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Doe v. Standard Insurance Co.

United States Court of Appeals, First Circuit

March 24, 2017

JANE DOE, Plaintiff, Appellant,


          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.


         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.


         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 ...

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