Opinion
CV 00-11329 SVW (AIJx)
July 10, 2001
ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT; ORDER DENYING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT
TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
The parties have brought cross-motions for partial summary judgment on the issue of the standard of review in this Employee Retirement Income Security Act ("ERISA") 29 U.S.C. § 1133 disability benefits case. The Court holds that the standard of review is de novo and sets a status conference for July 23, 2000 at 1:30.
Background
Plaintiff Robin Rothstein took a position as a legal secretary at Haight, Brown Bonesteel ("Haight") in 1991. As a benefit of her employment with Haight Rothstein received a Prudential employment disability insurance policy. Pursuant to this policy, Rothstein would receive disability benefits for the initial duration period of two years if her disability rendered her unable to perform her "own occupation." She would only be eligibly for long-term disability benefits after this time if she was from all jobs for which she was "reasonably fitted by [her] education, training, or experience." (PRU at 74).
Rothstein switched to part-time work at Haight in 1993 claiming her fibromyalgia and degenerative disc disease prevented her from maintaining a full-time work schedule. On June 15, 1994 she took disability leave from Haight because she claimed that her disorders prevented her from performing even the part time work. In July 1994 she filed for short-term disability benefits due to severe leg and back pain. Her application was supported by an evaluation from her physician Dr. Sheldon Jordan.
Prudential sent Rothstein to Dr. Sacks for an independent medical evaluation in late 1994. It then sent Rothstein for treatment with Lisa Victor at the Pain Care Center at Brotman Medical Center in 1995. It also reviewed submissions from Rothstein's treating rheumatologist Dr. Allen Metzger. Prudential ultimately sent a benefits denial letter on July 25, 1995 saying that benefits were to terminate on August 31, 1995.
Rothstein first appealed this denial on February 27, 1996. Prudential upheld the denial on June 6, 1996. Rothstein asked for another reconsideration on July 22, 1996. Prudential sent Rothstein's records to Dr. Philip Harbor at UCLA Medical Center for review. It decided to pay Rothstein benefits through September 12, 1996 but apparently decided to applied a mental health disability limitation to Rothstein's case. It felt that the disability, although due in part to the fibromyalgia, also had a mental disorder component. The policy only provided for a maximum of two years of benefits for mental health disorders.
On February 3, 1997 Rothstein asked for a clarification of the 1996 denial. Prudential claims that it received additional medical evidence at that time and on March 7, 1997 decided to reverse its application of the mental disability limitation. It extended Rothstein's benefits through September 1999 and sent Rothstein to Dr. Jonathan Greenberger for an independent medical evaluation. Prudential sent Rothstein a denial of benefits letter on November 18, 1999 which terminated benefits as of February 1, 2000.
On December 7, 1999 Rothstein requested another reconsideration. Prudential again denied benefits on April 5, 2000.
II. Analysis
Under ERISA a federal court will review the denial of benefits by a plan administrator either under a de novo or an abuse of discretion standard. The general rule is that decisions are reviewed de novo. Where the plan language gives the plan administrator discretionary authority however abuse of discretion is applied. Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). The Ninth Circuit has further clarified that the plan language must explicitly grant the discretionary authority: the administrator has discretion "only where discretion was `unambigously retained' by the administrator." Kearney v. Standard Insurance Co, 175 F.3d 1084, 1089 (9th Cir. 1999)
The first question in this case is whether the plan language unambiguously grants discretionary authority to the plan administrator. It does not.
There are two relevant sections of language in the Prudential plan. The first is the section that describes when a policy holder is eligible for disability benefits. It says that the policyholder is totally disabled when "Prudential determines" that the policyholder has met certain conditions. The second relevant section of language concerns the proof of disability that a policyholder must provide: "Prudential must be given written proof of the loss for which claim is made under the Coverage." PRU at 81.
The policy provides that:
"Total Disability" exists when Prudential determines that all of these conditions are met: (1) Due to Sickness or accidental Injury, both of these are true: (a) You are not able to perform, for wage or profit, the material and substantial duties of your occupation. (b) After the Initial Duration of a period of Total Disability, you are not able to perform for wage or profit the material and substantial duties of any job for which you are reasonably fitted by your education, training or experience. The Initial Duration is shown in the Schedule of Benefits.
(2) You are not working at any job for wage or profit.
(3) You are under the regular care of a Doctor. PRU at 74.
Older Ninth Circuit opinions suggested that, because "determine" connotes some judgment, the use of the language "the administrator determines" might have been sufficient to grant the administrator discretionary authority and trigger abuse of discretion review by this Court. See e.g., Bogue v. Allied-Signal. Inc., 976 F.2d 1319, 1324-25 (9th Cir. 1992); Eley v. Boeing Company, 945 F.2d 276, 278-79 (9th Cir. 1991)
The Ninth Circuit has however recently rejected such an interpretation. It has held that in light of Kearney's holding that discretion must be unambiguously conferred, the mere grant of the power to determine does not confer discretion on the administrator. Ingram v. Martin Marietta Long-Term Disability Income Plan for Salaried Employees of Transferred GE Operations, 244 F.3d 1109, 1112-13 (9th Cir. 2001). ("An allocation of decision-making authority to MetLife is not, without more, a grant of discretionary authority in making those decisions.") Ingram also reaffirms the heightened explicitness requirement announced in Kearney:
The plan in Ingram provided both that "the carrier will make all decisions on claims" and that the "carrier is solely responsible for providing the benefits under this Plan." Id. at 1112. This language is a stronger assertion of the administrator's decision making authority than that in the present case.
We think it appropriate to insist, as we did in Kearney that the text of a plan be unambiguous. If an insurance company seeking to sell and administer an ERISA plan wants to have discretion in making claims decisions, it should say so. It is not difficult to write, "The plan administrator has discretionary authority to grant or deny benefits under this plan."
Id. at 1113.
The language in the proof of loss section also does not grant the plan administrator discretion. On several occasions the Ninth Circuit has held that plan language requiring a beneficiary to provide "satisfactory proof of loss" does not grant the plan administrator discretion in deciding whether the proof is sufficient to merit payment of benefits. See Kearney v. Standard Life Ins. Co., 175 F.3d 1084; Sandy v. Reliance Standard Life Ins. Co., 222 F.3d 1202 (9th Cir. 2000). The language here is similar to that in Kearney and Sandy except that word "satisfactory" is omitted here. Using "satisfactory" strengthens the inference of discretion. Therefore, if language including "satisfactory" does not confer discretion, neither does the language in this case.
Although the Court can not and does not rely on this, it notes that the Ninth Circuit has reached a similar conclusion in an unpublished opinion. Achtel v. Connecticut Mutual Life Ins. Co., 2000 U.S. App. LEXIS 5228 (9th Cir. 2000)
Because the language of the plan requires a de novo rather than an abuse of discretion review, the Court need not reach the issue of a conflicted administrator. The Court however notes that the plaintiff has presented substantial evidence of actual conflict on the part of the plan administrator here. In particular, there appear to be inconsistencies in the Defendant's treatment of Rothstein's claims similar to the inconsistencies found to constitute an actual conflict in Lang v. Long-Term Disability Plan of Sponsor Applied Remote Technology. Inc., 125 F.3d 794 (9th Cir. 1997). Among these are the disparities between claims administrator Tanis Sugden's notes and the denial of benefits explanations. PRU 583.
Even if the plan language grants the administrator discretion, the record will be reviewed under a less deferential abuse of discretion standard if the administrator has a conflict of interest. Snow v. Standard Ins. Co., 87 F.3d 327, 330 (9th. Cir. 1996). First, there must be a formal conflict because the administrator both funds and administers the plan. Next, the plaintiff has the burden of producing material evidence of an actual conflict on the part of the administrator. Finally, the defendant has an opportunity to refute the plaintiff's contentions. Atwood v. Newmont Gold Co. Inc., 45 F.3d 1317, 1322 (9th Cir. 1995)
IT IS SO ORDERED.