APPEAL
FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MAINE Hon. George Z. Singal, U.S. District Judge
Geraldine G. Sanchez, with whom Roach Hewitt Ruprecht Sanchez
& Bischoff PC was on brief, for appellant.
Brooks
R. Magratten, with whom Scott K. Pomeroy and Pierce Atwood
LLP were on brief, for appellee.
Before
Lynch, Circuit Judge, Souter, [*] Associate Justice, and Baldock,
[**]
Circuit Judge.
LYNCH,
CIRCUIT JUDGE.
In this
ERISA benefits suit for long term disability
("LTD") payments, the sum owed to the plaintiff,
"Jane Doe, " turns on the year of disability onset,
as the prior year's earnings determine the monthly
benefit amount. The parties disagree on whether Doe's
disability began in 2011 or in 2012: the insurer has paid Doe
the benefits owed using a January 2012 onset date, but not
the benefits owed if the onset date is in November 2011. The
difference, we are told, amounts to over $100, 000 in
payments.
The
wrinkle in the case is that the disability insurance involved
is "Own Occupation" insurance, for which an
additional premium is charged. Doe's Own Occupation was
"environmental lawyer." Yet when the insurer
assessed whether and when Doe became disabled, it chose not
to use the material duties of an environmental lawyer, but
rather those of a lawyer. In doing so, it eviscerated the Own
Occupation coverage, and its evaluation as to Doe's
disability onset date was based on the wrong standards. Its
denial of benefits from an onset date no later than November
2011 was arbitrary and capricious. The district court entered
judgment on the record for the insurer. We reverse.
I.
A.
Background
Doe
worked at a Maine law firm for more than 25 years, and for
many years she was an equity partner. In August 2011, Doe
became a non-equity partner and remained employed in that
capacity for about six months thereafter. Over the course of
2011, Doe billed far fewer hours than she had in previous
years.
Defendant
Standard Insurance Company ("Standard") is the
claim administrator and insurer of the employee welfare
benefit plan ("the Plan") offered by Doe's law
firm to its employees. The Plan was insured by an LTD policy
("the Policy"), which was also issued by Standard
and which covered Doe. The Policy provides that a claimant is
"Disabled" if she is "unable to perform with
reasonable continuity the Material Duties of [her] Own
Occupation." The Policy also promises lawyers with at
least five years' experience that "[their] Own
Occupation [is] the one legal subject matter area or type of
legal practice in which [they] specialize, provided [they]
have earned at least 85% of [their] gross professional
service fee income in that area or type of practice"
during the 24 months before disability onset. There is no
dispute that Doe met these criteria for specialty coverage.
The Policy defines "Material Duties" as "the
essential tasks, functions and operations, and the skills,
abilities, knowledge, training and experience, generally
required by employers from those engaged in a particular
occupation that cannot be reasonably modified or
omitted."
Under
the Policy, those who become disabled due to a "Mental
Disorder" may receive LTD benefits for, at most, 24
months.The monthly benefit amount depends on the
claimant's "Predisability Earnings." The
Predisability Earnings depend in turn on the claimant's
income during the "prior tax year" -- that is, the
calendar year before the year of disability onset. Doe's
income in 2011 was only one-third of what it had been in
2010, and so whether she became disabled in 2011 or in 2012
significantly affects the calculation of her monthly benefit
payments.
For
context, we recite briefly some of the medical evidence
relevant to Doe's LTD claim. On November 30, 2011, during
her regular appointment with her gynecologist, Dr. Kathleen
Petersen, Doe confessed that she had become "bone
crushingly exhausted" in the preceding year and had lost
"any interest in life, " among other symptoms. Dr.
Petersen suspected that Doe was afflicted with a mental
health problem. She recommended that Doe seek counseling --
advice that Doe resisted -- and also doubled Doe's
prescribed daily dose of citalopram, an antidepressant, which
Doe had been taking for roughly four years.
On
December 9, 2011, Doe met for the first time with Dr.
Frederick White, a clinical psychologist. Dr. White's
notes from that visit state that Doe exhibited numerous
symptoms consistent with Major Depressive Disorder --
including suicidal ideation and diminished attention,
concentration, and memory -- and he diagnosed her with that
disorder. In two follow-up appointments that same ...