Opinion
CIVIL ACTION NO. 02-2180, SECTION "C".
June 10, 2003.
Order and Reasons
John S. Goehring, a third year law student at Tulane Law School, assisted in the research and preparation of this decision.
This matter comes before the Court on motion for summary judgment filed by Defendant Standard Insurance Company (Standard). Having considered the record, the memoranda of counsel, and the law, the motion for summary judgment is DENIED for the following reasons.
I. Summary Judgment — Standard of Review
A district court can grant a motion for summary judgment only when 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.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)). When considering a motion for summary judgment, the district court "will review the facts drawing all inferences most favorable to the party opposing the motion." Reid v. State Farm Mut. Auto Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986). The court must find a "factual dispute . . . [to be] `genuine' if the evidence is such that a reasonable jury could return a verdict for the nonmoving party . . . [and a] fact . . . [to be] `material' if it might affect the outcome of the suit under the governing substantive law." Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir. 1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986)). "If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial." Engstrom v. First Nat'l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995) (Citing Celotex, 477 U.S. at 322-24, 106 S.Ct. at 2552-53, 91 L.Ed.2d 265 and Fed.R.Civ.P. 56(e)). The mere argued existence of a factual dispute will not defeat an otherwise properly supported motion. See Anderson, 477 U.S. at 248, 106 S.Ct. at 2510, 91 L.Ed.2d 202. "If the evidence is merely colorable, or is not significantly probative, "summary judgment is appropriate." Id., at 249-50, 106 S.Ct. at 2511, 91 L.Ed.2d 202(citations omitted).
II. Undisputed Facts
Dr. Dodd was diagnosed with multiple sclerosis (MS) in 1973. He worked for Parish Anesthesia Associates Ltd. (Parish Anesthesia) until he claimed permanent disability on May 1, 2000, due to MS, after having been employed since 1988. Parish Anesthesia sponsored an employee welfare benefits plan to its eligible employees. Prior to December 1, 1999, the plan was underwritten by AIG Life Insurance Company (AIG), and on December 1, 1999, Parish Anesthesia changed insurers from AIG to Standard.
Dr. Dodd performed only one procedure in September 1999, and none in October, November, or December of that year. There is no evidence that this absence was related to his MS. Rather, he was caring for his young son, who was suffering and later died from a brain tumor on November 27, 1999. Following his son's death, he continued his time away from work to grieve and to help his other young children deal with their grief. Dr. Dodd resumed working, full time on January 6, 2000, until May 2000, when he was forced to accept a 30 hour per week paperwork position due to his disability.
On August 8, 2001, Standard denied Dr. Dodd's initial claim for disability benefits due to evidence of a pre-existing condition. Dr. Dodd had been taking Avonex for his MS since approximately November 1998.
Standard found that Dr. Dodd was not covered by AIG as of December 1, 1999, the date the Standard policy became effective. Had he been covered at that time, his coverage for MS would have continued as a covered pre-existing condition under the Standard policy. The focus of this motion is the plaintiff's employment status on that date.
In this initial denial, Standard determined that Dr. Dodd was not covered by the AIG plan as of December 1, 1999, by concluding that he "was not working in his Own Occupation at the date the group policy became effective" and thus "did not meet the Active Work requirement prior to January, when he resumed work at some level." The denial was based on a copy of the employment agreement between Dr. Dodd and Parish Anesthetic, reports showing the procedures performed by Dr. Dodd, a "procedure and charges analysis" showing the procedures performed by Dr. Dodd on a monthly basis from January 1999 to August 2000, and a payroll record for the period of April 4, 1999, through September 31, 2000.
On January 15, 2002, while the decision was on appeal with Standard, Dr. Dodd submitted to the administrative record an affidavit signed by Dr. Neal Cormada, President of Parish Anesthesia. The affidavit states that "we told Dr. Dodd he could use vacation time and take whatever time he needed," to deal with his family problems. The affidavit further stated that "Dr. Dodd was listed as active (on the member listing) at the time the corporation terminated its group coverage with AIG on 12/1/99."
On January 28, 2002, Standard determined that its original denial of the claim was proper. Standard's letter stated, "based on the information received and Dr. Cormada's affidavit, Dr. Dodd was not actively working from September 1999 through early January 2000 . . . therefore, as defined by the terms of the prior plan, Dr. Dodd's employment had been terminated." "The information in the claim file supports that while Dr. Dodd was being paid with vacation time, he was on an approved leave of absence until January 6, 2000. Therefore, he was not a Member until that date." Finally, Standard submitted Dr. Dodd's claim to the quality assurance unit for an independent review of its denial of the claim. That unit also found that denial was proper. This suit followed.
II. Analysis
The Parish Anesthesia Plan is governed by the Employee Retirement Income Security Act of 1974, as amended, 29 § 1001, et. seq. (ERISA). Factual determinations made by an administrator during the course of a benefits review are reviewed for an abuse of discretion. Meditrust Fin. Servs. Corp. v. Sterling Chems., Inc., 168 F.3d 211, 213 (5th Cir. 1999). Courts must find that the claim administrator abused its discretion without some concrete evidence in the administrative record that supports the denial of the claim. Vega v. National Life Ins. Servs. Inc., 188 F.3d 287, 392 (5th Cir. 1999). A plan administrator's decision will be affirmed if it is supported by "substantial evidence." Meditrust, 168 F.3d at 215. "Substantial evidence is `more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Girling Health Care, Inc. v. Shalala, 85 F.3d 211, 215 (5th Cir. 1990) (quoting Richardson v. Perales, 402 U.S. 389, 401, 28 L.Ed.2d 842, 91 S.Ct. 1420 (1971)).
Further guiding the analysis here is Standard's conflict of interest. Because Standard serves as both the insurer and administrator, Standard is "self-interested, i.e. potentially benefits from every denied claim." Vega, 188 F.3d at 295. However, the only evidence of an actual conflict of interest here is the fact that Standard is both the insurer and the plan administrator. Therefore, the administrator's decision will be reviewed "with only a modicum less deference." Vega, 188 F.3d at 301. In this case, the question of whether Dr. Dodd's employment was terminated prior to January 6, 2000 is a factual determination which does not involve a legal interpretation of plan terms. Thus, the Court is not required to apply the two-step analysis set forth in Wildbur v. ARCO Chem. Co., 974 F.2d 631, 638 (5th Cir. 1992). See also Duhon v. Texaco, Inc., 15 F.3d 1302, 1307 n. 3 (5th Cir. 1994).
To rule on the Standard's motion for summary judgment, the Court must determine whether there is enough evidence for a trier of fact to find that, in light of the "modicum less deference standard," Standard abused its discretion when it denied Dr. Dodd's claim for benefits. Again, the focus is on the facts concerning whether Dr. Dodd was an active employee and AIG plan member as of the transition day, or instead a non-active employee and non-member who is not entitled to a continuation of benefits. The motion turns on whether there is a disputed issue of material fact in the record to support the finding that Standard could have abused its discretion when it found that the Dr. Dodd was on a leave of absence on the relevant date. The Court unhesitantly finds that such a dispute exists.
The AIG plan provides that to have "active employment," and thus insurance coverage,
You must be working:
1. for your employer on a full-time basis and paid regular earnings (temporary or seasonal employees are excluded);
2. At least 30 hours per week; and either
3. At your employer's usual place of business; or
4. At a location to which your employer's business requires to you travel.
Standard concluded that Dr. Dodd was not working the requisite thirty hours per week, and thus was not an active employee but rather a non-active employee taking a leave of absence under the AIG plan. The AIG plan does not define "leave of absence," nor does it define "vacation." The problem with Standard's argument is that it may prove too much so as to be unreasonable for purposes of this Court's review; any employee on vacation would not be covered under the Standard interpretation of the AIG plan. This interpretation is contrary to Standard's own policy language which provides that employees remain "actively at work" while taking vacation time.
In addition, there appears to be a stark lack of factual justification for Standard's argument. Standard's letter to Dr. Dodd states "that while Dr. Dodd was being paid with vacation time, he was on an approved leave of absence until January 6, 2000. Therefore, he was not a Member until that date." Standard must provide "concrete evidence" to support its determination that Dr. Dodd was not on vacation but rather on a leave of absence, and this evidence must be found within the administrative record. Here, the administrative record contains essentially nothing to support that argument. In fact, the only evidence on point is directly to the contrary. An affidavit by the president of Parish Anesthetic stated that Dr. Dodd was on the active insurance member list as of the date in question, was paid vacation time for the period in question, and was in fact told to take vacation time for the period in question. Standard acknowledges this affidavit in its letter rejecting Dr. Dodd appeal. In that same letter, Standard also acknowledges that the plaintiff remained on Parish Anesthetics' payroll throughout his absence from work but finds, nonetheless, that this was a "leave of absence" resulting in the plaintiff's termination under the AIG policy. Standard's conclusion that Dr. Dodd was on a "leave of absence" rather than using vacation time, despite the direct evidence to the contrary, smacks of an insurance company reaching to twist the facts to avoid paying an otherwise legitimate claim for benefits. For purposes of the defendant's motion, Standard's factual conclusions are genuinely disputed even under the deference ERISA affords.
The Court questions whether such deference should even apply given the fact that Standard is primarily interpreting the terms of the AIG plan rather than its own plan. The Court need not discuss this issue since the motion fails under the abuse of discretion standard.
Accordingly,
IT IS ORDERED that the motion to dismiss filed by the defendant is DENIED.