Opinion
Case No. 8:00CV488
July 12, 2002
MEMORANDUM AND ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
This matter comes before the Court on the Defendants' Motion for Summary Judgment (Filing No. 17). In support of their motion, Pitney Bowes, Inc. ("Pitney") and the Life Insurance Company of North America ("LINA") have submitted an Index of Evidence consisting of the Affidavit of Kate Wallace, Filing No. 18 at Exhibit A, and LINA's Administrative Record, Filing No. 18 at Exhibit B. The Plaintiff, Virginia Binder, opposes the motion. The issues have been fully briefed.
LINA's Administrative Record will be referred to herein as "LINA" followed by the page number of the Administrative Record, 1 through 216.
Background
This matter arises out of a denial of accidental death insurance benefits that Plaintiff claims were owed to her upon the death of her spouse, Francis Binder. Francis Binder was admitted to the hospital on May 19, 1998, with complaints of fever and weakness. In connection with a physical examination for life insurance in 1992, Francis Binder had some liver tests returned as abnormal, but he apparently had not seen a doctor in connection with his liver problems since 1992 (LINA 104). Upon his admission to the hospital in 1998, he was diagnosed with cirrhosis of the liver and alcoholic liver disease and possible hepato-renal syndrome (LINA 138, 141-42). At that time, his liver functions showed "complete deterioration with decompensation changes" (LINA 149). Within days of his admission to the hospital, lab results from his blood work-up indicated that Francis Binder had a serious staphylococcus aereus bacteremia ("staph infection") which, given its severity, he had likely contracted before he was admitted to the hospital (LINA 149).
Given his preexisting health problems, Francis Binder was unable to combat the staph infection. He went into multi-organ failure, and died in the hospital on June 11, 1998.
Plaintiff's Complaint is brought pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(e) and (f). The parties agree that Francis Binder was a participant in Group Accident Policy OK 81-69-26 ("the group accident policy"), issued to Pitney as the policyholder as part of the Pitney Bowes Accidental Death and Dismemberment Plan ("ADD plan"). The plan was made available to Pitney employees as part of their employee benefits package. LINA is the plan administrator for the ADD plan. Wallace Aff. at ¶ 6.
The Defendants seek summary judgment based on their contention that LINA's technical specialists properly reviewed the Plaintiff's claim for benefits and in good faith denied the claim under the terms of the ADD plan. LINA contends that as the plan administrator and fiduciary of the ADD plan, it had the:
authority to "interpret the terms of the plan and determine which plan benefits [participants] are eligible for and entitled to. Any decision they make as a discretionary authority is upheld, unless that decision is shown to be arbitrary and capricious."Id. at ¶ 7, parenthetical in original, citing the "Obligations of Fiduciary" section of the ADD plan (LINA 191). Plaintiff opposes the motion based on what she characterizes as the plan administrator's abuse of discretion in denying her claim for benefits.
Summary Judgment Standard
The summary judgment standard applicable to ERISA claims is no different than the standard applied to any other summary judgment motion.
A court considering a motion for summary judgment must view all facts in the light most favorable to the non-moving party and give to the non-moving party the benefit of all reasonable inferences that can be drawn from the facts. While a party is entitled to summary judgment if "there is no genuine issue as to any material fact and if the moving party is entitled to judgment as a matter of law," . . . summary judgment is inappropriate when the record permits reasonable minds to draw conflicting inferences about a material fact. Donaho v. FMC Corp., 74 F.3d 894, 897-98 (8th Cir. 1996) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-51, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)); see Fed.R.Civ.P. 56(c).Riedl v. General American Life Ins. Co., 248 F.3d 753, 756-757 (8th Cir. 2001).
Standard of Review
The Plaintiff and the Defendants urge the Court to apply different standards of review to the decision of the LINA plan administrator. The Defendants maintain that the Court must apply an arbitrary and capricious standard, referred to by the Eighth Circuit Court as an "abuse of discretion" standard, to determine whether the plan administrator acted properly in denying Plaintiff's claim for benefits. Under this standard, the Court gives great deference to the plan administrator's decision, and the decision will be upheld if it is reasonable. See Donaho, 74 F.3d at 900, and n. 11.
Plaintiff argues that the Court should undertake a de novo review of this matter. Plaintiff contends that the de novo standard of review is appropriate in this case because the ADD plan language fails to clearly designate to the plan administrator fiduciary discretionary authority. Under a de novo review, the Court may weigh evidence to determine whether the denial of benefits was factually supported by a preponderance of the evidence in the record.
The United States Supreme Court has considered the applicable standard of review in cases such as this, where a plaintiff challenges a plan administrator's denial of benefits under ERISA. In the landmark case of Firestone Tire Rubber Co., v. Bruch, 489 U.S. 101 (1989), the Court stated that the applicable standard of review is determined based on whether the plan language itself provides a clear delegation of discretionary authority to the plan administrator to determine eligibility for benefits or to construe the terms of the plan. Firestone directs that in the absence of a clear delegation of discretionary authority to the plan administrator, courts are to apply a de novo standard of review. On the other hand, if a plan provides a clear delegation of discretionary authority to the plan administrator, then courts are to apply the more deferential arbitrary and capricious standard. Drawing on the common law of trusts, the Court determined that the more deferential standard of review is appropriate when discretion is expressly conferred in the plan upon a fiduciary. Id. at 111. As an initial inquiry then, this Court must determine whether the language of the ADD plan clearly delegates discretionary authority to the plan administrator to determine eligibility for benefits.
A copy of the ADD plan summary is provided in Exhibit 18 (LINA 183-92). The contract of insurance between Pitney and LINA is also contained in Exhibit 18 (LINA 194-216). Having reviewed the summary and the contract, the Court has found the following excerpts to be helpful in determining this preliminary issue relating to delegation of authority. The plan states:
"The ADD benefit is a fully-insured benefit through Life Insurance Company of North America. The insurance company is the plan administrator and handles all claims issues, including claims appeals. To appeal a decision made on your ADD claim, you must contact: CIGNA Group Insurance, 1 Chatham Center, 3rd Floor, Pittsburgh, PA." (LINA 187, emphasis added).
"Plan Administration. The chart that follows, together with the information already presented, constitutes the summary plan description of those plans which are subject to the provisions of ERISA." [With regard to the ADD policy, the chart includes a column for "Insurance Company — Trustee" identifying "Life Insurance Company of America, 1601 Chestnut St., Philadelphia, PA," and a column for "Plan Administrator" identifying " Administrative Committee, Pitney Bowes, Inc., 1 Elmcroft Road, Stamford, CT."] (LINA 188 and 189, emphasis added).
"For all ERISA plans, the law allows a reasonable amount of time for the plan administrator — or insurance company in the case of an insured welfare plan — to evaluate a claim and decide whether to pay benefits based on the information contained in the written claim." (LINA 191).
"Obligations of Fiduciaries. The people who operate your employee benefit plans are called `fiduciaries.' They are legally responsible to act solely in the interests of plan participants and to exercise prudence in performing their plan duties. The plan administrator and other plan fiduciaries interpret the terms of the plan and determine which plan benefits you are eligible for and entitled to. Any decision they make as a discretionary authority is upheld, unless that decision is shown to be arbitrary and capricious." (LINA at 191, emphasis added).
Although the "Obligations of Fiduciaries" provision of the ADD plan purports to delegate discretionary authority to determine benefit eligibility in the "plan administrator and other plan fiduciaries," the problem is that the plan contains more than one provision that purports to identify the "plan administrator" and those provisions are contradictory on their face. As the first two bullet points set forth above demonstrate, in one place the plan summary identifies "the insurance company," LINA, as the plan administrator, but a few pages further into the summary, a chart contained in the summary identifies "the Administrative Committee, Pitney Bowes, Inc." as the plan administrator. The entities certainly do not appear to be one and the same given their names and different mailing addresses for each. If a plan participant is unable to determine which entity is the plan administrator, then it is apparent that a clear delegation of discretionary authority to that entity has not been achieved.
In addition, the broad and inclusive language contained in other plan provisions, such as that contained in the third and fourth bullet points, contributes to the plan's ambiguity. The plan does not establish whether the plan administrator or the insurance company will be evaluating claims within a reasonable time (LINA 191). Further, it is unclear whether there are "other plan fiduciaries" in addition to the plan administrator who owe duties to the plan beneficiaries (LINA at 192).
Although the Court finds that the plan communicates an intent to confer discretionary authority, the plan is not clear regarding to whom the authority is conferred. Certainly the plan confers discretionary authority upon the plan administrator, but because of the ambiguities in the plan itself, this Court does not know whether the plan administrator is LINA or the Administrative Committee of Pitney Bowes, Inc. . For all these reasons, the Court concludes that the ADD plan does not contain a clear delegation of discretionary authority to the plan administrator. Thus, it is appropriate for this Court to conduct a de novo review of the matter. See Ravenscraft v. Hy-Vee Employee Ben. Plan and Trust, 85 F.3d 398, 402-403 (8th Cir. 1996) (finding no plan provision conferring discretionary authority to decide benefit claims, and noting that "the claim and benefit provisions read like a typical insurance policy, which is not surprising since the Plan Administrator is an insurance company.")
The Court acknowledges that it may not matter whether Pitney reserves to itself discretionary authority as long as Pitney also confers discretionary authority to make eligibility determinations upon LINA. See Madden v. ITT Long Term Disability Plan for Salaried Employees, 914 F.2d 1279 (9th Cir. 1990) cert. denied 111 S.Ct. 964(1991). However, this Court declines to follow Madden because, unlike the plan in Madden, this ADD plan does not expressly identify whether Pitney and LINA are plan administrators, nor does it expressly state that Pitney has reserved discretion to itself.
The Eighth Circuit has found appropriate delegations of discretionary authority when the plan language is clear. Compare the language in the ADD plan in this case to the plan language set forth in Sahulka v. Lucent Technologies, Inc., 206 F.3d 763, 769 (8th Cir. 2000): "The pertinent part of the Plan giving the [Employee Benefits Committee] final and discretionary authority to determine eligibility for benefits [states] as follows: The [EBC] shall be the final review committee under the Plan, with the authority to determine conclusively for all parties any and all questions arising from the administration of the Plan, and shall have sole and complete discretionary authority and control to manage the operation and administration of the Plan, including, but not limited to, the determination of all questions relating to eligibility for participation and benefits, interpretation of all Plan provisions, determination of the amount and kind of benefits payable to any participant, spouse or beneficiary, and construction of disputed or doubtful terms. Such decisions shall be conclusive and binding on all parties and not subject to further review."
Analysis
When applying a de novo standard of review, the district court is not limited to the fiduciary's explanation of its denial, and it is appropriate for this Court to consider all applicable plan provisions that are alleged to be a basis for denial of benefits. See Farley v. Benefit Trust Life Insurance Co., 979 F.2d 653, 660 (8th Cir. 1992). If necessary, the Court may receive evidence in addition to that presented to the plan administrator, but that practice has been discouraged to ensure expeditious judicial review of ERISA benefits decisions and to keep district courts from becoming substitute plan administrators. See Donatelli v. Home Insurance Co., 992 F.2d 763, 765 (8th Cir. 1993).
Plaintiff bears the burden of proof to show that she is entitled to benefits under the ADD plan. Farley, 979 F.2d at 658. Defendants contend that Plaintiff must show, but cannot show, that Francis Binder's death was directly and solely caused by an accident. Defendants argue that there are no genuine issues regarding the material fact that Francis Binder's preexisting liver disease contributed to his death. Accordingly, Defendants argue that LINA's denial of benefits under the plan should be affirmed.
The plan states in relevant part:
We agree to pay benefits for loss from bodily injuries:
a) caused by an accident which happens while an insured is covered by this policy; and
b) which, directly and from no other cause, results in a covered loss (see the Description of Coverage).
We will not pay benefits if the loss was caused by:
a) sickness, disease, or bodily infirmity; or
b) any of the exclusions listed on page 2.
Page two of the plan lists several exclusions, including:
No benefits will be paid for loss resulting from:
6) sickness, disease or bodily infirmity. (Bacterial infection resulting from an accidental cut or wound or accidental ingestion of a poisonous food substance are not excluded).
(LINA 195-96).
There has been no challenge to the interpretation of the plan language. Thus, the Court shall consider whether Francis Binder's death was caused "directly and from no other cause" than by the Staph infection. Plaintiff argues that, but for the Staph infection, Francis Binder would be alive. Defendant argues that, but for the liver disease, Francis Binder would be alive.
The Eighth Circuit Court has employed a five-factor test to determine whether the interpretation of plan language is reasonable.
1) whether the Committee's interpretation is consistent with the goals of the Plan; 2) whether the interpretation renders any language in the Plan meaningless or internally inconsistent; 3) whether the Committee's interpretation conflicts with the substantive or procedural requirements of the ERISA statute; 4) whether the Committee has interpreted the relevant terms consistently; and 5) whether the interpretation is contrary to the clear language of the Plan.Cash v. Wal-Mart Group Health Plan, 107 F.3d 637, 641 (8th Cir. 1997). While the Plaintiff has not argued that the interpretation is unreasonable, the Court has considered these factors and finds that the interpretation of the plan language is reasonable under Cash.
The Administrative Record includes correspondence from Francis Binder's treating physician, Jose Albert Fontanilla, M.D. (LINA 06). Plaintiff asks this Court to consider Dr. Fontanilla's opinions that are contained in the letter. Plaintiff argues that the plan administrator ignored Dr. Fontanilla's opinions, and to do so was an abuse of discretion. As Francis Binder's treating physician, Dr. Fontanilla's opinion is entitled to greater deference than the opinion of a reviewing physician. Donaho, 74 F.3d at 901, Dodson v. Woodmen of the World Life Ins. Co., 109 F.3d 436, 439 (8th Cir. 1997). In his correspondence, Dr. Fontanilla provides his opinion regarding the cause of death. He states:
Mr. Binder died of sepsis and mulit-organ failure as a result of persistent Staphylococcus aureus bacteremia.
(LINA 006). Dr. Fontanilla also states that the staph infection was a "virulent organism" and "persistent," likening it to staphylococcus endocarditis, which "by itself carries a very high mortality." (LINA 0006).
Defendants argue, based on the record, that there is no proof that Francis Binder's death was caused directly and solely by an accident. The record contains medical opinions stating that the staph infection likely was caused by the abrasions on Francis Binder's hands that he sustained while working. Even if the Court assumes this fact to be true for purposes of this motion, and the Court does, then Defendants contend that the denial of benefits should be affirmed based on Francis Binder's liver disease being a substantial, concurrent cause of death.
The Court believes that Francis Binder entered the hospital with a very serious staph infection. Dr. Fontanilla diminishes the possibility that the staph infection originated from something other than a cut or abrasion, and he rejects the idea that the staph infection was acquired in the hospital. The record is clear that the antibiotics that were provided to Francis Binder in the hospital did not succeed in combating the staph infection. However, while the staph infection may have been the primary cause of his death, the Court finds that there were also contributing and secondary causes. Although Dr. Fontanilla rejects the significance of Francis Binder's hypoglycemia as contributing to the death, even Dr. Fontanilla cannot completely reject the significance of Francis Binder's liver condition upon his course of treatment, reaction to it, and death. Dr. Fontanilla's correspondence states, "his liver condition/cirrhosis plus the fact that he went into hepato-renal syndrome does make him immune compromised." Thus, the antibiotics Francis Binder was prescribed were less likely to work successfully for him than they would have worked in the body of a person not suffering from cirrhosis of the liver.
Plaintiff urges the Court to accept that Dr. Fontanilla believes that the staph infection was the "direct and only cause of Mr. Binder's hospitalization and death." Plaintiff's Brief at 12. As much as Plaintiff wishes that were true, nowhere does Dr. Fontanilla state that the staph infection was the "direct and only cause" of Francis Binder's death, which is exactly what is required under the ADD plan. The Court does not agree that Francis Binder's liver disease is simply a "red herring," as characterized by Plaintiff, but rather that it was a condition that significantly contributed to his death.
The Court has reviewed the entire administrative record. In it there is ample evidence to affirm the plan administrator's denial of benefits to the Plaintiff. While the plan administrator gave greater deference to the report of James Lewis, M.D., (LINA 55-60), the forensic pathologist who reviewed Francis Binder's records, than was proper, the Court reaches the same conclusion as the plan administrator based on the administrative record as a whole. For example, in the treatment summary prepared by Dr. Fontanilla shortly after Francis Binder's death, captioned "Clinical Resume," Dr. Fontanilla identifies twenty-two separate diagnoses that were made, including: alcoholic cirrhosis; hepatic failure; and spontaneous staphylococcal bacteremia with probable metastic infection (LINA 114-20). In addition, the record contains several and various consultations by other medical specialists, including one infectious diseases specialist, Tummala Prasad, M.D. Dr. Prasad states in the May 24, 1998, record that "at this time, the pressing problem is the Staphylococcus aureus sepsis with decompensated liver problems." In the same record, Dr. Prasad states that Francis Binder's overall prognosis is "very poor, not only because of the Staphylococcus aureus sepsis, but because of the underlying liver disease." (LINA 152). Michael Sweet, M.D., who provided a pulmonary consultation on May 24, 1998, stated his impression that: "His abnormal renal functions tests in association with the cirrhosis, certainly point toward hepato-renal syndrome." (LINA 156).
On the death certificate signed by Dr. Fontanilla, the immediate cause of death is identified as "septic shock" but other conditions leading to the immediate cause include "spontaneous staphylococcal bacteremia, adult respiratory distress syndrome, acute renal failure, alcoholic cirrhosis, and hepato-renal syndrome." (LINA 182).
Based on the Administrative Record, which this Court expressly finds no need to supplement, the Court concludes that the denial of benefits to Virginia Binder was proper. The record does not support a finding that Francis Binder died "directly and from no other cause" than the staph infection. The evidence is overwhelming that Francis Binder's death resulted from a combination of conditions, including the staph infection and his advanced cirrhosis/liver disease. Accordingly, the Defendants' Motion for Summary Judgment will be granted.
Attorney's Fees
In the Court's pretrial order, both Plaintiff and Defendants seek an award of attorney's fees and costs. Whether to award fees and costs is in the Court's discretion pursuant to 29 U.S.C. § 1332(g). Having considered the factors set forth in Dodson, 109 F.3d at 440, and specifically finding that there is no evidence of bad faith by either party, the Court shall not award attorneys fees or costs to either party.
IT IS ORDERED:
1) Defendants' Motion for Summary Judgment (Filing No. 17) is granted;
2) The parties' requests for an award of attorney's fees and costs pursuant to 29 U.S.C. § 1132(g) is denied, and each party shall bear its own costs and fees; and
3. Plaintiff's Complaint is dismissed with prejudice.