Summary
holding that SPD provision requiring claimant to present her administrative appeal within 60 days of the claim denial was invalid
Summary of this case from Cossey v. Associates' Health Welfare PlanOpinion
No. 03-4964 MMC, Docket Nos. 16, 21.
August 18, 2004
ORDER DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT; GRANTING PLAINTIFF'S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT; VACATING HEARING
Before the Court is the motion of defendants ADVO-Systems, Inc. Disability Income Plan and Paul Revere Life Insurance Company for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure. Also before the Court is plaintiff Linda Ludlow's motion for partial summary judgment, pursuant to Rule 56. Having considered the papers submitted in support of and opposition to the motions, the Court deems the matters appropriate for decision on said submissions, VACATES the hearing scheduled for August 20, 2004, and rules as follows.
Defendants did not provide the Court with a chambers copy of their Reply in Support of the Motion for Summary Judgment, which the docket reflects was electronically filed on August 6, 2004. The Court, nonetheless, has considered the filing. For future reference, defendants are reminded of the following provision in the Court's Standing Orders: "In all cases that have been assigned to the Electronic Case Filing Program, the parties are required to provide for use in chambers one paper copy of each document that is filed electronically. The paper copy of each such document shall be delivered no later than noon on the day after the document is filed electronically. The paper copy shall be marked `Chambers Copy' and shall be delivered to the Clerk's Office in an envelope clearly marked with the judge's name, case number, and `E-Filing Chambers Copy.'"
BACKGROUND
The following facts are undisputed.
Plaintiff is a former employee of ADVO Systems, Inc. ("ADVO"). (See Compl. ¶ 2.) Paul Revere Life Insurance Company ("Paul Revere") issued to ADVO an insurance policy, under which Paul Revere agreed to pay ADVO employees certain benefits, including long term disability income benefits if a claimant met the conditions set forth in the policy. (See Braz Decl. Ex. 1.) In a Statement for Disability Benefits, signed by plaintiff on December 2, 1992, plaintiff stated that on April 25, 1992, she "sustained nerve damage during wisdom tooth extraction, causing pain and resultant facial `twitch'," and that she had been unable to work as of May 27, 1992. (See Braz Decl. Ex. 2 at PRLCL 31.) On April 13, 1993, Paul Revere approved plaintiff's claim for disability benefits. (See Braz Decl. ¶ 7, Ex. 3.)
In December 2000, plaintiff's claim for disability benefits was transferred for "further administration" from Paul Revere to NATLSCO, Inc. ("NATLSCO"). (See Braz Decl. ¶ 10.) On November 28, 2001, NATLSCO informed plaintiff in a letter, "[I]t is our determination that you are not eligible for benefits under the plan" on the ground "there is no indication you would have difficulty resuming your job as an administrative assistant." (See Braz Decl. Ex. 7.) Accordingly, NATLSCO advised plaintiff, "benefits are denied effective February 1, 2001." (See id.) In the denial letter, NATLSCO stated that if plaintiff disagreed with the denial, she "may file a written request for appeal and a review of [the] claim" and that such request must be made "within sixty (60) days from receipt of the letter." (See id.)
Although the letter states "2001," this appears to be a typographical error as the letter also states that "benefits will be paid through January 31, 2002." (See id.)
On January 29, 2002, counsel for plaintiff sent NATLSCO a letter stating that counsel had been retained to "investigate the denial of [the] claim and associated conduct on NATLSCO's part and, if necessary, pursue appropriate administrative appeal entitlements and/or legal remedies on her behalf," and requesting "a complete and unabridged copy of NATLSCO's administrative record . . . and a copy of the group insurance policy under discussion." (See Braz Decl. Ex. 8.) On March 13, 2002, counsel sent to NATLSCO a letter stating that while counsel had received some of the requested materials, counsel had not received the policy or portions of the administrative record. (See Johnston Decl. Ex. A.) On June 14, 2002, NATLSCO faxed to counsel the requested portions of the administrative record and also, according to defendants, mailed the policy to counsel. (See Braz Decl. Ex. 10.) Thereafter, on August 19, 2002, in response to counsel having reported he had not yet received a copy of the policy, NATLSCO sent counsel a copy of the policy by certified mail. (See id.) On December 12, 2002, counsel for plaintiff sent NATLSCO a letter "to perfect an administrative appeal," arguing therein that the denial should be reversed because plaintiff had established she met the definition of "disabled" as set forth in the policy issued by Paul Revere. (See Braz Decl. Ex. 9.)
The letter of March 13, 2002, is not addressed to NATLSCO, but to "Integrated DisAbility Resources, Inc." Both parties, however, have referred to NATLSCO and "Integrated DisAbility Resources, Inc." interchangeably.
On May 22, 2003, the Disability Consulting Group sent counsel for plaintiff a letter stating that it was "uphold[ing] the decision in [the] letter of 11/28/01," on the sole ground that plaintiff had not presented an appeal within the 60-day period "clearly communicated in that letter." (See Braz Decl. ¶ 16.) On November 7, 2003, plaintiff instituted the above-titled action, alleging that, pursuant to the Employee Retirement Income Security Act ("ERISA"), she is entitled to benefits under the plan established by ADVO.
In January 2003, "responsibility for [plaintiff's] then closed claim was transferred from NATALSCO [sic] to DCG [Disability Consulting Group]." (See id.)
LEGAL STANDARD
Rule 56(c) provides that a court may grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."See Fed.R.Civ.P. 56(c).
The Supreme Court's 1986 "trilogy" of Celotex Corp. v. Catrett, 477 U.S. 317 (1986), Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986), andMatsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986), requires that a party seeking summary judgment show the absence of a genuine issue of material fact. Once the moving party has done so, the nonmoving party must "go beyond the pleadings and by her own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" See Celotex, 477 U.S. at 324 (quoting Rule 56(c)). "When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted."Liberty Lobby, 477 U.S. at 249-50 (citations omitted). When determining whether there is a genuine issue for trial, "`inferences to be drawn from the underlying facts . . . must be viewed in the light most favorable to the party opposing the motion.'" See Matsushita, 475 U.S. at 587 (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)).
DISCUSSION
Defendants seek summary judgment on the ground plaintiff "failed to appeal the denial of her claim within the 60-day time limit imposed by ADVO's benefit plan." (See Defs.' Mot. for Summ. J. at 9:22-23.) Plaintiff seeks partial summary judgment on the issue that the plan does not contain a term imposing a time limit on appeals.
Although ERISA does not contain an exhaustion requirement, federal regulations provide that "[a] plan may establish a limited period within which a claimant must file any request for review of a denied claim," and that "[i]n no event may such a period expire less than 60 days after receipt by the claimant of written notification of denial of a claim." See 29 C.F.R. § 2650-503-1(g)(3). "[A] claimant must avail himself or herself of a plan's own internal review procedures before bringing suit in federal court." Diaz v. United Agricultural Employee Welfare Benefit Plan and Trust, 50 F. 3d 1478, 1483 (9th Cir. 1995) (affirming dismissal of ERISA claim where plaintiff "failed to comply with the Plan's internal review procedures and hence did not exhaust the available administrative remedies").
Section 2650.503-1(g)(3) was in effect at the time plaintiff filed her claim. The regulation authorizing a plan to institute a limited period for appeals is now found in 29 C.F.R. § 2560.503-1(h). Defendants contend, and plaintiff does not dispute, that the regulation set forth in former § 2650.503-1(g)(3) pertains to the instant action.
Defendants, in arguing that the ADVO plan establishes a limited period within which a claimant must file an appeal, rely on a provision in ADVO's "benefits booklet" that states: "If your claim has been denied, you may appeal and have your claim reviewed. You have 60 days to make an appeal from the time you are notified of the denial." (See Lenser Decl. Ex. 1 at 97.) Defendants submit, and plaintiff does not dispute, that the "benefits booklet" is a "Summary Plan Description" ("SPD") of the ADVO plan.
ERISA provides that an "[SPD] of any employee benefit plan shall be furnished to participants," see 29 U.S.C. § 1022(a), and that it shall contain certain information, such as "the plan's requirements respecting eligibility for participation and benefits," see 29 U.S.C. § 1022(b). Plaintiff disputes whether defendants have offered any admissible evidence to establish that the SPD, i.e., the "benefits booklet," was distributed to ADVO employees. In light of the Court's findings discussed infra, the Court need not decide whether defendants' evidence on that point, (see Lenser Decl. ¶ 2), is admissible.
"[A] provision in the [SPD] can establish a new plan term if it meets all the statutory, regulatory, and plan requirements for modifying the plan." See White v. Jacobs Engineering Group Long Term Disability Benefit Plan, 896 F. 2d 344, 348 (9th Cir. 1989) (holding 60-day time limit on filing appeal in SPD became plan term where SPD met requirements for modifying plan). Plaintiff argues, however, that the 60-day time limit in the SPD here at issue is not a plan term because the SPD does not meet the requirements for modifying the plan. See Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F. 3d 1154, 1161-62 (9th Cir. 2001) (holding, where claim administrator placed provision in "Benefits Summary" booklet stating claim administrator had discretion to interpret insurance policy, provision was not part of plan because plan was not amended in "conformance with policy provisions").
Defendants, with their moving papers, offer the disability insurance policy issued by Paul Revere but do not identify that policy as the ADVO plan. "[A]n insurance policy may constitute the written instrument of an ERISA plan." Cinelli v. Security Pacific Corp., 61 F. 3d 1437, 1441 (9th Cir. 1995) (internal quotation and citation omitted). In her cross-motion and opposition, plaintiff argues that the policy submitted by defendants is the plan. In their reply, defendants fail to respond to this argument. If defendants were of the view that plaintiff had incorrectly identified the plan, defendants had the opportunity to offer with their reply any document other than the policy that might constitute the ADVO plan. Consequently, the Court finds that the policy is the plan.
Defendants also offer the SPD. The SPD, by its own terms, is not one of the "official plan documents," (see Lenser Decl. Ex. 1 at 97), but, rather, is "for informational purposes only." (See id. at 3.) Indeed, the SPD states that "[i]f any conflict arises between the summaries and the official plan documents, the official plan documents will always govern." (See id. at 97.)
ERISA requires that a plan "specify both an amendment procedure and a procedure for identifying persons with authority to amend."See Winterrowd v. American General Annuity Ins. Co., 321 F. 3d 933, 937 (9th Cir. 2003) (citing 29 U.S.C. § 1102(b)(3)). "The purpose of [ERISA's] mandate that benefit plans set forth, and adhere to, definite procedures for amendment, is to ensure that `proposed plan amendments, which are fairly serious events, are recognized as such and given the special consideration they deserve.'" Id. (quoting Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 82 (1995)).
Here, the SPD's provision setting a 60-day time limit on presenting appeals is, as plaintiff argues, not a valid amendment of the plan, for two independent reasons. First, the policy contains the following term: "This Policy and any application made by the policyholder or by an employee make up the entire contract between the parties." (See Braz Decl. Ex. 1 at last page.) The Ninth Circuit, in an ERISA action, has held this exact language constitutes a provision establishing that the policy is "fully integrated," and, as a consequence, new terms found in an SPD cannot become part of the plan. See Grosz-Salomon, 237 F. 3d at 1161-62. Second, the policy identifies the employer,i.e., ADVO, as the "agent" of Paul Revere and states that "[n]o agent has the power to change or waive anything in this Policy." (See Braz Decl. Ex. 1 at last page.) Because defendants concede that ADVO, not Paul Revere, authored the SPD in which the 60-day limitation is found, and there is no showing Paul Revere directed ADVO to include such term in the SPD, the 60-day time limit in the SPD is "null and void." See Grosz-Salomon, 237 F. 3d at 1161-62 (holding where plan administrator purported to amend plan by adding new term in SPD, while not following plan's procedure to modify plan, new term was "null and void").
Consequently, defendants have failed to show that the plan required plaintiff to present her administrative appeal within 60 days of the denial of her claim. Accordingly, defendants are not entitled to summary judgment.
Further, because the policy, which constitutes the plan, purports to be fully integrated, contains no provision setting a time limit on an appeal, and provides that ADVO may not amend the policy, plaintiff has demonstrated that the 60-day time limit in the SPD is not a plan term, and that no triable issue exists with respect thereto. Accordingly, plaintiff is entitled to summary adjudication on the issue of whether the plan contains a provision imposing a time limit on appeals.
In light of this finding, the Court does not address the additional issues on which plaintiff, in the alternative, sought summary adjudication.
Defendants argue in their reply that plaintiff did not notice a hearing date for her cross-motion in conformity with the Civil Local Rules of this District. See Civil L.R. 7-2(a) (requiring motions be noticed for hearing no less than 35 days after service). Although plaintiff's decision to combine her cross-motion with her opposition to defendants' motion had the effect of requiring defendants to file their opposition to the cross-motion within seven, rather than fourteen, days after receiving the cross-motion, defendants' reply in support of their motion, which was required to be filed seven days after receipt of plaintiff's opposition, responds to the arguments made in plaintiff's opposition, which are the same arguments made in support of plaintiff's cross-motion. Under the particular circumstances presented, the Court finds it appropriate to resolve at this time the issue of whether the plan contains a provision requiring that an appeal be presented within a limited time period.
CONCLUSION
For the reasons set forth above,1. Defendants' motion for summary judgment is hereby DENIED, and
2. Plaintiff's cross-motion for partial summary judgment is hereby GRANTED and it is hereby established that there is no applicable deadline for the initiation of administrative appeals imposed by the terms of the employee benefit plan under which plaintiff claims benefits herein.
This order terminates Docket Nos. 16 and 21.