United States District Court, N.D. Alabama, Western Division
ARTURO J. OTERO, Plaintiff,
UNUM LIFE INSURANCE COMPANY OF AMERICA, Defendant
OWEN BOWDRE CHIEF UNITED STATES DISTRICT JUDGE.
protection for what matters most” appears on the
website of the Defendant, Unum Life Insurance Company of
America. Its vision statement includes providing products
that help “employees protect their families and
livelihoods, ” and its statement of values places
integrity above all others.
ERISA lawsuit, the Plaintiff, Dr. Arturo Otero, asserts, in
essence, that Unum failed to live up to its own motto and
statements of values and vision when it failed to act with
integrity by denying him the financial protection for which
he paid. He claims disability benefits under a group
long-term disability policy issued to his employer. He argues
that Unum waived any right to declare him ineligible for
coverage based on his part-time work, because it knew he was
working part-time when it accepted his premiums, and failed
to follow the mandated claims procedures in processing his
case raises two issues that the Eleventh Circuit has not yet
resolved: whether waiver applies in an ERISA context in
circumstances present here, and whether the correct standard
of review is de novo in a “deemed
exhausted” ERISA case when the insurance company has
not exercised the discretion granted it by the plan.
matter is before the court on cross motions for judgment on
the administrative record: “Plaintiff's Motion for
Summary Judgment” (doc. 21), converted to a Motion for
Judgment on the Administrative Record (doc. 30), with an
accompanying brief (doc. 22); and “Unum Life's
Motion for Judgment on the Administrative Record, or
Alternatively, for Summary Judgment” (doc. 23), with an
accompanying brief (doc. 24). The parties responded to the
cross motions (Unum's response - doc. 34; Plaintiff's
response - doc. 36), so this matter has received thorough
reasons stated in this Memorandum Opinion,  the court DEEMS
these motions to be requests for judgment as a matter of law,
not judgment limited to the administrative record; the court
FINDS that Dr. Otero is eligible for coverage under the group
policy and FINDS that he cannot perform the material and
substantial duties of his regular occupation as a
neurologist. However, the court WILL REMAND this case to
Unum, directing it to request from Dr. Otero the relevant W-2
forms and to make appropriate calculations based on the W-2
forms to determine whether Dr. Otero's monthly earnings
after February 2, 2013 decreased by 20 % as required to
qualify as a disability under the policy.
Arturo J. Otero is a licensed neurologist who is not board
certified. This case represents the second case he has filed
against Unum, claiming disability benefits under the group
long-term disability policy that Unum issued to his employer,
Neurology Consultants of Tuscaloosa, P.C. To distinguish
between the two related lawsuits, the court will refer to the
first case filed, Otero v. Unum Life Ins. Co., Case
No. 7:10-CV-02554-SLB (N.D. Ala.), as “Otero
I”; and will refer to the instant case as
“Otero II.” An understanding of
Otero I sheds light on the circumstances of this
governs both the original claim made the basis of Otero
I and the one made the basis of the current suit. (29
U.S.C.A. §§ 1001 to 1461). Before 2005, Dr. Otero
had worked 60-80 hours per week as a neurologist, seeing
patients in the office and hospital and taking night call.
(Otero I, Doc. 35-14, at 74). Prior to filing the
first lawsuit, Dr. Otero filed a claim with Unum for
disability benefits beginning January 3, 2005, when he
stopped working on a full-time basis because of atrial
fibrillation. Dr. Otero continued to work as a neurologist on
a part-time basis with no night call. (Otero II,
Doc. 35-3, at 3).
provided Dr. Otero with full disability benefits of $10, 0000
per month for 24 months beginning April 3, 2005 (id.
at 3 & 5) based on policy provisions that provided for
benefits with a determination that the employee was
“limited from performing the material and substantial
duties of [his] regular occupation due to sickness or injury
and [that he has] ¶ 20% or more loss in [ ] indexed
monthly earnings due to the same sickness or injury.”
(Otero II, Doc. 25-1, Ex. 2; Doc. 25-2, at 19). The
company's determination to provide benefits at this
juncture was based on Dr. Otero's reported restriction of
being unable to perform night call, a substantial duty of his
job. (Otero I, Unum Opp. Br., Doc. 31, at 3 ¶
12 (resp. to “undisputed” fact 12.)).
that two-year period, the eligibility for benefits under the
policy changed from the determination of whether the employee
could perform his “regular occupation” to whether
he was “unable to perform the duties of any gainful
occupation for which [he] is reasonably fitted by education,
training or experience.” (Otero II, Doc. 25-1,
Ex. 2; Doc. 25-2, at 19; Doc. 35-3, at 3). The
policy defines gainful occupation as one that would provide
the claimant with an income “at least equal to your
gross disability payment within 12 months of your return to
work.” (Otero II, Doc. 25-2, at 37).
September 28, 2007, more than 29 months after the April 2005
commencement of disability payments to Dr. Otero, Unum
terminated his benefits. Although the policy's disability
benefit was now based on the “any gainful
occupation” standard, Unum terminated benefits because
it found that Dr. Otero could perform the full-time duties
required of his regular occupation as a neurologist,
including working the necessary hours and taking rotational
night call. (Otero I, Doc. 35-13, at 70-74).
Otero appealed that decision, and, after review, Unum
reversed the decision and reinstated Dr. Otero's
disability benefits on January 17, 2008. That reinstatement
letter quoted various policy provisions, and quoted the
definition of “regular occupation” but not
“gainful occupation.” Ultimately, the letter
notifying of the reversal stated simply that the additional
information from Dr. Otero's treatment providers
“was reviewed by our physician and restrictions and
limitations were found to be supported.” (Otero
I, Doc. 35-14 at 14-17, 19).
to Unum's response to Dr. Otero's statement of facts
in Otero I, which it adopts in Otero II,
Unum based its reversal decision on the need for more
information concerning Dr. Otero's restrictions and
limitations in his occupation, including an independent
medical exam. (Otero I, Doc. 31, at 3-4
(responding); Otero II, Doc. 34, at 4 (adopting)).
However the letter itself did not qualify the reversal or say
that the reversal was based on the need for more medical
information. It did say that, in the future, the benefits
center “will also require periodic updates of your
medical status to determine if you remain eligible for
continued benefits under the applicable policy
provisions.” (Otero I, Doc. 35-14, at 17).
document entitled “Appeal Reversal” in Unum's
file on Dr. Otero provided a rationale for the appeal
decision that the letter itself failed to provide: the Appeal
Reversal document focused on Dr. Otero's pre-disability
lengthy work hours and his report of sleep deprivation
triggering heart palpitations. Dr. Parisi, the medical
reviewer, noted that Dr. Kay, Dr. Otero's cardiologist,
had consistently restricted Dr. Otero from working night
call, a restriction with which Dr. Parisi could not disagree.
That same Appeal Reversal document noted that vocational
reviewer Catherine Rogers had previously found night call to
be a substantial and material duty in the occupation of
neurologist. Although vocational reviewer Shannon
O'Kelley found that night call could or could not be a
substantial and material duty because some neurologists are
not required to do night call, O'Kelley did agree that
lack of night call would result in a decline in income.
(Otero I, Doc 35-14, at 24).
paid disability benefits to Dr. Otero of $10, 000 per month
for two additional years from January 2008 to March 4, 2010.
On June 12, 2008, an independent medical doctor evaluated Dr.
Otero and determined that he would be able to practice as a
neurologist without night call or weekend call. (Otero
I, Doc. 35-22, at 149). In a January 2010 telephone
conversation with Unum staff, Dr. Otero advised Unum that he
was working as a neurologist and general medical practitioner
for about 20 hours per week, performing office-based clinical
work for four hours per day and seeing a limited number of
patients, but not performing night call or hospital call.
(Otero II, Doc. 35-3, at 3).
again, on March 4, 2010, Unum Lead Disability Benefits
Specialist Andrew Hamilton sent Dr. Otero a letter
terminating his benefits. In that letter, Unum noted his
part-time work as a neurologist and stated that, although the
medical data in his file did “not support [his]
reported inability to work 40 hours per week, ” the
data “supports the restrictions and limitations of no
night call, weekend call, and hospital work or hospital
procedures.” Unum concluded that Dr. Otero was not
disabled under the “any gainful occupation”
standard because he had transferable skills that would allow
him to earn $10, 000 per month as an Insurance Physician
(working 40 to 67 hours per month or approximately 10 to 16
hours per week to receive an income equal to $10, 000 per
month), Medical File Review Physician (same), or Peer Review
Physician (working 22 ½ to 31 hours per month or
approximately 5.5 to 7.6 hours per week to receive an income
equal to $10, 000 per month). (Otero II, Doc. 35-3,
at 2-5). Unum reached that conclusion, in part, because of
the vocational review completed on March 2, 2010. In that
report, the reviewer opined that Dr. Otero was qualified to
perform the work in those three identified jobs, and she did
not discuss board certification as a qualification.
(Otero I, Doc. 35-22, at 143-45). Thus, Unum based
this determination that Dr. Otero was not entitled to long-
term disability benefits upon a determination that he was
able to perform a “gainful occupation, ”
not upon a determination that he was able to perform his
“regular occupation” as a neurologist.
(Otero I, Doc. 35-22, at 147-150; Doc. 35-23, at
1-3, & 5).
Otero appealed that ruling administratively, and, in a letter
dated April 30, 2010, Unum Lead Appeals Specialist Robert
Spellman acknowledged that Unum's own consulting
physician agreed with part-time work restrictions for Dr.
Otero “based on the fact that full time work would
increase [his] bouts of atrial fibrillation.” However,
Unum determined that termination of benefits was correct
because Dr. Otero would perform other gainful employment on a
part-time basis. (Otero I, Doc. 35-23, at 105). That
letter gave Dr. Otero until May 30, 2010 to provide
additional information, and stated that, if Unum did not
receive additional information, the decision would be final.
The letter also advised Dr. Otero of his right to bring a
civil suit under § 502(a) of ERISA if he disagreed with
the decision. (Otero II, Doc. 35-4).
administrative record in Otero I reflected that Dr.
Otero submitted a letter dated May 24, 2010 along with a
letter from his cardiologist, Dr. Kay, dated May 20, 2010.
Dr. Kay's letter stated in part:
[Dr. Otero] has repeatedly shown that when he increases his
work load that atrial fibrillation becomes a major problem
for him. Thus, it is my opinion that Dr. Otero's current
work load status is optimal for his cardiac condition. He
presently attends as a practicing neurologist in an
outpatient clinic setting over seeing low complex cases in a
limited fashion. Asking Dr. Otero to carry out the job
description as suggested in your [termination of benefits]
letter would be far more stressful to him and can be expected
to cause him to have more atrial fibrillation. In order for
him to carry out the duties as you described would require
additional training for him as he does not have expertise in
these matters. I believe that this markedly increases his
risk of atrial fibrillation and would hinder his health and
well being . . . . My recommendation since 2007 [has] not
changed and I would strongly encourage that his present level
of work duties not be changed.
(Otero I, Doc. 35-23, at 119). Mr. Spellman
responded to that information with a letter dated May 26,
2010, acknowledging receipt of that information and stating
“we have completed our appellate review and our
decision was communicated to you by letter dated April 30,
2010. If you wish to request a re-appeal of your claim, we
would need a request in writing.” (Otero I,
Doc. 35-23, at 121).
Otero I, Dr. Otero appealed Unum's 2010 decision
terminating benefits by filing a civil suit in this court. By
final judgment of March 30, 2012, the court granted judgment
on the administrative record in Unum's favor, and denied
Dr. Otero's motion. It found that the information in the
administrative record did not support a finding that
Unum's decision was wrong when Unum concluded that actual
jobs existed that would pay Dr. Otero $10, 000 per month, and
thus, that he was not disabled under the “any gainful
occupation” standard. At the district court level, Dr.
Otero argued that he was not qualified for the jobs that the
VE identified because he is not board certified in neurology,
and, to establish that fact, relied on evidence that was not
in the administrative record. The court granted the motion to
strike the evidence outside the administrative record.
Considering only the material available to Unum when it made
its determination, the court concluded: “[a]lthough
plaintiff has argued that the VE's report is inaccurate,
nothing in the administrative record indicated that defendant
had any reason to know or suspect that VE's report was
inaccurate and that plaintiff could not perform the jobs as
reported by the VE.” (Otero I, Doc. 36, at 5).
Dr. Otero did not appeal that judgment against him.
(Otero II, Unum's Br. Doc. 24, at 7-undisputed
fact #11; Doc. 36, at 4-no dispute).
Otero II, Dr. Otero argues that Unum accepted his
premiums under the group long- term disability policy from
April of 2010 forward, knowing that he was working part-time,
and thus, it has waived any right to deny that he was not
eligible for coverage because of his failure to work the
minimum hours. Dr. Otero also argues that, as of February of
2013, he once again became disabled within the meaning of the
group policy because of the deterioration of the same
condition of atrial fibrillation. Comparing the 2013 claim
with his prior claim, as discussed in detail below, the 2013
claim focuses on the same condition (atrial fibrillation) for
a different time period (beginning February of 2013 versus
the prior claims's disability commencement date of 2005
with a different disability standard applying after two years
of payments) using a different disability standard
(“regular occupation” standard versus the prior
claim's “any gainful occupation” standard).
other hand, Unum asserts that Dr. Otero is not eligible for
coverage because of his part-time work and that Unum did not
waive the 36-hour eligibility restriction because Unum did
not know that Dr. Otero was not working the minimum number of
hours until he submitted a claim. Further, Unum argues that,
even if Dr. Otero were eligible for coverage, the decision to
deny his claim for disability was not wrong because he is
able to perform his regular occupation as a neurologist and
because he did not receive a 20% or more loss in his indexed
monthly earnings because of his atrial fibrillation. In light
of those arguments, the following facts are relevant and
the termination of his group disability benefits in March of
2012, Dr. Otero continued to work part-time as a neurologist.
He asserts that, by February of 2013, his condition had so
deteriorated that he was once again disabled within the
meaning of his policy.
Otero's Ability to Perform His “Regular
evidence reflects that Dr. Otero's regular occupation is
neurologist, and his Unum policy provides that Unum measures
whether he can perform that regular occupation by how the
occupation is “normally performed in the national
economy, instead of how the work tasks are performed for a
specific employer or at a specific location.”
(Otero II, Doc. 25-2, at 25). While the briefing
does not clearly list all the duties of a neurologist as that
job is performed in the national economy, the evidence does
reflect that such job would require working full-time, as
opposed to part-time hours, and some of the evidence supports
the inclusion of night call as part of those duties.
Catherine Rogers, Unum's Senior Vocational Consultant,
found night call to be a substantial and material duty in the
occupation of neurologist. Another Unum Senior Vocational
Rehabilitation Consultant, Shannon O'Kelley, found that
night call could or could not be a substantial and material
duty of the neurologist occupation, although a neurologist
who did not take night call would expect decreased income.
(Otero I, Doc. 35-14, at 8, 12, 24). Marilyn Howard
of Unum stated in her note to Dr. Otero's claims file
dated January 10, 2008 that “all statements indicate
the insured would need to work over 40 hours per week to
perform full duties.” (Otero I, Doc. 35-14, at
Otero suffers from chronic atrial fibrillation that generally
occurs with factors such as stress, anxiety, and lack of
sleep. (Otero II, Doc. 35-15, at 45). One of his
cardiologists, Dr. William Hill, characterized his symptoms
as “very severe and incapacitating to the point that he
is unable to sustain any type of full time job. . . . [H]is
clinical descriptions with his symptoms of weakness,
shortness of breath, and inability to function during and
after his episodes are quite consistent with the medical
literature [and] there really is no question in my mind that
based on the above, he is unable to carry on any meaningful
sustained job.” (Otero II, Doc. 35-15, at 45
& 46). In addition to Dr. Hill, Dr. Otero has been under
the care of cardiovascular electrophysiologists, first Dr.
Neal Kay, and, after he retired, Dr. Jose Osorio, both
practicing in Birmingham.
seriousness of Dr. Otero's condition is reflected in the
need to have medical procedures to restore his heart rhythm.
Even when working part-time in the office setting to decrease
the factors associated with atrial fibrillation, Dr. Otero
has required several cardioversion and two
ablation procedures to place his heart back into a
current claim for disability allegedly began in February of
2013 and represented a further deterioration of his heart
condition. On February 2, 2013, Dr. Otero underwent a
cardioversion procedure at DCH Regional Medical Center in
Tuscaloosa, which successfully reestablished a sinus rhythm,
and another on October 20, 2013. (Otero II, Doc.
35-15, at 32, 41, 55, 59 & 62). On January 16, 2014, Dr.
Osorio stated that Dr. Otero had been hospitalized on
December 4 and 5, 2013, for implementation of a new medical
therapy involving a beta-blocker called Sotalol HCL to treat
his atrial fibrillation. He stated that Dr. Otero “will
need to continue leading a non-stressfull [sic] life and work
part-time in a non-stressful environment, preferably less
stressful than what he works in now in order to help decrease
the symptoms of his afib.” (Otero II, Doc.
35-15, at 39.)
to the 2013 claim on appeal here, Unum had never made a final
determination that Dr. Otero was able to perform his
“regular occupation.” Unum paid him long-term
disability benefits for years when the definition of
“disability” under the policy was measured under
the “regular occupation” standard, and the 2010
determination that he was not entitled to long-term
disability benefits was based upon a determination that he
was able to perform a “gainful occupation,
” not upon a determination that he was able to perform
his “regular occupation” as a
neurologist. (Otero I, Doc. 35-22, at 147-150; Doc.
35-23, at 1-3, & 5).
Knowledge of Dr. Otero's Part-Time Work
complex history with Dr. Otero-involving numerous disability
benefits determinations, administrative appeals, and two
years of litigation in federal district court, all before the
denial of the current claim-meant that the company had much
information available to it about Dr. Otero's part-time
work schedule. In Otero I, the court entered
judgment in Unum's favor in March of 2012. The
information in Otero I's administrative record
reflected that, after filing claims for disability benefits,
Dr. Otero worked part-time as a neurologist from 2005 through
the approximate date of the 2010 decision, working four hours
a day and sixteen to twenty hours a week, seeing patients in
the office. (Otero I: Doc. 35-14, at 7; Doc. 35-22,
at 66; Doc. 35-23, at 6-7). The decision makers on his March
2010 disability benefits termination and the April 2010
administrative appeal, Andrew Hamilton and Robert Spellman
respectively, reviewed materials repeatedly referring to Dr.
Otero's part-time work hours, and those decision makers
repeatedly acknowledged his part-time work hours in their
claim file documents in March and April of 2010. (Otero
I: Doc. 35-23, at 6, 23, 25, 29, 31, 48, 51, 54).
March 26, 2010, Dr. Otero sent Andrew Hamilton a letter,
advising him that he was pursuing an administrative appeal of
the termination of his long term disability benefits. In that
letter, Dr. Otero specifically asked for “clarification
as to what is the current status of my group policy for any
premiums due or does the waiver of the premiums still apply
to this policy while the appeal is in process.”
(Otero I: Doc. 35-23, at 22). The same March 26,
2010 letter also contained confirmation that Dr. Otero was
working part-time; it attached two letters from Dr.
Otero's cardiologists, both dated in early 2010 and
setting out his work schedule of four hours a day and twenty
hours a week. (Otero I: Doc. 35-23, at 23-26). Unum
assigned the appeal to specialist Robert Spellman.
administrative record reflects that Dr. Otero resumed paying
premiums after termination of his benefits with the knowledge
of and based on the direction of Unum decision maker Robert
Spellman. Dr. Otero wrote to Unum, asking whether he needed
to pay premiums during the appeals process, and he and his
staff called Unum repeatedly from March 24 through April 1,
2010 to obtain an answer to that question; Dr. Otero and his
staff left messages with Robert Spellman, and the decision
maker on his March 2010 termination, Andrew Hamilton, among
others. (Otero I: Doc. 35-23, at 18, 28, 36, 38,
39). Robert Spellman created the following notation in the
claims file dated April 2, 2010: “Spoke to [Dr. Otero.]
I noted that he should continue to pay premiums while his
appeal is being reviewed as to avoid a lapse in coverage.
[Dr. Otero] said he would continue.” (Otero I:
Doc. 35-23, at 41).
before and after he gave that advice to Dr. Otero about
resuming payment of premiums, Mr. Spellman received documents
referring to Dr. Otero's part-time work status and
created documents in which he himself referred to Dr.
Otero's part-time work status:
• March 29, 2010: Mr. Spellman sent a letter to Dr.
Otero acknowledging receipt of his written notice of appeal;
that appeal notice attached letters from Dr.
Otero's cardiologists, both referring to his part-time
work status. (Otero I: Doc. 35-23, at 20, 22, 23,
• April 7, 2010: Mr. Spellman spoke with Dr. Otero over
the phone, and Spellman's notation of the phone call
states: “He continues to work on a PT [part-time] basis
in the same hours and has not applied for [social security
disability income] as he has been working pt [part-time].
(Otero I: Doc. 35-23, at 48).
• April 8, 2010: Mr. Spellman acknowledged Dr.
Otero's part-time work status in a file document, noting
that in 2005 he had returned to work “part time . . .
working appx 25-30 hours per week, ” and that Dr. Otero
was arguing “that he remains unable to work full time
in other gainful occupations.” (Otero I: Doc.
35-23, at 51, 54).
• April 12, 2010: a Clinical Consultant Resource file
entry by Karen York duplicated the information quoted above
for the April 8 entry and quoted the information from Dr.
Otero's cardiologists that, as of February 2010, Dr.
Otero “[h]as to divide his schedule into 2 hours in the
morning and 2 hours in the afternoon . . . . He clearly
reports a major problem with working more than 20 hours per
week.” (Otero I: Doc. 35-23, at 54-57).
• April 15, 2010: Doctor Resource file entry, created by
Karen York for referral to Dr. Alfred Parisi, again recounted
Dr. Otero's cardiologists' explanation of Dr.
Otero's part-time work and part-time capabilities.
(Otero I: Doc. 35-23, at 58-60).
• April 21, 2010: Appeals Opinion by Dr. Alfred Parisi
contained numerous references to Dr. Otero's part-time
work schedule, and Dr. Parisi's conclusions focused on
the issue of whether he was capable of performing full time
sedentary work: “R and L Supported for not to undertake
full time sedentary work . . . . In summary I cannot conclude
with a reasonable degree of medical certainty that claimant
would more likely than not function on a sustainable basis in
a full time sedentary occupation which does not involve
direct patient care responsibilities. . . .The basis for
restricting claimant from full time sedentary work is the
presumption that working full time would increase his stress
to a level which would engender more frequent bouts of atrial
fibrillation such that he could not sustain full time work on
a regular basis. That is the opinion of his AP cardiologist
Dr. Hill and pointed out as a consideration to be weighed by
his consulting electrophysiologist Dr. Kay. I have no basis
for refuting these opinions. . . . Claimant has the physical
capacity to undertake full time sedentary work. Whether he
would be limited in doing so by repeated bouts of atrial
fibrillation is speculative.” (Otero I: Doc.
35-23, at 70-75).
• April 30, 2010: Appeal Decision Letter to Dr. Otero
from Robert Spellman referred to his part-time work status:
“You have been working in the office setting four hours
daily five days per week seeing patients. You have been
allocating your work time each day from 9:00-11:00 am and
again from 1:00-3:00 p.m.” The jobs that Unum found
that Dr. Otero could perform were “occupations [that]
exist on a part-time basis.” Mr. Spellman stated in his
letter that the specific jobs identified could be performed
on a part-time basis while still generating the requisite
income to meet the definition of gainful employment: the job
of Insurance Physician and Medical File Review Physician
would require his working “approximately 10-16 hours
per week to be considered gainful” and the Peer Review
Physician occupation would require his working
“approximately 5.5-7.6 hours per week.”
(Otero I: Doc. 35-23, at 105).
Otero I court filings in 2011 and 2012, Dr. Otero
consistently took the position, with support from his
cardiologists, that he was limited to working part-time. The
briefs and evidentiary submissions focused on Dr. Otero's
alleged part-time work limitation and gainful employment
options given that limitation. No reasonable inferences
existed from the evidence Dr. Otero produced or from Dr.
Otero's briefs in that litigation that Dr. Otero planned
to work more than the twenty hours per week; indeed, he
claimed repeatedly that he could not. Unum did not
specifically take the position that Dr. Otero could work full
time, and the “other gainful employment” that it
identified for him were all occupations that exist on a
part-time basis. (Otero I: Otero's Br.
Statement of Facts filed on 8/26/11 numbers 7, 12, 21, 32:;
Doc. 24, at 4, 6, 8, 12; Unum's Resp. Doc. 31, at 3, 4, 6
with no dispute as to Dr. Otero's work schedule of 20
hours per week; Unum's Br. Doc. 27, at 3, at 5 ¶ 8,
at 6 ¶ ¶ 11-13, at 7-8 ¶ 20, at 9 ¶
¶ 25-27, at 10 ¶ 31, at 11 ¶ ¶ 33-36, at
17, 19; Memorandum Decision Doc. 36, at 2, (entered 3/30/12 -
“Dr. Otero cannot take night call or work 40 hours a
week. He currently works four days a week for four hours a
record reflects that Dr. Otero's work schedule remained
at approximately 20 hours per week from January 2010 forward,
continuing throughout the pendency of Otero I and
the claims period in Otero II. He sees approximately
six patients from 9:00 until 11:00 in the morning and then
six more from 1:00 until 3:00 in the afternoon with a
two-hour break during which he sits and reads or naps because
he claimed to be unable to physically see patients for four
consecutive hours. Sometimes, he must cancel patients because
of his symptoms. (Otero II, Doc. 35-15, at 45-47).
Otero's Premiums Paid During Period of Part-Time
administrative record in Otero II reflects that
Neurology Consultants paid a premium statement that Unum
prepared monthly from Spring 2010 onward. Neurology
Consultants provided Unum with information, called a census,
about its employees covered under the policy and the earnings
that were covered. The premium statement that Unum prepared
included “Employee Detail” sheets with a box
individualized for each employee, including Dr. Otero,
listing in that box the employee's name, ID number,
coverage amount (representing his earnings for that month)
and the monthly premium due for that employee based on his
the period that Unum paid disability benefits to Dr. Otero
prior to the March 2010 termination, the Employee Detail
sheets listed his name, but the premium listed was
“0.00.” (Otero II, Doc. 35-13, at 66,
71, 74). After the termination in early March 2010 of Dr.
Otero's disability benefits, Neurology Consultants did
not simply add Dr. Otero's premium to the statement
without consulting Unum. To the contrary, as noted, in the
weeks after the March 2010 decision, Dr. Otero and Neurology
Consultants repeatedly contacted Unum, asking Unum whether
Dr. Otero needed to resume payment of premiums.
April 2, 2010, Mr. Spellman of Unum specifically told Dr.
Otero to resume paying premiums. (Otero I: Doc.
35-23, at 41). On the April 2010 premium statement, the first
premium statement that Unum prepared for Neurology
Consultants after the termination of his disability benefits
in March, Neurology Consultants wrote a note: “Please
add Premium for Arturo Otero $105.00.” (Otero
II, Doc. 35-13, at 75). In the May 2010 premium
statement Unum prepared for Neurology Consultants, Dr.
Otero's box in the Employee Detail sheet changed the
premium from $0.00 to $105.00. (Doc. 35-13, at 82).
Therefore, each month Unum produced a document that listed
Dr. Otero's name and listed the premium due for him based
on his earnings, and Neurology Consultants continued to
submit monthly premiums on Dr. Otero's behalf based on
his monthly earnings. (Otero II, Doc. 35-2, at 2-3,
¶ 2; Doc. 35-12 (premium statements) & 35-13
Dr. Otero asked in March and April of 2010 whether he should
resume premium payments and Mr. Spellman told him to do so,
Unum did not subsequently revisit the issue of whether Dr.
Otero was eligible for coverage under Neurology
Consultants' group policy until after he filed a new
claim in September of 2013. Unum explained that, given the
millions of employees insured under its group disability
policies, Unum's practice is not to perform an
eligibility determination concerning whether an individual
employee has coverage until that employee submits a claim.
Otero's Earnings at Neurology Consultants
the determination of disability rests upon Dr. Otero's
earnings as a neurologist and his condition's effect on
those earnings. The administrative record of Otero
II contains the following specific information regarding
Dr. Otero's earnings. The premium statements reflected
Dr. Otero's earnings of $6, 250 per month from January
2010 through February 2012; earnings of $4, 167 per month
from May of 2012 through January of 2013; earnings of $4,
903 per month from February of 2013 through February of 2014;
earnings of $4, 220.00 per month for March and April of 2014.
(Otero II: Spellman Decl. Doc. 35-2, at 3 (stating
that premiums are based on Dr. Otero's monthly earnings);
Docs. 35-12 & 35-13 (premium statements with Dr.
Otero's earnings and premiums based on those earnings)).
the parties have pointed the court to no documents in the
Otero I and II administrative record
showing Dr. Otero's W-2 or K-1 forms for 2010, 2011, and
2012, Unum presented the W-2 statements that Dr. Otero
submitted to Provident Life in connection with his
individual claim. (Otero II, Doc. 25-4, at 2-8). As
discussed subsequently, Provident Life is a sister company to
Unum, and Dr. Otero had also purchased an individual
disability policy with Provident Life and submitted a
disability claim under that policy. The W-2 statements that
Dr. Otero submitted to Provident Life reflected that his
wages for 2010 were $45, 500.04, and that his wages for 2011
were $49, 291.71. Id. For the year 2012, neither
Unum nor Dr. Otero presented a W-2 form stating his income,
but Unum presented Dr. Otero's employee pay stub for the
pay period December 9, 2012 through December 22, 2012, which
shows a salary year to date of $58, 012.89 with a notation of
“NCV Compensation” of $819.00 for a total of $58,
831, 89, and net pay of $36, 848.84. (Otero II, Doc.
25-4, at 2-3 & 9).
Unum nor Dr. Otero presented W-2 forms stating Dr.
Otero's income for the years 2013 and
afterwards. Because Unum never processed Dr.
Otero's disability claim for his alleged disability
beginning in February of 2013, which would require comparing
his income before and after the disability commencement date,
it never requested information about his earnings for that
Dr. Otero's monthly earnings for the purposes of the
policy does not include income received from sources other
than the employer. (Otero II, Unum Br. Doc. 24, at
13-14 (undisp. fact 36)).
Otero's 2013 Claim for Disability Benefits
September 6, 2013, over a year after the entry of judgment in
Unum's favor in Otero 1, Dr. Otero
submitted through his attorney a request to Unum's
Benefits Center Coordinator that the company find him
disabled based on his current physical condition, which he
characterized as having deteriorated. Dr. Otero also attached
a list of over 50 companies, most of which were insurance
companies, that he claimed to have contacted unsuccessfully
concerning employment; Dr. Otero took the position that the
jobs were unavailable to him “specifically because he
is not board certified.” Dr. Otero's attorney made
the following request: “If UNUM continues to maintain
these jobs exist, would you please furnish the names of
employers you can identify that pay the amount of money that
would disqualify Dr. Otero for disability benefits.”
(Otero II, Doc. 35-6, at 1-19). Dr. Otero's
attorney also attached the medical records from Dr.
Otero's February 2, 2013 emergency room visit documenting
his heart problems. (Otero II, Doc. 35-6, at 2-3
Dr. Otero sent the September 2013 claim to
Unum's Benefits Center Coordinator in Columbia,
South Carolina and referred in the body of the letter to the
prior district court lawsuit involving the claim against
Unum for group disability benefits, the paragraph of
the letter marked “Re:” mistakenly referred to
Provident Life and Accident Insurance Company as the company
administering the claim. Provident Life is a separate company
administering Dr. Otero's individual disability
policy, and the office administering that policy was a
different office and in a different state than those handling
Unum's claims. However, both Provident Life and Unum are
sister companies under the umbrella of Unum Group.
letter dated September 17, 2013, Carol McCue, Director of
Unum's Disability Benefits Center, responded to the
September 6, 2013 claim, stating: “It is our
understanding you are requesting a review of the denial made
by Unum concerning Dr. Otero's long term disability claim
1794623. At this time a copy of your letter and the
attachments have been forwarded to the Appeals unit . . .
.” (Otero II, Doc. 35-7). Thus, although the
September 2013 claim sent to Unum's Benefit Center
improperly referenced Dr. Otero's Provident Life policy
number, because the companies were related under the Unum
Group umbrella, the mistake did not prevent the correct
claims personnel from receiving it eventually; the September
2013 claim was forwarded to the correct recipient, Robert
Spellman of Unum's Appeals department.
September 17, 2013, Mr. Spellman responded: “Please
understand this claim has been closed since 2010 and we
cannot consider any additional information. Also, your
client's coverage ceased when he stopped working and
therefore is unable to make a new claim.” (Otero
II, Doc. 35-9; 35-10, at 4). Mr. Spellman did not refer
to the appeal of the 2010 claims determination, which did not
conclude until 2012; he provided no support for the incorrect
statement that Dr. Otero had stopped working; and he did not
offer in that letter to return the premium payments made on
Dr. Otero's behalf during the three years that he had
been working part-time.
letter dated November 22, 2013, Dr. Otero's attorney
responded, requesting a further explanation:
Is it the position of Unum that once a claim is denied that
its insured can never file another claim for disability, even
if his condition gets worse?
As I described in my previous correspondence, Dr. Otero's
health has continued to decline affecting his ability to
work. In fact, he is now awaiting admission to the hospital .
. . .
Please explain how his coverage ceased when he stopped work.
I am anxious to hear your explanation as my investigation
reveals that he has continued to go into the office on a
periodic basis and has continued to pay premiums. If your
investigation is different, please furnish me with the source
so we can get to the bottom of who's telling the truth
and who is not.
I look forward to your prompt response and a detailed
explanation of each and every fact relied upon by Unum to
deny Dr. Otero's claim.
letter has a stamp on it: “RECEIVED Dec 02 2013
BCCPORTAPPEALS, ” which appears to reflect receipt at
the Portland Appeals office in December of 2013. (Otero
II, Doc. 35-10, at 2-3).
Mr. Spellman nor anyone else on behalf of Unum provided the
requested explanation; in fact, the company did not respond
at all to the November 22, 2013 letter. Spellman says the
failure to respond was inadvertent, but provides no further
explanation. (Otero II, Doc. 35-2, at 6, ¶ 17).
January 16, 2014, Dr. Otero's attorney made another
attempt to obtain the information about the investigation of
Dr. Otero's new claim, sending a follow-up letter, and
enclosing a copy of his November 22, 2013 letter. This letter
has a stamp: “RECEIVED Jan 22 2014
BCCPORTAPPEALS.” (Otero II, Doc. 35-11, at 2).
Once again, Unum did not respond. Despite the fact that the
letter was correctly addressed to Mr. Spellman at
Unum's office in Portland, Maine and
had the correct group policy number plus a stamp
that appears to state it was received on January 22 at
“BCCPORTAPPEALS, ” Mr. Spellman stated in his
declaration that someone, but not Spellman, imaged and
misfiled the letter into Dr. Otero's individual
disability claim file administered by Provident Life
in Massachusetts. Mr. Spellman provided no
documentary support for that statement, such as records
showing the sending of the letter to Massachusetts or receipt
of the letter in the Massachusetts center, a
“RECEIVED” stamp for the Massachusetts center, or
testimony from staff at the Provident Life's benefits
center acknowledging that letter had somehow arrived there.
Further, the only “RECEIVED” stamp on the letter
appears to reflect that the Portland Appeals office received
it on January 22, 2014. Mr. Spellman stated that no one in
Provident Life's Massachusetts office forwarded the
letter to him or otherwise advised him of it, despite the
fact that it was properly addressed to him and was apparently
stamped received in his office. Mr. Spellman stated that he
was not aware of the letter until after Dr. Otero filed the
instant suit. (Otero II, Doc. 35-2, at 7, ¶
April 3, 2014, Dr. Otero's attorney sent yet another
letter not only to Mr. Spellman but also to Unum's
Executive Vice President/Chief Financial Officer, Chairman of
the Board, President/CEO, and Executive Vice President/Chief
Operating officer. This letter purportedly enclosed a report
from Dr. Otero's treating physician and proof of premium
payments to Unum. It also referred to previous, unanswered
letters from the attorney to Unum, explaining that the
attorney was sending the current letter to Unum officials in
addition to Mr. Spellman “in hopes that each will
respond to this letter because the claim department will
not.” This letter bears the stamp “RECEIVED APR
07 2014 BCCPORTAPPEALS.” (Otero II, Doc.
35-12, at 2-3).
received the April 3 letter, and responded by letter dated
April 9, 2014, enclosing disability claim forms, and stating
in relevant part as follows:
letter is in response to your most recent correspondence,
dated April 3, 2014.
We understand you are seeking to file a new disability claim.
Please have the enclosed disability claim forms completed by
your client, his employer, and his treating physician. We
also have not received the report from Dr. Otero's
physician that you reference in your letter. Please forward a
copy of that report to our office with the completed claim
Once this information is received, we will have The Benefits
Center review it to see if your client meets the eligibility
and disability requirements under the policy.
(Otero II, Doc. 35-14, at 2). After Mr. Spellman
discovered that the January 16, 2014 letter from Dr.
Otero's attorney had gone astray, the record did not
reflect that Unum took any measures to determine why the
error had occurred or to ensure that it would not reoccur.
letter dated July 9, 2014, Dr. Otero's attorney returned
the completed disability claim forms and other 2013 and 2014
medical information from Dr. Otero's treating physicians.
(Otero II, Doc. 35-15, at 2-4). Those records and
the claim form reflected that on February 2, 2013 and October
20, 2013, Dr. Otero underwent cardioversions to convert his
atrial fib to sinus rhythm, and that he was hospitalized in
December of 2013. The update from cardiologist Dr. Jose
I have taken care of [Dr.] Otero for over a year now. He has
a [ ] history of chronice [sic] atrial fibrillation. It has
progressively gotten worse and he recently had to be
hospitalized for implementation of a new medical therapy on
December 4 and 5, 2013. He will need to continue leading a
non-stressfull [sic] life and work part-time in a
non-stressful environment, preferably less stressful than
what he works in now in order to help decrease the symptoms
of his afib. . . .
(Otero II, Doc. 35-15, at 39).
July 9, 2014 letter, Dr. Otero's attorney disagreed with
Unum's position that Dr. Otero could “earn the
equivalent of his long term benefits performing other work,
[as] Dr. Otero has been unable to obtain other work and none
is available to him. More significantly, Dr. Otero's
condition has worsened and he has limited his practice even
more. . . . I also request that you pay Dr. Otero his
benefits from February 2013 when he met the definition for
disability and submitted his claim.” (Otero
II, Doc. 35-15, at 2-4). Dr. Otero's attorney did
not copy the CEO and President of Unum on this letter. The
July 9, 2014 letter attached the previous September 6, 2013
letter, which in turn had attachments.
to Mr. Spellman, unbeknownst to him, the same misfiling error
that occurred in January of 2014 reoccurred in July of 2014.
Once again, the July letter was properly addressed to Robert
Spellman in Unum's Portland, Maine
office with the correct group policy number. And,
once again, according to Mr. Spellman, the letter and
attachments were imaged and incorrectly placed in Dr.
Otero's individual disability claim file with
Provident Life in its Massachusetts office
instead of properly placing it in his group disability claim
file with Unum. Again, the letter has a stamp marked
“RECEIVED JUL 14 2014 BCCPORTAPPEALS, ” which
appears to reflect receipt in the Portland Appeals office.
(Otero II, Doc. 35-15, at 2). Mr. Spellman provided
no documentation from Provident Life records or personnel to
support his statement that the letter was misfiled in a
Provident Life file, and the record does not reflect that Dr.
Otero had any individual disability claim on appeal.
According to Mr. Spellman, Provident Life personnel did not
send the misfiled letter to him despite the fact that it was
addressed to him and stamped “received” in his
office. Mr. Spellman claims that he did not respond to the
letter and attachments because he did not receive them. The
record does not reflect that Mr. Spellman followed up with
Dr. Otero in any way after his April 9, 2014 letter.
Unum had failed to respond to his claim in any way over four
months after his attorney submitted the claim form and
supporting information, Dr. Otero filed the instant suit on
November 20, 2104. (Otero II, Doc. 1).
amended the group policy issued to Neurology Consultants
effective April 1, 2005, and the amended policy applies to
disabilities that start on or after the effective date.
(Otero II: Doc. 25-2, at 5). Because the new claim
made the basis of this suit asserted disability as of
February of 2013, the group policy amendment effective April
1, 2005 would apply. The potentially relevant provisions of
that policy are attached as an appendix to this Memorandum
STANDARD OF REVIEW
Department of Labor's claims-procedure regulation, 29
C.F.R. § 2560.503-1, imposes minimum requirements for
benefit claims procedures. ERISA does not, however,
“set out the appropriate standard of review for actions
under § 1132(a)(1)(B) challenging benefit eligibility
determinations.” Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 108-09 (1989) (internal citation
and quotation marks omitted).
“De Novo” or Arbitrary and
proper standard of review in this case presents an unresolved
question within the Eleventh Circuit. The Supreme Court has
provided some guidance. It addressed the standard of review
issue in the Firestone decision, holding that
“a denial of benefits challenged under §
1132(a)(1)(B) is to be reviewed under a de novo
standard unless the benefit plan gives the administrator or
fiduciary discretionary authority to determine eligibility
for benefits or to construe the terms of the plan.”
Id. at 115. Thus, in a normal case, “[w]hen
reviewing a denial of benefits under ERISA, the scope of the
district court's review hinges upon whether the ERISA
plan granted the administrator discretionary authority to
make eligibility determinations or to construe the plan's
terms.” See Kirwan v. Marriott Corp., 10 F.3d
784, 788 (11th Cir. 1994). If the ERISA plan included a grant
of such discretion to the plan administrator and if the plan
administrator makes a decision, then the district court
reviews that decision under the arbitrary and capricious
standard and may only consider “the facts known to the
administrator” at the time of the
decision. If, on the other hand, the ERISA plan
does not grant the plan administrator such discretion, then
the district performs a de novo review and may
examine facts not before the administrator.
instant case does not follow the normal path because the plan
granted the discretion to Unum but Unum did not exercise
it. The policy granted discretion to Unum: “when
making a benefits determination under the policy, Unum has
discretionary authority to determine your eligibility for
benefits and to interpret the terms and provisions of the
policy.” (Doc. 25-2, at 15). If Unum had
exercised its discretion and had made a decision on the
claim, then the ruling in the Firestone decision
would govern, and this court must accord deference to its
discretionary determinations, including the decision on this
both parties acknowledge that Unum did not respond to the
letter submitting a claim for disability benefits beginning
February of 2013, and never made a determination of his claim
before Dr. Otero filed suit more than four months later.
Therefore, Unum did not follow ERISA claims-procedures on
timely determinations on claims, which gives the plan
administrator only 45 days to act on a claim, unless the
administrator properly extends that time period. 29 C.F.R.
§§ 2560.503-1(f)(3), 
(l) of 29 C.F.R. § 2560.503-1 states that when
a plan fails to act on a claim within 45 days or to properly
extend that claim, the claimant is deemed to have exhausted
the plan's administrative remedies and may pursue other
remedies, such as filing suit. 29 C.F.R. §
2560.503-1(l). Admittedly, subsection (l)
says nothing about standards of review, and various courts
have interpreted the silence in different ways. The issue,
then, is the appropriate standard of review in a
“deemed exhausted” case where the plan accords
discretion to the plan administrator but the administrator
does not exercise it.
Eleventh Circuit has acknowledged but refused to resolve this
issue. In Torres v. Pittston Co., the Eleventh
Circuit reviewed a “deemed denial” ERISA case,
and acknowledged a split in the Circuits regarding whether
the “deemed denial” by an administrator with
discretion receives “de novo” review instead the
more deferential standard:
Some court have held that . . . a deemed denial receives no
deference upon judicial review, since the plan administrator
did not in fact exercise any discretion. See Gilbertson
v. Allied Signal, Inc., 328 F.3d 625, 631 (10th Cir.
2003)(holding that “when substantial violations of
ERISA deadlines result in the claim's being automatically
deemed denied on review, the district must review the denial
de novo, even if the plan administrator has
discretionary authority to decide claims.”); Jebian
v. Hewlett Packard Co., 310 F.3d 1173 (9th Cir. 2002)
(reviewing denial de novo, where the plan
administrator did not issue decision until after deadline
provided by plan had elapse, and more than a month after
beneficiary filed suit); Gritzer v. CBS, Inc., 275
F.3d 291 (3d Cir. 2002) (extending no deference to plan
administrator's post hoc justification for
denying benefits, issued only after commencement of
litigation). Others, however have held that the fact that the
denial occurs by operation of ERISA regulations does not
alter the otherwise-applicable standard of review. See
McGarrah v. Hartford Life Ins. Co., 234 F.3d 1026 (8th
Cir. 2000) (holding that ERISA plan fiduciary's failure
to respond to beneficiary's request for administrative
review does not trigger heightened scrutiny, absent showing
of extreme procedural irregularities); Daniel v.
Eaton Corp., 839 F.2d 263, 267 (6th Cir. 1988) (holding
that, even though administrative review body failed to act on
claimant's appeal of an initial denial, resulting in a
deemed denial, the denial should be reviewed under the
arbitrary-and-capricious standard, because “the
standard of review is no different whether the appeal is
actually denied or is deemed denied.”).
346 F.3d 1324, 1332-33 (11th Cir. 2003) (per
curiam); see also Rasenack ex. rel. Tribolet, v. AIG
Life Ins. Co.,585 F.3d 1311, 1315-18 (10th Cir. 2009)
(following Gilbertson and finding that de
novo review was appropriate; when “the remedies
were ‘deemed exhausted' by operation of law rather
than the exercise of administrative discretion, [ ]
Firestone's rule of deference does not
apply.”); Nichols v. Prudential Ins. Co. of
Am.,406 F.3d 98, 109 (2d Cir. 2005) (“[W]e may
give deferential review only to actual exercises of
discretion.”); Pakovich v. BroadspireServs., Inc.,535 F.3d 601, 606 (7th Cir. 2008)
(adopting the Eighth Circuit's rule set out in the
Seman opinion, as discussed in fn 15 to this
opinion, which held that when the plan ...