Summary
In Brantley, the defendants' decision to deny benefits rested solely on the three-paragraph report prepared by Dr. Kessler.
Summary of this case from Fox v. Kaiser Foundation Employee Benefit PlanOpinion
Civil No. 99-CV-76250-DT.
September 29, 2000.
MEMORANDUM OPINION AND ORDER
This matter is before the Court on Defendants' motion for summary judgment or motion for entry of judgment to uphold the decisions of ERISA plan administrators to deny short term and long term disability benefits to Plaintiff Helen Brantley, pursuant to Wilkins v. Baptist Healthcare Sys. Inc., 150 F.3d 609 (6th Cir. 1998). Oral arguments were held on the matter on May 8, 2000.
I. FACTS
Plaintiff Helen Brantley began working for Defendant Ameritech Corporation as a Tape Librarian in 1980. She last worked for Ameritech on May 17, 1995, when she left work to seek psychiatric treatment. On May 23, 1995, Plaintiff began treatment with psychiatrist Dr. Abmad Kafi, M.D., who diagnosed her as suffering from major depression. Among her symptoms, Plaintiff experienced severe panic attacks which prohibited her from driving a car and insomnia which prohibited her from sleeping more than two to three hours per night. Plaintiff's insomnia also caused her extreme fatigue and rendered her unable to concentrate. Over a period of time, Plaintiff underwent intensive treatment, including daily doses of psychotropic medication and daily partial hospitalization.
Plaintiff applied for and received short term disability benefits through Ameritech's Sickness and Accident Disability Benefit Plan ("SADB Plan") beginning in May 1995. The SADB Plan provides for short term disability benefits to take effect seven days after the onset of a qualifying absence and to continue for a maximum of 52 weeks. In order to receive payments under the SADB Plan, an employee must 1) make a timely report of the disability to a supervisor; 2) remain under a physician's care, follow the physician's recommended treatment, and "as requested by the Company, furnish satisfactory certification of disability" from the employee's treating physician; 3) report for medical examinations with an Ameritech physician, as requested; and 4) not leave the locality where the employee resides without approval of the Medical Director. (Ex. A, p. 2.) After exhausting the 52 weeks of SADB benefits, an employee is then eligible for benefits under Ameritech's Long Term Disability Plan ("LTD Plan"). Both the SADB and the LTD Plans are employee benefit plans governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq.
Plaintiff also applied for Retirement, Survivors, and Disability Insurance based on her condition. In a letter dated January 9, 1996, the Social Security Administration determined that Plaintiff became disabled on May 17, 1995, and that she was entitled to monthly benefits.
In support of her claim for SADB disability benefits, Plaintiff provided Defendants with a number of doctor's reports and forms. On May 31, 1995, Plaintiff submitted a certification of disability form in which Dr. Kafi diagnosed Plaintiff with major depression. Dr. Kafi stated that Plaintiff was taking the medication Zoloft and participating in individual therapy. Her next appointment with him was scheduled for June 14, 1995. The form indicated Plaintiff was expected to return to work on June 30, 1995. (Exhibit B, p. 7.)
Plaintiff subsequently submitted to Ameritech a psychiatric questionnaire completed by Dr. Kafi, and dated either June 1, or June 7, 1995. In it, Dr. Kafi stated that he was treating Plaintiff on a weekly basis, and that Plaintiff could not return to work for another three to six months. Dr. Kafi also indicated — by marking an "X" inside the box which appears next to the word "NO" — that Plaintiff had no "functional limitations or physical restrictions which would impede this patient's ability to perform his/her own job or any job (commensurate with the patients skills/experience.)" (Ex. B, p. 8.)
On July 5, 1995, Ameritech received a letter from Dr. Kafi, dated June 29, 1995, which reads as follows:
[Helen Brantley] is under my professional care and has not recovered sufficiently to return to work. The patient is being admitted to the partial hospital program at Carlyle Medical Center where she will be treated for major recurrent depression until discharged. Please extend her medical leave for another month July 30, 1995.
(Ex. B, p. 6.) Plaintiff had been admitted to the Carlyle Mental Health Center on June 28, 1995.
After receiving Dr. Kafi's June 29, 1995, letter, Dr. Leonard Kessler, M.D., of Ameritech's occupational medicine department, reviewed Plaintiff's file, including the May 31, 1995, certification of disability and the June 1 or June 7, 1995, psychiatric questionnaire. Dr. Kessler then telephoned Dr. Kafi on July 6, 1995. Dr. Kessler wrote a short report, in which he claims that Dr. Kafi stated that Plaintiff should be able to return to work by the end of July 1995 with accommodations. Dr. Kessler stated that given that Dr. Kafi had indicated on the June 1995 psychiatric questionnaire that Plaintiff had no functional limitations, he also expected that Plaintiff could return to work by the end of July 1995. Defendants claim that they informed Plaintiff and Dr. Kafi in a letter that in order to continue receiving SADB benefits, they would have to provide Defendants with additional factors to warrant continuing the benefits prior to August 1, 1995. The parties did not submit a copy of this letter to the Court.
On July 13, 1995, Dr. Kafi submitted another certification of disability form to Defendants. The certification stated that Plaintiff continued to suffer from major recurrent depression, and that Plaintiff could not return to work because she required daily partial hospitalization at the Carlyle Medical Center and the psychotropic medications, Buspar and Xanax. No return to work date was written on the form, and no date was projected for Plaintiff being discharged from the hospital. Plaintiff was later discharged from Carlyle Medical Center on July 21, 1995.
On August 2, 1995, Plaintiff ceased receiving SADB disability benefits. Defendants claim they did not receive any further documentation warranting the continuation of the benefits, and terminated Plaintiff's benefits as of August 1, 1995, on the basis of a lack of evidence of total disability.
On the same day that her benefits ceased, August 2, 1995, Plaintiff provided Defendants with a form from Dr. Kafi dated August 2, 1995. (Ex. B, p. 26.) Dr. Kafi stated on the form that Plaintiff was under his professional care from May 23, 1995, to August 2, 1995, "inclusive, and was totally incapacitated during this time." The doctor certified that Plaintiff had "not recovered sufficiently to be able to return to work duties until September 5, 1995," and that he has "not released this patient to return to work at any time since 5-23-95." Plaintiff's diagnosis remained that of major recurrent depression with a "guarded" prognosis, and she continued to take Zoloft, Buspar, and other psychotropic medications.
Plaintiff appealed the denial of her SADB benefits on August 11, 1995. (Ex. B, pp. 21-24.) She was informed that her appeal would be reviewed by Ameritech's Employees' Benefit Committee ("EBC") and that she would receive a written response from the EBC by October 13, 1995. In a letter dated October 12, 1995, the EBC informed Plaintiff that the decision to deny her disability benefits was being upheld because of "insufficient medical documentation to support a totally disabling condition." (Ex. B, p. 1.)
On October 3, 1997, Defendants received a letter from Plaintiff's attorney appealing the denial of benefits. Ameritech claims that the letter sought to appeal a decision on the LTD benefits, and because Plaintiff had not yet filed a claim for LTD claim, Defendants treated the letter as a claim for LTD benefits, rather than an appeal. On November 17, 1997, Plaintiff's claim for LTD benefits was denied for failure to exhaust the full 52 weeks of SADB benefits. Plaintiff appealed the denial of LTD benefits in a letter dated December 12, 1997. The EBC denied Plaintiff's appeal of the LTD benefits on May 12, 1998, for failure to exhaust the 52 weeks of SADB benefits. The EBC also found that Plaintiff had submitted evidence of her disability which was not previously presented in the appeal of the SADB benefits, but the decision to deny the SADB benefits became final in 1995.
Plaintiff brought this cause of action on June 17, 1999, based on the denial of the LTD benefits and alleging ERISA violations, breach of contract, common law equitable estoppel, and breach of fiduciary duty. The matter was originally assigned to Judge Barbara Hackett. Defendants filed a motion for summary judgment. Prior to rendering a decision on the motion for summary judgment. Judge Hackett granted Plaintiff leave to add a claim for denial of the SADB benefits. Judge Hackett subsequently granted in part and denied without prejudice in part Defendants' motion for summary judgment on both the SADB and LTD benefits. The state law causes of action for equitable estoppel, breach of contract, and breach of fiduciary duty were dismissed on the basis that the claims were preempted by ERISA. Judge Hackett denied the motion for summary judgment without prejudice with respect to the LTD and SADB claims, indicating that the parties had submitted insufficient evidence for the court to make a determination. Defendants' subsequent motion for reconsideration of the decision was denied. The matter was later transferred to this Court.
II. STANDARD OF REVIEW
Defendants now seek summary judgment or an entry of judgment upholding the plan administrator's decision to deny Plaintiff's claims for SADB and LTD benefits. In Wilkins v. Baptist Healthcare System, Inc., 150 F.3d 609 (6th Cir. 1998), a panel of the Sixth Circuit, in a majority decision, set forth "Suggested Guidelines" to adjudicate ERISA benefit denial actions. Id. at 619. The Sixth Circuit opined that both the summary judgment and the bench trial standards as set forth in Rules 56 and 52 of the Federal Rules of Civil Procedure, respectively, are inappropriate for adjudicating ERISA denial of benefit actions which are brought pursuant to 29 U.S.C. § 1132(a)(1)(B). Id. at 617-619.
The panel began by noting that a district court's review of a plan administrator's decision is confined to the evidence which was before the plan administrator. Id. at 618 (citing Rowan v. Unum Life Ins. Co., 119 F.3d 433, 437 (6th Cir. 1997); Perry v. Simplicity Engineering, 900 F.2d 963. 966 (6th Cir. 1990)). As to the traditional bench trial, the court found that procedure inappropriate: "Such a proceeding would inevitably lead to the introduction of testimonial and/or other evidence that the administrator had no opportunity to consider." Id. The panel also found this method of adjudication inconsistent with ERISA's goal of having inexpensive and expeditious resolutions. Id. With respect to summary judgment, the panel found this procedure inapposite because under the summary judgment standard a district court must determine whether there are genuine issues remaining for trial. Id. at 619. Because ERISA precedent precludes a traditional bench trial, "it makes little sense to deal with such an action by engaging a procedure designed solely to determine, `whether there is a genuine issue for trial.'" Id. The panel opined, "To apply Rule 56 after a full factual hearing has already occurred before an ERISA administrator is . . . pointless." Id. Accordingly, district courts are not to use summary judgment or bench trial procedures in ERISA benefit denial actions. Id.
The Suggested Guidelines provide that a district court should conduct a review of the plan administrator's decision based solely upon the administrative record and render findings of fact and conclusions of law. Id. Only if a procedural challenge is alleged, such as lack of due process afforded by the administrator or bias on its part' may the district court consider evidence outside of the administrative record. Id. Discovery must be limited to these procedural challenges. Id.
When an ERISA plan does not give discretionary authority to the plan administrator in making its decision, a district court reviews the plan administrator's decision de novo. Wilkins, 150 F.3d at 613, 616. When conducting de novo review, the district court must take a "fresh look" at the facts and law which were before the plan administrator. Id. No new evidence may be presented to the district court which was not before the plan administrator. Id at 615 616.
When an ERISA plan gives the plan administrator discretionary authority to make eligibility decisions or to construe the terms of the plan, a district court reviews the administrator's decision under the arbitrary and capricious standard. Wilkins, 150 F.3d at 616 n. 4; Wendy's Int'l Inc. v. Karsko, 94 F.3d 1010, 1012 (6th Cir. 1996). Under the arbitrary and capricious standard, the decision of the plan administrator must be upheld "[w]hen it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome." Smith v. Ameritech, 129 F.3d 857, 863 (6th Cir. 1997). See also Baker v. United Mine Workers of Am. Health Retirement Funds, 929 F.2d 1140, 1144 (6th Cir. 1991) (finding that under the arbitrary and capricious standard a decision must be "upheld if it is the result of a deliberate, principled reasoning process and if it is supported by substantial evidence"). As with de novo review, the district court may only consider the evidence available to the administrator at the time the final decision was made. Killian v. Healthsource Provident Adm'rs, Inc., 152 F.3d 514, 522 (6th Cir. 1998); Peruzzi v. Summa Med. Plan, 137 F.3d 431, 433-34 (6th Cir. 1998); Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 985 (6th Cir. 1991); Perry, 900 F.2d at 967.
Defendants claim that because the Plans require Plaintiff to furnish satisfactory certification of disability from the employee's physician, the arbitrary and capricious standard applies in this case. (Defendant's brief, Ex. A, SADB, p. 2) InYeager v. Reliance Standard Life Ins. Co., 88 F.3d 376 (6th Cir. 1996), the Sixth Circuit held that if the plan language indicates that satisfactory proof of disability must be submitted "to the insurance company" or "to us" such language gives the plan administrator clear and express discretion and, therefore, the arbitrary and capricious standard of review is applied. Id. at 380. In this case, the SADB requirement for certification states "as requested by the Company, furnish satisfactory certification of disability from the physician who is caring for you." (Defendant's brief, Ex. A, SADB, p. 2) This language is distinguishable from the language found in Yeager because the language at issue does not indicate to whom the proof must be satisfactory. The certification could be interpreted to mean satisfactory to Defendant or its physician, but is not as clear as the language cited in Yeager which gave the plan administrator clear and express discretion involved language such as "satisfactory proof . . . to us" or "on the basis of medical evidence satisfactory to the Insurance Company." Yeager, 88 F.3d at 380. The SADB language at issue merely states that the Company may request satisfactory certification. The language does not clearly give the plan administrator the discretion to determine whether the certification submitted by the employee is satisfactory to the SADB plan administrator or reviewing physician. Based on the certification of disability requirement language alone, the plan administrator may not have clear and express discretion to review disability claims. However, for the reasons set forth below, the arbitrary and capricious standard applies in this case.
Defendant also claims that the arbitrary and capricious standard applies because the Plans provide the plan administrator full discretionary authority to interpret the terms of the Plans. Specifically, the Summary of Material Modifications of the SADB effective January 1, 1994 states, "[t]he Committee has full discretionary authority to interpret the terms of the Plans and to determine eligibility for and entitlement to Plan benefits in accordance with the terms of the Plans. The Committee determines conclusively for all parties all questions arising in the administration of the Plans and any decision of this Committee is not subject to further review." (Defendant's brief, Ex. A, SADB, Summary of Material Modifications, p. 2) Plaintiff concedes that pursuant to the Plans, the "committee has full discretionary authority to interpret the terms of the Plan and to determine eligibility for and entitlement to Plan benefits in accordance with Plan terms." (Plaintiff's brief, p. 5) Plaintiff argues, however, that the standard of review in this case is not an arbitrary and capricious standard but rather a de novo review because of the conflict of interest inherent in both the administration of a plan and paying benefits out of the company's own fund.
In Cochran v. Trans-General Life Ins. Co., 60 F. Supp.2d 693, 698 (E.D. Mich. 1999), the district court held that pursuant to Sixth Circuit precedent, the existence of a conflict of interest, assuming such a conflict is found, will be weighed as one factor in determining whether a plan administrator's decision to deny plaintiff benefits was an arbitrary and capricious. Id at 698-99, citing Davis v. Kentucky Finance Cos. Retirement Plan, 887 F.2d 689, 693 (6th Cir. 1989). "`The arbitrary and capricious standard is the least demanding form of judicial review of administrative action' and . . . `[w]hen it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious.'" Cochran, 60 F. Supp.2d at 699, quoting Davis, 887 F.2d at 693. Because the Plans at issue give the plan administrator full discretionary authority to interpret the terms of and to determine eligibility under the Plans, the Court finds that the appropriate standard of review in this case is whether or not the plan administrator's decision to deny Plaintiff benefits was arbitrary and capricious.
III. FINDINGS OF FACT AND CONCLUSIONS OF LAW
A. SADB Benefit Denial
Defendants argue that the initial decision to deny Plaintiff's request for SADB benefits and the decision to uphold the denial were not arbitrary and capricious. Under the SADB Plan, an employee must "as requested by the Company, furnish satisfactory certification of disability" from the employee's treating physician. The Court notes that nowhere in the SADB Plan is the phrase "satisfactory certification of disability" defined.
Defendants denied Plaintiff her SADB benefits because she submitted "insufficient medical documentation to support a totally disabling medical condition." Defendants claim that under the SADB Plan, Plaintiff has the burden of submitting satisfactory certification of disability, and that Defendants have no duty to seek out satisfactory medical information. Defendants claim that the documents submitted by Dr. Kafi were not satisfactory evidence that Plaintiff suffered from a disabling condition after August 1, 1995, because he initially stated that she could return to work June 30, 1995, and in the last report received by Defendants prior to the denial of benefits Dr. Kafi indicated that Plaintiff could return to work by the end of July 1995.
Defendants' arguments lacks merit. Defendants' argument that it does not have any duty to seek out medical information is inconsistent with the express language terms of the SADB Plan which provides that the employee must furnish satisfactory certification of disability from the treating physician "as requested by the Company." The evidence shows that Plaintiff presented sufficient evidence, as requested, that her disabling condition continued well past August 1, 1995. In none of the forms submitted to Defendants did Dr. Kafi, or any other doctor, release Plaintiff to return to work. Although Dr. Kafi stated on May 30, 1995, that Plaintiff should be able to return to work by the end of June 1995, and stated in early July 1995 that she may be able to return to work by the end of July 1995, Dr. Kafi's June 1995 psychiatric questionnaire projected that Plaintiff might be disabled for three to six months. The July 13, 1995, certification of disability did not have a date for Plaintiff's return to work, but it did state that she "still" required daily partial hospitalization and psychotropic medications. The August 2, 1995, certification of disability, provides that Plaintiff could not return to work sooner than September 5, 1995. Although Defendants set an August 1, 1995, deadline for providing such information, Defendants have not advised the Court of any provision in the SADB Plan which sets forth deadlines for submitting medical documentation, nor for an employee to request an extension of time of any such deadline.
Although the August 2, 1995, certification of disability was received by Defendants after the August 1, 1995, denial of benefits, the document was included in record on appeal of the SADB denial of benefits. Accordingly, the document is properly before this Court.
Defendants dismiss Dr. Kafi's August 2, 1995, report in which he opined that Plaintiff was totally incapacitated from May 23, 1995, to August 2, 1995, and would not recover sufficiently to be able to return to work until September 5, 1995. Defendants claim that this report is inconsistent with
Dr. Kafi's June 1995 psychiatric questionnaire in which he indicated that Plaintiff had no functional limitations or physical restrictions prohibiting her from work.
Defendants also criticize the August 2, 1995, certification of disability because Dr. Kafi did not submit medical documentation to support his opinions. After reviewing the documents considered in the SADB appeal, the Court can find no difference between the August 2, 1995, form and the documents Dr. Kafi submitted prior to August 2, 1995, upon which Defendants relied to initially find that Plaintiff was disabled under the SADB plan. The Court also notes that nowhere in the decision to uphold the denial of SADB benefits does the EBC state that Dr. Kafi should have submitted additional medical documentation to support the August 2, 1995, opinion.
In fact, although the August 2, 1995, report appears as part of the record on the SADB appeal, it is not mentioned at all in the decision. The EBC also failed to mention the July 13, 1995, statement of disability in which Dr. Kafi reported Plaintiff's continued need for daily partial hospitalization. The EBC found that after receiving Dr. Kafi's June 29, 1995, letter "no additional information was received." Defendants had requested further documentation on or about July 6, 1995, to continue Plaintiff's benefits. Defendants have provided no evidence or argument as to why the July 13, 1995, report did not constitute the additional evidence of a continuing disability. Even if the July 13, 1995 letter was not satisfactory, there is no evidence that Plaintiff was given notice that she needed a supplemental report. Her benefits were simply denied on August 2, 1995.
In light of all the medical evidence, the Court finds that the Plan administrator's decision to deny Plaintiff SADB benefits was arbitrary and capricious. A review of the documents submitted to the EBC on the SADB appeal, shows that although Dr. Kafi initially stated that Plaintiff could return to work on June 30, 1995, and later stated she could return by July 30, 1995, Dr. Kafi submitted additional certifications of disability which indicate that Plaintiff continued to suffer from major recurrent depression and required daily partial hospitalization and psychotropic medication. Although no date for a return to work was listed on the July 13, 1995, form, Plaintiff was never released for work. Defendants subsequently received the August 2, 1995, report stating that Plaintiff could not return to work until September 1995. Neither of these reports were mentioned in the appeal of the SADB.
The EBC's decision to deny Plaintiff SADB benefits seems to rest solely on Dr. Kessler's three paragraph psychiatric report, which from all indications was prepared the same day he gathered the information. Defendants never requested that Plaintiff submit to a medical examination before an Ameritech doctor, as they were allowed to do under the SADB Plan. Dr. Kessler did not interview Plaintiff, perform any tests, or render an independent evaluation. There is no indication that Dr. Kessler asked to review any individual therapy notes, hospitalization records, or test reports, if any, taken while Plaintiff was under Dr. Kafi's care. Dr. Kessler makes no independent opinions as to Plaintiff's functional limitations or mental capabilities, and does not support his report with any medical documentation. Dr. Kessler merely reviewed the disability forms which Ameritech had Dr. Kafi complete, had a telephone conversation, of unknown duration, with Dr. Kafi, and merely summarized the reports of Dr. Kafi. Dr. Kessler then focused on the one instance when Dr. Kafi marked the box indicating Plaintiff had no functional limitations. Nothing in Dr. Kessler's report indicates that he asked Dr. Kafi to explain the "inconsistency" of Plaintiff having no functional limitation, but not being able to return to work. There is also no evidence that Plaintiff was given notice that Dr. Kessler filed a report, such that she would be able to refute it on appeal.
The Court finds the ruling of the EBC to be arbitrary and capricious, and finds in favor of Plaintiff. Plaintiff is entitled to SADB benefits.
B. LTD Benefits
The LTD benefits are dependent on exhaustion of the SADB benefits. An employee must apply for LTD benefits within six months after the expiration of the Waiting Period — the period of 26 weeks or 52 weeks for which an employee is receiving benefits under the SADB. (Defendants' Ex. C, p. 3, ¶¶ 2.11 and 3.1.(c)) Defendants denied Plaintiff's LTD disability application based on failure to exhaust her SADB benefits. Once Plaintiff exhausts her benefits under the SADB, Plaintiff is allowed to submit a request for LTD benefits. Defendants may then determine whether Plaintiff is eligible for LTD benefits pursuant to the LTD plan.
IV. CONCLUSION
For the reasons set forth herein,
IT IS HEREBY ORDERED that Defendants' Motion for Summary Judgment, or, for Entry of Judgment (Docket Nos. 22-1 and 22-2, Filed 2/9/00) is DENIED.
IT IS FURTHER ORDERED that the Plan Administrator's determination is REVERSED as to the denial of Short Term Disability benefits. Plaintiff is entitled to Short Term Disability benefits.
IT IS FURTHER ORDERED that the matter be REMANDED to the EBC for a determination of Plaintiff's eligibility for Long Term Disability once Plaintiff has exhausted her benefits under the Short Term Disability Plan.