 7

26. In July 2002, BAIDA requested that her claim

be reopened. BAIDA said that she had performed

“freelance p.t. work (when available),” but that her

physical and mental limitations did not allow for full

time work, and that having good and bad days made

it difficult to keep a schedule. (A.R. UACL00547,

UACL00543, LACL00546, UACL00549, UACL00545)

27. An accompanying medical record note from Dr.

Boling revealed that BAIDA had just married and

taken a one-week honeymoon to Jamaica. It also

noted that she had been stressed in part by “trying to

start up some business through home.” Dr. Boling

went on to note: “Is having ongoing joint pain, but

has been able to get back to doing work at home,

although at limited hours of 10-12 hours per week.”

(A.R. UACL00545)

28. Dr. Boling submitted another Estimated Func-

tional Abilities Form, again, indicating that Badia

could perform four hours of sedentary activity, two

hours light activity and two hours of medium activity

in a work day. (A.R. VACL00549)

29. UNUM had the new claim documents reviewed

by medical consultant Janet Shepard, R.N. and by

Medical Director Tanya Mack Horne, M.D. The

review of the records reflected that BAIDA’s restric-

tions and limitations had not changed since January

2002, when her physician approved her participation

in the return-to-work program. Dr. Horne opined that

although BAIDA experienced periods of fatigue, her

ability to work at home would allow her to pace

App. 8

herself and rest as needed (A.R. UACLO00552-

UACL00551, UACL00555-UACL00553)

30. UNUM also had BAIDA’s new claim reviewed by

Rehabilitation Counselor G. Shannon O’Kelley,

M.Ed., who opined that BAIDA would be able to

perform her occupational duties within the restric-

tions and limitations presented by her attending

- physician. (A.R. UACL00556-UACL00559)

31. Based on the opinions of the medical and voca-

tional reviewers that BAIDA’s claimed limitations

were not sufficient to render her totally disabled from

her occupation and that her limitations could be

accommodated so that she could continue to work,

BAIDA’s claim for continued total disability benefits

was denied. UNUM advised BAIDA of the denial in a

letter dated September 23, 2002. The letter advised

BAIDA that if she wished to appeal the denial of her

claim, she should submit a written request and any

new information she would like considered within

ninety days. (A.R. UACL00563-UACL00561)

32. On October 21, 2002, BAIDA appealed the

denial of her claim. With her appeal, BAIDA submit-

ted a new Estimated Functional Abilities Form

completed by Dr. Boling which indicated that BAIDA

was limited to only four hours of “sedentary activity”

per day or no more than 15 hour weeks. (A.R.

UACL00572-UACL00566)

33. The appeal documents were reviewed by Dr.

Horne, who found no basis for Dr. Boling’s change

in opinion that BAIDA could not perform light or

App. 9

moderate activity, when he had previously opined on

two occasions that she could perform up to four hours

of “light/moderate” activity, in addition to four hours

of “sedentary activity.” (A.R. VACL00578-UACL00574)

34. In a letter dated November 13, 2002, UNUM

advised BAIDA that the information she had submit-

ted did not appear sufficient to reverse the decision

on her claim, but that her file had been sent to the

Quality Performance Support Unit for further appel-

late review. (A.R. VACL00579)

35. Upon further review, UNUM decided to have

BAIDA’s claim reviewed by an independent rheuma-

tologist and it informed BAIDA that an independent

review would be conducted. (A.R. UACL 00605)

36. UNUM also provided BAIDA with a complete

copy of her disability claim file and a copy of the

group LTD policy at her request. (A.R. UACL00602,

UACL00603, UACL00605)

37. UNUM then sought the opinion of an independ-

ent rheumatologist, Micha Abeles, M.D. (A.R. UAIA

00005-UAIA 00007)

38. Dr. Abeles is an Associate Professor of Medicine

at the University of Connecticut, a fellow of the

American Board of Rheumatology, and has published

extensively regarding rheumatological conditions,

including lupus and fibromyalgia. (A.R. VACL00663-

UACL00638)

39. Dr. Abeles reviewed the medical information and

opined that BAIDA’s claim of total disability was not

App. 10

supported. Specifically, Dr. Abeles found: “Ms. Rice

appears to be a patient with a functional somatic

disorder ... There is no evidence for active SLE....

There is no evidence in the clinical notes that allow

an objective reader to conclude that disability exists.

Complaint of fatigue are the patient’s major complaint;

yet, fatigue is not presently addressed (e.g., by. psychi-

_atric evaluation, use of anti-depressants such as SSRIs,

or use of energizing medication as Provigil.” (A.R.

UACL00771-UACL00768, UACL00663-UACL00638)

40. Dr. Abeles also noted that there was no evidence

of a current SLE diagnosis. (A.R. UACL 00769)

41. With regard to the limitations provided by Dr.

Boling, Dr. Abeles stated: “Dr. Boling does fill out an

estimated function ability form. He eventually changes

it. It’s unclear how Dr. Boling was able to conclude the

limitations he placed on Ms. Rice from his notes.

There is not documentation that indicates any major

functional process problem. There is also nothing

documented in Dr. Boling’s notes that warrants him

changing his evaluation.” (A.R. VACL00769)

42. On March 14, 2003, UNUM advised BAIDA that

its earlier decision denying benefits was affirmed and

that her appeal was denied. UNUM explained that

based on an evaluation of all of the information

gathered on her claim, including the report of Dr.

Abeles, it appeared that she was not totally disabled

under the terms of her policy. UNUM also noted

that while it had requested psychiatric treatment

records several times, such records had never been

App. 11

received. UNUM also advised BAIDA that it

would forward Dr. Abeles’ report to her treating

physician, Dr. Boling. (A.R. UACL00750-UACL00746,

UACL00614-UACL00615)

43. At BAIDA’s request, UNUM agreed to provide

an extension of time until May 31, 2003 in which to

provide additional information for consideration of

her appeal. (A.R. VACL00624-UACL00623)

44. BAIDA retained counsel and submitted a fur-

ther appeal on May 30, 2003. (A.R. UACL 00879-

UACL00898)

45. This second appeal relied on letters provided to

UNUM by BAIDA%s treating rheumotologist, Dr.

Boling, and from Dr. Daniel Wallace, another rheu-

motologist who had seen BAIDA for the first time

after her claim was denied. The letters from Dr.

Boling stated that the two initial Estimated Func-

tional Abilities Forms he had previously submitted in

January 2002 and July 2002 were incorrect and that

although he had previously stated that BAIDA could

engage in four hours of sedentary activity, two hours

of light activity and two hours of medium activity, he

had actually meant that she could engage in four

hours of sedentary activity (with two of the four being

light activity and the other two being medium activ-

ity). Dr. Boling also responded to Dr. Abeles’ report.

Dr. Boling opined that BAIDA could not work “full

time in her fast-paced occupation.” However, he also

opined that BAIDA could work part-time and that

“Joanna’s freelancing work is well-suited to her

App. 12

limitations, since she can control her workload

and work from home, resting as needed.” (A.R.

UACL00823, UACL00825-UACL00828)

46. Dr. Wallace’s report was based on his single

visit/evaluation. In his report, and note following the

report, he opined that BAIDA hac SLE, severe fi-

bromyalgia and steroid dependence and that she was

disabled due to the effects of her treatment. Dr.

Wallace also opined that Baida had a “labile emo-

tional state.” (A.R. VACLO00855-UACL00857)

47. The additional medical information submitted

was sent to the independent rheumatologist, Dr.

Abeles, for further review. (A.R. UAIA 00013, UACL

00945)

48. Dr. Abeles did not find the new information to be

supportive of total disability. (A.R. UACL 00954-

UACL 00956)

49. UNUM’s Medical Director, Dr. Horne, reviewed

Dr. Abeles’ report and found that Dr. Abeles had made

valid and reasonable findings, and that it did not

appear that Dr. Abeles’ assessment had changed

based on the additional information submitted. (A.R.

UACL00963-UACL00961)

50. Prior to the second appeal, BAIDA also submit-

ted a brief letter from clinical psychologist Dr. Richey

stating that he was seeing BAIDA for psychotherapy,

that her diagnoses were Major Depression aiid Anxi-

ety, and that her emotional and psychological distress

App. 13

were related to her physiological impairments. (A.R.

UACL00948)

51. No treatment records were sent with the one-

paragraph letter from Dr. Richey, although they had

previously been requested. Dr. Richey’s letter, along

with the letter previously received from BAIDA’s

psychologist in October of 2001, were referred to

Thomas M. Pendergrass, R.N., Ph.D., for review. Dr.

Pendergrass found that the available data did not

suggest or describe psychiatrically based restrictions

and limitations. (A.R. UACL00950-UACL00949,

UACL00952-UACL00953)

52. On August 8, 2003, UNUM advised BAIDA of its

determination that its prior decision was appropriate

and that her second appeal was denied. UNUM

explained that the additional medical information

provided had been reviewed and evaluated but that

the information submitted did not support a claim of

total disability. UNUM again invited BAIDA to pro-

vide the missing records pertaining to her psychiatric/

psychological treatment. UNUM also advised BAIDA

that her claim would remain open for another 30 days

to give her th2 opportunity to provide that informa-

tion. (A.R. UACL00977-UACL00972)

53. BAIDA’s counsel and Dr. Wallace submitted

further correspondence disagreeing with UNUM’s

decision, but no records regarding mental health

treatment were provided. (A.R. UACLO00980-

UACL00979, UACL01068-UACL01064 and UACLO1063-

UACL01062)

App. 14

54. Further medical and psychological reviews were

conducted to address the correspondence received

from BAIDA’s counsel and Dr. Wallace. (A.R. UA-

CL001087, UACL01089, UACLO1088; UACLO01091-

UACLO01090)

55. The reviews did not find any basis for an altera-

tion of the decision on BAIDA’s claim. The medical

review indicated that Dr. Wallace’s notes seemed to

“focus on the insured’s psychological response to her

steroid therapy.” (A.R. UACL01087, UACLO01089,

UACL01088)

56. No records had ever been submitted to support

a psychological aspect to Baida’s claim and a review

by Psychologist Dr. Pendergrass noted that the

limited information provided did not support signifi-

cant treatment or symptoms. (A.R. UACLO1091-

UACLO01090)

57. On September 30, 2003, BAIDA was advised,

through her counsel, that UNUM’s decision remained

unchanged and that the denial of the claim had been

upheld. (A.R. VACL01096-UACL01092)

58. On October 29, 2003, BAIDA’s counsel submitted

a copy of a Social Security Notice of Award letter.

(A.R. UACL 01097-UACL11102)

59. No further information regarding the basis for

the award was provided and UNUM’s decision re-

mained unchanged. (A.R. VACLO1104-UACL01103)

App. 15

CONCLUSIONS OF LAW

1. This Court has jurisdiction, pursuant to 28

U.S.C. § 1331 and 29 U.S.C. § 1132(e)(1).

2. The Court reviews UNUM’s benefit determi-

nation for abuse of discretion only, pursuant to its

Order of April 28, 2005 denying Plaintiff’s Motion for

Summary Adjudication on the Standard of Review.

(Attached hereto as “A.”)

3. The Court’s review of the decision on Plain-

tiff’s claim under the abuse of discretion standard is

limited to the Administrative Record. See Mongeluzo

vu. Baxter Travel Long Term Disability Benefit Plan, 46

F.3d 938, 944 (9th Cir. 1995); Kearney v. Standard

Ins. Co., 175 F.3d 1084, 1090 (9th Cir. 1999).

4. “(Ijt is an abuse of discretion for an ERISA

plan administrator to make a decision without any

explanation, or in a way that conflicts with the plain

language of the plan, or that is based on clearly

erroneous findings of fact.” Atwood v. Newmont Gold

Co., 45 F.3d 1317, 1323-24 (9th Cir. 1995).

5. However, “review under the ‘clearly errone-

ous’ standard is significantly deferential, requiring a

‘definite and firm conviction that a mistake has been

committed.’” Concrete Pipe & Products, Inc. v. Constr.

Laborers Pension Trust, 508 U.S. 602, 623, 113 S.Ct.

2264, 2280, 124 L.Ed.2d 539, 564 (1993). “[T)hat

standard certainly does not permit the overturning of

a decision where there is substantial evidence to

support the decision, that is, where there is ‘relevant

App. 16

evidence [that] reasonable minds might accept as

adequate to support a conclusion even if it is possible

to draw two inconsistent conclusions from the evi-

dence.’” Snow v. Standard Insurance Company, 87

F.3d 327, 331-32 (9th Cir. 1996) (citing Maynard uv.

San Jose, 37 F.3d 1396, 1404 (9th Cir. 1994)).

6. Although there must be some support for its

decision, UNUM need not demonstrate the validity of

its decision by a preponderance of the evidence. See

Voight v. Metropolitan Life Ins. Co., 28 F.Supp.2d 569,

576 (C.D. Cal. 1998) (citing Sandoval v. Aetna Life &

Casualty Ins. Co., 967 F.2d 377, 382 (10th Cir. 1992)).

Instead, BAIDA must demonstrate not only that

UNUM’s decision was incorrect, but that it was

unreasonable. See Donato v. Metropolitan Life Ins.

Co., 19 F.3d 375, 380 (7th Cir. 1994). See also, Horan

v. Kaiser Steel Retirement Plan, 947 F.2d 1412, 1417

(9th Cir. 1991) (emphasis in original).

DATED: Nov. 21,2005 /s/ George P. Schiavelli

UNITED STATES DISTRICT

COURT JUDGE