:: Eighth Circuit Relies Upon Pre-Glenn Precedent In Evaluating Disability Claim

Wakkinen asserts that another procedural irregularity existed in that UNUM lacked knowledge of Wakkinen’s condition and failed to inquire into his fibromyalgia and chronic fatigue syndrome when it denied his claim. We continue to examine this claim under Woo v. Deluxe Corp., 144 F.3d 1157, 1160 (8th Cir. 1998). The record does not support his argument.

Wakkinen v. UNUM Life Ins. Co. of Am., 2008 U.S. App. LEXIS 14208 (8th Cir. Minn. July 2, 2008)

The Eighth Circuit approach to addressing conflicts of interest was set forth in Woo v. Deluxe Corp., 144 F.3d 1157, 1160 (8th Cir. 1998). In the a post-Glenn claim for disability benefits decision, the Eighth Circuit determined that the approach taken in Woo still works acceptably in light of the Glenn opinion.

Conflict Of Interest

Citing the earlier Eighth Circuit decision, the plaintiff, Wakkinen, argued that UNUM should be afforded no deference because he has presented “material, probative evidence demonstrating that (1) a palpable conflict of interest or a serious procedural irregularity existed, which (2) caused a serious breach of the plan administrator’s fiduciary duty.”

Attempting to take advantage of the Glenn decision, the plaintiff also drew attention to investigations of the carrier’s claims settlement procedures:

Even though no conflict of interest could be assumed pre-Glenn, Wakkinen argued in his brief that a palpable conflict exists because UNUM engaged in unlawful procedures in handling his claim. The procedures he refers to are those that were subject to a multistate examination of the claims handling practices of UNUM Life and other subsidiaries of UNUM Provident. These practices are the subject of the law review article quoted by the Supreme Court . .

In September 2003, the Department of Labor and state regulators began a joint examination of claim files and claim administration and policy manuals from these companies to determine if their disability income claims handling practices reflected systemic unfair claim settlement practices. The examiners found several areas of concern, including excessive reliance upon in-house medical professionals, unfair construction of attending physician or independent medical exam reports, failure to evaluate the totality of the claimant’s medical condition, and inappropriate burdens placed on claimants to justify their eligibility for benefits. The result was a plan of corrective action implemented through a regulatory settlement agreement and consent orders entered into with the states.

No Change In Standard Of Review

The Eighth Circuit noted, however, that Glenn did not change the standard of review, stating:

. . . the existence of a conflict did not lead the Court to announce a change in the standard of review. We are to review an administrator’s discretionary benefit determination for abuse of discretion. Id. The Court concluded that “a conflict should be weighed as a factor in determining whether there is an abuse of discretion.” Id. (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S. Ct. 948, 103 L. Ed. 2d 80 (1989)).

Question Of Factors In Equipoise

The Eighth Circuit viewed the question as one of whether the issues were close enough to require a tiebreaker, citing the following language from Glenn:

. . . any one factor will act as a tiebreaker when the other factors are closely balanced, the degree of closeness necessary depending upon the tiebreaking factor’s inherent or case-specific importance. The conflict of interest at issue here, for example, should prove more important (perhaps of great importance) where circumstances suggest a higher likelihood that it affected the benefits decision, including, but not limited to, cases where an insurance company administrator has a history of biased claims administration. See Langbein, supra, at 1317-1321 (detailing such a history for one large insurer).

Glenn, 128 S. Ct. 2343 at *9 (citing John H. Langbein, Trust Law as Regulatory Law: The Unum/Provident Scandal and Judicial Review of Benefit Denials Under ERISA, 101 Nw. U. L. Rev. 1315, 1323-1324 (2007)). (emphasis added)

Even though no conflict of interest could be assumed pre-Glenn, Wakkinen argued that a palpable conflict existed because UNUM engaged in unlawful procedures in handling his claim. (Wakkinen was urging the fact of the multistate examination of the claims handling practices of UNUM Life and other subsidiaries of UNUM Provident in support of this argument.)

No Need For Tie Breaker

The Court considered the conflict issue, but did not view it as determinative.

We are instructed by Glenn to give importance to this conflict of interest, “perhaps . . . great importance,” Glenn, 128 S. Ct. 2343 at *9, depending upon how closely the other factors are balanced. The findings of the investigation are troubling, and we do not minimize their import. Taking into account the remaining factors discussed below, we conclude that there is not a sufficiently close balance for the conflict of interest to act as a tiebreaker in favor of finding that UNUM abused its discretion. See id.

And the Court continued to rely on its prior precedent in evaluating the claim:

We continue to examine this claim under Woo v. Deluxe Corp., 144 F.3d 1157, 1160 (8th Cir. 1998). The record does not support his argument.

On the facts presented, the Court held that Wakkinen had not demonstrated that UNUM failed to independently review his claim on appeal.

No Abuse Of Discretion

Having lost the battle over the standard of review, the plaintiff was left with little to work with – the carrier’s conduct on the record did not appear inconsistent or unsupported by the evidence:

While Wakkinen objects to the reasons UNUM gave in denying his initial claim and each of his appeals, UNUM was consistent in its position. UNUM concluded that Wakkinen had not demonstrated through his own treatment records that depression, fibromyalgia or chronic fatigue syndrome, or any combination of those conditions precluded him from performing the material and substantial duties of his position through the elimination period. We have examined the same record and we conclude that substantial evidence exists to support UNUM’s decision. Although UNUM was operating under a conflict of interest when it denied Wakkinen’s claim, the remaining facts in the case indicate that it did not abuse its discretion.

Note: Several factors militated against the plaintiff’s position on the standard of review according to the Court, including:

  1. Although Wakkinen’s medical records mentioned fibromyalgia and chronic fatigue syndrome, his application for benefits was only supported by a single attending physician’s statement from Dr. Bebchuk attributing his disability to “major depressive disorder recurrent in partial remission.”
  2. None of his treating physicians opined until well after the elimination period had ended that another condition was disabling. Dr. Brutlag wrote a one-sentence note which Wakkinen provided to UNUM on October 9, 2002
  3. Wakkinen advanced no evidence that calls into question the expertise of Dr. Jacobsen personally or of a doctor who specializes in occupational medicine to offer an opinion on the condition of fibromyalgia.
  4. Unum consistently took the position that Wakkinen’s fibromyalgia was not sufficiently severe during his 180-day elimination period to render him disabled from performing his occupation, and Wakkinen’s own doctors provided no opinion to the contrary.

The Unum File – The prior history noted by the Supreme Court was described as follows:

The procedures he [Wakkinen] refers to are those that were subject to a multistate examination of the claims handling practices of UNUM Life and other subsidiaries of UNUM Provident. These practices are the subject of the law review article quoted by the Supreme Court in the passage above. In September 2003, the Department of Labor and state regulators began a joint examination of claim files and claim administration and policy manuals from these companies to determine if their disability income claims handling practices reflected systemic unfair claim settlement practices. The examiners found several areas of concern, including excessive reliance upon in-house medical professionals, unfair construction of attending physician or independent medical exam reports, failure to evaluate the totality of the claimant’s medical condition, and inappropriate burdens placed on claimants to justify their eligibility for benefits. The result was a plan of corrective action implemented through a regulatory settlement agreement and consent orders entered into with the states.

The Discretionary Clause – Here’s the language from the certificate:

“When making a benefit determination under the policy, UNUM has discretionary authority to determine your eligibility for benefits and to interpret the terms and provisions of the policy.”

According to the Court, an amendment, effective December 1, 2001 (two days before the onset of Wakkinen’s claimed disability), provided:

In exercising its discretionary powers under the Plan, the Plan Administrator, and any designee (which shall include Unum as a claims fiduciary) will have the broadest discretion permissible under ERISA and any other applicable laws, and its decisions will constitute final review of your claim by the Plan. Benefits under this Plan will be paid only if the Plan Administrator or its designee (including Unum), decides in its discretion that the applicant is entitled to them.

Thus, these provisions adequately stated the requisite discretion granted to UNUM under the policy. (The Court cited Walke v. Group Long Term Disability Ins., 256 F.3d 835, 839 (8th Cir. 2001) on this point.)

Applying Woo This is a helpful excerpt that describes the operation of the abuse of discretion standard:

Wakkinen argues that UNUM’s denial of his application for benefits was improper under any standard of review, but he acknowledges the deference that is implicit if the question is whether the plan administrator abused its discretion.

Under that standard, we will not disturb the administrator’s decision if it was reasonable. We measure reasonableness by whether substantial evidence exists to support the decision, meaning “more than a scintilla but less than a preponderance.” Woo v. Deluxe Corp., 144 F.3d 1157, 1162 (8th Cir. 1998). We examine only the evidence that was before the administrator when the decision was made, and we are to determine whether a reasonable person could have — not would have — reached a similar decision. Phillips-Foster v. UNUM Life Ins. Co., 302 F.3d 785, 794 (8th Cir. 2002).