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Fischer v. Principal Life Insurance Co.

August 11, 2006


The opinion of the court was delivered by: James H. Jarvis United States District Judge


This is an action under the ERISA statute, 29 U.S.C. § 1132(a)(1)(B), removed to this court from the Chancery Court of Knox County. Plaintiff Herman A. Fischer, III, contests defendant Principal Life Insurance Company's (Principal) denial of his claim for long-term disability benefits under a policy issued to his former employer, Lutheran Services in Tennessee, Inc. Currently pending are cross-motions for judgment on the administrative record under the guidelines set out in Wilkins v. Baptist Healthcare Systems, Inc., 150 F.3d 609 (6th Cir. 1998). [Court Files #16, #18]. For the reasons that follow, plaintiff's motion will be granted, defendant's motion will be denied, and the decision to deny benefits reversed.

I. Factual Background

(a) Plaintiff's Employment History

The following employment history of the plaintiff with Lutheran Services in Tennessee, Inc., is taken from the administrative record and is virtually undisputed.

Lutheran Services is a non-profit, charitable organization affiliated with the Evangelical Lutheran Church in America. Plaintiff was hired in 1981 as its President and CEO, a position which he held until June 2003. As President and CEO, he supervised himself, but was responsible to, and reported to, the Board of Directors of the corporation. Further, as President and CEO, plaintiff basically defined himself how his job duties would be carried out to meet the approval of the Board of Directors. The only evidence in the record containing a description of how plaintiff carried out his function as President and CEO is set out in Mr. Fischer's own affidavit as follows:

Throughout my tenure as President and CEO of Lutheran Services, the majority of my duties to the corporation involved hands-on-review and supervision of the company's charitable programs where they are conducted out in the field (13 programs at 13 locations in eight Tennessee counties), and personal fund-raising and other face-to-face relational activities with potential donors and church congregations throughout the corporation's coverage region. Fulfilling these duties required frequent personal travel by car and substantial time in face-to-face meetings with corporation staff, our Board, other charitable organizations, charitable caregivers, and potential donors or donor groups. Lutheran churches in Tennessee, Mississippi, Alabama and Georgia supported the agency, and during my tenure as CEO, I made presentations in all 225 congregations in those states every two-three years. Many if not most of my fund raising and relational efforts required public speaking before large groups, such as church congregations, at which I would have to be standing up during my presentation. With voluntary donations being the lifeblood of any charitable organization, the pressure to maintain personal contact and relationships with donors and donor groups, like church congregations, was constant, and even became more acute when charitable giving dramatically declined after the September 11, 2001 disasters. I have carefully gone through my date books for the calendar years 1998 through 2003, and have made notes of every instance of travel and outside-the-office work activity I carried out during those years, and those daily notes, in my handwriting, are attached hereto.

Administrative Record at 314-315. It is undisputed that the amount of work-related travel, public speaking and face-to-face communication which plaintiff carried out in his job as President and CEO was extensive.

In 1999, plaintiff, in a report to his Board of Directors, drafted a job description for the Chief Executive Officer. Although the job description is couched in general terms and does not describe the actual physical requirements of the job, it does provide considerable insight into how plaintiff and the Board of Directors perceived it. The job description provided the following definition of the job function:

Provides a professional program of human services designed to strengthen the well-being and development of families and individuals, responsive to the needs of the entire community and delivered with compassion, by planning, organizing, directing, and controlling the resources of the corporation, while maintaining high morale among staff members.

Administrative Record at 271. The job description goes on to describe the CEO's "essential functions" as follows:

1. Identifies community service requirements, both actual and anticipated, by active personal contact and rapport with potential and actual clients and other persons in a position to understand the needs of the community.

2. Addresses changing community and professional trends by inaugurating progressive programs.

3. Develops a competent, productive, and satisfied staff by supervising, directly and through delegation, all personnel, including hiring, transferring, promoting, demoting, disciplining, counseling, coaching, appraisal performance, and terminating, as well as by providing educational and experiential growth opportunities.

4. Plans for and protects the physical and financial resources of the corporation by budgeting, controlling, and auditing, and by initiating and participating in fund-raising activities, including the submission of grants.

5. Ensures the smooth operation of the agency by formulating and enforcing program, operational, and personnel policies and procedures.

6. Maintains the stability and reputation of the agency by complying with, or influencing, the development of legal and accreditation requirements.

7. Promotes a positive image of the agency by ensuring an understanding of program services available, publicizing accomplishments and conducting one's self according to a professional code of ethics.

8. Provides agency consultative services to congregations and participate in coordinating programs which may be sponsored by church or community.

9. Contributes to the effectiveness of the Board of Directors by identifying short-term and long-term issues which must be addressed, providing information and commentary pertinent to its deliberations, recommending options and courses of action, especially where professional considerations are involved, implementing directives, and recruiting candidates.

10. Sets a personal example of the highest level of leadership and motivation for all employees.

11. Serves in other capacities at the discretion of the Board of Directors.

Administrative Record at 271-272.

Over the years, plaintiff has had numerous surgeries on his right knee, and in late 2000, upon continuing pain, opted to have a total replacement of his right knee. Prior to the operation, he warned the Board of Directors that the surgery could limit some of his ability to perform the physical functions of his job and obtained the Board's permission to perform some work out of his home following the operation. Although the knee replacement was mechanically successful, plaintiff continued to have significant pain in the right knee and down into the right foot, as well as low back pain. He also began to suffer from depression and alcoholism, which he claims resulted from his inability to perform the physical requirements of his work and stress related thereto. An MRI revealed objective findings in plaintiff's lumbar spine to support his allegations of back pain, which plaintiff elected to treat with physical therapy rather than surgery.

Between late 2000 and plaintiff's resignation from his employment in June 2003, the way in which plaintiff performed his job and the adequacy with which the Board of Directors judged his performance changed considerably. The best description of how plaintiff performed his job following the onset of his medical problems is described by the Chairman of the Board in a response to the defendant asking what he was doing "before leaving Lutheran Services in Tennessee, Inc., in June 2003." The Chairman of the Board reported:

1. Approximately 90% executive desk duties, such as phone calls and conferences, written correspondence, e-mail, reports, etc., were ...

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