Opinion digest – US 4th Circuit 

Posted: 7:00 pm Sun, November 1, 2009
By Daily Record Staff

Criminal Procedure
Sentencing special conditions

BOTTOM LINE: Where district court imposed special post-incarceration conditions as part of defendant’s sentence, the conditions, which appeared to be unreasonable and unrelated to defendant’s crime, were vacated because the district court provided no explanation for imposing them.

CASE: United States v. Armel, No. 8-4700 (decided, October 19, 2009) (Judges MOTZ, Gregory & Keith). RecordFax No. 9-1019-60, 8 pages.

COUNSEL: Mary Elizabeth Maguire, Office of the Federal Public Defender, Richmond, VA, for Appellant. Stephen David Schiller, Office of the U.S. Attorney, Richmond, VA, for Appellee.

FACTS: On July 18, 2007, Armel made three phone calls to an FBI office. During the calls, he made several angry and perverse threats. Armel claimed that the FBI owed him money and that God promised him that if he was not paid, FBI employees would be mutilated or die. The next day, after discovering that Armel had a history of such conduct, the FBI and local officials arrested him. Armel acknowledged that he understood the reason for his arrest and eventually apologized.
Armel was indicted under 18 U.S.C. §115(a)(1)(B) (2006), which prohibits, inter alia, threats to assault or murder federal law enforcement officers. After a bench trial, the district court found Armel guilty and sentenced him to a substantially above-guideline prison term. The court also imposed three years of supervised release, including rigid special conditions. Among other things, the court ordered that Armel not possess pornography, not enter places where pornography could be obtained, not have contact with children, and submit to invasive sex offender tests.
Armel appealed to the 4th Circuit, which vacated the sentence in part.

LAW: “District courts have broad latitude to impose conditions on supervised release,” and so such conditions are reviewed only for abuse of discretion. United States v. Dotson, 324 F.3d 256, 259, 260 (4th Cir. 2003). The sentencing court may impose any condition “reasonably related” to the factors referred to in 18 U.S.C. §3583(d)(1), which include “the nature and circumstances of the offense and the history…of the defendant…protect[ing] the public from further crimes…and provid[ing] the defendant with needed…medical care…or other correctional treatment.” §3553(a)(1), (2)(C-D). But special conditions must “involve[ ] no greater deprivation of liberty than is reasonably necessary” to achieve the goals enumerated in §3553(a). 18 U.S.C. §3583(d)(2).
“Although the discretion thus conferred is broad,” an appellate court “will carefully scrutinize unusual and severe conditions.” United States v. Sofsky, 287 F.3d 122, 126 (2d Cir. 2002). A district court “shall state in open court the reasons for its imposition of the particular sentence” 18 U.S.C. §3553(c). Accordingly, the court must explain the rationale for the special conditions it imposes. See United States v. Warren, 186 F.3d 358, 366 (3d Cir. 1999).
Here, while the district court accurately described the special conditions as “very rigid,” it offered no explanation as to their necessity in Armel’s case. Accordingly, there was no basis for determining whether they were reasonably related to the factors referred to in 18 U.S.C. §3583(d)(1) and “involve[ ] no greater deprivation of liberty than is reasonably necessary.” 18 U.S.C. §3583(d)(2). See Gall v. United States, 552 U.S. 38 (2007).
Imposition of the pornography prohibitions seemed particularly inexplicable. Given that Armel’s underlying conviction was not sex-related, the need for an explanation for the special conditions was all the more pressing. “[A]ppellate courts must have sufficient information about the justifications offered for the sentence imposed in order to conduct a meaningful review.” United States v. Henry,545 F.3d 367, 386 (6th Cir. 2008). Because the record here did not contain such information, the reasonableness of the conditions could not be determined.
Accordingly, the conditions were vacated.

U.S. District Court, Maryland

ERISA
Disability benefits

BOTTOM LINE: Where plaintiff suffered respiratory illness, rather than an injury per se, as a result of work-related activity, he was entitled to benefits under defendant’s short-term disability plan because there was no distinction between illness and injury.

CASE: McDevitt v. Reliance Standard Life Insurance Company, Civil No. JFM-08-3431 (decided Oct. 13, 2009) (Judge Motz). RecordFax No. 9-1013-40, 7 pages.

FACTS: Charles McDevitt was employed by Tricon Construction as a construction foreman. On June 29, 2006, McDevitt was exposed to fumes when a co-worker cut a steel beam at a construction site. On June 30, McDevitt, suffering from severe head and body aches, sought treatment at the hospital, where he was diagnosed with “metal fume fever” and discharged that day.
McDevitt returned to the hospital on July 3 complaining of blood in his urine and shortness of breath. He was subsequently admitted to the intensive care unit and was diagnosed with “acute respiratory failure secondary to inhalation injury with bacterial pneumonia complications and…acute respiratory distress syndrome.”
On July 4th McDevitt was intubated and placed in the intensive care unit. He remained in that unit until July 28th, when he was transferred to a rehabilitation bed. McDevitt returned to work on October 15, 2006.
At all relevant times, McDevitt was covered by a short-term disability insurance plan (the Plan), which was offered to employees of Tricon and insured by Reliance Standard Life Insurance Company.
Reliance refused to award McDevitt disablility benefits and, therefore, McDevitt filed the instant ERISA action against Reliance. The parties filed cross motions for summary judgment.
The district court granted McDevitt’s motion for summary judgment and denied Reliance’s motion for summary judgment.

LAW: Under Employee Retirement Income Security Act of 1974, 29 U.S.C. §001, “a civil action may be brought by a participant or beneficiary to recover benefits due to him under the terms of his plan, [or] to enforce his rights under the terms of the plan.” 29 U.S.C. §1132(a)(1)(B); Metro. Life Ins. Co. v. Glenn, 128 S. Ct. 2343 (2008).
Where a plan gives an administrator or fiduciary discretion to determine the beneficiary’s eligibility for benefits, the administrator’s decision about eligibility should be reviewed for an abuse of discretion. Champion v. Black & Decker Inc., 550 F.3d 353, 359 (4th Cir. 2008); Brogan v. Holland, 105 F. 3d 158, 161 (4th Cir. 1997).
Under the abuse of discretion standard, an administrator’s decision will be upheld if it is reasonable. Champion, 550 F.3d at 359. In determining reasonableness, a court may consider, inter alia, “(1) the language of the plan; (2) the purposes and goals of the plan; (3) the adequacy of the materials considered to make the decision and the degree to which they support it; (4) whether the fiduciary’s interpretation was consistent with other provisions in the plan and with earlier interpretations of the plan; (5) whether the decisionmaking process was reasoned and principled; (6) whether the decision was consistent with the procedural and substantive requirements of ERISA; (7) any external standard relevant to the exercise of discretion; and (8) the fiduciary’s motives and any conflict of interest it may have.” Champion, 550 F.3d at 359.
Here, the Plan’s excluded benefits for any period of disability caused by, inter alia, sickness “which is covered by a Worker’s Compensation Act, or other worker’s disability law” (the sickness exclusion), “or injury which occurs out of or in the course of work for wage or profit” (the injury exclusion).
McDevitt asserted he was entitled to benefits under the Plan for the pneumonia and respiratory failure which he suffered because these injuries did not fall within the Plan’s exclusion provision.
Courts must defer to the plain language in an ERISA plan when that language is unambiguous. United McGill Corp. v. Stinnett, 154 F.3d 168, 173 (4th Cir. 1998).
Applying this rule, the fourth and fifth clauses of the exclusion provision “literally and naturally” meant that McDevitt was entitled to coverage. The Plan distinguished between “sickness” and “injury,” and McDevitt suffered what ordinarily is understood to be a “sickness” not an “injury.” In that regard the Plan defined “sickness” as an “illness or disease causing disability” and pneumonia and respiratory failure certainly are commonly considered as “illnesses or diseases.”
Accordingly, McDevitt’s motion for summary judgment was granted and Reliance’s motion for summary judgment was denied.

COMMENTARY: Although insurance companies owe a duty to other participants in an ERISA plan (and to their shareholders) not to pay benefits to applicants who are not entitled to receive them, the ultimate purpose of insurance is, in fact, to provide coverage to those who have contracted for it rather than to erect administrative barriers, increase transaction costs, or delay the payment of legitimate claims.

PRACTICE TIPS: Reliance pointed out that the Plan defines “injury” as “[1] bodily injury [2] resulting directly from an accident, [3] independent of all other causes.” Seeking to buttress its position, Reliance noted that the Webster’s New World Dictionary defines “injury” as “physical harm.” A different Webster’s dictionary defines “injury” as “1. Damage of or to a person, property, reputation or thing. 2. A wound or other specific damage.” Webster’s II New Riverside Univ. Dictionary 186 & 629.
Webster’s definitions of “injury” undermined rather than supported Reliance’s argument. Both “physical harm” and “a wound or other specific damage” connote tangible change to an external body part or internal organ directly caused by invasion or impact.

Labor & Employment
Circumstantial evidence of discrimination

BOTTOM LINE: Defendant was not entitled to summary judgment on plaintiff’s claim of racial discrimination, where plaintiff established a prima facie case of discrimination and there was a genuine dispute of material fact as to whether the legitimate nondiscriminatory reason proffered by defendant was pretextual.

CASE: Jackson v. Sebelius, No. 08-1687 (decided Oct. 8, 2009) (Judge Quarles). RecordFax No. 9-1008-40, 17 pages.

FACTS: In May 1999, Doris M. Jackson, an African-American, began working at the Department of Health and Human Services (HHS) as a Health Insurance Specialist in the Division of Acute Care Services (DACS), within the Survey and Certification Group (SCG) at the Center for Medicare and Medicaid Services (CMS). DACS oversees the accreditation of hospitals for participation in Medicare and reviews applicants seeking to participate in Medicare.
In April 2002, Jackson, a GS-13 employee, asked Frank Sokolik, Director of DACS and her supervisor, about a promotion to a GS-14 position. Sokolik told her that she was already doing the work of a GS-14, and he would try to get the Center for Medicaid State Operations (CMSO) to allocate two GS-14 level positions for her and Jackie Kosh-Suber, another African-American female.
In 2003, Sokolik prepared a position description for a GS-13 position and promoted Amber Wolfe, a Caucasian, to it. Before Wolfe’s promotion, only African-American candidates had been eligible for promotion.
In December 2003, Congress passed the Medicare Prescription Drug Improvement and Modernization Act, which increased CMS’s responsibilities. As a result, Thomas Hamilton, SCG’s Director and Sokolik’s supervisor, asked his supervisors for additional personnel. Although Hamilton’s request was denied, he was given a GS-14 position for an employee who was doing extra work. Hamilton and Sokolik created a position description for the new position, which would be open only to current CMS employees.
Jackson told Sokolik on November 17, 2004, that she was leaving DACS for a job with the HHS Office of Inspector General (OIG). Sokolik never told Jackson about the new position although he knew that she was leaving because she had not gotten a promotion.
Jackson’s last day at CMS was December 10, 2004, and the GS-14 position was posted the same day. Sokolik ultimately promoted Amber Wolfe even though she had just recently become eligible.
On March 8, 2005, Jackson filed an EEO complaint charging racial discrimination. The Administrative Law Judge (ALJ) found in favor of CMS, and CMS adopted the ALJ’s findings. Jackson appealed to the EEOC, which affirmed CMS’s and the ALJ’s decision and dismissed Jackson’s claim.
Jackson sued Kathleen Sebelius, the Secretary of the Department of Health and Human Services, for race discrimination. The district court denied Sebelius’s motion to dismiss, or alternatively, for summary judgment.

LAW: Under Title VII of the Civil Rights Act of 1964, it is unlawful “for an employer to fail or refuse to hire…or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race.” 42 U.S.C. §2000e-2(a)(1).
To prove a Title VII violation by circumstantial evidence, Jackson had to proceed under the three step scheme of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973). First, Jackson had to show a prima facie case of discrimination. Id. at 802. If she did so, Sebelius had to present a legitimate, nondiscriminatory reason for the adverse employment action. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133 (2000). Then the burden shifts back to Jackson to show that the proffered reason was pretext. Reeves, 530 U.S. at 143.
To demonstrate a prima facie case of failure to promote, Jackson had to prove, inter alia, that she applied for the position, was qualified for the position, and was rejected under circumstance giving rise to an inference of discrimination. Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310, 319 n.6 (4th Cir. 2005).
Here, Sebelius argued that because CMS had a formal system for posting vacancies and Jackson knew about the vacancy, her application was necessary for a prima facie case. “If an employer has a formal system of posting vacancies and allowing employees to apply for such vacancies, an employee who fails to apply for a particular position cannot establish a prima facie case of discriminatory failure to promote.” Williams v. Giant Food, Inc., 370 F.3d 423, 430 (4th Cir. 2004). But, “if the employer fails to make its employees aware of vacancies, the application requirement may be relaxed and the employee treated as if she had actually applied.” Id. at 431.
Thus, “when the hiring process itself, rather than just the decision-making behind the process, is implicated in the discrimination claim or is otherwise suspect,” the application requirement may be waived. E.E.O.C. v. Metal Serv. Co., 892 F.2d 341, 349 (3d Cir. 1990).
The timing of the posting on Jackson’s last day and Sokolik’s failure to tell Jackson about the GS-14 position though he knew of her interest indicated a suspect hiring process. Thus, an application was not required.
There was conflicting testimony about whether background check experience was required for the position. Sebelius contended that the entire reason the position was authorized was so that the incumbent could fulfill the Agency’s new responsibilities under the Medicare Modernization Act to perform background check-related work and accreditation. But another member of the promotion panel did not believe there was any connection between the Act and the creation of the new GS-14 position. The Human Resources Specialist who approved the new position also testified that the criminal background function was not part of the position description. Thus, whether the position required experience in background check work was a disputed material fact that barred summary judgment.
Jackson’s non-promotion gave rise to an inference of discrimination because Wolfe, a Caucasian woman, was given the job. See Schafer v. Maryland, 555 F. Supp. 2d 572, 578 (D. Md. 2008). This inference was bolstered by circumstantial evidence of discrimination, i.e., the job posting on Jackson’s last day with DACS and Sokolik’s failure to tell her about the vacancy despite his knowledge of her interest in such a position.
Thus, Jackson established a prima facie case of discrimination, which could be rebutted by evidence of a legitimate, nondiscriminatory reason for CMS’s actions. Schafer, 555 F. Supp. 2d at 576. Some of those reasons included that Sokolik did not have control over later parts of the job approval and posting process. Furthermore, it was argued that Sokolik did not inform Jackson about the opening because it was possible that the position would be withdrawn or delayed. Sokolik testified that he never informs any staff members about job openings. This non-disclosure policy was a legitimate, nondiscriminatory reason not to tell Jackson about the job before it was posted.
Jackson then had to provide evidence that nondiscriminatory reasons provided for CMS’s actions were a pretext for discrimination. Worden v. SunTrust Banks, Inc., 549 F.3d 334, 341 (4th Cir. 2008). Jackson argued that pretext was established by Sokolik’s failure to tell her about the new position, knowing that she would be interested in applying and that she would become ineligible if she continued with her plan to transfer. Although Sokolik contended that it had been his policy not to announce openings before they were posted, there was evidence that he had previously done so. To show that Wolfe’s superior qualifications were also pretextual, Jackson noted that the district court had previously observed inconsistencies about Amber Wolfe’s qualifications for the promotion. The supplemental evidence produced during discovery did not resolve these inconsistencies.
Thus, viewed in a light most favorable to Jackson, there was a genuine dispute whether Sokolik discriminated against her by concealing the GS-14 position and hiring Wolfe and, therefore, Sebelius’s motion for summary judgment was denied.

COMMENTARY: In her reply, Sebelius argued that Jackson relied too heavily on the district court’s previous denial of summary judgment and failed to make proper response to the facts and arguments raised in this motion under FRCP 56(e)(2).
Rule 56(e)(2) requires that an opposing party “by affidavits or as otherwise provided in this rule – set out specific facts showing a genuine issue for trial. If the opposing party does not so respond, summary judgment should, if appropriate, be entered against that party.”
Previously, the district court held that Jackson had established a genuine issue of material fact on several elements of her discrimination claim. The previous denial is not “law of the case,” and does not preclude summary judgment. See Plotkin v. Lehman, 178 F.3d 1285, 1285 (4th Cir. 1999). But Jackson met her Rule 56(e)(2) duty to respond. In Jackson’s opposition to this motion, she cited the court’s previous order and opposed Sebelius’s new arguments with testimony from numerous depositions.

PRACTICE TIPS: Whereas a party opposing a motion for summary judgment must produce evidence upon which a reasonable fact-finder could rely, a mere “scintilla” of evidence is insufficient to preclude summary judgment. Anderson v .Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).