United States District Court, N.D. Indiana, South Bend Division
OPINION AND ORDER
P. SIMON, UNITED STATES DISTRICT JUDGE
cases turn almost entirely on what the applicable standard of
review is. This case is one of them. This is an ERISA case
that was transferred to me last year in a district-wide
reassignment of cases. Judge Lee, who previously was assigned
to the case, held that Reliance Standard Life Insurance
Company's decision to deny Donald Fessenden long term
disability benefits would be reviewed under the deferential
arbitrary and capricious standard, as opposed to deciding the
case from scratch - the so-called de novo standard.
When that decision was made by Judge Lee, the die was
is substantial evidence on both sides of the issue of whether
Mr. Fessenden is disabled. Although, after thoroughly
reviewing the record, I am inclined to believe that Donald
Fessenden is in fact disabled by his medical conditions,
oddly, that conclusion is not what dictates the outcome here.
Instead, given Judge Lee's earlier ruling, I am limited
to a highly deferential standard of review which means
Reliance's rejection of Fessenden's claim for
benefits will not be overturned unless Fessenden demonstrates
that Reliance's decision was “‘downright
unreasonable'.” Walton v. National Integrated
Group Pension Plan, 587 Fed.Appx. 328, 329
(7th Cir. 2014), quoting Williams v. Aetna
Life Ins. Co., 509 F.3d 317, 321-22 (7th Cir.
2007); Edwards v. Briggs & Stratton Retirement
Plan, 639 F.3d 355, 360 (7th Cir. 2011),
quoting Davis v. Unum Life Ins. Co. of Am., 444 F.3d
569, 576 (7th Cir. 2006). See also Kennedy v.
Lilly Extended Disability Plan, 856 F.3d 1136, 1138
(7th Cir. 2017) (Manion, J., dissenting). As long
as the “‘plan administrator's decision has
rational support in the record, '” I must uphold
it. Geiger v. Aetna Life Insurance Company, 845 F.3d
357, 362 (7th Cir. 2017), quoting
Edwards, 639 F.3d at 360. Because there is rational
support in the record for the decision made by Reliance, I
must reluctantly affirm it.
start with some background information. Donald Fessenden
worked for Oracle USA as a Software Engineer Manager until
January 2, 2008, when he stopped working due to fatigue and
severe chronic migraine headaches. Fessenden applied for and
was granted short term disability benefits through an
employee welfare benefits plan with Reliance Standard Life
Insurance Company. Years later on March 4, 2014, Fessenden
made a claim for long term disability benefits. Reliance
denied the claim and affirmed that decision in its
administrative appeals process. Judge Lee held that the
latter decision by Reliance - the decision denying the
appeal- was untimely under applicable ERISA regulations.
See DE 21 at 8; 29 C.F.R. §
2560.503-1. The delay in denying Fessesen's appeal is
important because it can have an effect on the standard of
review. I will return to this critical issue in a moment.
filed this lawsuit challenging the denial of long term
disability benefits, and both sides now seek summary
judgment. Summary judgment is proper “if the movant
shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of
law.” Fed.R.Civ.P. 56(a). In reviewing cross-motions
for summary judgment, a court must apply this standard to
both motions and view all facts and draw all reasonable
inferences in the light most favorable to the party opposing
each motion. Tate v. Long Term Disability Plan for
Salaried Emps. of Champion Int'l Corp. #506, 545
F.3d 555, 559 (7th Cir. 2008).
disability plan is governed by the Employee Retirement Income
Security Act of 1974, commonly called ERISA. With respect to
an employee benefit plan governed by ERISA, a plaintiff may
bring an action “to recover benefits due to him under
the terms of his plan, to enforce his rights under the terms
of the plan, or to clarify his rights to future benefits
under the terms of the plan.” 29 U.S.C.
§1132(a)(1)(B). A court considers the denial of benefits
de novo unless the plan grants the plan
administrator discretionary authority to construe policy
terms. Cheney, 831 F.3d at 849, citing Firestone
Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115
(1989). Where the plan grants such authority, the court
reviews only for abuse of that discretion- the deferential
arbitrary and capricious standard. Fontaine v.
Metropolitan Life Ins. Co., 800 F.3d 883, 885
(7th Cir. 2015); Holmstrom v. Metropolitan
Life Ins. Co., 615 F.3d 758, 767 n.7 (7th
Cir. 2010), citing Raybourne v. Cigna Life Ins. Co. of
New York, 576 F.3d 444, 449 (7th Cir. 2009).
Most plan administrators seem to have gotten the memo. Almost
every ERISA case I have encountered grants discretionary
authority to plan administrators.
the parties engaged in a lengthy dispute before Judge Lee
about whether the de novo standard or the more
deferential arbitrary and capricious standard of review
applies. [DE 21, 29.] After two rounds of briefing, Judge Lee
concluded that the plan clearly contains a discretionary
clause giving Reliance authority to construe the plan and
determine eligibility for benefits. Thus, the case would be
governed by the arbitrary and capricious standard of review.
[DE 29]. Judge Lee further concluded that although Reliance
missed a deadline in making its claim decision, that
wasn't enough to mandate a de novo review.
[Id.] Reliance was saved by the substantial
compliance doctrine. [Id.]
who said that “close is only good in horseshoes and
hand grenades” must not have heard of ERISA and the
substantial compliance doctrine. In the murky world of ERISA
litigation, being close enough is often considered to be good
enough. This is because the substantial compliance doctrine
often excuses plan administrators who don't turn square
corners in following ERISA regulations.
substantial compliance doctrine doesn't always save the
day from administrative foul-ups. The Second Circuit recently
held that an insurer can lose the benefit of the deferential
standard of review when it fails to comply with regulatory
requirements relating to time limits for making claim
decisions. Halo v. Yale Health Plan, Director of Benefits
& Records Yale Univ., 819 F.3d 42 (2nd
Cir. 2016). In other words, the court held that the
substantial compliance doctrine may be inapplicable where
deadlines are concerned. Id. at 55-58. This position
is consistent with Seventh Circuit cases in other areas of
the law that hold that a deadline that is blown by even one
day is blown nonetheless. See e.g. United States v.
Marcelo, 212 F.3d 1005, 1010 (7th Cir. 2000)
(a habeas corpus petition that is filed one day too late is
untimely and must be dismissed). It is also consistent with
Seventh Circuit cases that have looked askance at an
expansive use of the substantial compliance doctrine where
its application would conflict with a literal requirement of
the ERISA statute. Burns v. Orthotek, 657 F.3d 571,
575 (7th Cir. 2011). See also Schneider v.
Sentry Long Term Disability Plan, 422 F.3d 621, 627-28
(7th Cir. 2005); but see Edwards v. Briggs and
Stratton Retirement Plan, 639 F.3d 355, 361-62
(7th Cir. 2011). So according to the Second
Circuit, when an insurer blows a deadline in making a claims
decision, it may end up forfeiting the more deferential
standard, and lead to district courts reviewing the claims
decision under the de novo standard unless it can
show that the failure to follow the regulations was
inadvertent and harmless. Halo, 819 F.3d at 58.
Lee was unpersuaded by the Second Circuit opinion in light of
earlier Seventh Circuit cases that seem to rely on the
substantial compliance doctrine in similar circumstances. DE
29 at 9, citing Halpin, 962 F.2d at 690. In sum,
Judge Lee held that Reliance's failure to adhere to the
regulations could be overlooked because their compliance was
good enough. In other words, because Reliance substantially
complied with the regulations governing the timing of its
claims decision - remember, they didn't actually comply -
the arbitrary and capricious standard governs this case.
Whether use of the substantial compliance doctrine is
appropriate in this case is not for me to decide. After the
case was transferred to me, I have not been asked to
reconsider Judge Lee's ruling on this critical question.
As a result, I will review Fessenden's claim under the
arbitrary and capricious standard. [DE 29 at 10.]
order to qualify for long term disability benefits under the
plan, Fessenden was required to demonstrate (among other
things) that as a result of sickness or injury he was unable
to perform the material duties of his regular occupation from
January 2, 2008 and for 24 months thereafter. [DE 57-1 at 7,
8, 17.] There are two decisions from Reliance Standard - both
in letter form - denying long term disability benefits to
Fessenden. [DE 57-4 at 34-44; DE 57-4 at 49-57.] Both the
initial denial and its affirmance after appeal acknowledge
Fessenden's history of migraine headaches and fatigue.
[E.g., id. at 40, 53.] In each decision,
Reliance expressed its conclusion that those conditions had
not rendered Fessenden unable to “perform the material
duties of [his] regular occupation, ” as required to
demonstrate disability under the plan. [Id. at 34,
all the medical history from 2006 to the time of decision,
Reliance concluded that Fessenden “retained the ability
to perform the material duties of [his] regular
occupation” as of January 2, 2008. [DE 57-4 at 36.]
That meant Fessenden was not totally disabled as the term was
defined in the plan. [Id. at 34.] As noted, the
question is not whether I agree with that decision but
whether the decision is arbitrary and capricious - meaning
does it have rational support in the record. Geiger,
845 F.3d at 362.
claims that he is disabled by chronic fatigue syndrome.
Chronic fatigue syndrome is “a complicated disorder
characterized by extreme fatigue that can't be explained
by any underlying medical condition. The fatigue may worsen
with physical or mental activity, but doesn't improve
with rest.” Mayo Clinic, Diseases & Conditions,
Chronic Fatigue Syndrome,
Chronic fatigue syndrome can render a person feeble. Symptoms
of the aliment include fatigue, sore throat, unexplained
joint and muscle pain, headaches and extreme exhaustion.
2, 2008 is the date on which Fessenden claims his chronic
fatigue syndrome became disabling. Fessenden's case is
hindered by the lack of a formal diagnosis contemporaneous
with that claimed onset date. This problem is exacerbated by
the fact that Fessenden made his disability claim in 2014,
some six years after he claims he became disabled. Although
it appears that Fessenden had many of the symptoms of chronic
fatigue syndrome going back over a decade, he was only
recently formally diagnosed ...