Welcome To The Jungle

by Fowler White Burnett, P.A.

What happens when a plan administrator relies on information received from a third party to make a denial of benefits decision under an ERISA plan?  Does the plan administrator bear the burden of weighing the relative reliability of the evidence?  If it does not investigate the source of the evidence and weigh its reliability, is the administrator acting "arbitrarily and capriciously"?  These are some of the questions that were recently addressed by the Fifth Circuit Court of Appeals in Truitt v. Unum Life Ins. Co. of America, 729 F.3d 497 (5th Cir. 2013), cert denied 134 S.Ct. 1761 (2014).  In considering these issues, the opinion issued by the Fifth Circuit is one that provides a sign post for plan administrators and ERISA practitioners moving forward. 

Truitt involved an application for long term disability benefits by a claimant who worked as an attorney in the Houston office of a prominent national law firm.  The claimant, Truitt, specialized in oil and gas litigation, which required her to travel frequently, many times abroad.  She claimed that a byproduct of her travels was that she was required on many occasions to lift and handle heavy boxes.  For those of us routinely involved in large litigation matters, this is not at all surprising. 

Truitt claimed that she began experiencing numbness and pain in her lower back, left leg and left foot in 1999.  As a result of these alleged ailments, she stopped working in 2002 and applied for long term disability benefits under a plan administered by Unum.  The Unum disability plan (the "plan") defined "disability" as an inability to perform the material duties of his/her regular occupation; or being able to perform at least one of the material duties of his/her regular occupation or another occupation on a part-time or full-time basis, while earning 20% less per month than his/her indexed pre-disability earnings.

In May of 2003, Unum awarded Truitt benefits under the plan.  However, Unum advised Truitt that it would require updated medical information from her, and that it may seek repayment of benefits if it determined in the future that she was not disabled. Over the course of the next several years Unum received conflicting information regarding Truitt's claimed disability.  While Truitt's treating physicians provided support for her disability, surveillance videos showed her taking part in activities that she claimed to be physically unable to perform.  Moreover, an IME found that Truitt had "little to no physical impairment", and a functional capacity evaluation suggested that Truitt's claimed disabilities were the result of "self-limiting behaviors".  In 2006, Unum terminated Truitt's benefits, and Truitt filed an administrative appeal. 

In 2007 Unum reinstated Truitt's benefits based on a report from a vocational expert who stated that the demands of Truitt's occupation, e.g. lengthy flights, were not consistent with the requirement that she be allowed to change posture 2-3 times per hour.  Unum again notified Truitt that she would be required to provide updated medical information to determine whether she remained entitled to benefits.  It was at this point in 2007 that the facts underlying the appeal in this matter began to surface. 

In 2007, Unum was contacted by a man who claimed to have been involved in a personal relationship with Truitt for several years ("Thomas").  Thomas told Unum that he had emails and other evidence that demonstrated that Truitt was not, in fact, disabled.  He demanded payment from Unum for such information.  Unum advised Thomas that it would not pay for the information, but that Thomas was free to contact Unum if he wanted to provide the information for free.  Advising Unum that this matter was "personal to [him]", Thomas provided Unum with 600 pages of emails from March 2005 through July 2007. 

The aforementioned emails revealed that during the same time period that Truitt was claiming to be disabled, she was engaging in numerous work related and recreational activities that were of the type that she claimed she could not perform.  For instance, the emails revealed that Truitt had taken numerous long flights with extended stays at destinations across the world.  It further revealed that she was engaged in, what appeared to be, a full practice of law, and that she was taking part in physically taxing activities, such as dancing, horseback riding, household chores, shooting guns, sailing, fishing, and snorkeling. 

More importantly, however, the emails seemed to reveal that Truitt was purposefully trying to deceive Unum.  In one email she claimed to have suffered minor injuries due to a slip and fall, and stated that "[t]hat the good news is that I am very sore, so should help with tomorrow's exam."  There was also email evidence to suggest that she was aware that Unum was likely engaged in surveillance, and that she would "stay put" until Unum made its determination.  There were additional emails that indicated that she was purposefully modifying her behavior in order to maintain her "disabled" status under the Unum plan. 

In 2009, Unum advised Truitt that it was suspending her benefits based on the information learned from the emails received from Thomas.  Truitt submitted an affidavit stating that Thomas was a computer hacker who copied her computer's hard drive and email account.  She alleged that Thomas's emails were not legitimate, and that he was trying to frame her for fraudulently presenting her disability claim.  After having Truitt's entire file reviewed by one of its physicians, along with other medical experts, Unum ultimately terminated Truitt's benefits on October 27, 2009.  Unum also advised Truitt that it was seeking to recover more than $1 million in benefits that were paid to her on her claim.

Truitt filed an administrative appeal, and argued that the basis for Unum's decision—i.e., the emails from Thomas and the surveillance videos—were unreliable and not sufficient to support a denial of benefits determination.   Truitt also provided information to Unum to support her claim that Thomas could have hacked into her computer and fabricated or modified her emails.  In July 2010, Unum sent Truitt a letter to advise that it was upholding its decision, and to advise her that it was seeking reimbursement of the $1 million in overpayments.  Truitt filed suit for wrongful termination of her disability benefits, and Unum counterclaimed for more than $1 million in overpaid benefits. 

The United State District Court for the Western District of Texas determined that Unum acted arbitrarily and capriciously in its determination to deny Truitt disability benefits under the Unum plan.  Specifically, the district court found that Unum did not investigate the accuracy of the Thomas emails, and did not fulfill its duty to consider the source of the information when considering and weighing same.  The district court found this to be "procedural unreasonableness" by Unum. 

The Fifth Circuit rejected the district court's decision and reasoning.  First, it found that the district court's use of the concept of "procedural unreasonableness" as its basis for finding the plan administrator's decision to be "arbitrary and capricious" was incorrect, as "procedural unreasonableness" could not be used as the sole factor to support a finding of an abuse of discretion by the plan administrator.  Instead, the Fifth Circuit held that "procedural unreasonableness"—i.e., a finding that the method used by the administrator to make the claim decision was unreasonable—is but one factor to be considered by a reviewing court when determining whether a plan administrator's decision is arbitrary and capricious. 

More importantly, however, was how the Fifth Circuit analyzed the district court's reason for finding procedural unreasonableness by Unum.  The district court found that Unum's decision was based on procedural unreasonableness because Unum did not investigate the accuracy of the information taken from the emails provided by Thomas.  The court found that this was procedurally unreasonable because Unum was the plan administrator who evaluated Truitt's benefits claim, and was also the entity in charge of paying the benefits claim.  

The Fifth Circuit, citing its prior opinion in Vega v. Nat'l Life Ins. Servs., Inc., 188 F.3d 287 (5th Cir. 1999), held that Unum did not have a duty to investigate the accuracy of the information taken from the emails provided by Thomas. In fact, it held that a district court cannot impose a duty to reasonably investigate on the administrator.  Instead, the inquiry must be limited to whether the administrative record adequately supports the administrator's decision. The Fifth Circuit determined that a rule that requires the inquiry to focus on the contents of the administrative record both prohibits the district court from engaging in additional fact finding, and encourages both parties to present the best evidence at their disposal to make their case to the administrator. 

The Fifth Circuit further directed that there is no requirement that a plan administrator consider the source of the evidence contained in the record.  The process in ERISA cases is that the plan administrator identifies the evidence upon which it relies, then the claimant may attempt to discredit the evidence. Then the plan administrator must take into account the counter-evidence presented by the claimant to reach its decision. So long as the decision reached by the plan administrator is made by way of a rational connection between the known facts/discovered facts and the decision itself, a determination of a plan administrator should not be disturbed.   

Thus, the Fifth Circuit found that by relying on the reports of numerous medical experts, vocational experts, and the information obtained from the subject emails from Thomas, Unum's decision was not arbitrary and capricious.  The Fifth Circuit further found that Unum did consider the counter-evidence provided by Truitt—i.e., her affidavit and expert reports—but that it determined that such counter-evidence was outweighed by the amount of discovered evidence showing that Truitt was not, in fact, disabled. 

While other issues were considered and addressed by the Fifth Circuit in Truitt, the Truitt decision is a guidepost for plan administrators and practitioners going forward.  When granted discretion by the plan, a district court cannot impose new and additional duties or burdens on plan administrators regarding the investigation of facts relied upon.  District courts must look to the record before them, and must consider, based on the available evidence and facts, whether the determination of the plan administrator was arbitrary and capricious. If evidence exists that cannot be sufficiently rebutted by the claimant, then a district court cannot find that the reliance on such information or evidence is arbitrary and capricious, unless it is the type of evidence that bears no rational relation to the decision. 

The Truitt decision not only supports an administrator's reliance on the type of evidence considered when making its benefits determination, but pushes the burden to the claimant to actually demonstrate that certain record evidence, and reliance there on, should not be accorded any particular weight. This prevents a claimant from simply making vanilla assertions of unreliability, without actually coming forward with an evidentiary showing of its unreliability. Such a standard is a fair, just, and reasonable beacon where discretion was intended under the plan to be conferred on the plan administrator. In the jungle of conflicting evidence, this decision provides guidance and possible safe passage out the Jungle.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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