Opinion
Civil No. 03-1381-AS.
October 4, 2004
FINDINGS AND RECOMMENDATION
Plaintiff filed suit against three defendants alleging wrongful denial of long term disability ("LTD") benefits. The defendants are: (1) UNUMProvident ("UNUM"), the LTD plan administrator; (2) Gaylord Industries, the LTD plan sponsor; and (3) Illinois Tool Works, a wholly owned subsidiary of Gaylord Industries and plaintiff's former employer. Currently before the court are the parties' cross motions for summary judgment (docket Nos. 13 and 22).
BACKGROUND
Plaintiff worked at defendant Illinois Tool Works as an "NC programmer" until February 6, 2001. His job consisted of programming machines — the turret lathe and the laser lathe. After he ceased work, he applied for LTD benefits based on claimed conditions of emphysema and hepatitis. After investigating his claim, UNUM denied it. Plaintiff requested reconsideration, but UNUM upheld its decision. Plaintiff then brought the current action alleging that UNUM's denial violated the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 101, et seq. ("ERISA").
LEGAL STANDARD
In evaluating a claim for benefits under an ERISA plan, the Court must decide the appropriate standard of review based on the language of the plan. "[A] denial of benefits challenged under [ERISA] is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). The Ninth Circuit requires de novo review "unless the plan documents unambiguously say in sum or substance that the plan administrator or fiduciary has authority, power or discretion to determine eligibility or to construe the terms of the plan." Sandy v. Reliance Standard Ins. Co., 222 F.3d 1202, 1206 (9th Cir. 2000).If the decision to deny befits is reviewed for abuse of discretion, "a motion for summary judgment is merely the conduit to bring the legal question before the court and the usual tests of summary judgment, such as whether a genuine issue of fact exists, do not apply." Bendixen v. Standard Ins. Co., 185 F.3d 939, 942 (9th Cir. 1999). An abuse of discretion will be found it the plan administrator: (1) renders decisions without any explanation; (2) construes provisions of the plan in a way that conflicts with the plain language of the plan; or (3) relies on clearly erroneous findings of fact in making benefit determinations. Id. at 944.
DISCUSSION
As a preliminary matter, plaintiff apparently concedes defendants' motion to dismiss Gaylord Industries, the LTD plan sponsor, and Illinois Tool Works, plaintiff's former employer, on the ground that these are not proper defendants in this action for ERISA benefits. Consequently, the claims against these defendants should be dismissed, and the action should proceed solely against the plan administrator, UNUM.
I. Standard of Review
The plan administrator's decision will be reviewed de novo unless the plan unambiguously grants discretionary authority to the plan administrator. Plaintiff does not take issue with the plan's language. Rather, plaintiff argues that the Summary Plan Description ("SPD") does not unambiguously grant discretionary authority to the plan administrator, and that the SPD should control, because that is what is distributed to, and referred to by, the plan participants.
The SPD contains the following language:
"The party responsible for plan administration is the plan administrator. The plan administrator [defined as UNUM] has the following duties and powers:
"• To interpret the plan and determine all questions arising in its operation, administration and application;
"• To review any determination made by the claims administrator, either on its own or through the claims review process;
"• To adopt any rules, procedures and forms necessary for the operation and administration of the plan that are consistent with its provisions;
"• To determine all questions relating to the eligibility, benefits and other rights of covered individuals;
". . . . .
"As plan and claims administrator, Unum Life Insurance Company handles the operation of the plan, interprets plan provisions and makes the final decisions about such issues as eligibility and payment of benefits."
Amended Complaint, Ex. A, pp. 12-13. Regardless of whether the SPD should control over the plan, the excerpt above establishes that the SPD unambiguously retains discretionary authority in the plan administrator. Cf. Kearney v. Standard Ins. Co., 175 F.3d 1084, 1089-90 (9th Cir. 1999) (en banc) ("satisfactory written proof that you have become disabled" did not constitute an unambiguous retention of discretion).
The same is true for the language in the plan itself, which plaintiff apparently concedes. The plan provides:
"In making any benefits determination under this policy, the Company [defined as UNUM] shall have the discretionary authority both to determine an employee's eligibility for benefits and to construe the terms of the policy."
The clause refers to the "Company," which is defined as UNUM. See Affidavit of Mona Bombassi, Ex. A ("Record"), UACL 333, 328.
Record, UACL 328. Consequently, the UNUM's decision should be reviewed for an abuse of discretion.
Plaintiff asserts that the Ninth Circuit increased the level of scrutiny under the abuse of discretion standard in Jordan v. Northrop Grumman Corp. Welfare Benefit Plan, 373 F.3d 634 (9th Cir. 2004). Specifically, plaintiff asserts that Jordan requires a plan administrator to actively communicate with the participant's treating physicians to seek their explanations as to why the participant is prevented from performing her occupation. See Plaintiff's Memorandum Opposing Defendants' Motion for Summary Judgment, p. 7:17-19. Although the Jordan court noted that the plan administrator had done so, i.e., actively sought information from the participant's treating physicians, the court did not modify the abuse of discretion standard by making that an additional requirement. In describing the abuse of discretion standard, the Jordan court explained that
"we cannot substitute our judgment for the administrator's. We can set aside the administrator's discretionary determination only when it is arbitrary and capricious. We have held that a decision `grounded on any reasonable basis is not arbitrary and capricious, and that in order to be subject to reversal, an administrator's factual findings that a claimant is not totally disabled must be `clearly erroneous.'"Jordan, 370 F.3d at 875 (emphasis in original, footnotes and citations omitted). The court expanded on this standard:
"Deferential review, of course, does not mean no review. If the administrator's decision is arbitrary, as where the administrator `arbitrarily refuse[s] to credit a claimant's reliable evidence,' the administrator's decision fails the `fair review' requirement of the statute. But as long as the record demonstrates that there is a reasonable basis for concluding that the medical condition was not disabling, the decision cannot be characterized as arbitrary, and we must defer to the plan administrator."Id. at 879 (footnotes and citations omitted). Contrary to plaintiff's argument, the Jordan court did not establish a separate standard, beyond the general abuse of discretion standard, by which the administrator must communicate with the participant's physicians to obtain information.
The "statute" refers to 29 U.S.C. § 1133(1), (2), which requires the administrator to provide specific reasons for denial of a claim, written in a manner calculated to be understood by the participant, and must "afford a reasonable opportunity . . . for a full and fair review."
II. The Denial of Benefits
A. Facts
Plaintiff submitted a claim for LTD benefits asserting that his emphysema and hepatitis prevented him from performing his job. He explained that he was very short of breath, had dizzy spells and a constant cough, as well as fatigue and depression. Plaintiff's treating physician, Dr. Frank Rosenbloom, submitted an "Attending Physician's Statement" in which he diagnosed plaintiff with cardiomyopathy and noted objective findings of dyspnea (shortness of breath), hypertension and tachycardia. He opined that plaintiff was "unable to perform physical work" and that it was "unknown" when plaintiff could return to work. Medical records UNUM received from Dr. Rosenbloom reflected that he had first seen plaintiff in March 2000 for hypertension and that plaintiff had multiple medical conditions, including aortic and mitral valve replacements, bacterial endocarditis, and hypertension. Dr. Rosenbloom's chart notes for February 6, 2001, plaintiff's last day at work, reflect that plaintiff had reported that he believed he had had a transient ischemic attack the previous week and was experiencing numbness in his face. Dr. Rosenbloom diagnosed a transient ischemic attack, chest pain and dyspnea and agreed to write a letter to allow plaintiff to take some time off work.
UNUM also obtained records from Dr. Kremkau, a cardiologist to whom Dr. Rosenbloom had referred plaintiff. Dr. Kremkau provided plaintiff with a heart monitor, which indicated that there had been one six-beat burst of SVT (ventricular tachycardia), but otherwise his heart was in sinus rhythm and no bradycardia or important tachycardia was noted. Dr. Kremkau also ordered tests which indicated that: (1) plaintiff's blood work was normal, except for a high glucose level and an abnormal alkaline phosphatase; (2) that his complete blood count showed normal values; and (3) that his ejection fraction was normal at 65%. Plaintiff refused to perform a treadmill test, which Dr. Kremkau sought.
UNUM also sought the records of psychiatrist, Dr. Bellville. He submitted a one-page "chart summary," in which he indicated that he began seeing plaintiff in June 2000 for anxiety and depression. Dr. Bellville opined, "Initially, the major reason for Mr. Baldoni's disability seemed to be clearly related to his breathing problems. However, his depression has also loomed as a greater and greater factor as time has gone on." Record, UACL 210.
UNUM denied plaintiff's claim by letter of October 31, 2001. Though UNUM agreed that the pulmonary function tests demonstrated that plaintiff had moderate to severe chronic obstructive pulmonary disease, UNUM noted that all other pulmonary and cardiac test showed normal results. On that basis, UNUM concluded that plaintiff was not precluded from returning to work as a programmer. Record, UACL 247-50.
By letter of January 11, 2002, plaintiff asked UNUM to refrain from making a final decision until he could convey the results of a pulmonary function test scheduled for January 21, 2001. UNUM agreed to do so. UNUM never received the results of the test and advised plaintiff of that by letter of July 16, 2002, which also informed him that his claim was being referred for further review.
By letter of August 27, 2002, UNUM upheld its decision to deny plaintiff's claim, asserting that the clinical data contained in the file did not support or specify any restrictions or limitations that would prevent plaintiff from performing his occupation.
B. Discussion
Plaintiff asserts that UNUM abused its discretion by: (1) failing to adequately consider all the medical evidence in the record, thereby acting in bad faith; (2) failing to have appropriate medical experts review the medical evidence in the record; (3) failing to seek additional information from plaintiff's treating physicians; (4) failing to advise plaintiff of any further information needed to perfect his claim; and (5) impermissibly adding requirements to the plan.
Regarding his argument that UNUM acted in bad faith by failing to give adequate consideration to all the medical records, plaintiff argues that the denial letter of October 31, 2001, merely recites plaintiff's medical conditions and medications without explaining how each was considered in reaching the denial. Furthermore, plaintiff argues that the letter omits some of plaintiff's medical conditions, which plaintiff claims contribute to his disability, such as emphysema, chronic pain syndrome, unpredictable dizzy spells, cardiomyopathy, stroke, chronic anticoagulation and bleeding of the gums, pulmonary nodule, and a history of diplopia (double vision). Plaintiff argues that the denial letter mischaracterized the results of his echocardiogram as normal and inaccurately and incompletely reports the findings of the pulmonary function report. Plaintiff further asserts that UNUM failed to take into account his psychological condition, as reflected in the summary report of Dr. Bellville.
The summary report indicates that plaintiff saw Dr. Bellville four times between June 13, 2000, and July 19, 2001. Though Dr. Bellville's summary report indicates that "depression has loomed as a greater and greater factor," it did not include any actual diagnosis or opinion as to plaintiff's ability to function. Given the information that was submitted by Dr. Bellville, it was not unreasonable for UNUM to conclude that there was insufficient evidence that plaintiff's depression would prevent him from performing his job.
Plaintiff asserts that his medical conditions, though listed in the denial letter, were not adequately considered. Though the medical records contained many of the diagnoses claimed by plaintiff, not every diagnosis constitutes a disability.Jordan, 370 F.3d at 880. There was little evidence in the record regarding how the conditions would restrict plaintiff from performing his job. For example, while the record contains a diagnosis of diplopia — which plaintiff had had since he was a teenager — there is no indication that the condition limited his ability to perform his job.
Dr. Rosenbloom commented that plaintiff "couldn't perform physical work," but the pulmonary function report and echocardiogram showed that plaintiff's functioning was relatively normal. Though plaintiff asserts that these tests were mischaracterized in the denial letter, reference to the actual reports, contained in the record, shows that plaintiff's condition was generally normal. For example, to the extent the echocardiogram notes abnormalities, they are described as "trace," "slight," or "mild." UNUM did seek the advice of a board certified cardiologist in regard to these records. Under these circumstances, there was a rational basis for UNUM's conclusion that plaintiff's conditions were not disabling.
Plaintiff also asserts that UNUM abused its discretion by failing to have the record reviewed by a Pulmonary Internist or a Psychiatrist. Rather, UNUM had the record reviewed by a "Clinical Consultant, a Registered Nurse and a Board Certified Cardiologist/Internist." Dr. Rosenbloom indicated that plaintiff's primary disabling condition was cardiomyopathy, which is a heart condition. As such, UNUM's decision to have the file reviewed by a cardiologist rather than a pulmonologist had a rational basis. Furthermore, failure to have the one-page summary submitted by Dr. Bellville reviewed by a Psychiatrist was not arbitrary and capricious . As explained above, the summary indicated four visits with plaintiff during a fourteen-month period and did not include any actual diagnosis or opinion as to plaintiff's ability to function. As such, there was a rational basis to conclude, as UNUM did, that review of the summary by another psychiatrist was unwarranted.
Relying on Jordan, plaintiff takes issue with the amount of information solicited from his treating physicians, arguing that UNUM should have requested information regarding pulmonary rehabilitation, since its absence from plaintiff's treatment regimen was cited in the denial letter. As explained above,Jordan did not modify the abuse of discretion standard by requiring the administrator to engage in any specific level of communication with a participant's treating physicians. The administrator's decision will pass muster so long as there is a rational basis for the manner in which a participant's claim is investigated. Cf. Booton v. Lockheed Medical Benefits Plan, 110 F.3d 1461, 1463 (9th Cir. 1997) (reversing denial where administrator reviewed only a single operation report and set of x-rays, disregarded its own consultant's suggestion that additional records be obtained, and declined to consider treating physician's explanation for the necessity of the procedure). Here, UNUM requested and obtained all of Dr. Rosenblum's records and office notes, interviewed plaintiff, obtained a list of all his medical providers, and requested records from each. UNUM received medical records from six providers. The file was reviewed by a board certified cardiologist. UNUM's failure to inquire further about pulmonary rehabilitation was not arbitrary and capricious. The fact that its absence from plaintiff's treatment regimen was noted does not alter that conclusion.
Furthermore, UNUM provided plaintiff the opportunity to supplement the record with an updated pulmonary function report. UNUM waited six months for the report before sending plaintiff a letter informing him that it had not received the report and his claim was being referred for further review. Plaintiff did not submit the report after receiving that letter, and approximately six weeks later the denial was affirmed on review. Under these circumstances, it cannot be said that UNUM's investigation lacked a rational basis.
Plaintiff argues that the denial letter violated 29 C.F.R. § 2560.503-1(f)(3), which requires a denial notice to contain a "description of any additional material or information necessary for the claimant to perfect the claim and an explanation why such material or information is necessary." The denial letter, however, satisfies that requirement by informing plaintiff that there was "no substantial evidence in the file at this time to support occupationally limiting restrictions and limitations that would preclude a return to work in [his] occupation as a programmer," and inviting him to submit additional evidence, which "may include, but is not limited to, treatment records, diagnostic tests with results or functional capacity evaluations." The record does not indicated that there were any other unresolved factual issues, and in that circumstance, failure to make further inquiry does constitute an abuse of discretion.
Plaintiff argues that UNUM abused its discretion by adding requirements to the plan — specifically, that plaintiff be compliant with his physician's orders. While the denial letter notes plaintiff's non-compliance in the course of summarizing his medical records, there is no indication that UNUM denied plaintiff benefits for that reason. Rather, the letter explains that the denial is based on the absence of evidence that plaintiff's medical conditions render him unable to perform his job as a programmer.
Finally, plaintiff argues that the denial was an abuse of discretion because he was awarded disability benefits by the Social Security Administration. First, the Social Security Administration had access to records that were not provided to UNUM — a January 2002 pulmonary function test and a December 2001 psychiatric independent medical examination. Furthermore, decisions of the Social Security Administration are not binding on ERISA administrators. Madden v. ITT Long Term Disability Plan, 914 F.2d 1279, 1286 (9th Cir. 1990), cert. denied 498 U.S. 1987 (1991); see also Black Decker v. Nord, 538 U.S. 822, 832-33 (2003) (discussing "critical differences between Social Security disability program and ERISA benefit plans"). Thus, the finding of disability by the Social Security Administration does not compel the same conclusion by UNUM.
CONCLUSION
The record as a whole indicates that the administrator did not abuse its discretion in denying plaintiff benefits. For the reasons set forth above, plaintiff's motion for summary judgment should be denied (No. 22). Defendants' motion for summary judgment (No. 13) should be granted and plaintiff's action should be dismissed with prejudice.
SCHEDULING ORDER
The above Findings and Recommendation will be referred to a United States District Judge for review. Objections, if any, are due by October 19, 2004. If no objections are filed, review of the Findings and Recommendation will go under advisement on that date. If objections are filed, a response to the objections is due within fourteen days of the filing of the objections. The review of the Findings and Recommendation will go under advisement on the date of the filing of the response to the objections.