Opinion
CIVIL ACTION NO. 03-315
November 7, 2003
MEMORANDUM
Presently before the Court is Defendant Connecticut General Life Insurance Company's ("Defendant") Motion for Summary Judgment, Plaintiff John G. Kelly's ("Plaintiff) Response thereto, Plaintiff's Cross-Motion for Summary Judgment and Defendant's Response thereto. For the reasons set forth below, Defendant's motion is granted and Plaintiffs Motion is denied.
I. BACKGROUND
In or around March, 1968, Plaintiff began working for The Great AP Tea Company, Inc. ("AP"), where he continued to work for approximately thirty-three years. In or around April, 1985, AP promoted Plaintiff to store manager, a position he held until approximately May 18, 2001, when he stopped working for AP. Defendant, an insurance company located in Hartford, Connecticut, served as the administrator of the long term disability benefits plan that AP provided to its employees.
On or around January, 1998, Plaintiff was diagnosed with obstructive sleep apnea ("OSA"). Plaintiff also suffers from chronic daytime hypersomnolence, which began sometime in the late 1980's. Despite these conditions, Plaintiff continued to successfully work for AP for several years. Plaintiff alleges, however, that OSA ultimately rendered him totally disabled, and on or around May 18, 2001, Plaintiff stopped working for AP. Plaintiff claims that he was physically unable to perform any and all his job functions. From approximately June 1, 2001 through January 12, 2002, AP paid sick leave and/or short term disability benefits to Plaintiff.
On March 28, 2002, Plaintiff submitted an application for long term disability benefits. On the application, Plaintiff claimed that OSA rendered him disabled. Dr. Brian Carnavil, one of Plaintiff's doctors, completed the physician's portion of the application, and he indicated that Plaintiff had been diagnosed with OSA. In addition to the application, Plaintiff also submitted two medical exam records and a letter from Dr. Marda Donner — a physician who treated him for OSA. On April 22, 2002, Defendant requested that Plaintiff send additional medical information and that Plaintiff complete a disability questionnaire. On May 15, 2002, Plaintiff returned the completed questionnaire and provided two additional letters from Dr. Carnavil. Again, on the questionnaire, Plaintiff indicated that OSA was the primary physical condition that prevented him from working. Plaintiff ultimately supplied two additional letters to Defendant, one from Dr. Carnavil dated May 14, 2002 and one from Dr. Donner dated May 17, 2002.
On June 10, 2002, Defendant wrote a letter to Plaintiff to inform him that his request for benefits had been denied. In the letter, Defendant listed all of the evidence that it reviewed and then gave an explanation as to why it denied the benefits. On August 7, 2002 Plaintiff appealed Defendant's decision, and on August 23, 2002, Defendant wrote a letter to Plaintiff explaining that Plaintiff had forty-five days to supply any additional relevant information.
While the appeal was pending, Plaintiff became seriously ill. He was admitted to Holy Redeemer Hospital on August 14, 2002 and stayed there until August 20, 2002 when he was transferred to Abington Memorial Hospital. He stayed at Abington Memorial Hospital until the hospital discharged him on September 5, 2002. During the appeal process, Plaintiff sent various medical reports to Defendant. The new medical reports indicated that Plaintiff now has, inter alia, congestive heart failure, cor pulmonale, atrial flutter, hypertension, OSA, benign prostatic hypertrophy, morbid obesity and sick sinus syndrome with tachybrady syndrome.
On November 20, 2002, Defendant informed Plaintiff that it was affirming its original decision to deny benefits. On or around January 22, 2003, Plaintiff filed the instant action pursuant to the Employee Retirement Income Security Act ("ERISA") 29 U.S.C. § 1132, alleging that Defendant improperly denied employee benefits. After the discovery period closed, Defendant filed its motion for summary judgment on September 19, 2003 and Plaintiff filed his cross-motion for summary judgment on September 22, 2003.
II. STANDARD OF REVIEW
A motion for summary judgment will be granted where all of the evidence demonstrates "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248 (1986). Since a grant of summary judgment will deny a party its chance in court, all inferences must be drawn in the light most favorable to the party opposing the motion.U.S. v. Diebold. Inc., 369 U.S. 654, 655 (1962).
The ultimate question in determining whether a motion for summary judgment should be granted, is "whether reasonable minds may differ as to the verdict." Schoonejongen v. Curtiss-Wright Corp., 143 F.3d 120, 129 (3d Cir. 1998). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson. 477 U.S. at 248. III. DISCUSSION
A. Standard and Scope for Reviewing an Administrator's Decision to Deny Benefits
Before reviewing Defendant's decisions, the Court must first determine the appropriate standard for reviewing such decisions. The Supreme Court has held, "a denial of benefits . . . is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). If the benefits plan grants the administrator the discretion to determine eligibility benefits, then the court must review the administrator's decision using an arbitrary and capricious standard. Abnathva v. Hoffmann-La Roche. Inc., 2 F.3d 40, 41 (3d Cir. 1993). "Under the arbitrary and capricious standard, the court must defer to the administrator of an employee benefit plan unless the administrator's decision is clearly not supported by the evidence in the record or the administrator has failed to comply with the procedures required by the plan." Id.
Under certain circumstances, however, Courts must use a more stringent standard of review. Specifically, if an employer hires an insurance company to both fund and administer an employee benefits plan, then the insurance company "is generally acting under a conflict that warrants a heightened form of the arbitrary and capricious standard of review."Pinto v. Reliance Standard Life Ins. Co., 214 F.3d 377, 378 (3d Cir. 2000). It is the plaintiff's burden to prove that a conflict exists and that the court should use a heightened standard of review. Schlegel v. Life Ins. Co. of N. America. 269 F. Supp.2d 612, 617 (E.D. Pa. 2003);Scarinci v. Ciccia. 880 F. Supp. 359, 364 (E.D. Pa. 1995).
In the instant case, the parties do not dispute, and the evidence is clear that Defendant had the authority and discretion to determine eligibility benefits; therefore, the Court must use the arbitrary and capricious standard of review. Additionally, as explained below, Plaintiff did not meet his burden of proving a conflict, and the evidence of record shows that a heightened standard of review is not warranted.
In support of his argument that a conflict exists, Plaintiff states "AP both funds and administers the ERISA benefits at issue in this case." (PL Br. at 1.). Plaintiff then attempts to back-up this statement by citing certain portions of the benefits plan. (PL Br. at 1.) Plaintiffs argument, however, is disingenuous and is not supported by evidence in the record. In his complaint, Plaintiff alleges that Defendant — not AP — is "the administrator of the Employee Benefits Plan." (Comp. at ¶ 6.) Plaintiff further alleges that Defendant — not AP — "exercises discretionary authority respecting management of the Plan's assets." (Compl. at ¶ 7.) Most notably, however, is that Plaintiff actually sued Defendant — not AP — for not properly administering the plan. Now, however, in an attempt to prove a conflict of interest and receive heightened scrutiny, Plaintiff alleges that AP — not Defendant — administers the plan. Clearly, Plaintiff's own allegations contradict each other, and for this reason alone, the Court could find that Plaintiff has not met his burden of proving a conflict.
The parties do not dispute that AP funds the benefits plan. Rather, the parties dispute whether AP administers the plan.
Additionally, the evidence is overwhelming that Defendant — not AP — administered the plan regarding long tern disability benefits. After Plaintiff submitted his application for benefits, all communications regarding Plaintiff's eligibility for benefits were made with Defendant — not AP. Defendant requested additional medical information, and Plaintiff supplied that information to Defendant — not AP. Once all of the information was gathered, it was Defendant — not AP — who made the decision and wrote a detailed three page letter to Plaintiff explaining why "we cannot consider any benefits payable to you at this time." (A.R. at 334-36.) The same is true for the appeal process. All communications were made between Plaintiff and Defendant — AP was not involved. Defendant again requested additional medical information, and Plaintiff again sent that information to Defendant. Once Defendant assembled all of the medical information, Defendant rendered a decision and again wrote a three page letter to Plaintiff explaining the decision. (A.R. at 485-87.) The evidence clearly shows that Defendant administered the long term disability benefits plan, and Plaintiff has not supplied any evidence to the contrary.
"A.R." stands for administrative record.
The Court further notes that, even if Plaintiff's allegations were accurate, the law does not support Plaintiff's position. In attempting to make his argument, Plaintiff relies on Pinto v. Reliance Standard Life Ins. Co., 214 F.3d 377 (3d Cir. 2000). Plaintiff states that "the [Pinto] Court ruled that a heightened scrutiny is required when a company both funds and administers ERISA benefits . . ." (PL Br. at 11.) This statement, however, does not fully and accurately portray the Pinto holding. Rather, the Pinto Court held that heightened scrutiny "is required when an insurance company is both plan administrator and funder." Pinto, 214 F.3d at 387 (emphasis added). The Pinto Court distinguished between the following types of situations: 1) an employer both funds and administers its benefits plan; and 2) an employer hires an insurance company to both fund and administer a benefits plan. The Pinto Court noted that it had previously held that a conflict does not typically exist when an employer both funds and administers the plan. Id. at 383. "We have been highly deferential to decisions of an employer who funds and administers a benefit plan, a practice grounded in the belief that the structural incentives to deny meritorious claims are generally outweighed by the opposing incentives to grant them — such as the incentives to avoid the loss of morale and higher wage demands that could result from denial of benefits." Id. at 378.
A primary issue for the Pinto Court was to determine the appropriate standard for reviewing an insurance company's decision to deny benefits when an employer hires an insurance company to both fund and administer a plan. Id. at 378.
With the correct holding from Pinto now in hand, the Court can examine Plaintiff's legal argument. Specifically, Plaintiff asks for heightened scrutiny because "AP both funds and administers the ERISA benefits at issue in this case." (PL Br. at 1.) Not only is this statement not factually accurate, but even if it was accurate, Plaintiff's reliance onPinto is misplaced. It is undisputed that AP is the employer, and that Defendant is the insurance company. If AP truly did fund and administer the plan — which it did not — the Pinto holding would not require heightened scrutiny. Rather, the Pinto Court only held that heightened scrutiny is required when an employer hires an insurance company to both fund and administer the plan. If the employer itself both funds and administers the plan, the Courts do not automatically apply heightened scrutiny.
For all of the reasons discussed above, the Court finds that there is no conflict, and the Court will not use a heightened standard of review. Furthermore, the scope of the Court's review is limited to the evidence that was before the administrator at the time of its decision. Mitchell v. Eastman Kodak Co., 113 F.3d 433, 440 (3d Cir. 1997).
To support his position in this case, Plaintiff urges the Court to examine a ruling from the Social Security Administration that was made on December 15, 2002. This decision, however, is clearly outside the scope of the Court's review, as the decision was made approximately six months after Defendant's original decision to deny benefits and approximately one month after Defendant affirmed its original decision.
B. Administrator's Initial Decision to Deny Benefits
In determining whether Plaintiff was entitled to benefits, Defendant had to act in accordance with the benefits plan. The plan states, in pertinent part, "benefits are paid if you are totally disabled." (A.R. at 437.) "For purposes of this plan, total disability is defined as follows: for the first two years that [long term disability] benefits are payable, you must be unable to perform any and all duties of your job . . . and your disability must be certified by a physician." (Id.) Accordingly, the benefits plan required Plaintiff to submit evidence that showed that he was totally disabled, that a physician certified him as totally disabled, and that the disability prevented him from performing "any and all" duties of his job.
On March 28, 2002, Plaintiff submitted his application for long term disability ("LTD") benefits. (A.R. at 423-25.) The only medical condition that Plaintiff and his physician listed on the application was OSA. Notably, Plaintiff's physician, Dr. Carnavil, did not complete the section of the application regarding "Extent of Disability," which was critical information that Defendant needed to determine if Plaintiff was unable perform "any and all" of his job duties. (A.R. at 425.)
On April 22, 2002, Defendant sent a letter to Plaintiff requesting that he supply additional medical information and that he fill out a disability questionnaire. (A.R. at 408.) Over the span of a couple of months, Plaintiff submitted the following evidence to Defendant: 1) a letter from Dr. Donner dated January 24, 1998 and two medical reports from Dr. Donner (A.R. at 419-421); 2) a disability questionnaire (A.R. at 388-392.); 3) two letters from Dr. Carnival dated January 29, 2002 (A.R. 395-96.); 3) a letter from Dr. Carnival dated May 14, 2002 (A.R. at 385.); and 4) a letter from Dr. Donner dated May 17, 2002 (A.R. 143-44.)
Of the evidence that Plaintiff submitted, there is not a single certification from a physician that Plaintiff is totally disabled and unable to perform "any and all" of his job duties. Rather, the medical evidence merely confirms that Plaintiff has OSA, and it explains the symptoms associated with his OSA. The only piece of evidence that even remotely supports Plaintiff's position is the letter from Dr. Carnavil on January 29, 2002. That letter states that Plaintiff's OSA "disables him from working the shift that has been assigned." (A.R. at 396.) On the same day, however, Dr. Carnavil wrote another letter where he stated that despite Plaintiff's OSA, he "is able to perform the job functions and work the shift that he has in the past." (A.R. at 395.) These letters contradict each other, as it is undisputed that Plaintiff's previous work schedule required him to work at least one night shift per week. Regardless of the contradiction, Dr. Carnavil clearly states that Plaintiff is able to perform "job functions;" therefore, Plaintiff is not totally disabled under the benefits plan.
Plaintiff alleges that AP assigned him to a permanent night shift.
Furthermore, Plaintiff's own admissions support Defendant's decision. In completing the disability questionnaire, Plaintiff stated the that he performs the following activities: 1) cooks one to two hours per day; 2) shops one hour per day; 3) does laundry for one-half hour per day; 4) gardens for one to two hours per day; 5) goes on one to two mile walks two to three times per week; and 6) does aerobic exercise and weight training at a fitness center three or four times per week. (A.R. at 389.) Given Plaintiff's own statements, and given that his physicians never certified him as totally disabled, it was reasonable for Defendant to determine that Plaintiff was not totally disabled, and that Plaintiff was not unable to perform "any and all" of his job duties as a manager in a store.
Additionally, Plaintiff sought LTD benefits solely because of his OSA. Neither he nor his physicians cited any other medical condition. It is undisputed, however, that Plaintiff was first diagnosed with OSA in early 1998 and continued to work at AP until May 18, 2001. There was no evidence presented to Defendant — before its decision to deny benefits — that explains why Plaintiff was able to work with OSA for approximately three and one-half years, but as of May 18, 2001, became totally disabled solely from OSA.
Based on all of the evidence, and lack of evidence, presented to Defendant, the Court does not find that Defendant's decision was arbitrary and capricious. The Court finds that Defendant's decision to deny benefits was supported by evidence, and the Court upholds the decision.
C. Administrator's Decision to Affirm its Decision to Deny Benefits
On August 7, 2002, Plaintiff appealed Defendant's decision to deny benefits. (A.R. at 304.) On August 23, 2002, Defendant informed Plaintiff that he had forty-five days to supply any additional relevant information. (A.R. at 302.) On August 27, 2002, Defendant again requested additional medical information to support Plaintiff's claim that he became disabled in mid 2001. (A.R. at 318.)
On August 14, 2002, Plaintiff became ill and was admitted to Holy Redeemer Hospital. (PL Br. at 3.) Plaintiff remained in Holy Redeemer Hospital until August 20, 2002 when he was transferred to Abington Memorial Hospital. (Id. at 4.) Plaintiff remained in Abington Memorial Hospital until the hospital discharged him on September 5, 2002. (Id.)
In response to Defendant's requests for additional information, Plaintiff supplied the following three pieces of evidence: (1) a letter from Dr. Carnavil dated August 16, 2002 (A.R. at 127.); (2) records from his stay at Holy Redeemer Hospital (A.R. at 001-123.); and (3) records from his stay at Abington Memorial Hospital (A.R. at 839.) In his letter, Dr. Carnavil stated that Plaintiff has congestive heart failure and is disabled. (A.R. at 127.) The hospital records indicate, inter alia, that Plaintiff has congestive heart failure, cor pulmonale, atrial flutter, hypertension, OSA, benign prostatic hypertrophy, morbid obesity and sick sinus syndrome with tachybrady syndrome. (A.R. at 010, 501.)
Despite all of this new medical evidence, however, Plaintiff still did not provide any evidence that he was totally disabled as of May 18, 2001, the date that he alleges he became totally disabled. Additionally, all of this medical evidence indicates that Plaintiff has new medical conditions — conditions that Plaintiff did not suffer from in May, 2001. Indeed, on his application for LTD benefits, Plaintiff and his physician indicted that OSA was the only reason that he could not work. Furthermore, on August 14, 2002, a doctor at Holy Redeemer Hospital indicated that Plaintiff "had been feeling well until about a month ago." (A.R. at 013.)
During the appeal process, Plaintiff supplied no new evidence that indicates that he became totally disabled as of May 18, 2001 or that any of the new medical conditions — congestive heart failure, cor pulmonale, atrial flutter etc. — were diagnosed any time before August, 2002. Rather, Plaintiff has suggested that Defendant should have retroactively applied the new ailments to support his prior claim of total disability. Plaintiff, however, has offered no authority that requires Defendant to make a retroactive application, and such a request is contrary to the terms of the benefits plan. The benefits plan clearly states that during an appeal, the Administrator will review the original benefits application — and any new evidence that supports the application — to determine if an error was made in denying benefits. (A.R. at 443.) During the appeal process, the Administrator questions whether, based on the evidence, it made the correct decision to deny the original application. The appeal process is not the time for Plaintiff to make a brand new claim of disability based on new medical conditions. Accordingly, the Court finds that it was not arbitrary and capricious for Defendant to affirm its original decision, finding that Plaintiff was not totally disabled as of May, 18, 2001.
Plaintiff has pointed to no evidence that shows that the new medical conditions were diagnosed any time prior to August, 2002, which is approximately one year and three months after Plaintiff claims that he became totally disabled solely from OSA.
Additionally, Even if Plaintiff's new medical conditions rendered him totally disabled as of August 2002 — an issue that Defendant was never asked to decide — Plaintiff would not have even been eligible for benefits until approximately January, 2003. The benefits plan states, "LTD benefits begin after 180 consecutive days of total disability." (A.R. at 437.) All of Plaintiff's most recent medical evidence shows that Plaintiff might have become disabled in August 2002. Even if this is true, the benefits plan dictates that Plaintiff would not have been eligible for benefits until 180 days after total disability began; therefore, Plaintiff's request to receive benefits prior to January, 2003 was premature.
IV. CONCLUSION
Based on the foregoing, the Court finds that Defendant's decision to deny LTD benefits, and Defendant's decision to affirm the denial, were not arbitrary and capricious, were supported by evidence and were in accordance the benefits plan. Additionally, the Court finds that there are no genuine issues of material fact, and accordingly, the Court grants Defendant's motion for summary judgment and denies Plaintiff's motion for summary judgment.
An appropriate Order follows.
ORDER
AND NOW, this 7th day of November, 2003, upon consideration of Defendant Connecticut General Life Insurance Company's Motion for Summary Judgment (Docket No. 12), Plaintiff John G. Kelly's Response thereto (Docket No. 15), Plaintiff's Cross-Motion for Summary Judgment (Docket No. 13) and Defendant's Response thereto (Docket No. 17), it is hereby ORDERED that Defendant's Motion is GRANTED and Plaintiff's Motion is DENIED. Judgment is entered on behalf of Defendant Connecticut General Life Insurance Company and against Plaintiff John G. Kelly.
This case is CLOSED.