Opinion
No. CV-04-0493-PHX-FJM.
September 16, 2010
ORDER
I
This case involves a dispute over long-term disability ("LTD") benefits under an employee-benefits plan governed by the Employee Retirement Income Security Act, ("ERISA"), 29 U.S.C. §§ 1001- 1461. Plaintiff David Mazet was injured on the job in August of 2000. He made a claim for LTD benefits under a plan provided by his employer, Halliburton Company, and administered by Hartford Life and Accident Insurance Company (the "Plan"). The Plan provided for monthly benefits if a participant becomes "disabled." During the first 24 months of benefits, "disabled" means that the employee is unable to perform his "own occupation." After the initial 24-month period, a participant is entitled to continuing benefits only if he is unable to perform "any occupation."
The Plan defines "any occupation" as "an occupation: (1) for which you are qualified by education, training or experience; and (2) that has an earnings potential greater than an amount equal to 60% of your Indexed Pre-Disability Earnings."
Hartford determined that Mazet was eligible for benefits during the "own occupation" period and calculated his pre-disability monthly earnings at $4,524.09. Under the terms of the Plan, Mazet received 60% of his pre-disability earnings, or $2,714.46 per month for 24 months. On February 26, 2003, at the end of the 24-month "own occupation" period, Hartford reevaluated Mazet's disability status and found that he was capable of performing sedentary work, such as assignment clerk, repair order clerk, jacket preparer, fabric and accessories estimator, and weave defect charting clerk, with estimated median monthly earnings of $3,101.03. Because the estimated earnings of these occupations exceeded 60% of Mazet's pre-disability earnings, Hartford concluded that Mazet did not qualify as "disabled" under the more restrictive "any occupation" standard, and denied continuing benefits. Mazet filed this action challenging Hartford's denial of benefits.
On August 15, 2005, we held that Hartford did not abuse its discretion in deciding that Mazet did not qualify for benefits under the "any occupation" standard (doc. 40). Because we applied an abuse of discretion standard, we rejected Mazet's proffer of exhibits outside the administrative record.
We remanded to Hartford, however, the issue of whether it had properly calculated Mazet's pre-disability earnings when determining his benefits during the initial 24-month "own occupation" period. Id. On remand, Hartford concluded that Mazet's deferred compensation did not qualify as "basic earnings" and therefore refused to include that income in calculating Mazet's benefits during the "own occupation" period. Mazet again appealed.
On review, we held that Hartford abused its discretion in omitting deferred compensation from the calculation of Mazet's pre-disability earnings and again remanded to Hartford to recalculate Mazet's "own occupation" benefits (doc. 76). We also directed Hartford to determine Mazet's eligibility for continuing benefits during the "any occupation" period based on the revised calculation. Id. Hartford recalculated the pre-disability earnings, this time including deferred compensation in the calculation, and paid Mazet an additional $11,017.82 in "own occupation" benefits and interest. It concluded, however, that even with the revised pre-disability earnings calculation, Mazet was not eligible for "any occupation" benefits.
Mazet then filed another motion to remand with this court, this time arguing that he was entitled to "indexed benefits" that increased with the cost of living. (Doc. 78 at 3 ("both `own occupation' and `any occupation' benefits are required to be adjusted according to the CPI") (emphasis added)). When defendants responded that Mazet was not entitled to "indexed benefits," but only "indexed" pre-disability earnings, Mazet, apparently realizing his mistake, instead argued for the first time in a sur-response that Hartford's calculation of the indexed pre-disability earnings was incorrect. We concluded that Hartford did in fact index Mazet's pre-disability earnings for purposes of determining his eligibility for continued benefits. We refused to consider Mazet's new challenge to Hartford's indexed calculation because Mazet did not challenge this calculation in either his motion or reply. (Doc. 95 at n. 3). Mazet appealed.
Although Mazet raised multiple issues on appeal, the Ninth Circuit considered only the proper standard of review. The court held that, although the Plan expressly provided that Hartford "reserves the right to determine if your proof of loss is satisfactory," the Plan does not unambiguously provide discretion to the administrator. It remanded the case, directing us to apply a de novo standard in reviewing Hartford's benefits decision. In light of the de novo review, the court also directed us to reconsider whether Mazet's proffered additional evidence, not contained in the administrative record, is admissible.
II
In January 2003, as Mazet's benefits during the "own occupation" period were about to expire, Hartford considered whether Mazet was eligible for continuing benefits during the "any occupation" period. A Plan participant is eligible for benefits during the "any occupation" period if he cannot perform any occupation for which he is qualified that has an earnings potential greater than 60% of his indexed pre-disability earnings. Following our February 5, 2008 order (doc. 76), Hartford recalculated Mazet's pre-disability earnings and then "indexed" these earnings to reach an amount of $5,149.18. Therefore, according to the terms of the Plan, Mazet would not qualify for benefits during the "any occupation" period if his earnings potential exceeded 60% of his indexed pre-disability earnings, or $3,089.51.
On January 30, 2003, Hartford prepared an Employability Analysis Report ("EAR") analyzing Mazet's ability to work based on his functional capacities, skills, and education. It determined that Mazet was capable of performing six occupations contained in the Dictionary of Occupational Titles ("DOT") category of "Production Planning and Expediting Clerk" at the sedentary level. It concluded that, based on wage data derived from "the 2001 Estimated Median Wage following an adjustment to reflect estimated wages for 2003," these jobs would provide monthly estimated income of $3,103.03. The EAR further explained that the source of the wage data was calculated "Using [U.S. Department of Labor Occupational Employment Statistics ("OES")] data." Because Mazet's 2003 earnings potential ($3,103.03) exceeded 60% of his indexed pre-disability earnings ($3,089.51), Hartford concluded that Mazet was not eligible for benefits during the "any occupation" period.
Hartford originally calculated 60% of Mazet's pre-disability earnings at $2,714.46. Following our remand, it revised that calculation to $3,089.51. Hartford concluded that in either case, the amount was less than his estimated 2003 earnings potential.
Mazet argues that Hartford relied on outdated job data and incorrectly calculated the median wage for the cited occupations. He contends that this is a pivotal issue given that Hartford's decision to deny continuing benefits was based primarily on the wage data purporting to show potential wages exceeding 60% of Mazet's indexed pre-disability earnings. Mazet complains that Hartford did not identify any published data to support its wage assumptions and did not explain the method it used to "adjust" the 2001 estimated median wage to reflect 2003 wages.
The 2001 OES wage data was the most recent data available at the time the benefits decision was made in February 2003. As this litigation progressed, Mazet sought to introduce the actual published 2002 OES wage data, showing that the estimated median wage for the category of occupations defined as "production, planning, and expediting clerks" was $2,804.17 per month. Mazet later sought to introduce the actual published 2003 OES data, indicating that the estimated median wage for this category of occupations was $2,938.33 per month. Doc. 81, ex. 3. Mazet now contends that Hartford's unsubstantiated conclusion that his 2003 earnings potential was $3,103.03 is contrary to the published data. He argues that because 60% of his indexed pre-disability earnings ($3,089.51) is greater than either the actual 2002 or 2003 wage data, he has clearly met the definition of "disabled" during the "any occupation" period and is therefore entitled to benefits.
"[I]n most cases," even on de novo review of an administrator's benefits decision, we will consider "only the evidence that was before the plan administrator." Kearney v. Standard Ins. Co., 175 F.3d 1084, 1091 (9th Cir. 1999). Underlying this restriction is ERISA's goal of providing for the resolution of benefit disputes inexpensively and expeditiously, and a recognition that federal district courts should not function "as substitute plan administrators." Taft v. Equitable Life Assurance Soc'y, 9 F.3d 1469, 1472 (9th Cir. 1993) abrogated on other grounds. Nevertheless, an exception exists under de novo review "when circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision." Mongeluzo v. Baxter Travenol Long Term Dis. Ben. Plan, 46 F.3d 938, 943-44 (9th Cir. 1995) (quoting Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1025 (4th Cir. 1993)).
Although we suggested that on remand that Hartford's 2003 EAR earnings potential calculation of $3,101.03 "remains relevant to the continuing benefits eligibility determination," (doc. 76 at 5), Hartford nevertheless performed an "updated assessment," this time relying on 2006 OES wage data, and concluding that Mazet's earnings potential in 2003 was $3,218.80 (doc. 89). Hartford provided no explanation as to how 2006 wage data is relevant to Mazet's 2003 earnings potential. Mazet again asks us to consider the actual published 2002 and 2003 OES wage data in order to determine his 2003 earnings potential.
We conclude that circumstances in this case establish that additional evidence is necessary to conduct an adequate de novo review. In January 2003, at the time the benefits decision was made, Hartford did not have the benefit of the then-prevailing wage data in order to more accurately determine Mazet's estimated earnings potential. Instead, Hartford relied on what was the most recent data available-the 2001 wage data — and, without explanation, "adjusted" this data to reflect 2003 wages. Throughout the course of this protracted litigation, we now know that Hartford's wage assumptions were incorrect. Mazet argued at the time of his initial administrative appeal that Hartford's wage assumptions were unsubstantiated. But because Hartford did not consider the appeal, Mazet did not have the opportunity to submit updated wage information during the administrative process.
In Opeta v. Northwest Airlines Pension Plan for Contract Employees, 484 F.3d 1211, 1217 (9th Cir. 2007), the court cited a "non-exhaustive list of exceptional circumstances" in which the consideration of evidence outside the administrative record may be necessary, including "circumstances in which there is additional evidence that the claimant could not have presented in the administrative process." Mazet could not have presented the 2002/2003 wage data during the administrative process, both because the data was not initially available and because Hartford failed to decide Mazet's arguments on appeal.
Mazet's proposed wage evidence is not "cumulative of what was presented to the plan administrator, or . . . simply better evidence than the claimant mustered for the claim review." See Quesinberry, 987 F.2d at 1027. Instead, it reliably contradicts Hartford's wage determination and provides the best evidence available that Mazet's earnings potential for 2003 was $2,938.33 per month. While it would be inappropriate to reopen a finalized administrative or judicial proceeding in order to present more recent evidence, this case is unique in that it has been in the course of litigation for more than 6 years. To now ignore this new evidence that wholly undermines Hartford's benefits decision would prevent us from conducting an adequate de novo review. Because 60% of Mazet's indexed pre-disability earnings ($3,089.51) is greater than his 2003 earnings potential ($2,938.33), Mazet meets the definition of "disabled" during the "any occupation" period and is therefore entitled to benefits.
III
IT IS ORDERED REMANDING this case to the administrator for an immediate calculation and payment of benefits. The clerk shall enter final judgment.DATED this 15th day of September, 2010.