Edward Raybourne v. CIGNA Life Insu
700 F.3d 1076
| 7th Cir. | 2012Background
- Raybourne, an ElectroDynamics quality engineer, had a long-term disability plan insured and administered by Cigna, with a two-tier standard: 24 months for his current occupation, then any occupation thereafter.
- The SSA found Raybourne disabled; the Plan paid benefits for the first 24 months but denied after that under a stricter, any-occupation standard.
- Cigna contrived to determine Raybourne not disabled under the Plan, while the SSA later found disability, creating a potential conflict of interest since Cigna both adjudicated and paid benefits.
- The district court found that Cigna’s conflict of interest influenced the denial, remanded for proper analysis, and ultimately Raybourne prevailed on the merits.
- On remand, Cigna produced an IME (Dr. Player) indicating light duty but maintained denial; the ALJ found Raybourne disabled, Cigna recouped earlier benefits, and Raybourne was awarded fees.
- On appeal, the Seventh Circuit affirmed the district court’s merits decision and the fee award, holding that the conflict of interest influenced the denial and that Hardt governs the fee award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of review | Raybourne seeks deferential review; district court treated it as summary-judgment posture. | Cigna argues de novo review due to cross-motions. | Deferential (abuse-of-discretion) review applies. |
| Impact of structural conflict of interest | Conflict should be weighed as a factor in abuse-of-discretion analysis. | Conflict is just one factor and may be outweighed by other evidence. | Conflict is a weighty factor that tipped the decision in Raybourne’s favor. |
| Substantial medical evidence vs. conflict | ALJ’s disability finding is supported by medical record and Raybourne’s credibility. | Cigna’s reliance on its own evidence is consistent with plan terms. | Cigna’s denial not supported by substantial medical evidence; conflict influenced outcome. |
| Attorney’s fees under ERISA §1132(g) | Raybourne should recover fees for the entire litigation. | Fees should be limited; substantial justification or five-factor test should apply. | Fees awarded for the entire litigation; referral to Hardt standards; district court’s analysis affirmed. |
Key Cases Cited
- Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (U.S. 2008) (conflict of interest as a factor in abuse-of-discretion review)
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (U.S. 1989) (establishes deferential review for plan decisions with discretion)
- Holmstrom v. Metropolitan Life Ins. Co., 615 F.3d 758 (7th Cir. 2010) (plan administrator must address evidence when conflict of interest present)
- Bittner v. Sadoff & Rudoy Indus., 728 F.2d 820 (7th Cir. 1984) (five-factor test for fees under §1132(g)(1))
- Kolbe & Kolbe Health & Welfare Benefit Plan v. Med. Coll. of Wis., Inc., 657 F.3d 496 (7th Cir. 2011) (five-factor and substantial justification analyses for fees)
- Pakovich v. Verizon Ltd. Plan, 653 F.3d 488 (7th Cir. 2011) (continues use of five-factor framework for fees)
- Sullivan v. William A. Randolph, Inc., 504 F.3d 665 (7th Cir. 2007) (fee analysis referenced in Sullivan)
- Loomis v. Exelon Corp., 658 F.3d 667 (7th Cir. 2011) (post-Hardt view on bad faith requirement for fees)
- Jenkins v. Price Waterhouse Long Term Disability Plan, 564 F.3d 856 (7th Cir. 2009) (discusses conflict of interest and deference standards)