Opinion
No. C 03-01386 CRB
December 3, 2003
ORDER
This is an Employment Retirement Income Security Act ("ERISA") lawsuit for long-term disability benefits. Now pending before the Court is defendant's motion for summary judgment. After carefully considering the pleadings filed by the parties, and having had the benefit of oral argument, defendant's motion for summary judgment is GRANTED. The Court concludes that an abuse of discretion standard of review applies and that defendant did not abuse its discretion in finding that plaintiff had a "preexisting condition" as defined under the policy.
BACKGROUND
Plaintiff was employed by Lab One, Inc. as a phlebotomist. As a Lab One employee, plaintiff was covered by Lab One's long-term disability policy issued by Unum Life Insurance Company of America ("Unum"). The policy and this action are governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq.
Plaintiff submitted a claim for long-term disability benefits under the policy, claiming that he became disabled due to degenerative arthritis in his left knee and an anterior cruciate ligament ("ACL") deterioration. Unum denied plaintiff's disability claim based on its determination that plaintiff's condition is a preexisting condition that is excluded from the policy.
Plaintiff originally began working for Lab One on January 28, 1999, and ceased working on May 24, 2000. He then returned to Lab One on June 24, 2000, and was terminated on December 31, 2001. It is undisputed that the insurance policy at issue does not give plaintiff credit for his first term of service with Lab One, and that the starting date of June 24, 2000 is the operative date of his employment for purposes of the policy.
Coverage under the policy does not begin on the first date of employment; rather, coverage begins when the eligible employee completes the requisite waiting period. The waiting period under the policy is three full months of continuous employment, plus any additional days up to the first day of the following month. Because plaintiff's employment began on June 24, 2000, his coverage began on October 1, 2000-three full months of continuous employment plus any additional days up to the first day of the following month.
Under the express terms of the policy, preexisting conditions are excluded from the policy. The policy states: "Your plan does not cover any disabilities caused by, contributed to, or resulting from your: . . . preexisting condition." Markee Decl., Ex. A at 370. A policyholder has a preexisting condition if:
— you received medical treatment, consultation, care or services including diagnostic measures, or took prescribed drugs or medicines in the 3 months just prior to your effective date of coverage; or you had symptoms for which an ordinarily prudent person would have consulted a health care provider in the 3 months just prior to your effective date of coverage; and — the disability begins in the first 12 months after your effective date of coverage.Id. at 370-71.
Therefore, under the terms of the policy plaintiff would have had to have had treatment, care, or symptoms between July 1, 2000 — October 1, 2000, and the disability begin before October 1, 2001 in order for coverage to be excluded as a preexisting condition.
It is undisputed that plaintiff became disabled on September 20, 2001-before the October 1, 2001 deadline. It is also undisputed that plaintiff sought treatment from Dr. Mannie Joel, M.D. on July 24, 2000-within the preexisting condition period. Thus, the dispute is over whether the condition for which plaintiff sought treatment on July 24, 2000 is the same as the condition that caused his disability on September 20, 2001.
Plaintiff timely filed a disability claim form based on degenerative arthritis in his left knee and an anterior cruciate ligament ("ACL") deterioration. Defendant denied that claim on May 22, 2002, concluding the claim was based on his preexisting left knee arthrosis condition. Plaintiff them submitted a letter from Dr. Joel stating that plaintiff's treatment on July 24, 2000 was to help decrease sciatic pain down his left leg from a degenerative disc disease. Defendant upheld its decision to deny the claim. On November 14, 2002, plaintiff appealed the denial. Defendant, again, affirmed its decision on March 25, 2003. Plaintiff then filed this suit on April 1, 2003 under ERISA section 1132, seeking recovery of benefits. Defendant now moves for summary judgment.
DISCUSSION
I. Standard of Review
Defendant contends that the Court must review its disability determination under an abuse of discretion standard while plaintiff argues that defendant has a conflict of interest that warrants less deferential review by the Court.
"[A] denial of benefits challenged under [ERISA] § 1132(a)(1)(B) 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) Bendixen v. Standard Ins. Co., 185 F.3d 939, 942 (9th Cir. 1999). When the plan confers discretion on the plan administrator to determine eligibility for benefits, courts review the denial of benefits for abuse of discretion. Id. The "default is that the administrator has no discretion, and the administrator has to show that the plan gives it discretionary authority in order to get any judicial deference to its decision." Kearney v. Standard Ins. Co., 175 F.3d 1084, 1089 (9th Cir. 1999) (en banc).
The ERISA plan at issue here unambiguously provides defendant with discretion to determine whether a claimant is entitled to benefits. The plan provides: "When making a benefit determination under the policy, UNUM has discretionary authority to determine your eligibility for benefits and to interpret the terms and provisions of the policy." Markee Decl. Ex. A at 381.
Plaintiff does not contend that the policy does not confer discretionary authority upon defendant; instead, plaintiff argues that de novo review should apply because defendant has a conflict of interest.
Plaintiff does contend that defendant has not provided the actual plan, just a Summary Plan Description. However, plaintiff acknowledges that if the plan language is as defendant states, it does confer discretion to defendant. Defendant has provided a copy of the plan, see Markee Decl. Ex. A, and the policy language is as defendant states.
The Ninth Circuit has held that the abuse of discretion standard of review can be "heightened" by a plan administrator's conflict of interest. See Atwood v. Newmont Gold Co., 45 F.3d 1317, 1322 (9th Cir. 1995). There is an apparent conflict of interest where a long-term disability policy is both funded and administered by defendant.See Bendixen, 185 F.3d at 943; Lang v. Long-Term Disability Plan of Sponsor Applied Remote Tech. Inc., 125 F.3d 794, 797 (9th Cir. 1997). "Nevertheless, the presence of a conflict does not automatically remove the deference [courts] ordinarily accord to ERISA administrators who are authorized by the plan to interpret a plan's provisions." Id. "[O]nly a `serious' conflict would heighten scrutiny." Bendixen, 185 F.3d at 943.
In Bendixen, the court explained:
In order to establish a serious conflict, the beneficiary has the burden to come forward with "material, probative evidence, beyond the mere fact of the apparent conflict, tending to show that the fiduciary's self-interest caused a breach of the administrator's fiduciary obligations to the beneficiary." If the beneficiary cannot satisfy this burden, the district court should apply the traditional abuse of discretion review. If the beneficiary does satisfy the burden, the plan then bears the burden to show the conflict of interest did not affect the decision to deny benefits.Id. (quoting Atwood v. Newmont Gold Co., 45 F.3d 1317, 1322 (9th Cir. 1995)).
The Ninth Circuit has found "material, probative evidence" of a serious conflict of interest to consist of "inconsistencies in the plan administrator's reasons," Lang, 125 F.3d at 799; Tremain v. Bell Indus., Inc., 196 F.3d 970, 976 (9th Cir. 1999), and a failure to provide the claimant with a full and fair review and the failure to follow plan procedures. See Friedrich v. Intel, 181 F.3d 1105, 1110 (9th Cir. 1999).
Plaintiff does not argue that defendant gave plaintiff inconsistent reasons for the denial of benefits, or the defendant failed to provide the claimant with a full and fair review. Rather, plaintiff claims that Unum's "claim practices are unfair" and that Unum "failed to follow its own procedures on this claim." Plaintiff's Memo at 4. However, plaintiff has failed to provide "material, probative evidence" of the unfairness or failure to follow procedures. Plaintiff has submitted declaration regarding Unum's general practices, and concludes that Unum "acts as an advesary (sic) bent on denying claims." Id. at 10. These generalized statements about Unum's overall procedures are not material probative evidence of a conflict of interest. As the Ninth Circuit stated in Bendixen, evidence of a conflict of interest must be "beyond the mere fact of the apparent conflict" and the evidence must be regarding the defendant's obligations to the particular beneficiary.Bendixen, 185 F.3d at 943.
Plaintiff's sole declaration that specifically relates these contentions to plaintiff's case is that of Linda Nee. Nee was an employee of Unum until she was terminated on November 15, 2002. She asserts that she reviewed plaintiff's file and that Unum did not file its procedures for reviewing a preexisting condition. She does not, however, provide documentation of Unum's procedures, or any other material evidence regarding how decisions are made.
Plaintiff's sole evidence that relates its general contentions regarding Unum's bad practices to the plaintiff is the declaration of Linda Nee. Nee Decl. ¶¶ 49-55. Nee was an employee of Unum until she was terminated on November 15, 2002. Nee Decl. ¶ 4. She asserts that she reviewed plaintiff's file and that, in her opinion, Unum did not follow its procedures for reviewing a preexisting condition. Nee Decl. ¶ 54. She does not, however, provide documentation of Unum's procedures, or any other material evidence regarding how decisions are made. This declaration is insufficient to show a material, probative evidence, beyond the mere fact of an apparent conflict, tending to show that the Unum's self-interest caused a breach of its fiduciary obligations to plaintiff.
The Court concludes that plaintiff has not met his burden of producing material, probative evidence that defendant had a "serious" conflict of interest. The Court will therefore review defendant's benefits decision for an abuse of discretion.
II. Review of Claim Denial
A plan administrator abuses its discretion in denying benefits when it renders a decision without explanation, construes provisions of the plan in a way that conflicts with the plain language of the plan, or relies on clearly erroneous findings of fact. See Bendixen, 185 F.3d at 944. The Supreme Court recently noted that plan administrators also "may not arbitrarily refuse to credit a claimant's reliable evidence, including the opinions of treating physicians." The Black Decker Disability Plan v. Nord, 123 S.Ct. 1965, 1972 (2003), However, "courts have no warrant to require administrators automatically to accord a special weight tot he opinions of a claimant's physician; nor may courts impose on plan administrators a discrete burden of explanation when they credit reliable evidence that conflicts with a treating physician's evaluation." Id.
Plaintiff contends that the July 24, 2000 treatment was for saphenous nerve pain, and was not related to the joint and ligament pain that caused his disability on September 20, 2001. Plaintiff supports this contention with a letter from Dr. Joel, which states:
The patient due to his spine problems developed a very abnormal gait, resulting in peripheral entrapment of the geniculate branches of this left saphenous nerve. This will provide pain at the medial aspect of the leg below the knee joint, which is what [plaintiff] indicated on his pain drawing on 7/24/2000. On my examination on 7/24/2000, the patient had pain at the left saphenous nerve as indicated by my office notes. There was no indication of any problems with the patient's knee joints. I subsequently treated this pain with an injection to the geniculate branches of the saphenous nerve in the lower leg, which relieved the patient's pain, confirming that this pain is coming from the nerve and not from the joint.
Markee Decl. Ex. B at 170 (emphasis added).
Defendant, however, contends that the pain in plaintiff's left knee, which was treated on July 24, 2000, was the same condition as led to his disability on September 20, 2001. Unum had three registered nurses and two orthopaedists perform several reviews of the medical evidence, all of whom agreed that plaintiff had symptoms and treatment during the preexisting period, and this treatment was for the condition that led to his disability. As part of that review, Unum examined plaintiff's medical records, his disability claim form, and supplemental letters from plaintiff's treating physician. Based on this evidence, Unum concluded that plaintiff's had a preexisting condition in his left knee that led to his disability on September 20, 2001.
Defendant did not abuse its discretion in denying benefits by rending a decision without explanation. In fact, Unum's decision was explained to plaintiff by way of letters dated May 22, 2002; July 16, 2002; and March 25, 2003. Moreover, the decision was not in conflict with the plain language of the plan. The plan unambiguously provides that preexisting conditions are not covered under the policy, and defines what constitutes a preexisting condition. The remaining possible basis for finding an abuse of discretion is if Unum relied on clearly erroneous factual findings. See Bendixen, 185 F.3d at 944.
As previously stated, Unum had several nurses and doctor's review plaintiff's medical evidence. All reviewers concluded that the same condition for which defendant was treated in July 2000 led to his disability in September 2001. Plaintiff's primary support for its contention that the condition treated in July 2000 did not lead to his disability is a letter from his treating physician, Dr. Joel stating that the two are not related and that there was, "no indication of any problems with the patient's knee joints" at his July 2000 treatment. However, Unum does not need to accord special weight to the opinions of a plaintiff's physician. See Nord, 123 S.Ct. at 1965. Nor may the Court impose on Unum a discrete burden of explanation when they credit reliable evidence that conflicts with Dr. Joel's evaluation. Plaintiff has not offered sufficient evidence to conclude that Unum relied on clearly erroneous factual findings.
Plaintiff submitted to the Court numerous pages from Gray's Anatomy in support of his argument. However, the Court is unable to substantiate plaintiff's argument based on its own review of Gray's Anatomy. The Court notes that such review is more properly conducted by a physician whose findings can then be submitted to the Court in a declaration.
Accordingly, Unum did not abuse its discretion in denying plaintiff's claim.
CONCLUSION
For the foregoing reasons, the Court GRANTS defendant's motion for summary judgment. Defendant's denial of plaintiff's claim is subject to abuse of discretion review. Defendant's conclusion that plaintiff had a preexisting condition under the terms of the policy that precluded coverage under the policy was not an abuse of discretion.
IT IS SO ORDERED.
JUDGMENT
The Court having granted defendant's motion for summary judgment, it is hereby ORDERED that judgment be entered in favor of defendant.IT IS SO ORDERED.