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Nichols v. Reliance Standard Life Insurance Co.

United States Court of Appeals, Fifth Circuit

May 23, 2019

JUANITA NICHOLS, Plaintiff-Appellee,

          Appeal from the United States District Court for the Southern District of Mississippi

          Before KING, SMITH, and WILLETT, Circuit Judges.

          JERRY E.SMITH, Circuit Judge.

         Reliance Standard Life Insurance Company ("Reliance") appeals a judgment granting Juanita Nichols past and future long-term disability ("LTD") benefits. We reverse and render judgment for Reliance.


         Nichols worked for Peco Foods, Inc. ("Peco"), at a chicken processing plant in Sebastopol, Mississippi, as a Hazard Analysis Critical Control Point ("HACCP") Coordinator. Her job routinely exposed her to temperatures around forty degrees. She stopped working on January 28, 2016, stating that she had developed Raynaud's phenomenon, a circulatory disorder that could cause gangrene if she continued working in the cold.

         Nichols sought benefits through Peco's long-term disability policy (the "policy" or "plan") issued by Reliance. That policy is governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., and pays eligible claimants a percentage of their pre-disability earnings. A claimant is eligible if he is "Totally Disabled," meaning that he "cannot perform the material duties of [the] Regular Occupation" he was performing when total disability began.[1] The policy defines "Regular Occupation" as the way the claimant's job "is normally performed in the national economy" and not the way it is "performed for a specific employer or in a specific locale."[2]

         When Nichols applied for LTD benefits, Reliance considered whether exposure to the cold was a material duty of her regular occupation. Reliance engaged Matthew Bolks, a vocational rehabilitation specialist, to determine Nichols's regular occupation. Bolks reviewed the application-which described Nichols's job components as HACCP, Sanitarian Standard Operating Procedures ("SSOP"), and Good Manufacturing Practices Procedures for the plant- and a submission from Peco that confirmed Nichols's job title as HACCP Coordinator and listed her job duties. That list did not specify that Nichols was required to work in the cold. Comparing Nichols's application and the Peco job duties with the Department of Labor's Dictionary of Occupational Titles ("DOT"), Bolks concluded that Nichols's regular occupation was "Sanitarian." The material duties of the occupation of sanitarian, as defined by the DOT, include neither employment at a poultry processing facility nor exposure to the cold.

         After Bolks's assessment, Reliance denied Nichols's application for LTD benefits via letter, explaining that she "retain[ed] the ability to perform the material[ ] duties of [her] occupation." Reliance acknowledged that Nichols could not be exposed to cold temperatures and that her job for Peco required her to work in cold areas. But it determined that her regular occupation of sanitarian, "as it is typically performed in the national economy," did not require working in the cold. "[A]ny requirements regarding work in a cold environment," Reliance elaborated, were "job-site specific." Reliance concluded that Nichols was not "precluded from performing [her] regular occupation" and thus did not meet the policy's definition of "Totally Disabled."

         Reliance's letter told Nichols that she had the right to appeal, and she timely did, emphasizing that her condition "prohibited [her] from working in cold environments," as required by her "regular job duties as HACCP Coordinator." She did not contend that an alternative DOT entry would encompass her job duties better than did the sanitarian entry.

         During its appellate review, Reliance engaged Sharon Xu, M.D., independently to assess Nichols's physical capabilities. Xu determined that Nichols "ha[d] much less of a physical capacity limitation and more of an environmental limitation." "In the proper work environment," Xu continued, "[Nichols] should be able to perform all activities . . . [but] this would be in an environment where there [are] normal room temperatures and not one with exposures to cold temperatures." Xu found, however, that Nichols "suffer[ed] from a significant impairment when exposed to the cold environment as part of the regular duties of her job."

         Reliance consulted a second vocational review specialist, Jody Barach, who confirmed that Nichols's job at Peco fell within the "regular occupation" of sanitarian as defined by the DOT. Barach noted the environmental limitations that Xu had identified but concluded that Nichols's "physical restrictions . . . [we]re consistent with the physical demands of a Sanitarian. Any exposure to cold temperatures would be job-site specific." Thus, Barach summarized, "there [we]re no restrictions or limitations that would preclude Ms. Nichols from performing her Regular Occupation." Reliance accordingly affirmed the denial of LTD benefits, explaining to Nichols "that while [she was] limited in [her] ability to work in colder temperatures, this [wa]s a condition specific to Peco Foods, Inc., and not [her] occupation as a Sanitarian."


         Nichols sued Reliance under ERISA, seeking to "recover [LTD] benefits due," 29 U.S.C. § 1132(a)(1)(B), and contending that Reliance had abused its discretion in denying them because she "was clearly unable to perform the essential duties of her occupation." Reliance moved for summary judgment. In less than two pages of substantive response, Nichols urged the district court to "take judicial notice" that the facilities where chicken is processed must be kept cold. She also averred that she was entitled to benefits because "a HACCP Coordinator in any chicken processing facility around the world is going to have to work in cold environments."

         To decide the motion, the district court focused on "[1] whether Reliance's denial was supported by substantial evidence, and [2] whether Reliance has a conflict of interest." Nichols v. Reliance Stand. Life Ins. Co., No. 3:17-CV-42-CWR-FKB, 2018 WL 3213618, at *3 (S.D.Miss. June 29, 2018). Regarding the first factor, the court held that Reliance's determination "that exposure to cold temperatures was not among the 'material duties' of Nichols' 'regular occupation' . . . is not based on a fair estimate of the record evidence." Id. at *4. The court opined that "Nichols' specific job duties, as described by [Peco], fell into three categories." Id. "[W]herever Nichols' job was performed in the national economy," the court explained, "it would require her to perform [1] sanitary-training duties, [2] meat inspection duties, and [3] meat packaging duties." Id. (emphasis added).

         Reliance thus erred, the district court continued, by defining Nichols's regular occupation based only on her sanitary-training duties. Id. Noting that a different DOT title-"Cooler Room Worker (Meat Products)"-"best captures Nichols' meat inspection and packaging duties," the court found that work in the cold was a material duty of Nichols's regular occupation. Id. at *4-5 (quotation at *4). It concluded that Reliance's denial of benefits "was unsupported by any evidence, let alone substantial evidence." Id. at *5 (emphasis added).

         The district court next observed that the existence of a conflict stemming from an insurer's role as issuer and administrator is an important factor in reviewing for abuse of discretion, particularly "when there is evidence that an insurer has a 'history of biased claims administration.'" Id. at *6 (quoting Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 117 (2008)). The court thus "conducted a cumbersome review of judicial opinions addressing Reliance's behave-ior in disability cases" and found "over 60 opinions reversing a decision [of Reliance's] as an abuse of discretion." Id.; see also id. at *6 n.79 (collecting citations). Those cases demonstrated that "[c]ourts in every federal circuit have repeatedly criticized [Reliance's] claims management practices." Id. at *8. The district court specifically found that "Reliance has been admonished for reflex-ively using [DOT] while having clearly ignored the actual duties of a claimant's job." Id. (cleaned up).[3]

         The district court summarized that "[t]he fact that Reliance's decision to deny Nichols benefits was devoid of evidentiary support is enough to prove that the decision was an abuse of discretion," but "Reliance's long past of biased and wrongful claims denials in defiance of countless judicial warnings . . . simply underscores this conclusion." Id. at *9. The court consequently denied the motion for summary judgment, reversed "[Reliance's] decision to deny Nichols benefits," and ordered Reliance to pay Nichols both past and future benefits and "a reasonable attorney's fee." Id. at *9-10.


         We review a summary judgment de novo, "applying the same legal standards that controlled the district court's decision." White v. Life Ins. Co. of N. Am., 892 F.3d 762, 767 (5th Cir. 2018). Summary judgment is appropriate "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).

         "When an ERISA plan lawfully delegates discretionary authority to the plan administrator, a court reviewing the denial of a claim is limited to assessing whether the administrator abused that discretion." Ariana M. v. Humana Health Plan of Tex., Inc., 884 F.3d 246, 247 (5th Cir. 2018) (en banc) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). The plan gives Reliance such discretion, so we review its denial of Nichols's claim for abuse of discretion.[4] "An ERISA claimant bears the burden to show ...

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