The 5th U.S. Circuit Court of Appeals has ruled that a benefit-plan administrator had no duty to further investigate numerous emails alleging that a former Mayer Brown partner was trotting the globe on vacation after claiming she was fully disabled. That clears the way for the insurer to seek $1 million in benefit reimbursements from the lawyer.
The background to the 5th Circuit's Sept. 6 decision in Terri Truitt v. Unum Life Insurance Co. of America is as follows, according to the opinion. Terri Truitt worked as a partner in Mayer Brown in Houston, where her expertise was international oil and gas litigation. In that capacity, she traveled abroad to foreign countries for arbitrations, where lifting and handling 25-pound boxes was a frequent requirement of those trips.
Citing numbness and pain in her lower back, left leg and left foot, Truitt stopped working in 2002 and applied for long-term disability benefits under a plan administered by Unum Life Insurance Co. of America. Unum awarded Truitt benefits in 2003 but advised her that she was required to update it with medical information to clarify her restrictions and limitations. Unum also notified Truitt that it reserved the right to discontinue benefits and seek reimbursement if it determined she was no longer disabled.
Unum's continued review of Truitt's claim produced some evidence supporting her asserted disability, such as her inability to walk or stand for 30 minutes, and evidence that was inconsistent with her disability, such as surveillance video showing Truitt walking, driving, and lifting and carrying boxes, according to the opinion.
In 2006, Unum notified Truitt that it was terminating her benefits because there was "no objective information that supports [Truitt's] inability to perform [her] occupational demands as a trial attorney." But after an administrative appeal, Unam restored Truitt's benefits in 2007, according to the opinion.
Around the time Truitt's benefits were restored, a man named Andrew Mark Thomas called Unum and alleged that he had been in a personal relationship with Truitt for a number of years, that Truitt had him deported to the United Kingdom, and that he had photos and documents to show that Truitt was not totally disabled. Thomas asked to be paid six times the current monthly payments made to Truitt in exchange for providing the evidence, according to the opinion.
Unum declined Thomas' offer, and Thomas, without compensation, provided Unum with 600 pages of emails spanning 2005 to 2007. The emails, which included flight and hotel itineraries, indicated that Truitt flew to: New York City; Akumal, Mexico; Cancun, Mexico; Jamaica; Guatemala; Venezuela; England; Ireland; France and Italy. In one of the emails while she was in Guatemala, Truitt allegedly wrote that she traveled in "planes, a van on the most winding, curving mountainous 2 lane road for 3 hours, then a boat ride across Lake Atitlan in the clouds and lightning. Good thing I'm a seasoned traveler!"
In 2009, Unum advised Truitt that it was suspending her benefits. Truitt sent Unum a three-page affidavit alleging that none of Thomas' allegations were true, among other things. Later that year, Unum again terminated Truitt's benefits and further advised that, because she wrongfully received benefits from 2005 until 2007, she owed Unum more than $1 million in reimbursements.
After a second administrative appeal, Unum upheld its decision to terminate Truitt's benefits. Truitt then filed a complaint in a Western District of Texas trial court, alleging that Unum wrongfully terminated her benefits. Unum filed a counterclaim seeking to recover more than $1 million in benefits it alleged that Truitt had fraudulently received.
The trial court granted Truitt's motion for judgment based on the administrative record in the case. The trial court explained that it was "not holding the record lacks substantial evidence in support of Unum's decision." Instead, the trial court found that, although Unum's administrative process is not "limited to considering only legally admissible evidence," the "decision Unum made to rely on Thomas' emails, and the weight it granted the information contained in them, was arbitrary and capricious." Given that "Unum has failed to establish Plaintiff's representation to it were false," the court also rejected Unum's counterclaim. Unum appealed the decision to the 5th Circuit.
Consider the Source
While the trial court faulted Unum for not "consider[ing] the source" of the emails and weighing that information accordingly, the 5th Circuit stated that it could not find a case in which it imposed an affirmative duty for a benefits-plan administrator to "consider the source" of evidence. It also noted that Truitt did not produce any evidence that the emails were forged or hacked.
"In sum, we hold: that Unum did not have an affirmative duty either to investigate the accuracy of the emails or investigate and further consider their source; that, instead, Truitt failed to discredit Unum's proof through the administrative process; and that therefore, Unum did not arbitrarily and capriciously rely on and weigh the emails and other items of evidence relating to Truitt's condition," wrote Judge Stephen Higginson, joined by Judges Eugene Davis and James Graves.
The decision reversed and rendered the trial court's holding that Unum wrongfully denied Truitt's benefits.
The court also found that, while the federal Employee Retirement Income Security Act (ERISA) does not outline how a plan administrator may recover benefits it alleges were fraudulently obtained, it found that the trial court erred by applying Texas law rather than federal common law in denying Unum's counterclaim.
"Given that the district court incorrectly applied Texas law, that the district court based its analysis on a principle of Texas law that is not controlling under federal common law, and the district court's finding that the emails were unreliable also may have affected its analysis, we vacate the district court's holding that Truitt did not fraudulently obtain benefits, and we remand for further proceedings," Higginson concluded in the opinion.
Rickey Brantley, a Fort Worth attorney who represents Truitt, did not return a call for comment. Truitt also did not return a call for comment.
Lauren Welch, a director in New Orleans' McCranie, Sistrunk, Anzelmo, Hardy, McDaniel & Welch who represents Unum, declines comment.
