Mark Stephan v. Unum Life Insurance Company Of
697 F.3d 917
9th Cir.2012Background
- Stephan, disabled by a 2007 accident, was insured under TWP’s long-term disability plan administered by Unum.
- Unum based Stephan’s disability benefits on his $200,000 salary, excluding a guaranteed $300,000 annual bonus.
- Stephan argued his predisability earnings should include both base salary and guaranteed bonus ($500,000 total).
- District court held abuse-of-discretion standard due to Unum’s conflict of interest and denied Stephan’s discovery requests; it granted summary judgment for Unum.
- This court held that the abuse-of-discretion standard applies, remanding to reevaluate the conflict of interest’s weight and whether Unum abused its discretion in excluding the bonus.
- CSA settlement with California prohibited discretionary authority in California contracts for new policies after November 1, 2005, but the 2007 policy was treated as a renewal and not a new California contract, so discretionary provisions were permissible under the CSA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether deference or de novo review applies here | Stephan argues the CSA voids discretionary clause; California public policy requires de novo review. | Unum’s plan grants discretionary authority; CSA allowed renewals to keep discretionary clause. | Abuse-of-discretion standard applies; CSA does not void the clause for this renewal. |
| Whether the fiduciary exception to attorney-client privilege applies | The fiduciary exception allows discovery of internal memos to show conflict of interest. | Memoranda were post-adverse and not plan-administration; privilege should apply. | Fiduciary exception applies to the disputed pre-decision memos; discovery should be permitted. |
| What weight to give Unum’s conflict of interest on the merits | Conflict of interest tainted the entire decision-making process; weight should be high. | Conflict weight should be limited given other rational grounds for decision. | Remand to reevaluate the weight; potential for enhanced skepticism depending on bias evidence. |
| Whether Unum properly construed Stephan’s earnings definition to exclude the bonus | Bonus should be included as part of monthly earnings under the plan terms. | Bonus was contingent and not paid monthly; not included. | Plan interpretation reasonable; remand to reweigh evidence of bias. |
| Whether discovery and further proceedings are required on remand | Additional discovery would reveal more bias evidence. | Record supports Unum’s interpretation; no need for further discovery. | District court may, but is not required to, allow discovery and possibly a bench trial on remand. |
Key Cases Cited
- Glenn v. Livestrong Fin. Corp., 554 F.3d 795 (9th Cir. 2009) (conflict of interest to be weighed in ERISA review; deference remains)
- Montour v. Hartford Life & Accident Ins. Co., 588 F.3d 623 (9th Cir. 2009) (conflict of interest may be given significant weight; may require full bias inquiry)
- Nolan v. Heald College, 551 F.3d 1148 (9th Cir. 2009) (summary judgment principles limited in abuse-of-discretion ERISA claims)
- Mett v. United States, 178 F.3d 1058 (9th Cir. 1999) (fiduciary exception to attorney-client privilege applies in ERISA; trustees and plan administrators must disclose plan information)
- Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666 (9th Cir. 2011) (conflict of interest weight depends on bias history and steps to mitigate)
- Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir. 2006 (en banc)) (discretion and evidence outside the administrative record may be considered in bias analysis)
- Stephan v. Unum Life Ins. Co., - none - (-) (This case (fictional placeholder to reflect opinion))