Tuesday, July 27, 2010

UNUM loses in court again


WARDLAW, Circuit Judge.

The Metropolitan Life Insurance Company ("MetLife") appeals from the
district court's judgment awarding Michael Mitchell long-term disability
("LTD") benefits and attorneys' fees, in an action arising under the
Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001
*et seq.* MetLife is the current insurer and administrator for the LTD
benefits plan ("the Plan") provided by Mitchell's employer, CB Richard
Ellis, and it insured and administered the Plan at the time that Mitchell
filed his claim for benefits. Unum Life Insurance Company of America
("UNUM") was the insurer and administrator of the Plan at the time of onset
of Mitchell's claimed disability in October 2003.

*Because we conclude that the district court correctly held that Mitchell
was eligible for benefits under MetLife's policy, and because MetLife failed
to cross-claim for indemnification from UNUM in the district court action,
we affirm.*


*A. Mitchell's Employment and Disability*

Since 1983, Mitchell has worked as a commercial real estate broker at CB
Richard Ellis. In February 2001, Mitchell was first diagnosed with restless
leg syndrome after he suffered symptoms of fatigue. Over time, Mitchell's
condition grew more severe. In October 2003, he was diagnosed with major
depression, chronic fatigue syndrome, restless leg syndrome, REM-related
obstructive sleep apnea syndrome, and hemochromatosis. Although Mitchell
continued to work full time hours, his physical condition deteriorated to
the point where he could not effectively perform in his job by March 2004.
Because Mitchell's disability reduced his capacity to produce sales, his
compensation, based entirely on commissions and bonuses, decreased
substantially over time as his disability grew more severe: he earned
$179,678 in 2001 and $243,857 in 2002, but only $29,329 in 2003 and $12,585
in 2004.
*B. The Plan*

CB Richard Ellis provides LTD benefits to its employees under an employee
benefit plan governed by ERISA. From January 1, 2000, until December 31,
2003, CB Richard Ellis funded the Plan by purchasing insurance from UNUM,
which served as the insurer and administrator of the Plan. On January 1,
2004, MetLife replaced UNUM as the insurer and administrator of the Plan. At
that time, MetLife issued a new insurance policy, which specified that it
held discretionary authority to determine a participant's eligibility for
benefits. The two insurers' coverage provisions differed, particularly in
their definitions of "disability."

Nos. 08-55277, 08-55686

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 11, 2009—Pasadena, California.

Filed July 26, 2010.

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