Circuit Upholds Decision Denying Disability Benefits for Employee Who Claimed She Had FibromyalgiaApril 30, 2013 | | |
The plaintiff in this case worked for American International Group (AIG) and participated in its group long term disability benefit plan, which was governed by the provisions of the Employee Retirement Income Security Act (ERISA) and administered by Hartford Life and Accident Insurance Company. After several hospitalizations, the plaintiff filed a claim for long term disability benefits under the plan, attaching a physician’s statement advising of her diagnosis of fibromyalgia, among other conditions. Hartford denied the plaintiff’s claim and the plaintiff sued, arguing that Hartford had failed to conduct a full and fair review of her claim. The district court ruled in favor of Hartford, and the plaintiff appealed to the U.S. Court of Appeals for the Second Circuit.
The Second Circuit affirmed. It first rejected the plaintiff’s argument that Hartford had abused its discretion when it required the plaintiff to produce objective evidence showing that she suffered from fibromyalgia. The circuit court pointed out that a physician retained by Hartford to review the plaintiff’s records had expressed doubt about her diagnosis of fibromyalgia because she had not been tested for “tender points,” which, according to the National Health Institute, are “specific places on the body – on the neck, shoulders, back, hips, and upper and lower extremities – where people with fibromyalgia feel pain in response to slight pressure,” and that the absence of this test was mentioned in Hartford’s rejection of the plaintiff’s claim. The circuit court then found that the plaintiff was aware of the use of tender points as a diagnostic criterion for fibromyalgia and that she had the opportunity to obtain and present such testing results to Hartford. Indeed, the circuit court noted, her counsel had begun her appeal letter to Hartford with an extensive discussion of the American College of Rheumatology’s criteria for diagnosis of fibromyalgia, noting that “[t]he patient must . . . report abnormal pain over at least 11 of 18 predesignated sites (known as tender points), when a standard quantifiable degree of pressure is applied to these areas.” Without deciding whether a tender points test was required for a definitive diagnosis of fibromyalgia, the circuit court concluded that the plaintiff bore the burden of showing that she was disabled and that Hartford had not abused its discretion in denying the plaintiff’s claim.
The circuit court also rejected the plaintiff’s contention that, in making its determination, Hartford had failed to consider the decision of the Social Security Administration (SSA) to award her disability benefits. According to the appellate court, an SSA award was “by no means determinative of a claimant’s eligibility” under an ERISA benefits plan. Indeed, the Second Circuit ruled, in this case the SSA award was even less significant than it might have otherwise been because the only document the plaintiff provided to Hartford was a letter from the SSA confirming the amount of disability benefits she received each month and she did not provide any documents that revealed the basis for the SSA’s determination. Without that, the circuit court concluded, it could not fault Hartford for failing to discuss the award in its decision denying coverage. [Ianniello v. Hartford Life and Accident Ins. Co., 2013 U.S. App. Lexis 1573; (2d Cir. Jan. 24, 2013).]
Circuit Affirms Denial of Attorney’s Fees to Plaintiff Who Was Victorious in Benefits Suit
The plaintiff in this case, a former sales representative for Time Warner Cable Inc., participated in an employee benefit plan administered by Unum Life Insurance Company of America that was governed by ERISA. After the plaintiff was diagnosed with fibromyalgia, she sought long term disability benefits. Unum approved the plaintiff’s request but discontinued benefits after two years, citing the plan’s self-reported symptoms limitation.
The plaintiff sued, claiming that Unum’s decision to cease benefits was arbitrary and capricious. The district court granted summary judgment for Unum but the U.S. Court of Appeals for the Seventh Circuit reversed, concluding that although Unum had read the limitation clause literally to apply to all illnesses or injuries for which the disabling symptoms were self reported, “the only viable conclusion”, given the context, was that the self-reported symptoms limitation applied only to disabling illnesses or injuries that were diagnosed primarily based on self-reported symptoms.
The circuit court concluded that because the plaintiff had undergone a “trigger test” to determine whether she had fibromyalgia, “the diagnosis was supported by objective medical evidence and the self-reported symptoms limitation did not apply.”
The case was remanded to the district court, where the plaintiff moved for attorney’s fees as a party who had obtained some degree of success in the litigation. The district court denied the motion, concluding that Unum’s litigation position was substantially justified because the plan conferred discretion on Unum to interpret its provisions, the interpretation of the self-reported symptoms limitation was a novel issue in the Seventh Circuit, and Unum’s interpretation was supported by the limitation’s plain language. The district court also applied a multi-factor test for determining whether to award attorney’s fees in ERISA cases and concluded that there was no evidence that Unum was “out to harass” the plaintiff, that the merits of the parties’ positions were close, that only a small number of plan beneficiaries would benefit from the new interpretation, and that an award would not deter others’ conduct in the future because Unum lost on a “garden variety legal dispute over the meaning of a particular contract.” The plaintiff appealed.
This time, the Seventh Circuit affirmed the district court’s decision. It explained that parties who achieve “some degree of success” in ERISA cases were not automatically awarded attorneys’ fees. Rather, the circuit court explained, to be able to claim attorney’s fees, they must show that the other party’s litigating position was not “substantially justified.”
In this case, the appeals court observed, the district court concluded that although Unum lost on appeal, the limitation clause had not yet been interpreted in the Seventh Circuit and so Unum’s litigation position was justified and taken in good faith. The Seventh Circuit agreed, noting that Unum’s interpretation was simply a literal reading of the clause, and the plan gave Unum discretion to interpret its terms. Thus, it found, the district court’s conclusion that Unum’s position had a reasonable basis in law and fact was “amply supported.” [Weitzenkamp v. Unum Life Ins. Co. of America, 2013 U.S. App. Lexis 463 (7th Cir. Jan. 8, 2013).]
Employee’s Failure to Administratively Appeal by Plan Deadline Dooms Her Court Case
In this case, the plaintiff was enrolled for short term and long term disability coverage under a group policy issued to her employer by the Union Security Insurance Company. The plaintiff submitted a claim for benefits, which Union denied. The plaintiff appealed the initial claim determination, but Union denied that appeal in a letter it faxed to the plaintiff’s attorney on December 21, 2010, that stated:
If [plaintiff] chooses to pursue this level of appeal, she should submit a written request to this effect, along with a statement indicating why she believes my decision is incorrect. Any such statement must be submitted within 180 days after your receipt of this letter. She may also submit, within 180 days, the attached Appeal Form to indicate her desire to request such a review. Any appeal submitted after 180 days will be denied for being filed too late. If she files a lawsuit, a court can dismiss that lawsuit if she did not submit her appeals in a timely manner or if she does not complete the appeal process before filing a suit.
The letter also enclosed a copy of Union’s procedures regarding appeals at the next level. That document advised that a request for a review of the denial of her appeal must be in writing and must be submitted within 180 days of receipt of written notice of denial. The document also outlined the appeal process, explaining that there was a first review, which the plaintiff had gone through, and a second review, which would have been the plaintiff’s next step and the final level of administrative review. The document also provided forms to fill out or to use for assistance in preparing the plaintiff’s appeal.
On July 7, 2011, the plaintiff’s attorney sent Union a letter that stated that he was going to appeal the denial of the plaintiff’s claim for long term disability benefits “as set forth in your complete level of denial received by me on January 10, 2011.”
On July 15, 2011, Union wrote to the plaintiff’s lawyer to remind him of the 180 day deadline and procedures specified in the denial letter. The letter also stated:
180 days from December 21, 2010 is June 19, 2011. We administratively allow 5 days for mail service and would thus have accepted an appeal as late as June 24, 2011. However, as the 180-day deadline has been exceeded, any appeal now submitted will be denied due to untimely submission.
The plaintiff sued Union on December 13, 2011, and Union moved for summary judgment.
In its decision granting Union’s motion, the district court explained that claimants seeking benefits from an ERISA plan such as the Union plan first must exhaust available administrative remedies under the plan before bringing suit to recover benefits. The district court then observed that the plaintiff had received the denial letter on December 21, 2010, via fax from Union to her attorney, and found that it began the 180 day period during which the plaintiff could appeal the denial.
The district court continued by noting that for the plaintiff to have complied with the plan’s administrative procedures, she was required to submit an appeal by June 19, 2011, although Union would have accepted it up to five days later. The court rejected the plaintiff’s attorney’s statement that he had received the denial letter on January 10, 2011, based on the fax transaction reports and a fax the attorney sent to Union on the evening of December 21, 2010, seeking the administrative record for the plaintiff’s claim. It then held that because the 180 days had expired on June 19, 2011, and Union would have administratively allowed five extra days, the attorney’s July 7, 2011, letter was untimely and thus did not comply with the plan’s procedures.
In any event, the district court continued, even if the plaintiff’s attorney’s July 7, 2011, letter could be considered timely, it did “not constitute an appeal” because it merely stated that the plaintiff intended to appeal. The letter “included no factual or substantive arguments, and no evidence,” and provided “nothing for [Union] to consider on appeal,” the district court pointed out.
Accordingly, the district court concluded that the plaintiff had failed to exhaust her administrative remedies as required under ERISA, and her complaint had to be dismissed. [Green v. Union Security Ins. Co., 2013 U.S. Dist. Lexis 10625 (N.D. Tex. Jan. 25, 2013).]
Mandatory Park and Ride Program Does Not Require Compensatory Time, Circuit Court Rules
S&B Engineers and Constructors, Limited, an engineering and construction services contractor in the petrochemical and refining industry, provided construction services for Motiva Enterprises, L.L.C., at the Motiva plant in Port Arthur, Texas. Initially, manual laborers hired by S&B to work at the Motiva plant had the option of either parking at a parking lot located near the Motiva plant or participating in a park and ride program.
After a period of time, however, S&B required its laborers to participate in the park and ride program. Under that program, all laborers had to park their vehicles in a parking lot located approximately six to seven miles away from the Motiva plant and ride a bus provided by S&B from the parking lot to the Motiva plant. Before boarding the buses between 5:30 a.m. to 6:30 a.m., laborers had to walk through turnstiles and were required to scan their Motiva plant badge. S&B also provided a late arrival bus, which departed at 6:45 a.m.
The parking lot and S&B buses were considered Motiva plant site extensions, and as a result, Motiva’s rules of conduct applied to these areas. In particular, laborers were required to follow Motiva’s Transportation Rules of Conduct, which included, but were not limited to, prohibitions of fighting and littering, using tobacco, consuming alcohol or controlled substances, and possessing weapons. Additionally, Motiva prohibited cell phones with cameras on the site. Laborers who violated these rules could be subject to disciplinary action such as removal from the bus, notification of misconduct to Motiva plant officials, or termination from employment.
After arriving at the Motiva plant, laborers had to scan their S&B badges and then proceed to their appropriate work stations. At approximately 5:30 p.m., the buses transported the laborers back to the parking lot. The daily round-trip travel time to and from the Motiva plant lasted approximately 40 to 60 minutes. S&B did not provide laborers with any job-related instructions prior to or during the bus rides or compensate them for the travel time to and from the Motiva plant.
After one of the laborers, a journeyman electrician, left S&B, he filed a collective action suit on his behalf and on behalf of similarly situated laborers, alleging that S&B’s mandatory busing scheme violated the federal Fair Labor Standards Act of 1938 (FLSA) because laborers were not compensated for their travel time.
The plaintiff maintained that the travel time was compensable because:
- the mandatory busing scheme served as an economic commercial benefit for S&B;
- laborers were considered “to be on the worksite” during the bus rides and subject to Motiva plant’s rules of conduct which, if violated, could result in disciplinary action; and
- the bus rides to and from the Motiva plant were “integral and indispensable” to his work at the Motiva plant.
The district court granted summary judgment in favor of S&B, ruling that the travel time was not compensable under the FLSA. The district court noted that the sole fact that S&B instituted a mandatory scheme did not per se render such travel time compensable. With respect to Motiva’s Transportation Rules of Conduct, the district court explained that these rules were reasonably related to the “logistics of commuting,” which was not a principal activity. Regarding the plaintiff’s contention that the bus rides were “integral and indispensable” to his employment, the district court concluded that “merely traveling or commuting” did not confer a benefit on S&B because it did not relate to the duties the employee was hired to perform. The plaintiff appealed to the U.S. Court of Appeals for the Fifth Circuit.
In its decision affirming the district court’s ruling, the Fifth Circuit held that the travel time was not compensable under the FLSA, as it constituted “ordinary home-to-work-and-back travel.” It pointed out that the plaintiff had conceded that he neither performed any work prior to the beginning of his shift at the Motiva plant nor received any work-related instructions prior to or during the bus rides; that he retrieved his tools after the daily safety meetings, which were held at the Motiva plant at approximately 7:10 a.m., and that he returned his tools at 5:20 p.m., 10 minutes prior to the end of his shift; and that S&B did not restrict him from engaging in personal activities such as sleeping and reading during the rides.
Finally, the circuit court added, although the plaintiff was required to follow Motiva’s Transportation Rules of Conduct, these rules “were simply logistical, administrative, and marginally restrictive,” and not “integral and indispensable” to the plaintiff’s activities as a journeyman electrician.
Accordingly, the circuit court affirmed the district court’s grant of summary judgment. [Griffin v. S&B Engineers & Constructors, Ltd., 2013 U.S. App. Lexis 785 (5th Cir. Jan. 11, 2013).]
Comment: An interpretative statement of the Wage and Hour Division of the Department of Labor further supports the ruling in this case that the travel time was not compensable under the FLSA. 29 C.F.R. § 790.7(f) provides:
Examples of walking, riding, or traveling which may be performed outside the workday and would normally be considered “preliminary” or “postliminary” activities are: (1) walking or riding by an employee between the plant gate and the employee’s lathe, workbench or other actual place of performance of his principal activity or activities; (2) riding on buses between a town and an outlying mine or factory where the employee is employed; and (3) riding on buses or trains from a logging camp to a particular site at which the logging operations are actually being conducted.
Circuit Court Rejects FLSA Claim over Time and Place for Plaintiff to Express Breast Milk
The plaintiff in this case alleged that her former employer violated Section 207(r)(1) of the Fair Labor Standards Act of 1938 (FLSA) because it did not give her a time and place to express breast milk and that it also violated Section 215(a)(3) when it terminated her employment after she asked for a time and place to do so. The case went to trial before a jury. After the plaintiff’s testimony, the district court granted the employer’s motion for judgment as a matter of law, concluding that there was not a legally sufficient evidentiary basis for the jury to find that the employer had violated either FLSA provision. The plaintiff appealed.
The U.S. Court of Appeals for the Eleventh Circuit affirmed. It explained that Section 207(r)(1) required that an employer provide a reasonable break time and a private place, other than a bathroom, for an employee to express breast milk. The circuit court then noted that while working for her employer, the plaintiff “was free to take breaks as needed,” her breaks were neither counted nor timed, she was never criticized for taking a break, she also was given a one hour lunch break, and she testified that she received the necessary breaks to express breast milk.
Moreover, the circuit court continued, the plaintiff also had access to a private place. “Vacant, nearby offices were available to [the plaintiff] as a private location to express breast milk.” Additionally, the plaintiff facilitated the use of her office by taping folders to her office window for privacy, and did not ask for a different location, according to the circuit court. It also pointed out that the plaintiff had testified that she was given the necessary breaks for this purpose and that she had access to a private place. Accordingly, the circuit court concluded, the district court had correctly concluded that the evidence was insufficient for a reasonable jury to find that the plaintiff’s employer had violated Section 207(r)(1).
The Eleventh Circuit reached the same conclusion with respect to the plaintiff’s claim under Section 215(a)(3), which provides that “it shall be unlawful for any person . . . to discharge or in any other manner discriminate against any employee because such employee has filed any complaint.” It explained that the filing of a complaint under Section 215(a)(3) did not have to be in the form of an official complaint or even be in writing, but that some degree of formality was required to provide the employer with “fair notice” that an employee was lodging a grievance.
The circuit court then found that the plaintiff had not filed a complaint within the meaning of Section 215(a)(3), rejecting her argument that she had done so when she emailed her supervisor to ask for a time and place to express breast milk. “Neither the context nor content of [the plaintiff’s] email put [her employer] on notice that she was lodging a grievance,” the circuit court concluded. Indeed, it continued, the circumstances surrounding the email would not have informed a reasonable employer that the plaintiff was filing a complaint because, before sending the email, she had not complained or asked for a different location.
Additionally, the Eleventh Circuit rejected the plaintiff’s argument that because her employer monitored her email communications, an email she sent to a friend that was entitled “Federal Law” and that referenced Section 207(r)(1) was sufficient to constitute a complaint under Section 215(a)(3). The circuit court explained that she had never shown this email to anyone at her employer and did not she tell anyone at her employer that she believed the law had been violated. “Because [the plaintiff] did not direct the statutory reference to [her employer], her email would not have met the formality requirements of § 215(a)(3) so as to put [her employer] on notice that a complaint had been filed,” the Eleventh Circuit concluded. [Miller v. Roche Surety and Casualty Co., Inc., 2012 U.S. App. Lexis 26364 (11th Cir. Dec. 26, 2012).]
Court Upholds Agreement Mandating Arbitration of Plaintiff’s Claims after Finding Certain Provisions Unenforceable, but Severable
When the plaintiff in this case began working as a sales associate with Volkswagen Tulsa, LLC, the parties executed an agreement that required submission to arbitration of “any dispute between any employee(s) and VW Tulsa LLC which arises either directly or indirectly from Employee’s employment with VW Tulsa LLC.” The agreement provided for “final and binding” arbitration, with the following terms:
[S]uch dispute shall be settled by arbitration in accordance with the rules for commercial arbitration of the American Arbitration Association (or a similar organization) in effect at the time such arbitration is initiated, and subject further to the provisions of any applicable Oklahoma arbitration law, incorporated herein by reference. I will submit any dispute – including but not limited to my termination – arising under or involving my employment with VW Tulsa LLC to binding arbitration within one (1) year from the date the dispute first arose. . . .
The prevailing party shall be awarded all of the filing fees and related administrative costs. Administrative and other costs of enforcing an arbitration award, including the costs of subpoenas, depositions, transcripts and the like, witness fees, payment of reasonable attorney’s fees, and similar costs related to collecting an arbitrator’s award, will be added to, and become a part of, the amount due pursuant to this Agreement.
My signature on this document acknowledges that I understand the Arbitration Policy and agree to abide by its conditions. . . . I agree that the arbitration shall be the exclusive forum for resolving all disputes arising out of or involving my employment with VW Tulsa LLC or the termination of that employment.
The plaintiff subsequently sued VW Tulsa for race discrimination, hostile work environment, gender discrimination, and retaliation under Title VII of the Civil Rights Act of 1964 and for violations of wage and hour laws. VW Tulsa moved to stay the lawsuit and to compel arbitration of the plaintiff’s claims.
The plaintiff did not deny that her claims arose under or involved her employment within the scope of the arbitration agreement, but she argued that the arbitration agreement was unenforceable because its terms were unreasonably favorable to VW Tulsa due to its fee and cost terms and its one year limitations period.
The plaintiff asserted that the Commercial Arbitration Rules of the American Arbitration Association (AAA), which were referenced within the agreement, would require her to pay an initial filing fee of $2,800, a final fee of $1,250, and one-half of the arbitrator’s fees, and that she could not afford such costs, rendering it “unlikely” that she would be able to pursue her claims.
In response, VW Tulsa noted that those rules provided that the “AAA may, in the event of extreme hardship on the part of any party, defer or reduce the administrative fees.” In addition, VW Tulsa “agree[d] to pay the costs of the arbitration, such as filing fees and the arbitrator’s fee, and waive[d] any right it may have had under the Agreement to recoup the same or its own attorney’s fees, regardless of the outcome of the arbitration.” As a result, VW Tulsa argued, the plaintiff could not establish that she was likely to bear the costs of the arbitration because any concern had been removed by its agreement to bear all such costs. VW Tulsa also agreed to waive any defense under the one year limitation and represented that it would not seek to enforce the one year limitations period against plaintiff.
In its decision on VW Tulsa’s motion, the court decided that the one year limitation provision and the fee and cost provisions of the arbitration agreement did not prevent arbitration of the plaintiff’s claims. The court first found that, if enforced, the one year limitation period “would significantly diminish” the plaintiff’s statutory rights under Title VII and thus it ruled that the one year limitation therefore was unenforceable. However, the court decided that the provision was severable from the agreement and that, in any event, the issue was moot because VW Tulsa had agreed that it would not seek to enforce that provision.
The court also ruled that VW Tulsa’s agreement to pay the costs of the arbitration, such as filing fees and the arbitrator’s fee, and to waive any right it may have had under the agreement to recoup those costs or its own attorney’s fees mooted the plaintiff’s objection to the fee and costs provision because that provision no longer nullified the plaintiff’s right to assert her claim without risk of paying fees. Additionally, the court also found that even if VW Tulsa had not agreed to pay all the costs and its own attorney’s fees, any fee-shifting provision “would be unenforceable” against the plaintiff and also would be severable from the agreement.
Accordingly, the court granted VW Tulsa’s motion and directed the parties to submit the plaintiff’s claims to binding arbitration. [Morrison v. Volkswagen Tulsa, LLC, 2013 U.S. Dist. Lexis 8974 (N.D. Okla. Jan. 23, 2013).]
Reprinted with permission from the May 2013 issue of the Employee Benefit Plan Review – From the Courts. All rights reserved.