Opinion
CIVIL NO. 1:03CV16
October 20, 2003
MEMORANDUM OF OPINION
THIS MATTER is before the Court on Defendants' timely filed objections to the Memorandum and Recommendation of United States Magistrate Judge Max O. Cogburn, Jr. Pursuant to standing orders of designation and 28 U.S.C. § 636, the undersigned referred the Plaintiffs motion to settle the administrative record, filed June 5, 2003, and the parties' cross motions for summary judgment, filed June 27, 2003, to the Magistrate Judge for a recommendation as to disposition. Having conducted a de novo review of those portions of the recommendation to which specific objections were filed, the undersigned denies the Plaintiffs motion to settle the administrative record, denies the Defendants' motion for summary judgment, and grants the Plaintiffs motion for summary judgment. 28 U.S.C. § 636(b); Fed.R.Civ.P. 72.
I. STATEMENT OF FACTS
The relevant facts of this case are not disputed. Plaintiff Knox McKellar Barnes, a resident of Buncombe County, North Carolina, worked for Defendant BellSouth Corporation ("BellSouth") from 1974 until the late fall of 2001. Complaint, ¶ 1; Answer, ¶ 1. At the time the Plaintiffs employment with BellSouth ended, he held the title of "Specialist — BellSouth Network Operations," and his duties included generating various reports for the Integrated Technician Performance plan and developing and preparing tracking and budget reports from multiple databases. Administrative Record, at 871-72, 876. His salary was $68,500 annually. Id. , at 621. Plaintiffs job at BellSouth never involved sales. Id. , at 879.BellSouth maintains a long term disability plan for its employees pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1002 et seq. Complaint, ¶ 8; Answer, ¶ 8. Although the plan does not mention Defendant Kemper National Services, Inc. ("Kemper"), the Summary Plan Description states that BellSouth has delegated to Kemper "the duty to administer all claims for benefits under the plan for all participating companies." Administrative Record, at 1236. The Summary Plan Description further provides that
Kemper National Services is the named fiduciary under the plan with complete authority to review all denied claims for benefits in exercising such fiduciary responsibilities.
Kemper National Services shall have discretionary authority to determine whether or to what extent participants and beneficiaries are entitled to benefits and to construe disputed or doubtful plan terms. Kemper National Services shall be deemed to have properly exercised such authority unless they have abused their discretion hereunder by acting arbitrarily and capriciously.Id. The plan defines "disability" as
a physical or mental illness, whether work-related or non-work related, which makes a Participant . . . unable to perform any type of work other than one which pays less than half of his base pay at the time his benefits under the Short Term Disability Plan begin. . . . [A] participant's earnings potential shall be determined using potential jobs in the community.Id. , at 1218.
Between 1991 and July 11, 2000, Plaintiff underwent four back surgeries. Id. , at 309, 697-723. In May 2000, BellSouth attempted to accommodate Plaintiffs back problems by allowing him to work out of his home. BellSouth bought office equipment for Plaintiffs home, furnished him a telephone and high-speed data line, limited his travel time, and allowed him to work extremely flexible hours. Id. , at 160. With such a flexible schedule, Plaintiff was able to do his job by working for short periods of time throughout the day and night. Id.
On November 7, 2000, Plaintiff visited Dr. Margaret Burke, a physiatrist with Mountain Neurological Center, for the first time. Dr. Burke diagnosed Plaintiff as having a "[f]ailed surgical back with chronic narcotic dependent pain." Id. , at 299. Over the next several years, Plaintiff made countless visits to Dr. Burke. Dr. Burke's notes from a visit in March of 2001 indicate that Plaintiff had been successful in alleviating his pain by stretching and icing his back. Id. , at 294.
Throughout the summer of 2001, however, Plaintiff continued to see Dr. Burke and to complain of "severe intolerable back pain." Id. , at 292. Dr. Burke noted at this point that Plaintiff was able to work but was not able to sit or stand for longer than one hour. Id. , at 287.
On October 29, 2001, Plaintiff, on a referral from Dr. Burke, saw Dr. Jon M. Silver. Dr. Silver's notes do indicate that Plaintiffs pain may be "a little bit better." Id. , at 284. However, his notes do not contain the quotation that the Defendants attribute to him in their summary judgment memorandum. In that document, the Defendant's claim that Dr. Silver noted that Plaintiff "has not really had much pain since his studies a year ago." Defendants' Memorandum of Law in Support of Motion for Summary Judgment ("Defendants' Memorandum"), filed June 27, 2003, at 5. Quite to the contrary, Dr. Silver's notes actually state that Plaintiff "has not really had much change since his studies a year ago." Administrative Record, at 284 (emphasis added). The reason for the studies one year prior had been chronic back pain.
On October 30, 2001, Plaintiff returned to Dr. Burke. Dr. Burke's notes from this appointment include a statement that Plaintiff reported constant pain. Id. , at 281. Dr. Burke also reported that Plaintiff was "able to work." Id. It is not clear whether Dr. Burke was merely recording a statement from Plaintiff that he could work or whether she was opining that his pain was not severe enough to prevent work. Dr. Burke attempted to clarify this point in her notes regarding Plaintiffs April 25, 2002, visit:
He is having some trouble with his long term disability. When I stated that he was working in my 10/30 note, it was assumed that he had no restrictions, however, he was working with extreme restrictions and when his job requirements changed the next month he was no longer able to work.Id. , at 677.
In November 2001, BellSouth told Plaintiff that his position was being eliminated. Plaintiff's Memorandum in Support of Motion for Summary Judgment ("Plaintiff's Memorandum"), filed June 27, 2003, at 1. His employment with BellSouth officially ended on December 2, 2001. Complaint, ¶ 1; Answer, ¶ 1. All parties agree that Plaintiff was eligible to apply for benefits under BellSouth's long term disability plan. Complaint, ¶ 7; Answer, ¶ 7.
In the winter of 2001-2002, Plaintiff elected to forego, at least temporarily, the severance package that BellSouth offered him in order to apply for long term disability benefits. Administrative Record, at 55, 191, 527. The Defendants admit that they received the completed application for long term benefits on February 18, 2002. Answer, ¶ 16.
While Plaintiffs application was pending, he continued to seek medical attention for his back. During this time, Dr. Burke completed an Attending Physician's Statement for Kemper wherein she stated that Plaintiff had achieved "Maximum Medical Improvement" and that he was severely limited in his functional capacity and incapable of sedentary work. Administrative Record, at 104. Burke prescribed for Plaintiff Duragesic-75, a drug given to late-stage cancer patients. Id. , at 328, 551.
On March 6, 2002, Debbie Craig, a physical therapist, conducted a Functional Capacity Evaluation ("FCE") of Plaintiff at Kemper's request. Id. , at 235. Craig found that Plaintiff gave a submaximal, self-limiting effort, and that Plaintiff was capable of performing "medium" work for an eight-hour workday. Id. The evaluation took three hours, and Plaintiff claims that it was so painful that he could barely move the next day. Id. , at 879. Plaintiff further alleges that Craig asked Plaintiff to take the readings from the heart monitor and, not having any experience with reading monitors, he was unsure he took the readings accurately. Id. , at 879. Plaintiff further states that Craig did not have the proper equipment for the tests and that she improvised, for example, by using a wheelchair and a weighted box as a substitute for a cart. Id. Finally, Plaintiff claims that Craig told him that the purpose of the examination was to "determine that [he] was NOT qualified for benefits." Id.
Kemper also arranged for Plaintiff to undergo an Independent Medical Examination on March 28, 2002, with Dr. Duff Rardin. Dr. Rardin wrote that Plaintiff "exhibits significant pain behavior throughout the examination. He ultimately sits on his right buttock or stands throughout the examination." Id. , at 232. Dr. Rardin further recorded that Plaintiff "has a dramatic pain response with attempted straight leg raise to about 20 degrees on the left but no pain when raising the leg to about 35 degrees on the right." Id. Dr. Rardin also found that "[i]n the lower extremities there is submaximal effort in the hips flexors with complaints of pain but there does not appear to be any genuine anatomical weakness." Id. Dr. Rardin concluded that "he does not have any objective neurologic deficits that would limit his function" and that "[t]here is no neurologic contraindication for him sitting at a desk." Id. , at 233. Dr. Rardin suggested that BellSouth accommodate Plaintiff by allowing him to shift positions throughout the work day as much as possible. Id.
On April 20, 2002, Dr. Craig Mills, another of Plaintiffs doctors, completed an Attending Physician's Statement for Kemper. Dr. Mills indicated that Plaintiffs back rendered him severely limited in his functional capacity and incapable of sedentary work. Id. , at 224. Dr. Mills also found that Plaintiff had a moderate mental impairment that allowed him "to engage in only limited stress and limited interpersonal relationships." Id.
Also during April 2002, Jacqueline Haynes, a Kemper Vocational Care Manager, conducted an Employability Assessment Report with Transferable Skills Analysis and a Labor Market Survey ("TSA/LMS"). In that report, Haynes attempted to determine whether, given Plaintiffs qualifications and his medical limitations, he would be able to find a job that paid at least 50 percent of his ending salary at BellSouth. Haynes searched for jobs that would pay $34,200 annually, or $16.42 hourly. Id., at 196-202. Haynes did find several jobs whose median salaries were below the target amount but whose high end salaries were over the target amount. Those jobs were statistical clerk, chemical equipment tender, communication center coordinator (air transportation), dispatcher (utilities company), expediting clerk, and precision assembler (aircraft manufacturing). Id., at 197-98. Haynes concluded, however, that Plaintiffs prospects of obtaining one of these jobs were slim because he does not have a college degree and because his experience is not specific enough to those jobs or companies. Id. , at 200. Finally, Haynes suggested that Plaintiff has "excellent job opportunities in the sales industry" and suggested several jobs in that industry with qualifying salaries that he could pursue. Id. , at 200-02.
In a letter dated May 3, 2002, Kemper denied Plaintiff's disability claim. Kemper's letter cited the results of the FCE, Dr. Rardin's examination, and the TSA/LMS to support its conclusion that Plaintiff was not "disabled" as defined by the plan. Id. , at 187-88.
Plaintiff underwent an MRI examination on May 23, 2003. After studying the results of the MRI, Dr. Michael Boerner opined that Plaintiff may be suffering from a condition known as "arachnoiditis." Id. , at 681.
On August 2, 2002, Dr. Burke completed a questionnaire from Plaintiffs attorney. Dr. Burke answered "yes" to the question, "In your medical opinion, does Mr. Plaintiff suffer from a physical illness which renders him unable to perform any type of work other than one which pays less than half of his pre-disability Annual Compensation?". Id. , at 622. Dr. Burke also answered "yes" to the question, "In your medical opinion, since November 17, 2001 and continuously to the present, has Plaintiff suffered from a physical illness which renders him unable to perform any type of work other than one which pays less than half of his pre-disability Annual Compensation?". Id. , at 623. On the form, Dr. Burke wrote that Plaintiff could sit for a total of two hours during an eight-hour workday, stand for a total of one hour during an eight-hour workday, and drive for a total of one hour during an eight-hour work day. Id. Dr. Burke also wrote that Plaintiff "can't stay in one position for longer than a few minutes. He requires high doses of narcotic analgesics that cause drowsiness. Some of these drugs have impaired driving." Id. , at 624. Finally, Burke opined that Plaintiffs chances of returning to any type of job other than that which paid less than half of his BellSouth salary were "poor." Id.
On October 1, 2002, Dr. Vaughn Cohan engaged in a peer review of the evidence supporting Plaintiffs claim. Dr. Cohan noted inconsistencies between Dr. Burke's reports at a time before Plaintiff began having difficulties obtaining disability benefits and her reports after that time. "Beginning 1/21/02, the reports from Dr. Burke indicate the claimant is having difficulty establishing disability benefits. At this time, medical notes begin to indicate that the claimant's subjective symptoms have become more severe." Id. , at 603. He further noted that Dr. Burke "offered to assist the claimant in obtaining long-term disability benefits," but provided "no specific objective data which would support" her conclusion that Plaintiff was incapable of sedentary work. Id.
The Defendants received Plaintiffs appeal request on August 20, 2002, and denied the appeal October 4, 2002. Exhibit C, Letter dated October 4, 2002, from Joyce Cote to Heather Newton, attached to Plaintiff's Motion to Settle Administrative Record ("Appeal Denial"). The Defendants claimed that "Barnes' physicians did not provide sufficient objective examination findings to support a functional impairment that would preclude him from performing any work." Id. The Defendants also cited the FCE, Dr. Rardin's examination, and the TSA/LMS as reasons for denying the appeal. Finally, the Defendants stated that a Kemper physician, presumably Dr. Cohan, had reviewed Plaintiffs file and found insufficient evidence of a disability. Id.
On October 7, 2002, before Plaintiff had received Kemper's letter denying his claim, Plaintiff submitted additional records from Dr. Burke in support of his claim for benefits. Complaint, ¶ 17; Answer, ¶ 17. Furthermore, on November 18, 2002, Plaintiff submitted to Kemper a copy of a November 11, 2002, social security decision that found him to be disabled as of December 2, 2001. Administrative Record, at 15. Kemper sent Plaintiff letters refusing to consider the additional doctor's records and the social security decision. Exhibit C, Letters dated October 15 and November 27, 2002, from Joyce Cote to Heather Newton, attached to Plaintiff's Motion to Settle Administrative Record.
II. PROCEDURAL HISTORY
Plaintiff filed his complaint on January 14, 2003, alleging failure to pay benefits and breach of fiduciary duties under ERISA. The Defendants answered on February 5, 2003. On June 5, 2003, Plaintiff filed a motion to settle the administrative record. Although Plaintiff never formally amended the complaint, the parties agreed in June 2003, that Plaintiff would dismiss the claim for breach of fiduciary duty. Exhibit A, Letter dated June 10, 2003 from Heather Newton to Robert Thomas, attached to Defendants' Memorandum. On June 27, 2003, the parties filed cross-motions for summary judgment. On August 15, 2003, the Magistrate Judge issued a Memorandum and Recommendation that the Plaintiffs motions be granted and that the Defendants' motion be denied. The Defendants filed timely objections to that Recommendation on September 2, 2003.III. DISCUSSION
A. Scope of review
The Supreme Court has held that the denial of benefits under ERISA plans "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). When the plan does grant the administrator or fiduciary such discretionary authority, "the fiduciary's actions will be reviewed only for abuse." Doe v. Group Hospitalization Medical Servs. , 3 F.3d 80, 85 (4th Cir. 1993). But "if 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." Bruch, supra , at 115 (internal quotation omitted).
The Fourth Circuit has explained how to weigh the conflict described in Bruch. See, Ellis v. Metropolitan Life Ins. Co. , 126 F.3d 228, 233 (4th Cir. 1997). In that case, the Court explained that
the court modifies that abuse of discretion standard according to a sliding scale. The more incentive for the administrator or fiduciary to benefit itself by a certain interpretation of benefit eligibility or other plan terms, the more objectively reasonable the administrator or fiduciary's decision must be and the more substantial the evidence must be to support it.Id. In other words, a conflicted fiduciary's decision "will be entitled to some deference, but this deference will be lessened to the degree necessary to neutralize any untoward influence resulting from the conflict." Group Hospitalization, supra , at 87. Under this modified abuse of discretion standard, courts are to "review the merits of the interpretation to determine whether it is consistent with an exercise of discretion by a fiduciary acting free of the interests that conflict with those of the beneficiaries." Id.
Therefore, "[a]s an initial matter [the Court] determines de novo whether the ERISA plan confers discretionary authority on the administrator or fiduciary." Ellis, supra. At first glance, the plan in question clearly confers discretionary authority on Kemper. The Summary Plan Description states that "BellSouth has delegated to Kemper National Services the duty to administer all claims for benefits under the plan for all participating companies. . . . Kemper National Services shall have discretionary authority to . . . construe disputed or doubtful plan terms." Administrative Record, at 1236. However, Plaintiff argues that this quoted language is from the Summary Plan Description, not the actual plan. The actual plan, though it gives BellSouth the authority to delegate its responsibilities, requires that such delegation be in writing. Id. , at 1225. No where in the actual plan is Kemper mentioned.
The Court finds Plaintiffs argument on this point too formalistic. The plan clearly intends for BellSouth to be able to delegate its discretion, and BellSouth clearly attempted to do so. The fact that the plan mentions delegating "responsibilities" rather than "discretion," and the fact that BellSouth delegated those responsibilities in a separate document rather than by amending the plan, is not fatal. The plan at issue in Lloyd v. Evangeline Health Care, Inc., 1999 WL 33117256 (W.D.N.C. 1999), mentioned the third party administrator, but did not clearly indicate that the administrator was to have the type of discretion that would give its decisions a deferential standard of review. Id. , at *5. The court held, however, that such a small technical defect would not be allowed to frustrate the defendant's clear intent of delegating its discretion. Id. This Court follows Lloyd's, logic. Even if BellSouth did not follow the proper procedure for delegating its discretion to Kemper, it clearly manifested its intent to do so. Based on Lloyd, the Court finds this attempt to be sufficient and finds that Kemper's actions will be reviewed under an abuse of discretion standard.
The issue then becomes whether Kemper was operating under a conflict of interest that would make it appropriate to modify the abuse of discretion standard as contemplated in Bruch and described in Ellis and Group Hospitalization. The facts of Lloyd are very similar to the facts in the present case. In Lloyd, the plaintiffs employer, Evangeline Health Care, retained Automated Group Administration [Automated] to serve as a third party administrator of its disability benefits plan, a plan that was "primarily funded by contributions from Evangeline." Lloyd, supra , at *1. Automated's duties included "the issuance of benefit summaries, basic record keeping and reporting, and the payment of claims." Id. , at *2. The Defendants in the present case imply that, if the plan in Lloyd was "primarily" funded by Evangeline, it could have been partially funded by Automated. The Defendants also argue that Automated had the duty of paying claims and, therefore, was more financially conflicted than Kemper. Defendants' Objections to the Memorandum and Recommendation of the Magistrate Judge ("Defendants' Objections"), filed September 2, 2003, at 2-3.
Although the language in Lloyd is not abundantly clear, this Court does not believe that Automated funded the plan in Lloyd but finds that the "payment of claims" mentioned in Lloyd merely refers to the act of paying the claim with Evangeline's money. If Automated did fund the plan or if Automated paid claims out of its own funds, such a relevant fact would have been made explicit by the Court. As such, the Lloyd case holds that a fiduciary who is retained by an employer to administer a disability benefits plan, even where payments come from the employer's funds, is faced with a conflict of interest that necessitates a modified abuse of discretion standard for reviewing its decisions. See id., at *5. Lloyd is not the only case to come to such a conclusion. See, Willis v. Baxter Int'l, Inc. , 175 F. Supp.2d 819, 827 (W.D.N.C. 2001). In that case, the Court held that the "plaintiff has satisfactorily shown the probability of a conflict of interest, inasmuch as the decision makers were both fiduciaries under the plan and employees and/or agents of the employer and carrier who ultimately would have been required to foot the bill had a decision favorable to plaintiff been rendered." Willis, like Lloyd, supports the notion that payment to an administrator by an employer to determine whether the employer must pay disability claims, will create a conflict of interest such that the administrator's decisions should be reviewed under a modified abuse of discretion standard.
The Court notes the Defendants' argument that such an interpretation of law would mean that "there is no conceivable case in which a straightforward `abuse of discretion' standard would apply. No person or entity is going to administer claims without some form of compensation." Defendants' Objections, at 3. While there may be "conceivable" cases where an unmodified abuse of discretion standard may apply, the Defendants' statement is largely correct; it will be exceedingly rare that a paid administrator's decision will be judged by an unmodified abuse of discretion standard. The fact that the Defendants cited no cases from this Circuit that considered possible conflicts and still applied an unmodified abuse of discretion standard underscores how rare those cases are.
Applying an unmodified abuse of discretion standard only in rare cases comports with common sense and with the purpose of ERISA. When an entity is paid by an employer and wishes to continue the relationship, that entity has an incentive to minimize the payments that the employer must make. This incentive conflicts with the duty of a fiduciary which is to "serve the best interests of all Plan beneficiaries." Ettis, supra , at 234. As such, there will usually be a conflict of interest that calls for a modified abuse of discretion standard. Furthermore, the Supreme Court has been careful not to give too much deference to plan administrators for fear that doing so would frustrate the purpose of ERISA which is "`to promote the interests of employees and their beneficiaries in employee benefit plans.'" Bruch, supra , at 114 (quoting Shaw v. Delta Airlines, Inc. , 463 U.S. 85, 90 (1983)). Therefore, this Court is not troubled by the Defendants' assertion that it will be a rare case in which a paid administrator's decision is reviewed under an unmodified abuse of discretion standard.
Therefore, Kemper's decision will be reviewed under a modified abuse of discretion standard. But it should be noted that Kemper did not face as severe a conflict of interest as may exist under many arrangements, for example, an arrangement where the administrator pays claims out of its own funds. See Group Hospitalization, supra , at 86; Bedrick v. Travelers Ins. Co. , 93 F.3d 149, 152 (4th Cir. 1996). Therefore, the standard of review in this case will fall on the deferential end of the sliding scale explained in Ellis.
B. Motion to settle the administrative record.
The next issue is whether to grant Plaintiffs motion to settle the administrative record by including Dr. Burke's records and the social security ruling sent to the Defendants after Plaintiffs appeal was adjudicated. Although the Defendants did not specifically object to the Magistrate Judge's recommendation on this issue, the Court, under 28 U.S.C. § 1651, has the inherent authority to notice error. The Court declines to follow the recommendation.
Plaintiffs argument and the Magistrate Judge's recommendation rely heavily on the Fifth Circuit case of Vega v. National Life Ins. Servs., Inc., 188 F.3d 287 (5th Cir. 1999). In that case, which is practically "on all fours" with the present case, the Fifth Circuit held that if, after a plan administrator denies a claimant benefits, "the claimant submits additional information to the administrator . . . and requests the administrator to reconsider his decision, that additional information should be treated as part of the administrative records." Id. , at 300. See also O'Sullivan v. Metropolitan Life Ins. Co. , 114 F. Supp.2d 303 (D.N.J. 2000). The Vega court further held that "the administrative record consists of relevant information made available to the administrator prior to the complainant's filing of a lawsuit and in a manner that gives the administrator a fair opportunity to consider it." Vega, supra. While Vega's factual scenario is very similar to the case at hand, Fifth Circuit cases are not binding on this Court, and the Court finds Fourth Circuit precedent calls for a different conclusion.
In the Fourth Circuit, there are instances in which a district court conducting a de novo review of a plan administrator's decision may consider evidence that was not before the administrator at the time he made his decision. Quesinberry v. Life Ins. Co. of N. America , 987 F.2d 1017, 1026-27 (4th Cir. 1993). However, when a court reviews the administrator's decision under an abuse of discretion standard, modified or unmodified, the court is limited to the evidence before the plan administrator at the time when he made his decision. Webster v. Black Decker (U.S.), Inc. , 33 Fed.Appx. 69, 74 (4th Cir. 2002); Malagrida v. Holland , 19 F.3d 1429 (table), 1994 WL 89336, *6 n. 4 (4th Cir. 1994) ("In our recent decision, [ Quesinberry, supra ], we held that, under the de novo standard of review, a `district court [may] in its discretion . . . allow evidence that was not before the plan administrator.' However; this rule has no application under the abuse of discretion standard applicable in this case."); Lloyd, supra , at *6 ("Having determined that the proper standard of review is a `modified' abuse of discretion standard, this Court will limit its scope of review to the evidence actually considered by [the administrator] at the time it rendered its final decision."). Therefore, this Court is limited to the evidence that was before Kemper when it made the decision.
Plaintiff argues that, if the preferred evidence is not added to the record, neither should Dr. Cohan's report be included in the record. Plaintiffs Response to Defendants' Objections to Magistrate's Recommended Decision (Plaintiffs Response to Objections"), filed September 4, 2003, at 11. Kemper's letter to Plaintiffs attorney denying his appeal states that the decision to deny the claim was made on October 3, 2002. See Appeal Denial, supra. Dr. Cohan's report included in the Administrative Record shows it was dictated on October 2, 2002. Administrative Record, at 602. As Plaintiff points out, Kemper's "Appeal Summary," dated October 1, 2002, states that Dr. Cohan's report is pending, and the letter denying Plaintiffs appeal does not mention Dr. Cohan by name. Id. , at 59. Plaintiffs argument is that "there is no evidence in the record that Kemper actually received the report from Dr. Cohen before it issued its October 3, 2002 denial decision." Plaintiffs Response to Objections, supra. But the letter denying Plaintiffs appeal states, "We requested a Kemper physician, to review the medical information in your client's file. It was determined that there was insufficient evidence of a functional impairment that would preclude Mr. Knox from performing some type of work." Appeal Denial, supra. Dr. Cohan's report, entitled "General Peer Review," states that Plaintiff "[f]ails to support functional impairment(s) that precludes work." Administrative Record, at 602. The Court finds that Dr. Cohan dictated the report before the decision was made; that the appeal denial contains language that is almost identical to language in Dr. Cohan's report; and, therefore, that the letter does refer to Dr. Cohan's report. As such, the report was properly incorporated as part of the evidence used in denying Plaintiffs appeal and will remain part of the administrative record.
C. Cross motions for summary judgment
Each party has moved for summary judgment, claiming that it is entitled to judgment as a matter of law. Summary judgment is appropriate if there is no genuine issue of material fact and judgment for the moving party is warranted as a matter of law. Fed.R.Civ.P. 56(c). A genuine issue exists if a reasonable jury considering the evidence could return a verdict for the nonmoving party. Shaw v. Stroud , 13 F.3d 791, 798 (4th Cir. 1994) (citing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248 (1986)).
Where the parties have cross-moved for summary judgment, the Court will consider each motion separately. Thus, in considering Plaintiffs motion, Plaintiff, as the moving party, has an initial burden to show a lack of evidence to support the Defendants' case. Shaw, supra (citing Celotex Corp. v. Catrett , 477 U.S. 317, 325 (1986)). If this showing is made, the burden then shifts to the Defendants who must convince the Court that a triable issue does exist. Shaw, supra. Such an issue will be shown "if the evidence is such that a reasonable jury could return a verdict for the [Plaintiff]." Id. A "mere scintilla of evidence" is not sufficient to defeat summary judgment. Id. After consideration of Plaintiffs motion, the same procedure is used with regard to the Defendants' motion for summary judgment. Thus, in considering the facts of the case for purposes of these cross-motions, the Court will view the pleadings and material presented in the light most favorable to the nonmoving party. Matsushita Electric Industrial Co. v. Zenith Radio Corp. , 475 U.S. 574 (1986). Since this case contains no disputed material facts, and since both parties have acknowledged by moving for summary judgment that the issue of whether the Defendants abused their discretion is an issue of law, summary judgment is appropriate.
The Court must now apply the modified abuse of discretion standard to the evidence in the record to determine whether the Defendants did, in fact, abuse their discretion by denying Plaintiffs claim. Courts applying the modified abuse of discretion standard may consider, but are not limited to, the following factors:
(1) the language of the plan; (2) the purposes and goals of the plan; (3) the adequacy of the materials considered to make the decision and the degree to which they support it; (4) whether the fiduciary's interpretation was consistent with other provisions in the plan and with earlier interpretations of the plan; (5) whether the decision making process was reasoned and principled; (6) whether the decision was consistent with the procedural and substantive requirements of ERISA; (7) any external standard relevant to the exercise of discretion; and (8) the fiduciary's motives and any conflict of interest it may have.Cottrell v. Long Term Disability Plan for Employees of First Virginia Banks, Inc. , 2000 WL 33281702, *6 (W.D. Va. 2000) (quoting Booth v. Wal-mart Stores, Inc. Assoc. Health and Welfare Plan , 201 F.3d 335, 342-43 (4th Cir. 2000)).
The Court understands that "[u]nder this deferential standard, the administrator or fiduciary's decision will not be disturbed if it is reasonable, even if this court would have come to a different conclusion independently." Ellis , 126 F.3d at 232. The Court is also aware that plan administrators are not required to give special weight to the opinion of a treating physician, and when doctors disagree, plan administrators must chose between the doctors' positions. Black Decker Disability Plan v. Nord , 123 S.Ct. 1965, 1970 (2003); Dwyer v. Metropolitan Life Ins. Co. , 4 Fed.Appx. 133, 140 (4th Cir. 2001). However, in the present case, where the fiduciary's decision-making process reeks of predetermination and self-interest, and where the results are obviously contrived, this Court does not hesitate to rule that the Defendants abused their discretion. See Pappus v. Reliance Standard Life Ins. Co. , 20 F. Supp.2d 923, 929-30 (E.D. Va. 1998) ("[A] review of this record points persuasively to the conclusion that in reaching its discretionary determination, Reliance engaged not in the disinterested evaluation ERISA mandates, but in an evaluation that impermissibly weighed Reliance's own financial interests.").
In denying Plaintiffs claim and his appeal, the Defendants relied on a lack of "sufficient objective examination findings" in support of Plaintiff s claim, the FCE, Dr. Rardin's examination, the TSA/LMS, and Dr. Cohan's peer review. Administrative Record, at 187-88; Appeal Denial, supra. The decision based on this evidence constituted an abuse of discretion.
The FCE was conducted by Debbie Craig, a physical therapist with VerNova. Id. , at 235. As Plaintiff points out, on VerNova's web site, the company advertises that its "primary objective is to ensure that documentation is available to support your decisions in every stage of a claim. This gives you full control over your file throughout the client's recovery process." VerNova's advertisement further states that they "give you the information you need to resolve claims. Information that is outcome-based and specific to both your needs and the individuality of the client." VerNova Insurance Services , at http://www.vernova.com/insurance.asp (emphasis added). Even if the uncontradicted allegations about the inadequacies of the FCE should not have prevented the Defendants from giving it any weight, these clear statements acknowledging VerNova's bias obviously should have caused the Defendants not to rely on Craig's FCE. In fact, VerNova's willingness to be so candid in stating the true purpose behind its examinations actually gives some credit to Plaintiffs allegation that Craig told him that the purpose of the FCE was to make sure that he was not qualified for benefits. Administrative Record, at 878. The Defendants abused their discretion by arranging for and relying on a report that was so obviously biased.
Plaintiff claims that Craig works for VerNova. Plaintiff's Memorandum, at 12. The Defendants never challenge this allegation. The FCE appears on NovaCare letterhead, but it is addressed to Christy Morris at VerNova. Administrative Record, at 235. Since the Defendants never denied that Craig works for VerNova, and since the FCE indicates that she at least reports to VerNova, the Court will accept Plaintiffs allegation as true.
Next, the Court will consider the results of the TSA/LMS. The Defendants admit that "the basis for Kemper's decision was a conclusion by Ms. Haynes . . . that Plaintiff `has excellent opportunities in the sales industry' and that Ms. Haynes did not adequately address Plaintiffs suitability for a sales job." Defendants' Objections, at 4. Haynes did not address Plaintiffs suitability for a sales job because he has no sales experience. Administrative Record, at 879. The Defendants, who now admit that Haynes's assertion was baseless, instead of disregarding her opinion, actually relied on it in their letters to Plaintiff and in their pleadings before this Court. Id. , at 187-88; Appeal Denial, supra ; Defendants' Reply to Plaintiffs Memorandum in Opposition to Defendants' Motion for Summary Judgment, filed July 21, 2003, at 4. Haynes's ridiculous conclusion that Plaintiff had "excellent opportunities in the sales industry" and the Defendants' reliance on that conclusion underscore the bias that was present throughout Kemper's review of Plaintiffs claim.
Dr. Rardin's examination and Dr. Cohan's peer review suffer from none of the same blatant defects as the FCE or the TSA/LMS. But merely having some evidence that is not obviously biased does not change the fact that this was not "the disinterested evaluation ERISA mandates, but . . . an evaluation that impermissibly weighed [the Defendants'] own financial interests." Pappus, supra , at 930. In summary, the Defendants abused their discretion by putting Plaintiff through a charade obviously designed to provide documentation for a decision Defendants had already made.
The Defendants make an appealing argument that "[i]t is difficult to comprehend how someone can go from earning over $68,000 in his current job to being disabled under the terms of the Long Term Disability Plan with no change in medical condition." Defendants' Objection, at 4. The Defendants argue that the day before he was fired, Plaintiff was able to work and earn over $68,000 per year. Therefore, without a change in medical condition, it is impossible for him to claim that the next day, he was incapable of making $34,000 per year. The Defendants' argument fails, however, because Plaintiff was only able to work before his job was eliminated because of the extensive accommodations BellSouth made for him. BellSouth's accommodations to Plaintiff — allowing him to work out of his home, on his own schedule, and at all hours of the day and night — went beyond what is required by the Americans With Disabilities Act, 42 U.S.C. § 12101 et seq. ("ADA"). See Tyndall v. National Educ. Cen., Inc. of California , 31 F.3d 209, 213 (4th Cir. 1994) ("[a]n employee who cannot meet the attendance requirements of the job at issue cannot be considered a `qualified' individual protected by the ADA"). BellSouth was not required to make the concessions it made regarding Plaintiffs attendance, and there is nothing in the record that indicates that Plaintiff could find another employer who would make those concessions. Therefore, the Defendants' argument that "the Magistrate Judge seems to imply that only BellSouth would be required to accommodate Plaintiffs restrictions" is unpersuasive. BellSouth did not have to accommodate Plaintiffs restrictions, and since other employers would not have to either, Plaintiff became disabled under the plan's definition when he lost the one job that paid him the salary required by the plan.
The intuitive response to this point is that it creates a perverse incentive for companies not to accommodate disabled workers any more than is required by the ADA. This, however, is not the case. BellSouth did not make Plaintiff disabled by accommodating him. Plaintiff became incapable of performing most kinds of work at some point during his employment with BellSouth. Since there was apparently no way reasonably to accommodate Plaintiff, BellSouth could have chosen to terminate his employment and begin paying disability or make the exceptional accommodations that it made. BellSouth originally chose the latter route and now is opting for the former. Therefore, BellSouth's accommodation to the Plaintiff in no way created liability for BellSouth; it was merely postponed. In fact, the opportunity to postpone the payment of disability benefits actually gives companies an incentive to make extraordinary accommodations, and it certainly does not discourage them from doing so.
The Court also notes that it is only because of the unique facts of this case, specifically the plan's definition of "disability" and the fact that Plaintiff continued to work for BellSouth after his back made him incapable of most forms of work, that Plaintiffs termination actually rendered him eligible for disability benefits. In most cases, if an employee is capable of working on one day, his termination will not render him disabled the next; and the Court does not wish for disability claims to become a means by which disgruntled former employees sue their former employers for terminating them. This holding, therefore, is limited to these facts.
Finally, the Court addresses the conclusion set forth in the Recommendation and in Ramos v. BellSouth Long Term Disability Plan, 2001 WL 1352319 (E.D. La. 2001), a case on which the Plaintiff relies. Both the recommendation and the Ramos decision, which is interpreting a Kemper plan with virtually the same definition of "disability," at least implicitly take the position that if the fiduciary cannot identify jobs for which the plaintiff is qualified that pay at least half of the plaintiffs previous salary, then the plaintiff is disabled. Id. at *5; Memorandum and Recommendation, at 31. The problem with these opinions is that the plaintiffs inability to find qualifying employment must be because of his "physical or mental illness" for him to be eligible for benefits. Both plans describe "disability" as "a physical or mental illness . . . which makes a participant . . . unable to perform any type of work other than one which pays less than half of his base pay." Ramos, supra ; Administrative Record, at 1218 (emphasis added). If the participant were simply overpaid in his previous job or, for any other reason, could not find a job paying at least half of his salary, he would not be eligible for benefits. Therefore, a TSA/LMS that favors the applicant cannot, alone, make an applicant eligible for disability benefits under Kemper's plan. To the extent that Ramos and the Magistrate Judge's recommendation hold that a participant is disabled when he cannot find a new job paying half of what his former job paid, even if the reason for his inability is not related to a "physical or mental illness," they do not correctly interpret Kemper's plan.
IV. ORDER
IT IS, THEREFORE, ORDERED that the Plaintiffs motion to settle the administrative record is hereby DENIED. IT IS FURTHER ORDERED that the Plaintiffs motion for summary judgment is hereby GRANTED, and the Defendants' motion for summary judgment is hereby DENIED.
A Judgment is filed herewith.
JUDGMENT
For the reasons set forth in the Memorandum of Opinion filed herewith,IT IS, THEREFORE, ORDERED, ADJUDGED, AND DECREED that the Plaintiffs motion for summary judgment is ALLOWED; the Defendants' motion for summary judgment is DENIED; and the Plaintiff is hereby entitled to payment of disability benefits under the terms and conditions of the Plan herein from date of termination until he reaches his 65th birthday or as otherwise provided under the terms of the Plan.