In Christoff v. Unum Life Insurance Company of America, Plaintiff Christoff suffered from severe fibromyalgia. He was insured under a group employee benefit plan provided by his employer and the insurance company was Unum. He began receiving long-term disability (LTD) benefits from Unum in November 2001. More than 15 years later, on November 22, 2016, Unum determined he was no longer disabled and terminated his LTD benefits.
Plaintiff filed an administrative appeal. On June 15, 2017, Unum upheld its termination decision, so Plaintiff filed an ERISA lawsuit in the United District Court for the District of Minnesota. He raised two claims for relief.
In Count I, Plaintiff alleged Unum violated its fiduciary duty, so he was entitled to a clarification of rights and to recover benefits under 29 U.S.C. section 1132(a)(1)(B). In Count II, he requested the “equitable remedy of surcharge “for attorneys fees” and the cost of substitute health care coverage under 29 U.S.C. section 1132(a)(3).
Unum filed a Motion for Judgment on the Pleadings on Count 2 and argued that it was duplicative of Count I. The Court disagreed and denied UNUM’s motion.
Plaintiff filed objections to the Magistrate’ Judge’s recommendation that the correct standard of review for Plaintiff’s claims should be for abuse of discretion. Plaintiff argued his case should be reviewed de novo. The Court disagreed with Plaintiff and ruled that the proper standard of review was for abuse of discretion.
The District Court did not consider the merits of the Plaintiff’s claim and made no determination as to whether Unum abused its discretion in terminating Plaintiff’s LTD benefits.
Court Ruled that Claims for Relief Under 29 U.S.C. section 1132(a)(1)(B) and 29 U.S.C. section 1132(a)(3) are not the same and Denied Unum’s Motion for Judgment on the Pleadings
Unum filed a Motion for Judgment on the Pleadings in which it argued that Plaintiff raised two duplicative claims, so Count I should be dismissed. The Court noted that a Judgment on the Pleadings is only appropriate when there is no dispute as to any material facts and the movant is entitled to judgment as a matter of law.
The District Court evaluated Plaintiff’s claims and determined they were not duplicative but were acceptable ways for the Plaintiff to argue different theories of the case. The U.S. Court of Appeals for the Eighth Circuit recently affirmed its prior ruling that “seeking relief under (a)(1)(B) does not preclude relief under (a)(3). This is because the two counts allege distinct theories of liability.”
The Circuit Court continued, “it is difficult for a court to discern the intricacies of the plaintiff’s claims to determine if the clams are indeed duplicative, rather than alternative, and determine if one or both cold provide adequate relief.” The Circuit Court concluded that ERISA plaintiffs should be allowed “to plead alternative claim advancing distinct legal theories under these provisions.”
Relying on this precedent, the District Court denied Unum’s motion on the grounds that the case was at the pleadings stage, and the two counts arose under “distinct legal theories—improper denial of benefits under the terms of the plan and breach of fiduciary duty – but also seek distinct relief.”
Proper Standard of Review is “Abuse of Discretion”
The Magistrate Judge recommended that the District Court apply the abuse of discretion standard of review when determining whether Unum wrongly terminated Plaintiff’s LTD benefits. In ERISA cases, if the plan grants discretionary authority to the plan administrator, the appropriate standard of review is for abuse of discretion.
This recommendation was based on the certificate language which granted discretionary authority to make benefit decisions to the plan administrator. Plaintiff objected and argued that the certificate was not part of the policy, and the Court should apply the de novo standard of review.
The Plaintiff argued that since the delegation of authority was only included in the certificate, it was not part of the policy. At the least, Plaintiff argued, the language in the certificate was ambiguous, so his appeal should be subject to de novo review.
The Court ruled that the plan document must be reviewed as a whole, including the policy and the certificate. It conducted a de novo review of the record and all the arguments and submission s of both parties, and overruled the Plaintiff’s objections, concluding that “The Court agrees that the abuse-of-discretion standard should apply to this matter based on the clear language in the policy granting discretionary authority to Defendant.”
If you have had your LTD benefits denied, or have any other issue with your disability claim, contact one of our attorneys at Dell & Schaefer for a free consultation.