Opinion
Case Number C 03-00538 JF (PVT).
April 13, 2004
ORDER RE CROSS-MOTIONS FOR SUMMARY JUDGMENT
At issue in this dispute is whether Defendants properly denied Plaintiff's claim to certain long-term disability insurance benefits. The parties have filed cross-motions for summary judgment. The Court has considered the moving and opposing papers as well as the oral arguments presented at the hearing on April 12, 2004. For the reasons set forth below, Plaintiff's motion will be granted and Defendants' motion will be denied.
I. BACKGROUND
Plaintiff David DiGiacomo alleges that Defendants improperly denied his claim to long term disability benefits to which he was entitled under an Employment Retirement Income Security Act ("ERISA") policy. ERISA, 29 U.S.C. § 1001 et seq.; Declaration of Paula McGee ("McGee Decl."), Ex. A (Liberty Group Disability Income Policy No. GF3-860-038747-01("the Policy")). Plaintiff was employed by Adobe Systems, Inc. ("Adobe") as a "Senior Computer Scientist," with duties described as follows: "[w]orks on extremely complex problems of wide scope in analysis, design, and programming," "[a]nalysis of situations or data requires an evaluation of intangible variance factors," [i]nterfaces with marketing," "[e]xercises autonomous judgment," "[p]rovides leadership," and "[a]cts as mentor to engineers." Declaration of Melvyn D. Silver ("Silver Decl."), Ex 17. Adobe obtained long term disability coverage from Defendants. Plaintiff is entitled to receive two-thirds of his basic monthly earnings — or $7,510.78 per month — if he is found to be "disabled" under the following terms of the Policy:
i. If the Covered Person is eligible for the 60 Month Own Occupation benefit, "Disability" or "Disabled" means during the Elimination Period and the next 60 months of Disability the Covered Person is unable to perform all of the material and substantial duties of his occupation on an Active Employment basis because of an Injury or Sickness; and
ii. After 60 months of benefits have been paid, the Covered Person is unable to perform, with reasonable continuity, all of the material and substantial duties of his own or any other occupation for which he is or becomes reasonably fitted by training, education, experience, age and physical and mental capacity.
McGee Decl., Ex. A (Policy, section 2, p. P-007).
Plaintiff has complained of abdominal pain, has seen physicians for diagnosis and treatment, and asserts that he cannot concentrate or perform his job as a result of the pain and the effect of the medications that he takes for the pain. Defendants argue that Plaintiff is capable of doing his job because there is no objective data supporting his diagnosis and that he has been able to perform his job duties on a part-time basis during various periods since he developed the alleged disability. They assert that the medical records suggest that Plaintiff's symptoms are psychological in origin. However, Defendants identify no evidence that indicates affirmatively that Plaintiff has not experienced pain that prevents him from performing all of the material and substantial duties of his occupation.
Gastroenterologist Dr. Michael S. Verhille examined Plaintiff on May 12, 2000. Dr. Verhille initially noted that "[m]y impression is that most likely this is GERD [gastroesophageal reflux disease], although the symptoms are somewhat atypical." Silver Decl., Ex. 2. During that particular examination, however, Dr. Verhille found no physical abnormalities that may have caused the pain. Gastroenterologist Dr. John C. Fletcher subsequently examined Plaintiff and concluded that "[t]his certainly sounds like irritable bowel syndrome or nonuclear dyspepsia." Silver Decl., Ex. 3. Dr. Fletcher also noted: "Of interest, his girlfriend does say that he is more anxious" and that "this man would be a candidate for a trial of tricyclic drugs, SSRI, or even buspirone [antidepressants]." Id. It is unclear how these comments are related to the pain experienced by Plaintiff. Plaintiff stopped working full time on March 2, 2001. He applied for disability benefits on July 5, 2001. On the disability benefits application form, his doctor stated that his diagnosis was "recurrent severe abd pain that prevents him from concentration working as computer programmer" and the history was "[p]ersistent epigastric pain without clear cause." Silver Decl., Ex. 6.
Defendants' nurse, Mark Janousek, who reviewed the claim file, concluded that there was no objective data supporting Plaintiff's doctors' conclusions and that "[t]reatment for GI problems have [sic] been appropriate, however excessive at this point. It does not appear that Clmt is being treated for his stress management. . . . Clmt may not be receiving appropriate treatment for psychological issues." Silver Decl., Ex. 12. On July 24, 2001, in a telephone conversation, Disability Case Manager, Melissa Chavez, discussed her opinion of Plaintiff's case with him. She stated that "all objective test results are normal" and that Plaintiff "is capable of medium manual activity." Silver Decl., Ex. 14 (July 24, 2001 telephone conversation). Plaintiff responded that his job required strong mental ability.
Plaintiff was examined by Dr. Kenneth J. Hammerman on July 24, 2001. Dr. Hammerman discovered some objective evidence of a possible source of Plaintiff's pain. Specifically, Plaintiff had "an upper GI series which showed a small hiatus hernia and reflux." Silver Decl., Ex. 16. The other tests were negative. Dr. Hammerman also noted that Plaintiff "is now working 20 hours per week" and "has lost about 20 pounds." Id. Dr. Hammerman concluded that Plaintiff had "[e]pigastric pain, etiology unknown. . . . This may well be psychophysiologic." Id. He also concluded that Plaintiff "is not capable of returning to work at the current time." Id.
On August 10, 2001, Defendants denied Plaintiff's claim, stating that the "[m]edical records do not support total disability from all the material and substantial duties of your occupation" and "treatment notes from your office visits with [Dr. Verhille] all indicate subjective complaints of abdominal pain. However, all objective diagnostic testing performed to date has been normal." Silver Decl., Ex. 18. Nothing in Defendants' denial indicates that they considered Plaintiff's claim that the pain reduced his mental acuity, which resulted in his inability to perform his job duties. Dr. Verhille wrote a letter in response explaining that Plaintiff's "symptoms are consistent with a diagnosis of functional dyspepsia" and that it "is common and expected in patients with functional GI disorders to not have extensive abnormalities on medical testing," yet "in addition to [Plaintiff's] reported pain, he had an upper GI performed on 05-26-00 which did show gastoresophageal reflux disease, . . . an esophagogastroduodenoscopy on 08-07-00 . . ., which showed a small hiatal hernia," and "a gastric emptying test done in the last two weeks which showed a borderline delay in gastric emptying." Silver Decl., Ex. 23. Dr. Verhille stated that "[a]ll of these are consistent with functional disease of the GI tract." Id. Dr. Verhille further noted that Plaintiff "displays signs of fatigue and discomfort and has had difficulty functioning, which is correlated with his report of pain symptoms." Id. After reviewing Plaintiff's job responsibilities, Dr. Verhille concluded that "because of his symptoms . . . of chronic pain, [Plaintiff] is not able to perform all the duties of his occupation of Senior Computer Scientist at the current time." Id.
On September 25, 2001, Defendants reviewed his records again and concluded that Plaintiff "has had multiple tests for cause of pain with no objective findings. . . . Findings of gastroesophageal reflex disease and small hiatal hernia would not preclude [Plaintiff] from being able to perform the material and substantial duties of his occupation." Silver Decl., Ex. 25. On December 12, 2001, Defendants rejected Plaintiff's appeal, stating that the
objective medical documentation we have been provided does not support your condition is [sic] of such severity that it would prevent you from performing the material and substantial duties of your occupation as a Computer Scientist, throughout the elimination period. All testing submitted has been essentially within normal limits and your reported symptoms are mainly subjective.
Silver Decl., Ex. 30.
II. LEGAL STANDARD
A motion for summary judgment should be granted if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c)); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The moving party bears the initial burden of informing the Court of the basis for the motion, and identifying portions of the pleadings, depositions, answers to interrogatories, admissions, or affidavits which demonstrate the absence of a triable issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party meets its initial burden, the burden shifts to the nonmoving party to present specific facts showing that there is a genuine issue of material fact for trial. FED. R. CIV. P. 56(e); Id. at 324. The evidence and all reasonable inferences therefrom must be viewed in the light most favorable to the non-moving party. T.W. Elec. Service, Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir. 1987). Summary judgment is not appropriate if the nonmoving party presents evidence from which a reasonable jury could resolve the material issue in his or her favor. Barlow v. Ground, 943 F.2d 1132, 1136 (9th Cir. 1991).
III. DISCUSSION
A. The Court Will Review Defendants' Decision for Abuse of Discretion
This Court reviews the denial of benefits de novo unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan. See Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 109 (1989). The default is that the administrator has no discretion, and the administrator must show that the plan gives it discretionary authority in order to receive judicial deference to its decision. See Kearney v. Standard Insurance Co., 175 F.3d 1084, 1089 (9th Cir. 1999). Where such authority is given, a deferential standard of review is proper. See Firestone, 489 U.S. at 109. Where a plan grants discretionary authority, the Court applies the "arbitrary and capricious" standard of review. See id. The policy at issue contains the following language: "Liberty shall possess the authority, in its sole discretion, to construe the terms of this policy and to determine benefit eligibility hereunder." McGee Decl., Ex. A (Policy, section 7, p. P-027). Plaintiff concedes that the policy gives Defendants discretionary authority. Plaintiff's motion, p. 11.
However, while the Court thus ordinarily would review Defendants' decision under the deferential standard of review, Plaintiff argues that Defendants ceded their entitlement to deference by failing to meet deadlines for responding to Plaintiff's claim and Plaintiff's appeal of the denial of her claim. In the Ninth Circuit, failure to adhere to regulatory deadlines may amount to a nondiscretionary denial of benefits, thus rendering review under the abuse of discretion standard meaningless. Jebian v. Hewlett Packard Co. Employee Benefits Org. Income Protection Plan, 349 F.3d 1098 (9th Cir. 2003). The district court should "not defer when a decision is, under the Plan, necessarily the mechanical result of a time expiration rather than an exercise of discretion." Id. at 1105. However, "deference may be due to a plan administrator that is engaged in a good faith attempt to comply with its deadlines when they lapse." Id. at 1103.
Defendants represent that, during their review of Plaintiff's claim, which was completed within seventy-nine days, they were in contact with Plaintiff, his pharmacy, and his doctor, were attempting obtain additional documents from his doctor, and that, after obtaining the necessary documents, Plaintiff's entire file was referred to Defendants MDS unit for medical review. See Defendants' Opposition, pp. 8-10. Defendants thus appear to have attempted to resolve Plaintiff's claim in good faith prior to the deadline. Defendants also informed Plaintiff that they might need additional time in view of the required correspondence. Although Defendants offer no explanation as to why they did not formally request an additional sixty days for review of the appeal prior to the deadline, there is no indication that Defendants did not make a good-faith determination of the merits of Plaintiff's appeal. Defendants did not merely deny Plaintiff's claim in reliance on a procedural deadline. Defendants exercised discretion in their review of Plaintiff's claim and appeal, and this Court will accord deference to their determination.
Plaintiff also argues that California courts always must review denials of benefits under a de novo standard because California's Insurance Commissioner has expressed the opinion that his office might withdraw approval of policies containing discretionary clauses. In view of the Court's decision (see below) under the more stringent abuse of discretion standard, the Court will assume without deciding that the Insurance Commissioner's letter is not binding.
B. Defendants Abused Their Discretion in Denying Plaintiff's Claim and His Appeal
It is an abuse of discretion for Defendants to construe provisions of the Policy in a way that "conflicts with the plain meaning of the plan." Taft v. Equitable Life Assur. Soc., 9 F.3d 1469 (9th Cir. 1993). Defendants' interpretation of the plan must not be "unreasonable." Saffle v. Sierra Pacific Power Co. Bargaining Unit Long Term Disability Income Plan, 85 F.3d 455, 458 (9th Cir. 1996). Plaintiff's appeal was denied on the ground that the "objective medical documentation we have been provided does not support your condition is [sic] of such severity that it would prevent you from performing the material and substantial duties of your occupation as a Computer Scientist. . . . and your reported symptoms are mainly subjective." Silver Decl., Ex. 30. Notably, Disability Case Manager, Melissa Chavez, told Plaintiff that his claim was problematic because "all objective test results are normal" and Plaintiff "is capable of medium manual activity." Silver Decl., Ex. 14.
In their notice of denial of the claim, Defendants emphasize the lack of "objective data" supporting Plaintiff's diagnosis of abdominal pain. In a case addressing a similar issue, the Seventh Circuit stated: "the gravest problem with [the doctor's] report is the weight he places on the difference between subjective and objective evidence of pain. Pain often and in the case of fibromyalgia cannot be detected by laboratory tests." Similarly, here, Dr. Verhille concluded that Plaintiff's "symptoms are consistent with a diagnosis of functional dyspepsia" and that it "is common and expected in patients with functional GI disorders to not have extensive abnormalities on medical testing." Defendants have not pointed to any doctors' or nurses' findings or conclusions that contradict Plaintiff's complaint of severe pain. Their only basis for disregarding his complaint is that it is not supported by objective data. However, the Policy at issue does not require objective data. It is an abuse of discretion for Defendants to construe provisions of the Policy in a way that "conflicts with the plain meaning of the plan." Taft, 9 F.3d 1469.
Additionally, Defendants ignored the available "objective data" in denial of the appeal. Dr. Vehille reminded them during the appeal process that, "in addition to [Plaintiff's] reported pain, he had an upper GI performed on 05-26-00 which did show gastoresophageal reflux disease, . . . an esophagogastroduodenoscopy on 08-07-00 . . ., which showed a small hiatal hernia," and "a gastric emptying test done in the last two weeks which showed a borderline delay in gastric emptying." Silver Decl., Ex. 23. Defendants denied the appeal even with this objective data in mind. Defendants have not indicated what objective evidence they would require. In fact, the Policy requires none, and Dr. Verhille has stated that there often is no objective data consistent with pain due to GI disease. It appears, instead, that Defendants denied benefits to Plaintiff because Defendants do not believe that Plaintiff really suffers from abdominal pain. However, Plaintiffs have not provided any facts contradicting, or even argument disputing, the three examining doctors' diagnosis of pain.
Defendants hired a private detective to monitor Plaintiff's activities for several days. Defendants have submitted evidence regarding those activities. Plaintiff has filed a motion to strike the surveillance report and related evidence. Because the Court must consider only evidence that is in the record that was reviewed by Defendants in denying Plaintiff's claim and appeal, it has not reviewed the evidence in question. However, the Court will note that this proffer of evidence further amplifies Defendant's mistaken basis for denying Plaintiff's claim and appeal. That is, conducting surveillance of Plaintiff cannot provide evidence of lack of pain or of Plaintiff's inability to concentrate to the ability required by his job description. Defendants appear to focus on whether Plaintiff can conduct "manual" or "physical" activities, rather than "mental" ones.
Finally, Defendants do not specifically address whether Plaintiff is able to concentrate to the full extent required by his job description. The Policy defines disabled in part as "unable to perform all of the material and substantial duties of his occupation on an Active Employment basis because of an Injury or Sickness." McGee Decl., Ex. A (Policy, section 2, p. P-007). It is undisputed that Plaintiff's job title was "Senior Computer Scientist," Silver Decl., Ex. 2, which required an ability to work on extremely complex problems of wide scope, analyze situations or data, evaluate intangible variance factors, communicate with other departments, exercise autonomous judgment, and to be a leader and a mentor. See Silver Decl., Ex 17. Nothing in this job description relates to "manual" activity. Moreover, even assuming that Defendants also considered "mental" activity, they have provided no explanation supporting their conclusion that Plaintiff's ability to perform such activity is not impaired. In contrast, Plaintiff and his doctors have provided evidence that Plaintiff has difficulty concentrating and performing at the requisite mental level required by the job description, due both to his pain and his medication. "Plan administrators . . . may not arbitrarily refuse to credit a claimant's reliable evidence, including the opinions of a treating physician." Black and Decker v. Nord, 123 S.Ct. 1965, 1972 (2003). Defendants did not address the doctors' opinions with respect to Plaintiff's ability to perform his job duties. Such a failure only could have occurred in the context of a review that was arbitrary and capricious.
In fact, Defendants appear to have conducted their review at least in part based on whether Plaintiff is capable of "manual activity." Silver Decl., Ex. 24.
In summary, in denying the claim and appeal, Defendants provide only a conclusory statement that a lack of objective findings indicates that Plaintiff is able to perform his job duties. Defendants ignore Plaintiff's complaints of pain and the doctors' conclusions and instead focus on a purported absence of objective findings. Yet it is undisputed that Dr. Verhille concluded that Plaintiff did show some objective basis for his symptoms and, even if he had not, it would not be unusual for there to be a lack of objective data. Nothing in the Policy requires objective data supporting the existence of pain. There is no genuine issue of material fact that Defendants' conclusion that Plaintiff can perform his job duties not only was arbitrary but also ignored the mental aspects of Plaintiff's job description. Defendants thus failed to adhere to the language of the Policy, which clearly defines "disabled" as someone who is "unable to perform all of the material and substantial duties of his occupation on an Active Employment basis because of an Injury or Sickness."
C. Defendants' Objections to Evidence
Defendants argue that the Court should not review evidence that was not in the record during the claim review and appeal period. Because the Court has not considered such evidence, it need not rule on the merits of Defendants' objections.
IV. ORDER
Good cause therefore appearing, IT IS HEREBY ORDERED that:
(1) Plaintiff's motion for summary judgment is GRANTED;
(2) Defendants' motion for summary judgment is DENIED;
(3) Counsel shall meet and confer concerning the proper calculation of accrued benefits due to Plaintiff; and
(4) The time within which Plaintiff must file a motion for attorney's fees and costs is extended to June 14, 2004.