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Click here for the full text of this decision FACTS:Linda Ellis began working for Chase Manhattan Bank in 1997 as a loan officer. In 1999, she applied for short-term disability benefits under one of Chase’s plans with Liberty Life Assurance Co. of Boston, because she could no longer perform her job duties. Though her ailment was not specifically identified, Ellis apparently suffered from fibromyalgia. When Ellis’ short-term disability benefits expired, her claim automatically converted into one for long-term disability (LTD) benefits under another policy issued by Liberty. The policy specifies that LTD benefits are payable for the first 24 months of disability to a covered employee who is “unable to perform all of the material and substantial duties of his occupation on an Active Employment basis because of an Injury or Sickness.” After 24 months, LTD benefits continue to be payable if the disabled employee “is unable to perform with reasonable continuity, all of the material and substantial duties of his own or any other occupation for which he is or becomes reasonably fitted by training, education, experience, age and physical and mental capacity.” Liberty, as the plan administrator, reviewed Ellis’ claims and concluded that, while it was clear that she was ill and met the policy definition of disability at one point, she no longer did. Ellis filed an administrative appeal, which affirmed the decision to terminate Ellis’ benefit. Ellis then sued Liberty in state court for statutory and common-law violations of the state insurance code, breach of contract and breach of the duty of good faith and fair dealing. Liberty removed the suit to federal court on grounds of ERISA preemption. Liberty filed for summary judgment on Ellis’ state-law claims, and Ellis filed a cross-motion for summary judgment, asking to amend her complaint to state and ERISA claim. The district court granted Ellis’ motion. The district court interpreted the phrase “unable to perform all” as synonymous with “unable to perform any one.” The district court denied Liberty’s motion for summary judgment. The district court also dismissed granted summary judgment for Ellis on her ERISA, but dismissed her state-law claims as being preempted by ERISA. Judgment was entered for Ellis, and Liberty appealed. HOLDING:Affirmed in part; reversed and rendered in part. The court first turns back Liberty’s argument that the district court erred when it granted Ellis leave to amend her complaint to state an ERISA claim. Having removed on the basis of ERISA preemption, Liberty cannot now complain about the district court’s ruling to include an ERISA claim. There was no prejudice to Liberty. The court then turns to review the district court’s ruling in favor of Ellis on her ERISA claim. To review a plan administrator’s (Liberty) interpretation of its plan (the LTD policy), the court says it will first determine the legally correct interpretation of the plan. If the court determines that the administrator’s interpretation of the plan was legally correct, the inquiry is over, “pretermitting any need to consider whether a legally incorrect interpretation of the administrator was not an abuse of discretion.” The court says it will apply a sliding-scale standard, where the greater the evidence of conflict, the less deferential the court with be to the way in which the plan has been interpreted. The court finds the district court erred in its interpretation. The court says that the correct interpretation of “unable to perform all” is synonymous with “unable to perform any one.” The word “unable” is synonymous with “not able,” and “all” is synonymous with “every.” The court concludes that Liberty gave a legally correct interpretation to this provision of the plan. The court also finds that Liberty denied Ellis’ LTD benefits based on this interpretation. The court then looks to whether Liberty’s interpretation is consistent with a fair reading of the plan. For Ellis to qualify for LTD benefits under the policy, Liberty determined that she had to show that she could not perform “each” of the material and substantial duties of her occupation; in other words, “each and every duty” or “every single duty.” This is consistent with a fair reading of the plain wording of the plan, the court finds. Then, the court looks to whether a different interpretation of the plan would result in unanticipated costs to the plan. The court finds that the district court’s interpretation would lead to Liberty’s incurring of unanticipated costs. The court concludes that Ellis would have had to demonstrate that she cannot perform “every single” or “each and every” “material and substantial duty of her occupation,” which she did not, to obtain LTD benefits. The court rejects Ellis’ suggestion that the substantial evidence she provided was enough. The law requires only that substantial evidence support a plan administrator’s decisions, including those to deny or to terminate benefits, not that substantial evidence (or, for that matter, even a preponderance) exists to support the employee’s claim of disability. The court then affirms the trial court’s decision that Ellis’ state-law claims are preempted. OPINION:Wiener, J.; Jolly, Wiener and Pickering, JJ. DISSENT:Pickering, Circuit Judge. “As an initial matter, I disagree with the majority’s conclusion that ‘unable to perform all of the material and substantial duties of his occupation’ can only mean unable to perform ‘each and every one’ of the material and substantial duties of an occupation, so that if an employee can perform even one material and substantial duty of his or her occupation, the employee is not disabled.” The dissent says that this issue, though is not outcome-determinative. “However, I do respectfully dissent from the majority’s conclusion that when a plan administrator initially determines that a covered employee is eligible for benefits and later determines that the employee is not eligible for those benefits, the plan administrator may terminate benefits without demonstrating that its initial decision was erroneous, or without substantial evidence of a change in the claimant’s medical condition.”

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