Bilyeu v. Morgan Stanley Long Term Disability Plan
711 F. App'x 380
| 9th Cir. | 2017Background
- Plaintiff Leah Bilyeu, covered by an ERISA long-term disability plan administered by First Unum Life Insurance Company (Unum), challenged termination of benefits under the plan’s mental-health limitation.
- The district court conducted a "trial on the record" (not summary judgment) and found Bilyeu’s disability lacked a physical component, allowing Unum to apply the plan’s mental-health limitation and deny benefits.
- Bilyeu’s treating physician supported a physical component, but the district court credited independent reviewers (Drs. Hogan and Bress) over the treating physician (Dr. Proefrock).
- Bilyeu argued the district court improperly required objective medical evidence, ignored the SSA disability finding, and was bound by judicial estoppel; the court rejected each argument.
- Unum asserted a counterclaim seeking reimbursement (ill-gotten gains and money-had-and-received) for benefits paid; the district court entered judgment for Bilyeu on the counterclaim, finding no deliberate deception and that the restitution claim was legal (not equitable) relief under ERISA.
- The Ninth Circuit affirmed the district court’s legal conclusions de novo and factual findings for clear error.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court improperly treated case as summary judgment and made credibility findings | Court misapplied summary judgment rule and improperly weighed evidence | Court properly conducted a trial on the record (consistent with parties’ schedule) | No error; trial on the record appropriate and any notice defect harmless |
| Whether disability included a physical component (Patterson test) | Bilyeu: treating physician showed a physical component so mental-health limitation inapplicable | Unum: independent reviewers showed no physical component so limitation applies | Court did not clearly err in crediting independent reviewers; disability lacked physical component |
| Whether court imposed additional eligibility requirement by demanding objective medical evidence | Bilyeu: court required objective evidence beyond plan terms | Unum: court permissibly weighed objective evidence but did not add eligibility requirements | No additional requirement imposed; consideration of objective evidence proper |
| Whether court erred by disregarding SSA disability ruling | Bilyeu: SSA finding should have been considered and supports her claim | Unum: SSA ruling not in administrative record and did not address physical-component issue | No reversible error; SSA ruling would not change outcome and did not resolve key issue |
| Whether judicial estoppel or inconsistent positions bar Unum’s denial | Bilyeu: Unum encouraged SSA application and is estopped from denying benefits | Unum: positions not clearly inconsistent; reimbursement theory not inconsistent with SSA benefits | Judicial estoppel/estoppel arguments fail; Unum’s positions not clearly inconsistent |
| Whether Unum entitled to restitution/recovery of benefits paid | Unum: entitled to recover because payments were improper (ill-gotten gains or money had and received) | Bilyeu: no deliberate misrepresentation; restitution claim seeks equitable relief barred under §1132(a)(3) | District court correctly rejected recovery: no fraud/intentional deception and money-had-and-received remedy is legal, not equitable, so §1132(a)(3) not available |
Key Cases Cited
- Armani v. Nw. Mut. Life Ins. Co., 840 F.3d 1159 (9th Cir. 2016) (standard of review: legal conclusions de novo; factual findings for clear error)
- Kearney v. Standard Ins. Co., 175 F.3d 1084 (9th Cir. 1999) (district courts may conduct trials on the administrative record and weigh conflicting evidence)
- Patterson v. Hughes Aircraft Co., 11 F.3d 948 (9th Cir. 1993) (mental vs. physical component test for disability)
- Canseco v. Constr. Laborers Pension Tr. for S. Cal., 93 F.3d 600 (9th Cir. 1996) (administrator may not add eligibility requirements not in plan)
- Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666 (9th Cir. 2011) (SSA rulings are highly relevant to ERISA disability determinations)
- Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623 (9th Cir. 2009) (consideration of SSA findings in ERISA review)
- Ladd v. ITT Corp., 148 F.3d 753 (7th Cir. 1998) (administrator’s inconsistent positions may bear on abuse of discretion but do not independently defeat denial)
- Milton H. Greene Archives, Inc. v. Marilyn Monroe LLC, 692 F.3d 983 (9th Cir. 2012) (elements of judicial estoppel; requires clearly inconsistent positions)