Opinion
Case No. 1:05 cv 2947.
March 21, 2007
MEMORANDUM ORDER
This is an action arising under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et. seq. ("ERISA"). Plaintiff Danny Justus ("Justus") originally filed his Complaint against two entities: the Roofers' and Waterproofers' Local No. 44, and the Board of Trustees for Roofers' and Waterproofers' Local No. 44. The Complaint was later amended to identify the proper Defendant in this action — the Board of Trustees for Roofers' and Waterproofers' Local No. 44, Pension Plan ("the Board"). Jurisdiction is invoked pursuant to 28 U.S.C. § 1343, 28 U.S.C. § 1331, and 29 U.S.C. § 1132(e).
The Amended Complaint seeks review of a denial of total and permanent disability retirement benefits under the terms of an employee welfare benefit plan. Justus asserts two claims in this action: (1) Improper Denial of Disability Benefits under 29 U.S.C. § 1132(a)(1)(B); and, (2) Breach of Fiduciary Duty under 29 U.S.C. § 1104(a)(1)(A)(i). Justus also requests attorney fees pursuant to 29 U.S.C. § 1132(g)(1).
Currently before the Court is the Board's Motion for Summary Judgment (Doc. No. 11) on both claims asserted in the Amended Complaint, and Justus' Cross-Motion for Summary Judgment (Doc. No. 19) solely on his claim for improper denial of disability benefits.
For the reasons more fully explained below, the Board's Motion for Summary Judgment is DENIED with respect to Count One of the Amended Complaint (Improper Denial of Benefits), and GRANTED with respect to Count Two of the Amended Complaint (Breach of Fiduciary Duty). Justus' Cross-Motion for Summary Judgment is GRANTED, except to the extent he seeks attorneys fee; that request is DENIED.
I. STATEMENT OF FACTS
The following operative facts are not in dispute. Justus is a member of the Roofers' and Waterproofers' Local No. 44 ("the Union"). The Union provides its members with a group disability retirement policy issued and underwritten by the Union ("the pension plan"). The parties agree that the pension plan constitutes an employer-funded employee welfare benefit plan within the meaning of ERISA. The Board of Trustees for the Union is the administrator of the pension plan. As such, the Board recognizes it owes Justus — who is a participant in the plan — certain fiduciary duties.
The parties agree to the admissibility of the documents contained in the Board's Appendix to Motion for Summary Judgment. These documents are part of the administrative record. Also before the Court, however, is the deposition transcript of Michael Vasey, Trustee and Chairman of the Trust Board. It is settled that, in an ERISA action where a district court is asked to review the denial of benefits, the district court generally is confined to the administrative record that was before the plan administrator at the time the benefits decision was made and considered. Wilkins v. Baptist Healthcare System, Inc., 150 F.3d 609, 615 (6th Cir. 1998). It necessarily follows that, as a general rule, discovery outside of the administrative record is not permitted, and the district court may not review evidence that was not presented to the administrator. Id. at 619 (Gilman, J., concurring). Here, however, the Board has not objected to Justus' use of the deposition testimony of Mr. Vasey. It is clear to the Court, moreover, that this is not "discovery outside of the administrative record" but, rather, discovery that clarifies the administrative record by confirming what evidence was before the Board when it made its benefits determination relative to Mr. Justus' application, and by explaining the Board's reasoning process. There is nothing asserted by the parties, therefore, that would appear to prevent the Court from considering this testimony.
In or around August 25, 2005, Justus submitted an Application for Retirement to the Board. In his application, Justus requested retirement with "total and permanent disability — 100%." Defendant's Appendix to Motion for Summary Judgment, Exh. A. In support of his request, Justus included an award letter from the Social Security Administration, Retirement, Survivors and Disability Insurance (dated August 20, 2005), which indicated that Justus was found disabled under the standards employed by that agency. Deposition of Michael Vasey, p. 9.
The application is actually hand-dated August 25, 2004; however, both parties agree it was submitted on August 25, 2005.
Mr. Vasey testified that the Board views a Social Security disability award as indicating the claimant is totally disabled. Deposition of Michael Vasey, p. 35.
According to the express language of the Union's pension plan, "Permanent and Total Disability" is defined as: "an injury or illness which the Trustees, in their sole and absolute discretion according to uniform, objective and nondiscriminatory procedures, find on the basis of medical evidence renders the Employee permanently and totally unable to engage in any occupation, employment or self-employment for wage or profit." Defendant's Appendix to Motion for Summary Judgment, Exh. B, pp. 2-3. The plan also contains a secondary classification — that of "Occupational Disability," which is defined as: "an injury or illness which the Trustees, in their sole and absolute discretion according to uniform, objective and nondiscriminatory procedures, find on the basis of medical evidence renders the Employee permanently and totally unable to engage in any employment or self-employment as a "Roofer" or other work in the building trades." Id., p. 3.
In August 2002, the Board decided that a Social Security disability award shall be given weight when the Board determines the classification of benefits to which a claimant may be entitled:
[A] Social Security Disability Award for a claimant constitutes a rebuttable presumption for the higher tier Local 44 disability benefits. However, at the Administrator's discretion, a second opinion physical will take place. If the second opinion does not feel that "substantial gainful employment" is prohibitive, then the lower tier benefits will be granted.Defendant's Appendix to Motion for Summary Judgment, Exh. H; Deposition of Michael Vasey, p. 35. Finally, where an adverse benefit decision is made, participants in the pension plan are entitled to:
[A] written statement setting forth the specific reasons for the denial, a specific reference to the provisions of the Plan on which the denial is based, a description of any additional material or information necessary for such Claimant to perfect the denied claim and an explanation of why such material or information is necessary, and an explanation of the following review procedures * * *Defendant's Appendix to Motion for Summary Judgment, Exh. B, pp. 7-8.
On October 12, 2005, the Union's administrative office denied Justus' application for disability retirement (100%). The letter received by Justus advised him the denial was based on certain Articles of the pension plan (defining "total and permanent" disability), and a Second Opinion Evaluation conducted by Radha R. Baishnab, M.D. — a copy of which was provided to Justus at that time. Justus was instructed on the procedures for appeal, and was further informed that he was eligible for "early retirement" benefits, the acceptance of which would not waive his right to appeal the denial of disability retirement. Defendant's Appendix to Motion for Summary Judgment, Exh. C. Justus was not, however, informed that any additional material or information was necessary if he hoped to qualify for the denied disability benefits.
On or about October 15, 2005, Justus invoked his appeal rights by advising the Board in writing that he was seeking full review of the decision to deny him disability benefits. In the same letter, Justus reminded the Board: "As you know, I am currently receiving full benefits under disability by the U.S. Government, Social Security due to the permanent condition of my legs. I have qualified by the National Roofing and Industry Pension Plan." Defendant's Appendix to Motion for Summary Judgment, Exh. E.
Mr. Vasey confirmed that — at the time the Board was asked to reconsider the denial of benefits — the Board was aware that Justus had been declared disabled by both the Social Security Administration and the Roofing and Industrial Pension Plan. Deposition of Michael Vasey, pp. 10-11.
The Board's response came on or about December 1, 2005, when legal counsel for the Board informed Justus in writing that the Board "acted unanimously" to deny Justus' appeal. The Board, therefore, affirmed the denial of Justus' application for permanent and total disability benefits. The primary rationale given was, again, certain Articles of the pension plan (defining "total and permanent" disability), and the Second Opinion Evaluation conducted by Dr. Baishnab. In this letter, however, Justus was informed that he qualified for the Union's "lower tier" benefits — an occupational/trade disability — rather than the "higher tier" benefits for which he applied. The reason for the denial of "higher tier" benefits, according to the Board, was that the second opinion evaluation "did not establish that substantial and gainful employment would be prohibitive for you on a permanent basis." Defendant's Appendix to Motion for Summary Judgment, Exh. F.
During the course of litigating this case, and at the encouragement of the Court, Justus accepted payment of the "lower tier" benefits offered by the Board. Before the parties did so, however, the parties expressly agreed that this acceptance would not constitute a waiver of his request for "higher tier" benefits, nor prejudice that claim in any way.
According to calculations agreed to by the parties, early retirement benefits for Justus (as of March 1, 2006) would be $2,512.25 per month. Total disability benefits for Justus (as of March 1, 2006) would be $2,658.46. Declaration of Michael Vasey. The difference involved in this dispute, therefore, is approximately $146.12 per month in benefits. The Board, in its opposition to Justus' Cross Motion, alludes to two issues with respect to this difference. First, the Board argues that Justus "failed to mitigate his damages" in this case by not responding earlier to the offer of lower disability benefits . . The Board has not, however, directed the Court to any legal authority imposing an affirmative duty on Justus to "mitigate" his damages in the context of a denial of ERISA benefits. Second, the Board argues it is "disingenuous" for Justus to claim the Board is operating under a conflict of interest (discussed later in this Opinion) by continually directing Justus to "lower tier" benefits, when those benefits would pay Justus 95% of the benefits he is seeking. The Court, however, does not find it disingenuous for a pension plan claimant to argue that a fund administrator's offer of benefits that are lower than that to which the claimant believes he is entitled — regardless of the percentage difference — may imply a financial incentive and, therefore, a conflict of interest. The conflict might be less egregious or less apparent in such circumstances; it does not make it so obviously nonexistent, however, that it would be "disingenuous" to argue it does exist.
II. LAW AND ANALYSIS
The Court does not, in this Opinion, set forth the well-established standard of review on a Motion for Summary Judgment as the Sixth Circuit has held that, generally, a Motion for Summary Judgment is an inappropriate vehicle for resolving a claim for ERISA benefits. See Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 617-19 (6th Cir. 1998); University Hosp. of Cleveland v. Emerson Elec. Co., 202 F.3d 839, 845 n. 2 (6th Cir. 2000). Because the Court is generally confined to the evidence contained in the administrative record, rather than consideration of materials typically offered in summary judgment motions, the parties' motions are more properly considered as motions for judgment on the administrative record. See Andrus v. AIG Life Ins. Co., 368 F. Supp. 2d 829, 830-32 (N.D. Ohio 2005, Carr, CJ.); Serbin v. Fortis Benefits Ins. Co., 79 Supp. 2d 864, 867 (N.D. Ohio 2000, Aldrich, J.). The standard of review for such a request is, therefore, the standard of review discussed and applied in this Opinion.
The standard of review to be used by a court when a plaintiff challenges a benefits determination was set forth in Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). The Supreme Court held that "a denial of benefits challenged under § 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." Id. So, as the Sixth Circuit noted in Wulf v. Quantum Chemical Corp., 26 F.3d 1368, 1373 (6th Cir. 1994), "a reviewing court should first examine the plan to determine whether or not the required discretion has been given." Discretionary authority does not hinge on the incantation of "discretion" or any other magic word; it is to be determined from an overall review of the plan. Johnson v. Eaton Corp., 970 F.2d 1569, 1572 (6th Cir. 1992). If it can be found that the plan empowers the administrator or fiduciary with discretionary authority to interpret the terms of the plan and to determine benefits, courts are cautioned to reverse an adverse benefits determination only if it is "arbitrary and capricious." Elliott v. Metropolitan Life Ins. Co., 473 F.3d 613, 617 (6th Cir. 2006) (citing McDonald v. Western-Southern Life Ins. Co., 347 F.3d 161, 168 (6th Cir. 2003)).
The arbitrary and capricious standard "is the least demanding form of judicial review of administrative action." Davis v. Kentucky Fin. Cos. Retirement Plan, 887 F.2d 689, 693 (6th Cir. 1989) (citing Pokratz v. Jones Dairy Farm, 771 F.2d 206,209 (7th Cir. 1985)). Under this standard, a plan administrator or fiduciary's decision on eligibility for benefits is not arbitrary and capricious if it is "rational in light of the plan's provisions." Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 984 (6th Cir. 1991) (citing Daniel v. Eaton Corp., 839 F.2d 263, 267 (6th Cir. 1988)). So, when it is possible to "offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious." Davis, 887 F.2d at 693 (citing Pokratz, 771 F.2d at 209). Highly deferential does not, however, equate to a foregone conclusion. See Jones v. Metropolitan Life Ins. Co., 385 F.3d 654, 661 (6th Cir. 2004) ("Although [the arbitrary and capricious] standard is deferential, it is not a rubber stamp for the administrator's determination.").
For example, in a case where a conflict of interest exists, it is settled that the conflict "should be taken into account as a factor in determining whether [Defendant's] decision was arbitrary and capricious." Calvert v. Firstar Finance, Inc., 409 F.3d 286, 292 (6th Cir. 2005) (quoting Univ. Hosps. of Cleveland v. Emerson Elec. Co., 202 F.3d 839, 846 (6th Cir. 2000)); see also Firestone Tire Rubber, 489 U.S. at 115 ("[I]f a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest, that conflict must be weighed as a `factor in determining whether there is an abuse of discretion.'") (internal citations omitted). A potential conflict exists where the administrator of an ERISA plan is "both the decision-maker, determining which claims are covered, and also the payor of those claims." Calvert, 409 F.3d at 292 (citing Marks v. Newcourt Credit Group, 342 F.3d 444, 457 (6th Cir. 2003)). Under such circumstances, the standard of review to be applied remains unchanged; however, the Court considers the conflict of interest in applying that standard. See Id.
In cases involving disability benefits, a determination by the Social Security Administration to award benefits is, similarly, a permissible consideration for the Court during application of the standard of review to the facts of the case. "[C]ourts have recognized that a disability determination by the Social Security Administration is relevant in an action to determine the arbitrariness of a decision to [deny] benefits under an ERISA plan." Glenn v. Metropolitan Life Ins. Co., 461 F.3d 660, 667 (6th Cir. 2006). A social security disability determination, standing alone, does not conclusively establish that a denial of benefits under an ERISA plan is arbitrary and capricious. It is, however, "one factor the Court should consider, in the context of the record as a whole, in determining whether [Defendant's] contrary decision was arbitrary and capricious." Calvert, 409 F.3d at 295.
Finally, highly deferential does not mean — in a disability determination case such as this — that a reviewing court cannot form any opinion whatsoever as to the evidence available to the plan administrator at the time an adverse decision was made. The obligation under ERISA to review the administrative record in order to determine whether the plan administrator acted arbitrarily and capriciously "inherently includes some review of the quality and quantity of the medical evidence and the opinions on both sides of the issues." McDonald, 347 F.3d at 172. While an administrator need not defer automatically to the opinions of the claimant's treating physician, nor is the administrator required to afford greater weight to those opinions, a plan may not summarily reject or refuse to credit a claimant's reliable evidence — including the opinions of a treating physician. It must, instead, give reasons for adopting an alternative opinion. Black and Decker Disability Plan v. Nord, 538 U.S. 822, 834 (2003); Elliot at 620, Evans v. UnumProvident Corp., 434 F.3d 866, 877 (6th Cir. 2006) ("[A] plan administrator may not arbitrarily disregard reliable medical evidence proffered by the claimant, including the opinions of a treating physician.").
Mindful of these standards, the Court turns to an analysis of the Union's pension plan and the Board's eligibility determination with respect to the disability application submitted by Justus.
B. Discussion
1. Improper Denial of Benefits (Count One)
The Board argues that Article II of the pension plan unambiguously grants the Board discretionary authority to determine conclusively the eligibility of Employees and Retired Employees and beneficiaries to benefits under the plan, to interpret the terms and provisions of the plan and the trust agreement, and to decide any and all questions which may arise in connection with the operation of the plan. Thus, the Board asserts that the "highly deferential arbitrary and capricious" standard applies to the Board's determination that Justus was not permanently and totally disabled under the terms of the pension plan.Justus concedes that: "[a]n arbitrary and capricious standard of review is appropriate for ERISA cases where discretion exists." Plaintiff's Cross Motion for Summary Judgment and Memorandum in Opposition to Defendant's Motion for Summary Judgment, p. 8. And, Justus does not dispute that the Board has discretion under the pension plan. Thus, he appears to agree with the Board that an arbitrary and capricious standard of review should be applied in this case. He argues, instead, that the Board wrongfully denied disability benefitseven under application of an arbitrary and capricious standard of review, and that the Board's explanation for its denial of benefits is "not the type of reasoned analysis required under the ERISA's arbitrary and capricious standard." Id. at pp. 7-9.
The Board's contention that Justus argues for application of a de novo standard of review, rather than an arbitrary and capricious standard, is simply not supported by a fair reading of his briefing.
The Court agrees that the pension plan expressly gives the plan administrator — here, the Board of Trustees for the Union — the necessary discretionary authority to determine the eligibility of individuals such that the Board may invoke the arbitrary and capricious standard of review for its decisions. Although the word "discretion" need not be present to give this authority to a plan administrator or fiduciary, the Union's plan explicitly uses the word "discretion." It also uses other language sufficient to reserve the necessary discretion to the Board. To be exact, the plan provides:
1.16 "Permanent and Total Disability" means an injury or illness which the Trustees, in their sole and absolute discretion according to uniform, objective and nondiscriminatory procedures, find . . .
* * *
1.17 "Occupational Disability" means an injury or illness which the Trustees, in their sole and absolute discretion according to uniform, objective and nondiscriminatory procedures, find . .
* * *
2.04 Powers and Duties of the Board. In addition to the powers and duties set forth in the Trust Agreement, the Board shall have the following powers and duties regarding the Plan:
* * *
(b) To determine conclusively the eligibility of Employees and Retired Employees and beneficiaries to benefits under this Plan and, when required or appropriate, certify such eligibility to the Corporate Trustee.Defendant's Appendix to Motion for Summary Judgment, Exh. B, pp. 2-3, 5 (emphasis added). Because the Court is satisfied the Board gave itself discretionary authority to determine whether Justus was eligible for a certain classification of disability benefits, the Court must review the denial of those benefits under the arbitrary and capricious standard.
a. "Arbitrary and Capricious"
The administrative record under which the Board based its decision in this matter is sparse, consisting solely of:
(1) The Union's Amended and Restated Pension Plan, effective May 1, 1997;
(2) A June 22, 2005 letter from Michael Moore, MD, Department of Orthopaedic Surgery, Cleveland Clinic Foundation, certifying that Justus was under medical care following a right total knee replacement that occurred on March 14, 2005, and further certifying that Justus was unable to work and would not to be released to return to work until August 29, 2005;
(3) A Notice of Award from the Social Security Administration indicating Justus qualified for monthly disability benefits beginning in June 2005;
(4) An Application for Retirement submitted by Justus on August 25, 2005, requesting "total and permanent" disability retirement benefits (100%);
(5) A September 1, 2005 letter from Michael Moore, MD, Department of Orthopaedic Surgery, Cleveland Clinic Foundation, certifying that Justus was under medical care following additional right knee surgery that occurred on May 16, 2005, and further certifying that Justus was not permitted to climb ladders or do any type of roofing;
(6) A September 30, 2005 letter from Radha R. Baishnab, MD, of Lutheran Hospital detailing the results of the Second Opinion Evaluation conducted at the request of the Union, and concluding that, while unable to perform his duties as a roofer in the future, Justus "may be able to do desk jobs with occupational training;"
(7) An October 12, 2005 letter from the Union's administrative office denying Justus' application for disability retirement, and advising him of his eligibility for early retirement benefits in lieu of a disability retirement;
(8) An October 15, 2005 letter from Justus requesting a "full and fair review" of the disability denial from the Board;
(9) A December 1, 2005 letter from Susan L. Gragel, Esq., legal counsel for the Board, advising Justus that the Board had reviewed Justus' application and acted unanimously to deny his appeal, and further advising Justus he was eligible for occupational/trade disability in lieu of "total and permanent" disability; and,
(10) Board minutes from an August 1, 2002 meeting, which held that a Social Security Disability Award creates a rebuttable presumption for the higher tier Union disability benefits, but that "a second opinion physical may take place at the discretion of the Administrator and lower tier benefits would be granted if the second opinion does not feel that substantial and gainful employment is prohibitive."
The Board's support for its decision to deny Justus the requested "total and permanent" disability benefits is found in the last paragraph of the two-page report issued by Dr. Baishnab. The bulk of that report is devoted to confirming the existence of two prior right knee surgeries, advanced arthritis in both knees, advanced degenerative joint disease changes in the left knee with effusion, an inability to walk about freely because of pain and stiffness, an inability to squat or stand straight because of knee problems, a planned left knee replacement surgery, and a general unsteady gait on the part of Mr. Justus. Dr. Baishnab concludes the report by noting:
He is unable to stand, walk, drive, or live his everyday life freely because of pain and stiffness in his knees. As stated above, because of his advanced degenerative joint disease of both knees, he will be unable to perform his duties as a roofer in the future, even after his planned left knee arthroplasty surgery. He may be able to do desk jobs with occupational training.Defendant's Appendix to Motion for Summary Judgment, Exh. D, p. 2 (emphasis added).
The Union's initial letter to Justus advising him that his application for disability retirement was denied expressly states that the decision was based upon the fact that Dr. Baishnab "indicated" that Justus "may be able to do desk jobs with occupational training." Defendant's Appendix to Motion for Summary Judgment, Exh. C. The December 1, 2005 letter to Justus from the Board's legal counsel, however, advising Justus that the Board had acted unanimously to deny his appeal, expressly states the denial was based upon the failure of Dr. Baishnab's report to "establish that substantial and gainful employment would be prohibitive for you on a permanent basis." Defendant's Appendix to Motion for Summary Judgment, Exh. F.
The Board argues that its standard for finding "total and permanent" disability is set forth in the minutes of its August, 2002 board meeting, when the Board decided that a second medical opinion must find that "substantial gainful employment is entirely prohibited" before total and permanent disability benefits would be allowed. Defendant's Motion for Summary Judgment, p. 11. In his Declaration, Mr. Vasey confirms the Board denied Justus' appeal "based on Dr. Baishnab's findings that substantial and gainful employment would not be prohibitive on a permanent basis." See Declaration of Michael Vasey (emphasis added). As argued by Justus, however, Dr. Baishnab did not affirmatively state (or find) any such thing. In fact, Dr. Baishnab was not even confronted with the issue. In deposition, Mr. Vasey admitted:
Q. Did the Board specifically ask the doctor whether Danny Justus could perform substantial and gainful employment on a permanent basis?
A. No.
Q. Then how do you know that the doctor is saying Danny can perform that substantial and gainful activity?
A. I don't.Deposition of Michael Vasey, p. 57. Thus, while Dr. Baishnab may have supposed a certain position (i.e., a desk job) was a "possibility" for Justus, she did not make any finding regarding the feasability or non-feasability of "substantial and gainful employment on a permanent basis." Quite simply, Dr. Baishnab's report did not meet the standards — set by the Board itself — for denying total and permanent disability benefits.
Because the Court finds that, under the Board's own reading of its standards, Dr. Baishnab's report does not support the Board's conclusions, the Court does not determine whether the Board's interpretation of those standards is reasonable, though it does not appear to be so.
The Board argues it had no medical record from any doctor saying Justus was unable to perform any and all work duties but, rather, only had two doctors confirming an inability to perform the duties of a roofer. Deposition of Michael Vasey, pp. 12, 27-28. The Board, thus, directs the Court to several cases from the Sixth Circuit as support for its position that a plan administrator's "rational interpretation" of a pension plan's terms and conditions are not subject to reversal under the arbitrary and capricious standard of review — even in the face of an equally rational, but differing, interpretation. While this statement is generally correct, the Court finds each of the cases cited by the Board to be distinguishable (and inapplicable) on several levels.
The Board cites generally to Gismondi v. United Tech. Corp., 408 F.3d 295 (6th Cir. 2005), Anderson v. Emerson Elec. Co., 161 Fed. Appx. 504 (6th Cir. 2005), Belluardo v. Cox Enterprises, Inc., 157 Fed. Appx. 823 (6th Cir. 2005), Morgan v. SKF USA, Inc., 385 F.3d 989 (6th Cir. 2004), and Steadman v. Board of Trustees of Building Material Drivers Local 436 Pension Fund Plan, 2006 WL 305311 (N.D. Ohio, Feb. 8, 2006, McHargh, J.).
First, each of the cases cited by the Board are strict contract interpretation cases. The limited issue faced by the Sixth Circuit was whether, when confronted with two equally reasonable interpretations of express plan language, a reviewing court is bound by the plan administrator's interpretation. The answer in this Circuit is typically `yes' — provided the interpretation given by the plan administrator "adheres to the language of the plan as it would be construed by an ordinary person." Anderson v. Emerson Elec. Co., 161 Fed. Appx. 504, 2005 WL 3529111, at *2 (6th Cir. 2005) (citing Morgan v. SKF USA, Inc., 385 F.3d 989, 992 (6th Cir. 2004)). The Court, therefore, in each of those cases, was not — as here — asked to review the rationality of the process used to make a disability determination.
Second, and closely related, is that all but two of the Sixth Circuit cases cited by the Board involved retirement or severance benefits — not disability benefits. Of the two cases that did concern disability benefits, neither was questioning the disability determination: it was agreed that the claimants in both cases were "permanently" and/or "totally" disabled. The question was, therefore, whether the language of other plan provisions exempted the claimant from eligibility. This involved review of the rationality of two (competing) interpretations of a specific plan provision, not the rationality of the process for determining a disability based upon the medical evidence.
Last, and most important, all but one of the cases cited by the Board were decided prior to several recent, on-point decisions issued by the Sixth Circuit — specifically in the area of ERISA disability claims. In five cases decided between January 2006 and February 2007, the Sixth Circuit found adverse benefits determinations made by ERISA plan administrators to be arbitrary and capricious on the basis of the reasoning process employed by the plan administrator in making the disability determination. These decisions confirm the standard of proof necessary in this Circuit to sustain an administrator's disability determination:
[W]e will uphold the administrator's decision if it is the result of a deliberate, principled reasoning process and if it is supported by substantial evidence.Glenn v. Metropolitan Life Ins. Co., 461 F.3d 660, 666 (6th Cir. 2006) (citing Baker v. United Mine Workers of Am. Health Ret. Funds, 929 F.2d 1140, 1144 (6th Cir. 1991). An adverse disability benefits decision, therefore, cannot be sustained in the Sixth Circuit — even under application of the highly deferential "arbitrary and capricious" standard — if it is not the product of a well-reasoned process and is not supported by significant evidence. The question, therefore, for this Court is whether the Board "can offer a reasoned explanation, based on the evidence, for its judgment that [Justus] was not [totally] disabled within the plan's terms." Elliott v. Metropolitan Life Ins. Co., 473 F.3d 613, 617 (6th Cir. 2006). The Court finds the Board has not done so — and cannot do so — based upon the administrative record before it.
See, e.g., Godleski v. FirstEnergy Corp., 2007 Fed. App. 0067P (6th Cir., Feb. 20, 2007), Elliott v. Metropolitan Life Ins. Co., 473 F.3d 613 (6th Cir., Nov. 15, 2006), Glenn v. Metropolitan Life Ins. Co., 461 F.3d 660 (6th Cir., Sept. 1, 2006), Smith v. Continental Casualty Co., 450 F.3d 253 (6th Cir., June 13, 2006), Evans v. UnumProvident Corp., 434 F.3d 866 (6th Cir., Jan. 20, 2006).
Although the Board may wish it were so, the "arbitrary and capricious" standard is not so deferential that the Board can point to whatever medical report they choose, hand-select only the language they find favorable, and then use that language as support for a denial of benefits. This is especially true where the medical report selected by the plan administrator is so obviously equivocal. Generally speaking,
The mere possibility that a participant in an ERISA plan might be able to return to some type of gainful employment, in light of the overwhelming evidence to the contrary, is an insufficient basis upon which to support a plan administrator's decision to deny that participant's claim for [long-term disability] benefits.McDonald v. Western-Southern Life Ins. Co., 347 F.3d 161, 170-71 (6th Cir. 2003) (emphasis added). Justus argues that the Board's justification in its denial letters, based solely upon the last sentence in Dr. Baishab's report, is bare-boned and vague rather than specific, and lacks any medical support in the record making the Board's "reasoning" virtually non-existent and, at best, premised on pure speculation. The Court agrees.
This case falls squarely on the side of the recent decisions issued by the Sixth Circuit; indeed, the facts here closely parallel those at issue in Elliott v. Metropolitan Life Ins. Co., 473 F.3d 613 (6th Cir. 2006). There, the claimant began receiving short-term disability benefits in early 2003 as a result of unexplained, renewed symptoms from an accident dating back to 1989. She began seeing several doctors and, while no doctor could explain with precision why her symptoms had reemerged, in May, 2003, a neurologist found symptoms "consistent with a central cord-like syndrome." Elliott, 473 F.3d at 615. The doctor noted the claimant was "better than she was six months ago," but that there was still "chronic pain and anxiety" related to her syndrome. He recommended prescription medication and physical therapy. Id.
The claimant was injured in an automobile accident, suffering fractures of her second and third cervical vertebrae, and underwent stabilization and spinal surgery in 1989. She began working for her current employer in 1993 and was relatively symptom-free until October, 2002, when she began experiencing radiating shoulder pain, numbness, and burning sensations.
The claimant applied for long-term disability in September, 2003, after further consultation with the neurologist confirmed that, although the claimant showed some improvement through the use of prescription medication and physical therapy, she had "chronic weakness and numbness that is exacerbated when she is standing for any length of time" — particularly in her legs and feet. Id. The claim was denied by MetLife on December 1, 2003. The denial letter recounted the terms of the claimant's disability plan, restated the technical medical terms from the claimant's doctor's reports, and then — without any further reasoning — concluded that the medical documentation "does not support a condition of severity that would prevent you from working." Id.
The rejection was appealed by the claimant, and a letter was provided from her doctor specifying particular limitations on the claimant's ability to work. Id. at 616. In response, MetLife engaged its own physician to review the file. MetLife's physician conceded that the claimant's physician "appears to be credible," but concluded "I am not left with the impression given the current level of documentation that the claimant appears medically unable to perform sedentary work based on the physical findings supplied." Based on this finding, MetLife denied the appeal. MetLife wrote: "There was no indication that your condition caused impairments that would have prevented you from performing the duties of your job." Id. The United States District Court for the Eastern District of Kentucky affirmed the denial of long-term disability benefits, citing to the extremely deferential standard of review.
On appeal, the question asked by the Sixth Circuit was whether MetLife had made a deliberate, principled, and reasoned judgment that the claimant's medical condition allowed her to perform the duties of her job — or other, similar duties. Elliott, 473 F.3d at 618. The Court found MetLife had not; therefore, the benefits denial was deemed arbitrary and capricious and the administrator's decision overturned. The Sixth Circuit specifically noted:
It is worth mentioning that there, unlike here , there was no indication that the claimant had been awarded disability benefits by any other entity — including the Social Security Administration.
Logically, MetLife could have made a reasoned judgment only if it relied on medical evidence that assessed Elliott's physical ability to perform job-related tasks.Id. The Court then cited to decisions from other circuits, which have found benefits plans to be "under a duty to make a reasonable inquiry into the types of skills [the claimant] possesses and whether those skills may be used at another job." Put differently by the Sixth Circuit:
[M]edical data, without reasoning, cannot produce a logical judgment about a claimant's work ability. Despite the numerous medical evaluations that took place in this case, MetLife did not rely on an application of the relevant evidence to the occupational standard when it denied her claim initially and on internal appeal.Id. Fatal to MetLife's decision, therefore, was its failure to discuss specific occupational duties and to provide any reasoning with respect to how the claimant's condition would permit her to perform those duties — or otherwise function in a workplace. This, of course, was because the physician employed by MetLife presented no reasons for his conclusion that the claimant's condition would not prevent her from working a "sedentary" job.
This Court is not saying that Justus' contrary medical evidence in this case is overwhelming. It is, however, detailed and apparently sufficient to support two other total disability determinations. In contrast, the Board's reliance on a single, equivocal sentence in a medical report stating that Justus "may" be able to do a desk job — without any analysis whatsoever as to the types of skills possessed by Justus and how they fit into specific, job-related tasks — is indicative of the absence of a deliberate, principled, and reasoned decision. As in Elliott, supra, such decision-making is, by its nature, arbitrary and capricious. See also Glenn v. Metropolitan Life Ins. Co., 461 F.3d 660 (6th Cir. 2006) (holding that an administrator's decision to deny long-term disability benefits for cardiomyopathy, a disease of the heart muscle that causes the heart to become enlarged and pump inadequately — causing excessive fatigue and shortness of breath, was not the product of a principled and deliberative reasoning process where a second opinion evaluation expressly discounted the effect of emotional stress on cardiac arrhythmias, despite documentation of instances of the claimant's emotional stress-induced symptoms and her treating physician's confirmation of those symptoms, and where the second opinion evaluation was ambiguous in stating "the patient seems to be a reasonable candidate to try one of the sedentary job classes at least on a trial basis").
Mr. Vasey testified that, because Justus' treating physician — Dr. Moore — simply opined with respect to an inability to perform duties as a roofer, which Dr. Baishnab similarly found, the Board authorized a trade disability. Deposition of Michael Vasey, pp. 27-28, 37. But this does not constitute a reasoned basis for rejecting a full disability — especially given the fact that the Board had proof of a Social Security disability award and a finding of disability by the National Roofers' Union Pension Plan, on the one hand, and only had, on the other, an equivocal second opinion evaluation, which, interestingly, notes that Justus "is unable to stand, walk, drive , or live his everyday life freely because of pain and stiffness in his knees."
Generally speaking, a court will not overturn a plan administrator's denial of benefits simply because the administrator chose to rely on the opinion of one physician over that of another. McDonald, 347 F.3d at 169. Indeed, it is entirely possible for a plan administrator to rely upon a single medical opinion finding that an employee is not disabled without the decision being deemed "arbitrary and capricious." Id. This presumes, however, that the medical opinion is at least minimally supported. Where there is — as here — so little evidence of a process that begins with the claimant's physical limitations and ends with specific job functions and work ability, it is entirely reasonable for a court to conclude that reliance upon the opinion (or, in this case, speculation) of one physician was arbitrary and capricious.
Simply put, in the case before this Court, "may be able to do" — without more — cannot be interpreted as equating to "can do." As Justus points out, the Board has essentially expanded Dr. Baishnab's tentative speculation regarding the possibility of a different occupation into an affirmative finding that substantial gainful employment on a permanent basis is within Justus' reach. Yet, there is absolutely no mention of what transferrable skills Justus has that might allow him to take a desk job, or any consideration of how — or if — his residual functional capacity would affect his ability to hold such a position. Not only does Dr. Baishnab fail to offer any medical support for her statement, it is entirely conditional upon Justus receiving some type of (unspecified) job training. Indeed, as pointed out by Justus points out, there is an utter lack of evidence with respect to Dr. Baishnab's qualifications to make vocational assessments, to offer opinions regarding Justus' potential for job retraining, or to make determinations as to the existence and availability of retraining. It further appears to the Court that Dr. Baishnab — in stating Justus "may" be able to take a desk job with additional training — was not even cognizant of Justus' (limited) educational or vocational history.
Anyone familiar with the Social Security disability process knows that, as a matter of course, it relies upon input from trained vocational specialists who assess whether, given a claimant's disabilities and transferrable skills, there are available positions in the work force that would allow the claimant to be gainfully employed. The Social Security vocational specialist used in this case presumably concluded there were no such positions in the economy for Justus.
According to Justus' affidavit, his highest level of education is the 8th grade.
Had the Board chosen to support this equivocal and conditional statement with a vocational assessment showing an actual ability to perform the envisioned position (with or without training), and then related that assessment to Justus' physical limitations, this might be a different case. But the Board chose not to do so. The single, conditional statement the Board relied upon, therefore, being entirely speculative and without any analysis, cannot form the basis for concluding that the Board engaged in a deliberate, principled reasoning process.
It is true that, as the Board points out, the terms of the pension plan do not require the administrator to seek a vocational evaluation, nor do they otherwise impose an obligation on the part of the administrator to seek additional information or take into account a participant's vocational or educational status. Whether the Board had an express duty under the plan to undertake a particular type of review, however, does not answer the question of whether it undertook a reasoned process. There may not be a requirement or duty on the part of a court to provide a detailed analysis of its decisions, but "an Opinion that merely says `affirmed' or `reversed' can hardly be considered reasoned." Elliott v. Metropolitan Life Ins. Co., 473 F.3d 613, 619 (6th Cir. 2006). Because the Board's second opinion evaluation merely indicates the possibility of another career (with retraining), and because the Board's own standards apparently require an affirmative showing that substantial and gainful employment is not prohibitive on a permanent basis, which the report failed to establish, it is not unreasonable to expect the Board to provide further support for its assumption that Justus is able to work in another profession. As discussed earlier in this Opinion, the standard in the Sixth Circuit for disability determinations is a deliberate and reasoned process that is supported by substantial evidence.
b. Social Security Disability Findings
As mentioned, Justus also relies upon the fact that the Board's own internal criteria dictates that some deference be given to Social Security disability determinations. Under the Board's standards, a Social Security determination creates a rebuttable presumption of total and permanent disability — entitling the claimant to "higher tier" benefits under the Union's pension plan. Defendant's Appendix to Motion for Summary Judgment, Exh. H; Deposition of Michael Vasey, p. 35. Yet, despite the Board's awareness of it, there was no mention of Justus' Social Security disability award (or even his disability award under the National Roofers' Union Pension Plan) in either the October 2005 denial letter, or the December 2005 letter rejecting Justus' appeal. Thus, there was no reason given to Justus — much less a "specific" reason pursuant to the terms of the Union's pension plan — as to why, or how, these findings were insufficient to allow for a total and permanent disability finding here as well. Nor was there any explanation offered as to why, or how, the presumption that should have been afforded to Justus was (presumably) considered rebutted.
The Board contends that, on the basis of the medical evidence in front of the Board at the time the decision was made,including the Social Security finding, reasonable minds can only come to the conclusion that Justus' physical condition simply meets the definition of "occupational disability" benefits under the pension plan. While it is true that the letters of Justus' treating physician, Dr. Moore, focuses on Justus' inability to perform his duties as a roofer and that the bulk of Dr. Baishnab's report also focus on Justus' inability to work in that profession, that is not all that can be gleaned from those reports. The nature and extent of the disability discussed in those reports is so severe that even one untrained in the medical field can see that the conclusion that Justus can not work as a roofer was driven, in the case of both doctors, by their conclusion that he could not perform the most basic functions of walking, standing, driving, etc. Given these medical reports, the fact that the Board presumes a total and permanent disability when faced with an award of social security disability benefits, that Dr. Baishnab's report did not actually opine that Justus is not prohibited from substantial gainful employment on a permanent basis, and that the Board did not say how the presumption of disability had been rebutted, the Court is not persuaded by the Board's argument. On the record presented, it seem more likely that the Board gave no weight, and certainly not presumptive weight, to those disability findings.
Certainly a finding of disability by the Social Security Administration — an entity charged with the responsibility of taking into account a claimant's physical and mental limitations, as well as vocational abilities — should have alerted the Board that the contingent possibility of a desk job that was posited by Dr. Baishnab required some degree of further analysis. Per the express terms of the pension plan, participants are entitled to specific reasons supporting the Board's eligibility determination. The process is to be applied in a fair, equal, and non-discriminatory manner according to the pension plan terms. The Board's failure, therefore, to follow its own rules and come forward with specific, rather than tentative, reasons for rebutting the presumption of total disability merely enhances the conclusion that its reasoning process was anything but fair, equal, and reasoned.
c. Conflict of Interest
Last, Justus raises — in his Cross Motion — a potential conflict of interest on the part of the Board, and asks the Court to consider this factor in its review of the Board's decision. The Court has already found that, regardless of the presence or absence of a conflict of interest, the Board's adverse benefits determination cannot withstand scrutiny under an arbitrary and capricious standard of review. The Court need not, therefore, address the adequacy of the record with respect to a potential conflict of interest, or determine whether any purported conflict played a role in the Board's decision, and declines to do so.
2. Breach of Fiduciary Duty (Count Two)
In addition to seeking damages for an improper denial of ERISA plan benefits, Justus seeks damages arising from a breach of the fiduciary duty imposed upon administrators of an ERISA plan. The Board seeks summary judgment on this claim; Justus does not. Nor has Justus responded to the arguments raised by the Board with respect to Count Two of the Amended Complaint.
The Board argues that, where 29 U.S.C. § 1132(a)(1)(B) is available as a remedy, relief for breach of fiduciary duty is not appropriate. See Marks v. Newcourt Credit Corp., 342 F.3d 444 (6th Cir. 2003); see also Hill v. Blue Cross and Blue Shield of Mich., 400 F.3d 710, 717 (6th Cir. 2005) ("Because § 1132(a)(1)(B) provides a remedy for [plaintiff's] alleged injury that allows him to bring a lawsuit to challenge the Plan Administrator's denial of benefits to which he believes he is entitled, he does not have a right to a cause of action for breach of fiduciary duty."). The Board, therefore, claims it is entitled to judgment as a matter of law on Justus' claim for breach of fiduciary duty because he can avail himself of another remedy under § 1132, and, indeed, has asserted a claim under § 1132(a)(1)(B) for the recovery of benefits under the terms of the Union's pension plan.
The Board has correctly stated the general rule that a litigant cannot normally proceed under ERISA § 502(a)(3) — under which Justus brings his fiduciary claim — if he can also proceed under § 502(a)(1)(B) — under which Justus brought his first claim for relief (improper denial of benefits). This is because § 502(a)(3) has been found to be a "catch-all" provision intended to provide a remedy when no other subsection of § 502 provides adequate relief. Varity Corp. v. Howe, 516 U.S. 489, 512 (1996). In doing so, "[t]he Supreme Court clearly limited the applicability of [§ 502(a)(3)] to beneficiaries who may not avail themselves of [§ 502's] other remedies." Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 615 (6th Cir. 1998) (citing Varity, 516 U.S. at 512).
Even if Justus could bring a claim for breach of fiduciary duty where there is a surviving claim for improper denial of ERISA benefits, moreover, the Board argues the alleged breaches that Justus asserts in the Amended Complaint are merely reiterations of his claim for wrongful denial of pension plan benefits — not "independent" breaches. As proof that Justus' breach of fiduciary duty claim is a restatement of his claim for wrongful denial of benefits, the Board points to the fact that Justus alleges no set of facts to indicate that the Board misled him as to the status of his application for benefits. Nor is there any accusation on the part of Justus that the administrator was otherwise negligent in the execution of its duties as a fiduciary. Rather, Justus merely asserts:
21. Under 29 U.S.C. § 1102(21)(a), Defendant is a fiduciary with respect to the Plan when it exercises discretionary control respecting management of the Plan. Defendant Board of Trustees is a fiduciary when it has discretionary authority or responsibility in the administration of the Plan.
22. As a fiduciary, Defendant Board of Trustees owes a fiduciary duty to Plaintiff, as it is the administrator of benefits under the Plan.
23. Defendant breached its fiduciary duties to Plaintiff in violation of ERISA, 29 U.S.C. § 1104(a)(1)(A)(i).
The Sixth Circuit requires a misrepresentation about the availability or extent of benefits in order to sustain a breach of fiduciary duty claim under 29 U.S.C. § 1104. On the record before this Court, there simply is no factual basis for claiming any such misrepresentation. The Court, therefore, finds dismissal of Justus' second claim for relief (breach of fiduciary duty) to be appropriate.
See, e.g., James v. Pirelli Armstrong Tire Corp., 305 F.3d 439, 455 (6th Cir. 2002) (requiring "materially misleading and inaccurate information about the plan benefits"); Krohn v. Huron Mem'l Hosp., 173 F.3d 542, 547 (6th Cir. 1999) (citing limited examples of breaches to include where the administrator answers questions inaccurately or incompletely, or where the administrator negligently or intentionally misleads plan participants about plan eligibility or benefits); Sprague v. Gen. Motors Corp., 133 F.3d 388, 405-06 (6th Cir. 1998) (suggesting that breach can occur where employer provides misleading information about the future of a plan or fails to provide such information when required to do so).
3. Request for Attorney Fees
29 U.S.C. § 1132(g) grants this Court statutory authority to award attorneys' fees in an ERISA action, providing that in certain actions "by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee to either party." See 29 U.S.C. § 1132(g). Justus, in his prayer for relief and in a brief statement in his Cross Motion, has submitted a request for attorney fees:
Plaintiff also asks that Defendant be required to pay attorney fees. This matter appears to be of the nature where an insurer hopes that a Plaintiff will not stand up for his or her total rights, and challenges that employee to wait on the outcome of appeal or take lesser benefits.Plaintiff's Cross Motion for Summary Judgment and Memorandum in Opposition to Defendant's Motion for Summary Judgment, p. 18. No legal support has been cited by Justus with respect to any standards or factors applicable to a request for an award of attorney fees.
Section 1132(g) does not expressly limit an award of attorney fees to a prevailing party. Courts, however, have interpreted the statute to allow an award only to a prevailing party. See, e.g., Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 89 n. 14 (1982); Cattin v. Gen. Motors Corp., 955 F.2d 416, 427 (6th Cir. 1992). Based on the Court's finding that the Board arbitrarily and capriciously denied Justus' application for total and permanent disability benefits, Justus is a prevailing party for purposes of an award of attorney fees under 29 U.S.C. § 1132(g). The Court, however, in reviewing the factors it must consider, finds that this is not a case where the Court should exercise its discretion and make such an award.
In exercising its discretion to award fees, the Court considers the following five factors:
1) The degree of the opposing party's culpability or bad faith;
2) The opposing party's inability to satisfy an award of attorney's fees;
3) The deterrent effect of an award on other persons under similar circumstances;
4) Whether the party requesting fees sought to confer a common benefit on all participants and beneficiaries of an ERISA plan or resolve significant legal questions regarding ERISA; and,
5) The relative merits of the parties' positions.Secretary of Dep't. of Labor v. King, 775 F.2d 666, 669 (6th Cir. 1985).
The King factors are flexible and assist a court in making a determination for attorney's fees. "The factors simply summarize considerations that have sometimes been deemed significant in other cases." Foltice v. Guardsman Products, Inc., 98 F.3d 933, 937 (6th Cir. 1996)
Justus has not come forward with record evidence on any of these factors; indeed, he has not even briefed the issue. The Court, nevertheless, is persuaded by several factors. First, the Court does not find the Board acted with the requisite culpability, or "blameworthiness," by failing to approve Justus' request for "higher tier" benefits or by failing to take further action to substantiate its denial. While the Court has found that the Board's denial was not the product of the requisite deliberate, reasoned process, it does not follow that it was the product of deliberate misconduct, which raises the second factor.
The deterrent effect of an award is an important consideration. "Fee awards are likely to have the greatest deterrent effect where deliberate misconduct is in the offing." Foltice v. Guardsman Products, Inc., 98 F.3d 933, 937 (6th Cir. 1996). Here, however, while perhaps the Board behaved in a cursory manner in denying total and permanent disability benefits, the Board's readiness to award Justus occupational disability benefits — and the medical support in the record for such an award — militates against a finding that there was deliberate misconduct in offering such benefits to Justus (rather than the higher benefits he sought). The Court does not believe, in this case, that deterrence is necessary by way of an attorney's fee award simply to encourage the Board to examine claims with more scrutiny.
Finally, Justus has not in any way indicated he seeks to "confer a common benefit on all participants and beneficiaries of an ERISA plan, or resolve significant legal questions regarding ERISA." Rather, he seeks to increase a disability benefit already conferred upon him. The Court finds, therefore, that there is no sufficient justification to support a finding of attorney's fees in this case.
IV. CONCLUSION
In light of the foregoing, it is
ORDERED THAT the Board's Motion for Summary Judgment (Doc. No. 11) is DENIED with respect to Count One of the Amended Complaint (Improper Denial of Benefits), and GRANTED with respect to Count Two of the Amended Complaint (Breach of Fiduciary Duty). Justus' Cross-Motion for Summary Judgment (Doc. No. 19) is GRANTED, except to the extent he seeks attorneys fees; that request is DENIED. IT IS FURTHER ORDERED THAT Defendant shall pay Plaintiff benefits due at the "higher tier" rate throughout his period of eligibility and shall pay interest at the statutory rate on all amounts unpaid (or underpaid) prior to the date of this Order. Because this Order resolves all pending claims, this action is hereby DISMISSED.