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WALSH v. FIRST UNUM LIFE INS. CO.

November 10, 1997

RICHARD W. WALSH, Plaintiff, -vs- FIRST UNUM LIFE INSURANCE COMPANY, Defendant.

JOHN T. CURTIN, United States District Judge.


The opinion of the court was delivered by: CURTIN

CURTIN, District Judge

 This is an action to recover benefits due under an employee benefit plan and arises under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"). Plaintiff, Richard W. Walsh, claims that his disability benefits were wrongfully terminated. Before the court is defendant First UNUM Life Insurance Company's ("UNUM") motion in limine to exclude two settlement offers given to plaintiff on July 10, 1991, and July 13, 1994, while the plaintiff was still receiving disability benefits.

 BACKGROUND

 Plaintiff Walsh seeks benefits under a long term disability policy issued on April 15, 1981, by defendant UNUM to his former employer, Schutte & Company of Buffalo, Inc. ("Schutte"). Plaintiff was formerly a Vice President and Manager at Schutte and became disabled on January 2, 1990. He was diagnosed as having a peripheral vascular disease.

 Plaintiff, at all times during his employ with Schutte, was enrolled in an employee benefit program that was administered by defendant. On March 1, 1990, plaintiff made his first request for disability benefits to Schutte and defendant. Item 1, Exhibit C. On May 8, 1990, defendant informed plaintiff by letter that his "request for Long Term Disability Benefits has been approved." Item 1, Exhibit D. Plaintiff was told that he would receive supplementary claim forms on a periodic basis "for the purpose of providing [UNUM] with continuing proof of disability." Id. Thereafter, plaintiff received benefits without controversy until September 1994. Item 16.

 In the meantime, on March 29, 1991, defendant informed plaintiff about the Plan's Work Incentive Benefit Program wherein plaintiff would receive "his entire pre-disability income during the first 12 months of an attempted return to work." Item 1, Exhibit E. If plaintiff were able to return successfully, but to a lower paying job, then plaintiff's disability payments would be offset by the amount that his monthly benefit plus new salary exceeded his indexed pre-disability income. Id.

 On July 10, 1991, while plaintiff was still receiving his long term disability benefits, defendant sent a letter to plaintiff which stated "UNUM is willing to offer you $ 85,000 as full and final settlement of your claim for Long Term Disability benefits. . . . This offer is in effect through, but not beyond July 31, 1992." Item 1, Exhibit F. Plaintiff did not accept this offer and continued to receive benefits without controversy.

 Three years later, while plaintiff was still receiving his long term disability benefits, defendant sent plaintiff a letter on July 13, 1994 stating "UNUM is willing to offer you $ 150,000 as full and final settlement for your claim for disability benefits." Item 1, Exhibit G. Once again, plaintiff did not accept this offer and continued to receive benefits.

 On September 6, 1994, defendant informed plaintiff by letter that "We have completed our review of your UNUM disability claim and . . . . our review has concluded that we are unable to continue your benefits." Item 1, Exhibit H. Defendant based its decision on a medical report which stated that plaintiff "can perform [his] sedentary occupation on a full-time basis." Id.

 Plaintiff immediately appealed this denial of his benefits. Item 1, Exhibit I. His primary physician, Dr. John Ricotta, also sent a letter to defendant stating that plaintiff's medical condition had remained unchanged since March 14, 1991. Item 1, Exhibit J. On February 13, 1995, Dr. Ellen Dickinson informed defendant that plaintiff was still suffering from a variety of psychiatric disorders and that he "is currently totally disabled." Item 1, Exhibit K.

 On May 23, 1995, defendant informed plaintiff that it had approved "benefits for disability due to mental illness." Item 1, Exhibit L.

 On June 27, 1995, defendant informed plaintiff that it had completed review of his disability claim and that "our review has concluded that we are denying all liability on your claim as of 2/95." Item 1, Exhibit M. Defendant's reason for the denial was that "we have no evidence of continued disability beyond 2/95." Id.

 On August 15, 1995, defendant informed plaintiff that "we have reviewed the additional information you recently sent us and regret that this was not sufficient to reverse ...


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