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Lavery v. Restoration Hardware Long Term Disability Benefits Plan

United States Court of Appeals, First Circuit

September 3, 2019

JOHN LAVERY, Plaintiff, Appellee,
v.
RESTORATION HARDWARE LONG TERM DISABILITY BENEFITS PLAN; AETNA LIFE INSURANCE COMPANY, Defendants, Appellants.

          Appeals from the United States District Court for the District of Massachusetts [Hon. Denise J. Casper, U.S. District Judge]

          Lori A. Medley, with whom Kenneth J. Kelly and Epstein Becker & Green, P.C. were on brief, for appellants.

          Stephen Churchill, with whom Fair Work, P.C. was on brief, for appellee.

          Before Lynch, Circuit Judge, Souter, [*] Associate Justice, and Kayatta, Circuit Judge.

          Kayatta, Circuit Judge.

         After being diagnosed with malignant melanoma, John Lavery applied for benefits under his employer's long-term disability benefits plan, which Aetna Life Insurance Company administered and funded. After Aetna denied Lavery's application under the plan's exclusion for disabilities caused by pre-existing conditions, Lavery brought this lawsuit in federal district court against Aetna and the plan, alleging that the denial of his disability benefits claim violated the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. The district court agreed with Lavery and awarded him back benefits, interest, fees, and costs. The defendants appealed. For the following reasons, we affirm and remand for any further proceedings that may be necessary.

         I.

         A.

         Restoration Hardware offers qualifying employees long-term disability insurance coverage through the "Restoration Hardware Long Term Disability Benefits Plan" ("Plan"). The Plan, underwritten by Aetna Life Insurance Company, is an employee benefits plan governed by ERISA. Aetna is also the Plan's claims administrator.

         The Plan contains a "pre-existing conditions" clause that excludes coverage for certain disabilities. It states:

Long Term Disability Coverage does not cover any disability that starts during the first 12 months of your current Long Term Disability Coverage, if it is caused or contributed to by a "pre-existing condition."
A disease or injury is a pre-existing condition if, during the 3 months before the date you last became covered:
• it was diagnosed or treated; or
• services were received for the disease or injury; or
• you took drugs or medicines prescribed or recommended by a physician for that condition.

         The three-month period before the coverage date is referred to as the "look-back" period.

         Lavery worked for Restoration Hardware, first as a "Construction Associate" and then as a "Regional Facilities Manager/Store Facilities Leader." On April 14, 2014, Lavery sought medical attention for a skin lesion on his back that had been present for six months. His primary care physician, Dr. Anthony Lopez, observed that the lesion might be basal-cell carcinoma. He referred Lavery to a dermatologist. Dr. Lopez did not recommend any other actions, provide any treatment, prescribe any medications, or take any other action himself.

         On June 10, 2014, Lavery was examined by a dermatologist, Dr. Eileen Deignan, who decided to biopsy the lesion. On June 19, 2014, Dr. Deignan diagnosed the lesion as malignant melanoma, and Lavery underwent surgery on June 30 to have the tumor and certain lymph nodes removed. Dr. Lopez later declared that he was surprised to learn that Lavery was diagnosed with malignant melanoma and that he had not discussed "any treatment, recommendations or medications for malignant melanoma with Mr. Lavery during the April 25, 2014[, ] appointment."

         Lavery stopped working on September 30, 2014, subsequently claimed disability, and began receiving short-term disability benefits because of the malignant melanoma. In late January 2015, Lavery's claim was converted to a claim for long-term disability coverage. Aetna informed Lavery:

According to the information in your file, your coverage under the Restoration Hardware, Inc. plan became effective on 06/01/2014 and you have claimed disability as of 9/30/2014. Your coverage was in effect for less than 12 consecutive months as of 9/30/2014, thus we must determine whether you received medical treatment/services, or were prescribed medication during the three month period between 3/1/2014 and 5/31/2014.

         Lavery's claim was assigned to Therese Leimback, an Aetna disability benefits manager (DBM). Leimback referred the claim to Pedro Cortero, an internal clinical consultant, to perform a "pre-existing condition review." In his assessment on March 25, 2015, Cortero stated:

There is no evidence of a definitive diagnosis and management rendered for [Lavery's] malignant melanoma during the look back period. Dr. Lopez assessment on 4/25/14 was approx. 5 mm raised lesion on R lower back questionable for BCC [basal-cell carcinoma] with referral to dermatology. The lesion may be present for the past six months but remained undiagnosed. Definitive diagnosis was therefore confirmed only after a wide local excision and biopsy on 6/30/14 which has confirmed his melanoma and Basal cell Carcinoma (BCC) was ruled out.

         That same day, Leimback acknowledged Cortero's clinical assessment and made an internal note that she would "recommend approval of [Lavery's] claim and obtain updates as recommended by clinical."

         Nevertheless, four days later, Leimback's supervisor, Kathy Leonard, wrote that "[Leimback] recommend[ed] denial due to pre ex condition." Leonard further stated that she "agree[d] [that Lavery] was seen/treated during the look back period" and concluded that Lavery's claim should be denied. Lavery's claim file contains nothing from Leimback herself confirming this about-face. Nor does it contain any explanation for the change in Leimback's position.

         Leimback sent Lavery a denial letter on March 30, 2015, stating in relevant part:

Based on the clinical review of the medical records we received, we have concluded that you received medical treatment during the preexisting condition period of March 1, 2014 and May 31, 2014 for a skin lesion, which was diagnosed as melanoma of skin. As such, your Long Term Disability claim has been denied, ...

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