Opinion
CIVIL ACTION NO. 03-1445, SECTION "L" (2).
July 2, 2004
ORDER REASONS
This matter is before the Court on cross-motions for summary judgment, which have been the subject of extensive briefing. The motions were heard with oral argument. Thereafter, the Court determined that Policy No. 21462 (the "Policy") governed the Plaintiff's claim. After determining the applicable policy, the parties submitted post-hearing memoranda on the substantive issue of whether the Plaintiff is entitled to long-term disability benefits under the Policy. The Court took the matter under submission. Having considered the administrative record, the memoranda filed by the parties, the applicable law, and the argument of counsel, the Court hereby GRANTS the Plaintiff's Motion for Summary Judgment and DENIES the Defendant's Motion for Summary Judgment.
I. BACKGROUND
This is an action on a disability insurance policy provided by the Defendant to Catlin, Inc. ("Catlin"), bearing group identification number 21462 (the "Policy"). The Plaintiff was a founding partner and Senior Vice President of Catlin, formerly BCC Holdings, Inc., ("BCC") and was covered by this Policy. Catlin specializes as a contract underwriter for syndicates at Lloyd's of London in writing insurance policies for entities engaged in the energy exploration and production business. The Defendant originally provided disability coverage to BCC. After BCC merged with Catlin, the Policy was continued and was endorsed by the Defendant to reflect the change in the name of the company. The Policy remained in effect until May 31, 2001. On June 1, 2001, a new policy went into effect.
After being diagnosed with congestive heart failure and dilated cardiomyopathy, the Plaintiff terminated her employment. In June of 2001, the Plaintiff filed a claim for disability benefits with the Defendant pursuant to the Policy. As explained in greater detail below, the Defendant denied the Plaintiff's claim. After appealing the denial two times, the Plaintiff filed suit against the Defendant in this Court on May 21, 2003.
A. Medical Condition of the Plaintiff
In December, 1999, while an in-patient at St. Luke's Hospital, Texas Heart Institute in Houston, the Plaintiff was diagnosed with congestive heart failure and dilated cardiomyopathy. She was released from St. Luke's Hospital on December 27, 1999, and was referred to Dr. Roland J. Bourgeois, Jr., of Metairie, Louisiana, on January 4, 2000. Dr. Bourgeois was the Plaintiff's cardiologist at all times relevant to the instant matter.
By letter dated May 7, 2001, sent to the Defendant as part of the Plaintiff's disability claim, Dr. Bourgeois confirmed the Plaintiff's diagnosis as congestive heart failure and severe idiopathic dilated cardiomyopathy. (UACL 00085-86). He classified the Plaintiff's heart condition as New York Heart Association ("NYHA") Class II. Due to her condition, Dr. Bourgeois advised the Plaintiff to avoid stress and fatigue by limiting her activities and obtaining frequent periods of rest. He also indicated in the physician statement portion of the Long Term Disability Claim form sent to the Defendant that he believed the date on which the Plaintiff was first unable to perform all work duties was December 15, 1999. (UACL 00087-88). Dr. Bourgeois treated the Plaintiff until December 4, 2002. Throughout the period of time when Dr. Bourgeois was the Plaintiff's treating physician, he maintained that the Plaintiff was disabled from her regular occupation as an insurance executive due to the stressful nature of the profession and the Plaintiff's inability to exert herself physically and mentally for a sustained period of time. He indicated that, due to her condition, the Plaintiff required periods of rest throughout the day and that she should avoid stressful situations and fatigue.
All citations shall be to the administrative record attached as an exhibit at record document number 7.
The New York Heart Association classification system is used to classify cardiovascular disease. (UACL 00454).
In addition to receiving treatment from Dr. Bourgeois, the Plaintiff also consulted a vocational rehabilitation expert, Mr. John M. Yent, who performed a job analysis and advised job modifications to address her medical condition. (UACL 00191-197). Mr. Yent concurred with Dr. Bourgeois and opined that the Plaintiff could not return to her former occupation. Mr. Yent based his conclusion on the physical as well as the non-physical requirements of the Plaintiff's former position. Mr. Yent outlined some of the non-physical requirements that he believed were beyond the impaired capabilities of the Plaintiff as including: "high stress, responsible for success of `high stakes' agreements worth millions of dollars, constant rapid work pace, frequent short-turnaround deadlines, high volume of telephone calls, and email correspondence, etc." (UACL 00191-197). As the Plaintiff required frequent periods of rest during the day, she could not safely work in such an atmosphere. Mr. Yent and Dr. Bourgeois concluded that these non-physical elements of the Plaintiff's work were not elements that Catlin could alter to accommodate the Plaintiff's medical condition. Rather, these elements were simply part of the Plaintiff's daily work environment.
Sometime in 2002, the Plaintiff moved to the State of Alabama. She began seeing Dr. Robert A. Schuster and Dr. Kevin P. Ryan as her treating physicians in Alabama. Both Drs. Schuster and Ryan confirmed that the Plaintiff suffers from congestive heart failure and dilated cardiomyopathy. They also independently concluded that the Plaintiff should not return to her previous employment due to her condition. (UACL 01218, 01272).
The Defendant conducted several reviews of the Plaintiff's claim prior to issuance of its final denial. The Plaintiff's medical record was reviewed a total of four times by two of the Defendant's in-house cardiologists: the first and third reviews were conducted by Dr. Tom Hashway; the second and final reviews were conducted by Dr. George J. DiDonna. A "clinical consultant" and vocational rehabilitation consultant also reviewed the Plaintiff's records.
The first such review by Dr. Hashway occurred on July 27, 2001. Based merely on a review of the Plaintiff's medical records, the Defendant concluded that the medical evidence did not support the severe limitations placed upon the Plaintiff by her treating physician. (UACL 00141-144). The Defendant noted that no functional testing had been performed. The Defendant further concluded that the Plaintiff's condition had improved, required only slight restrictions, and did not preclude her from performing the requirements of her job. Accordingly, the Defendant denied the Plaintiff's claim for benefits by letter dated August 20, 2001. (UACL 00157-159).
Thereafter, in November 2001, the Plaintiff appealed the denial of her disability claim. (UACL 00172). On December 5, 2001, Dr. DiDonna again reviewed the Plaintiff's medical records. Similar to the first review, Dr. DiDonna found that the Plaintiff's medical record did not support the conclusion that she was unable to perform the requirements of her employment. (UACL 00257). Dr. DiDonna also noted that he was "not aware of any evidence that shows a direct relationship between mental stress and dilated cardiomyopathy." (UACL 00257). He did agree that the Plaintiff should rest during the workday, but opined that periodic rest does not preclude working.
On December 21, 2001, the Defendant arranged for a vocational review and occupational analysis. (UACL 01016-1022). This review also consisted of a review of medical and other records. The Vocational Rehabilitation Consultant, Kelly Marsiano, who completed the review, also concluded that the Plaintiff could perform her occupation. Her conclusion was based primarily on the physical demands of the Plaintiff's job, which were admittedly not great. The most difficult physical requirement was the fact that the Plaintiff traveled a significant percentage of her time. Ms. Marsiano felt that traveling required light physical exertion because of the availability of valets and sidewalk luggage check-in.
Based upon these additional reviews, the Defendant denied the Plaintiff's appeal by letter dated January 25, 2002, but requested an independent medical examination ("IME") of the Plaintiff to provide a good faith effort in the review. (UACL 00352-354). The IME was conducted on July 8, 2002, by Dr. Kansal. In his report, Dr. Kansal confirmed that the Plaintiff suffered from congestive heart failure and dilated cardiomyopathy. (UACL 01091-1093). He noted that the Plaintiff also suffered from decreased mental capacity and mental quickness, which he thought was due to factors other than her heart condition. He felt that she should undergo a psychiatric evaluation and an exercise test. Dr. Kansal did not address whether or not he felt that the Plaintiff was able to perform the requirements of her employment.
On May 28, 2002, the Plaintiff was awarded Social Security Disability benefits pursuant to the Notice of Decision-Fully Favorable by Judge Donald Colpitts. (UACL 01079-1081). After reviewing all of the medical evidence, Judge Colpitts found that the Plaintiff was totally disabled since May 31, 2001. Judge Colpitts based his conclusion in large part on the following findings:
In November 2001, Dr. Bourgeois provided that Ms. Campbell sufferes from severe physical symptoms related to dilated cardiomyopathy. These symptoms render Ms. Campbell unable to tolerate prolonged low level activity and severely reduces her ability to tolerate mental stress. Moreover, Mr. John Yent, a vocational counselor, revealed that Ms. Campbell is unable to perform sedentary work for more than one hour without the need to rest. Mr. Yent further indicated that Ms. Campbell is unable to tolerate even four hours of sedentary work during an eight hour day.
(UACL 01079-1081). As part of his decision, Judge Colpitts also noted that prior to May, 2001, the Plaintiff had an excellent work history.
On July 26, 2002, the Defendant authorized another review of the Plaintiff's record by Dr. Hashway, including the results of the IME and the award of Social Security benefits. Dr. Hashway essentially confirmed his prior opinion and concluded that the Plaintiff was capable of performing at the "sedentary or light activity level." (UACL 01094-1096). No definition of the kinds of activities that might be appropriate at this exertion level were provided.
Additionally, the Defendant requested that the Plaintiff undergo an exercise stress test. The Defendant contacted the Plaintiff by letter dated July 29, 2002, to inform her that a stress test had been scheduled with Dr. Kansal for August 12, 2002. (UACL 01110). On the advice of her treating physician, Dr. Bourgeois, the Plaintiff refused to take the stress test. Dr. Bourgeois advised the Plaintiff and the Defendant that a stress test, which measures physical activity over a short amount of time, would not be helpful in an evaluation of the Plaintiff's condition. (UACL 01128). According to Dr. Bourgeois, the Plaintiff was able to exert herself for a short amount of time, but was unable to sustain physical or mental exertion over longer periods of time, a result of her medical condition that a stress test would not measure. Thus, Dr. Bourgeois advised against having the Plaintiff undergo a test which would reveal no new or useful information about her condition.
By letter dated October 29, 2002, the Defendant notified the Plaintiff that the decision to deny benefits would be upheld. (UACL 390-393). On October 30, 2002, the Plaintiff requested another review of her claims. (UACL 513-317). On December 17, 2002, the Defendant arranged for Dr. DiDonna to perform another review of the Plaintiff's case. Dr. DiDonna's opinion regarding the Plaintiff's ability to perform the requirements of her employment were substantially the same as his first opinion. (UACL 1208-1204). That is, based on his review of the Plaintiff's entire record, including medical literature submitted by the Plaintiff, he felt that the Plaintiff's medical record did not support the restrictions and limitations advised by the Plaintiff's treating physicians. Thus, the Defendant upheld its original decision to deny the Plaintiff's claim, but informed the Plaintiff that it would consider additional information submitted no later than February 10, 2003. (UACL 01212-1216).
On February 7, 2003, the Plaintiff submitted additional information for the Defendant to review, consisting of medical records and reports. On February 25, 2003, Dr. DiDonna reviewed the additional information and re-stated his prior opinion regarding the Plaintiff's ability to perform the duties of her position. (UACL 1285-1287). Finally, on March 10, 2003, the Defendant informed the Plaintiff that its denial of her claim was final. (UACL 1320-1321).
B. Occupational Disability of the Plaintiff
As part of the Plaintiff's claim, Catlin reported to the Defendant that, due to her medical condition, the Plaintiff was unable to perform the material duties of her position. By correspondence addressed to the Defendant, Catlin indicated that the Plaintiff occupied a central management role. (UACL 01007-1008). Her duties included insurance underwriting; supervision of policy reporting, policy issuance and account management; client development and sales; and training and supervision of other personnel. Furthermore, Catlin indicated that the Plaintiff was required to work three (3) days per week every other week in its Houston, Texas office. She was also required to travel to London, England at least once per year.
In the period following the onset of her medical condition, the Plaintiff wanted to continue to work for Catlin. Catlin indicated that it accommodated the Plaintiff's medical condition on a temporary basis out of respect for her as a founding partner of the firm and in the hopes that she would recover and be able to return to full work duties. Thus, Catlin allowed her to decrease her work hours and eliminate certain elements of her work. For example, the Plaintiff discontinued all travel and outside calls upon clients for sales and account development. The Plaintiff worked sporadically, sometimes only two or three times a week for no more than three or four hours a day. During this period, from January 2000 to May 31, 2001, other Catlin staff members assumed the duties that the Plaintiff was unable to complete. Catlin considered these accommodations temporary and continued to pay the Plaintiff her full salary in the hopes that she would recover her health and be able to return to full-time employment. Catlin indicated that these accommodations could not have been made permanently due to the nature of the industry and the particular duties required by the Plaintiff's job. Finally, on May 31, 2001, Catlin terminated the Plaintiff, only after determining that she would not be able to work at her previous level of productivity for the foreseeable future. During the pendency of the Plaintiff's claim, Catlin has maintained that the Plaintiff is completely disabled with regard to her regular occupation due to her medical condition.
C. Unum Policy 21462
On December 10, 2003, this Court determined that Unum Policy 21462 applied to the Plaintiff's claim for disability benefits. (UACL 00396-415). The relevant definition of "disability" provided in the Policy is as follows:
"Disability" and "Disabled" mean that because of injury or sickness:
1. you cannot perform each of the material duties of your regular occupation; and
2. after benefits have been paid for 24 months, you cannot perform each of the material duties of any gainful occupation for which you are reasonably fitted by training, education or experience; or
3. you, while unable to perform all of the material duties of your regular occupation or another occupation on a part-time or full-time basis; and
a. Performing at least one of the material duties of your regular occupation or another occupation on a part-time or full-time basis; and
b. Currently earning at least 20% less per month than your indexed pre-disability earnings due to that same injury or sickness.
(UACL 00414). The Policy further provides for a ninety (90)-day elimination period. The elimination period is a period of "consecutive days of disability for which no benefit is payable," and begins to run on the first day of disability. (UACL 00409). Moreover, the Policy outlines several scenarios under which coverage would terminate, including:
. . .
6. the date your employment terminates. Cessation of active employment will be deemed termination of employment, except;
a. if you are disabled your insurance will be continued during:
i. the elimination period; and
ii. while benefits are being paid.
(UACL 00400). Under the policy,
"Active employment" means you must be working:
1. for your employer on a full-time basis and paid regular earnings . . .;
2. at least [thirty (30) hours per week]; and either
3. at your employer's usual place of business; or
4. at a location to which your employer's business requires you to travel.
(UACL 00410). Finally, pursuant to the Policy, benefits are calculated according to the following formula:
1. 60% (benefit percentage) of basic monthly earnings not to exceed the maximum monthly benefit, less other income benefits.
. . .
2. The maximum monthly benefit is $6000.
3. The minimum monthly benefit is the greater of:
a. $100.00; or
b. 10% of the monthly benefit before deductions for other income benefits.
(UACL 00415).
The parties do not dispute that the Policy neither grants nor reserves unto the Defendant the discretionary authority to determine eligibility for benefits or to construe the terms of the plan. (UACL 00396-415).
II. CONTENTIONS OF THE PARTIES
The Plaintiff submits that she became "disabled" as defined by the Policy as of December 15, 1999 and continued to be disabled through the date of her separation of employment, May 31, 2001. The Plaintiff contends that the administrative record clearly demonstrates that her medical condition precludes her ability to perform each of the material duties of her occupation and that, regardless of the standard employed by the Court, the Defendant was not justified in denying her claim. The Plaintiff's central argument is that the administrative record contains no concrete evidence that after the onset of congestive heart failure and dilated cardiomyopathy, she was capable of performing the material and substantial duties of her regular occupation as an insurance executive.
While the Plaintiff's treating physicians noted that her ability to tolerate physical activity was reduced, more importantly, the Plaintiff's treating physicians all agreed that the Plaintiff should avoid stress and fatigue associated with non-physical activity. Admittedly, the Plaintiff's job was not physically demanding in the sense that she was not required to perform demanding physical labor. She worked primarily at a desk. However, the Plaintiff's occupational analysis revealed that her position was demanding in the sense that it was very stressful, required the ability to concentrate and focus over long periods of time, and meet sensitive deadlines: all factors that led to the mental stress and fatigue the Plaintiff claims exacerbated her symptoms and necessitated her separation from employment. As such, the Plaintiff asks the Court to award past benefits as well as future benefits and attorney's fees.
For its part, the Defendant maintains that its decision to deny disability benefits is supported by the administrative record. Primarily, the Defendant submits that its determinations were rationally based on the evidence submitted by the Plaintiff and the opinions issued by its physicians. Specifically, the Defendant has consistently asserted that the Plaintiff is capable of performing a light capacity occupation. Based on its occupational analysis, the Defendant concluded that the Plaintiff's position fits into the category of light capacity or functional occupation. The Defendant based its conclusions primarily on the opinions of its two in-house physicians and occupational analysis.
Further, even if the Court finds that the Plaintiff meets the definition of "disabled" provided in the Policy, the Defendant argues that the Plaintiff is nonetheless ineligible because she was not actively employed as required when she filed her claim for benefits. Lastly, should the Court determine that the Plaintiff is entitled to benefits, the Defendant claims that the Plaintiff is not entitled to an award of future benefits.
III. LEGAL STANDARD
A. Motion for Summary Judgment
Summary judgment will be granted only if the pleadings, depositions, answers to interrogatories, and admissions, together with affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. If the party moving for summary judgment demonstrates the absence of a genuine issue of material fact "the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Willis v. Roche Biomedical Laboratories, Inc., 61 F.3d 313, 315 (5th Cir. 1995). "[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." Id. To oppose a motion for summary judgment, the non-movant cannot rest on mere allegations or denials but must set forth specific facts showing that there is a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 321-22 (1986).
The burden of demonstrating the existence of a genuine issue is not met by "metaphysical doubt" or "unsubstantiated assertions." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986)). The Court must "resolve factual controversies in favor of the nonmoving party, but only when there is an actual controversy, that is, when both parties have submitted evidence of contrary facts." Id. The Court does not, "in the absence of proof, assume that the nonmoving party could or would prove the necessary facts." Id. If the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, no genuine issue exists for trial. See Matsushita, 475 U.S. at 588. Finally, "the mere existence of some factual dispute will not defeat a motion for summary judgment; Rule 56 requires that the fact dispute be genuine and material." Willis, 61 F.3d at 315. If the evidence leads to only one reasonable conclusion, summary judgment is proper. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
B. Plan Administrator's Denial of Benefits
A district court considering a denial of benefits under an ERISA plan is limited, with few exceptions, to the evidence contained in the administrative record. Estate of Bratton v. Nat'l Union Fire Ins. Co. of Pittsburg, PA, et al., 215 F.3d 516, 521 (5th Cir. 2000). "If an administrator has made a decision denying benefits when the record does not support such a denial, the court may, upon finding an abuse of discretion on the administrator's part, award the amount due on the claim and the attorney's fees." Id. The Plaintiff argues that an award of attorney's fees is appropriate in the instant matter.
For example, the district court may consider other evidence related to how an administrator has interpreted terms of the plan in other instances and evidence, including expert opinion, that assists the court in understanding the medical terminology or practice related to a claim. Estate of Bratton v. Nat'l Union Fire Ins. Co. of Pittsburg, PA, et al., 215 F.3d 516, 521 (5th Cir. 2000) (citing Vega v. Nat'l Life Ins. Services, 188 F.3d 287, 299 (5th Cir. 1999)).
The United States Supreme Court has determined that a challenge to a denial of benefits by an administrator pursuant to an ERISA governed plan is to be reviewed by the district court under a de novo standard unless the benefit plan gives the administrator discretionary authority to construe the terms of the plan. Firestone Tire and Rubber Co. et al. v. Bruch, et al., 489 U.S. 101, 115 (1989). The parties do not dispute that the language in the Policy at issue does not grant such authority to the Defendant. Accordingly, the Court shall apply the de novo standard.
However, it is well settled in the Fifth Circuit that the factual determinations made by the Defendant during the course of the Plaintiff's benefit proceeding are reviewed for an abuse of discretion. Bratton, 215 F.3d at 522. A determination that a person is disabled is a factual determination. See Sweatman v. Commercial Ins. Co., 39 F.3d 594, 598 (5th Cir. 1994). Under the abuse of discretion standard, the Court must determine if the plan administrator acted arbitrarily or capriciously. Sweatman, 39 F.3d at 601. A decision is arbitrary when made "`without a rational connection between the known facts and the decision or between the found facts and the evidence.'" Lain v. Unum Life Ins. Co. of Am., 279 F.3d 337, 342 (5th Cir. 2002) (quoting Bellaire Gen. Hosp. v. Blue Cross Blue Shield of Mich., 97 F.3d 822, 828 (5th Cir. 1996)). An administrator's denial of benefits must be "based on evidence, even if disputable, that clearly supports the basis for its denial." Vega v. Nat'l Life Ins. Servs. Inc., 188 F.3d 287, 299 (5th Cir. 1992).
Under Vega, the Court applies a "sliding scale" to the abuse of discretion standard when the administrator has acted under a conflict of interest. Id. at 297. The existence of a conflict is a factor to be considered in determining whether the administrator abused its discretion in denying a claim. Id. "The greater the evidence of a conflict on the part of the administrator, the less deferential our abuse of discretion standard will be." Id. In a situation where a conflict exists, the reviewing court is "less likely to make forgiving inferences when confronted with a record that arguably does not support the administrator's decision." Id. at 298. In the case at bar, the Defendant has an inherent conflict of interest because it is the insurer and has acted as the plan administrator and the claims administrator, determining eligibility for benefits and denying claims made under the Policy. See House v. Am. United Life Ins. Co., 2002 WL 31729483, *5 (E.D. La., Dec. 3, 2002); Lain, 279 F.3d at 343. This will be a factor in the Court's review of the decision.
IV. DISCUSSION
A. Disability
In assessing whether to grant or deny benefits, an administrator must make two determinations. Lain, 279 F.3d at 343 (citing Schadler v. Anthem Life Ins. Co., 147 F.3d 388, 394 (5th Cir. 1998)). First, the administrator must determine the facts underlying the claim. Id. After resolving the facts, the administrator must then determine whether the facts establish a valid claim under the terms of the relevant policy. Id. The Defendant argues that, based on the facts established by the record, the Plaintiff is not disabled as defined under the Policy. The Defendant basis its argument on its conclusion that the Plaintiff could perform a sedentary to light occupation, which included her regular occupation as a vice president of an insurance company.
The relevant provision of the Policy provides:
"Disability" and "Disabled" mean that because of injury or sickness:
1. you cannot perform each of the material duties of your regular occupation . . .
(UACL 00414). The Defendant based its denial of the Plaintiff's claim on its conclusion that the Plaintiff could, in fact, perform each of the material duties of her regular occupation. According to the Defendant, the record does not support the restrictions placed on the Plaintiff by three independent treating physicians. Thus, the Defendant contends that its decision to deny the Plaintiff's claim was proper.
The Fifth Circuit applies a two-prong test when reviewing an administrator's denial of benefits. First, the district court must determine the "legally correct interpretation of the policy." Lain, 279 F.3d at 344 (citing Tolson V. Avondale Indus., Inc., 141 F.3d 604, 608 (5th Cir. 1998)). Second, if the court finds that the administrator failed to apply the legally correct interpretation of the policy, then the court must determine whether the administrator's denial was an abuse of discretion. Id.
1. The Legally Correct Interpretation
In ascertaining the legally correct interpretation of the Policy at issue, the Court must consider the following: (1) whether a uniform construction of the policy has been given by the administrator; (2) whether the interpretation is fair and reasonable; and (3) whether unanticipated costs will result from a different interpretation of the policy. Gosselink v. ATT, Inc., 272 F.3d 722, 726 (5th Cir. 2001) (citing Wildbur v. ARCO Chem. Co., 974 F.2d 631, 637-38 (5th Cir. 1992)).
In the case at bar, there has been no allegation regarding whether the Defendant gave the Policy a uniform interpretation. As to the third question above, the only potential unanticipated cost resulting from a different interpretation than the Defendant's would be that the Defendant has to pay benefits to the Plaintiff and possibly other employees similarly situated. The central issue in this case is whether the Defendant's interpretation of the policy is fair and reasonable.
The Defendant consistently denied the Plaintiff's claim based on its conclusion that the medical documentation did not support the restrictions and limitations placed on the Plaintiff by her treating physician concerning her employment. The Defendant's conclusion hinged in large part on its determination of the duties of the Plaintiff's "regular occupation." The evidence indicates that the Plaintiff's treating physician and the Defendant defined the duties of the Plaintiff's occupation differently.
The Plaintiff defined her occupation based on her job description and the duties that she performed prior to the onset of her disability. These duties involved mostly non-physical, but highly stressful activities. The Plaintiff was a successful insurance executive with many responsibilities, including brokering million dollar deals in a fast-paced, highly competitive setting. Such work required mental acuity, concentration, focus, and the ability to perform many tasks simultaneously. As indicated above, Catlin eliminated many of the stressful aspects of the Plaintiff's position temporarily, which essentially stripped the Plaintiff's position of its central functions. The accommodations were burdensome on the company and the other employees and were never intended to be permanent.
Despite the fact that Catlin and the Plaintiff repeatedly indicated that the modifications were made as a temporary measure, the Defendant defined the Plaintiff's occupation based on the modifications and accommodations provided by Catlin. The Policy did not define the term "regular occupation." In the Fifth Circuit, it is well-settled that, in construing the language of an ERISA plan, federal law must follow the doctrine of contra proferentem, which directs that when plan terms are ambiguous, courts construe them strictly in favor of the insured. House, 2002 WL 31729483, *6. "Where the term `regular occupation' is not defined in the Plan, a fiduciary must adopt an appropriate description of the claimant's occupation." Id. (citing Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 242, 252 (2nd Cir. 1999). Although the Defendant received a description of the Plaintiff's regular occupation and a letter from Catlin indicating that the modifications it made were temporary, the Defendant declined to adopt an objectively reasonable job description based upon the facts. Furthermore, the Defendant failed to evaluate the Plaintiff's medical condition against the rigors of the material duties of her regular occupation. Rather, the Defendant denied the Plaintiff's claim based on its conclusion that she was capable of performing a light exertional level occupation, as evidenced by the duties she was able to perform for Catlin after her illness.
Today's rapid paced business environment does not foster the kind of loyalty between employees and employers that used to exist. In this case, Catlin valued the Plaintiff and was willing to undergo a significant amount of inconvenience in the hopes that the Plaintiff would fully recover and be able to resume her full work duties. Prior to the onset of her illness, the Plaintiff was an executive, a founding member of the company, and an excellent worker. When it became clear that the Plaintiff would not recover, Catlin was forced to terminate the Plaintiff because Catlin could not continue to accommodate the Plaintiff's condition on a permanent or indefinite basis.
Under these circumstances, the Defendant's use of the modified duties in its determination of the Plaintiff's ability to perform the material duties of her "regular occupation" is contrary to the plain language of the policy. A fair and reasonable interpretation of the Plaintiffs "regular occupation" would include those duties required and performed by the Plaintiff prior to the onset of her disability and prior to the modifications and accommodations made by Catlin. Accordingly, the Court finds that the Defendant incorrectly interpreted the terms of the Policy by defining the Plaintiff's "regular occupation" based on the temporary modifications and accommodations provided by Catlin.
2. Abuse of Discretion
The Court now turns to whether the Defendant's interpretation of the Policy, while legally incorrect, constitutes an abuse of discretion. A legally incorrect interpretation of a policy does not in itself demonstrate an abuse of discretion. Lain, 279 F.3d at 346. The Fifth Circuit considers the following four factors to determine whether there has been an abuse of discretion: (1) the plan's internal consistency under the administrator's interpretation; (2) any relevant regulations; (3) the factual background underlying the decision; and (4) any indication of lack of good faith. Wildbur v. ARCO Chem. Co., 974 F.2d 631, 638 (5th Cir. 1992).
The first and second factors are not at issue in this case. Regarding the third factor, "[t]o find an absence of abuse of discretion, [this] court must scour the record and pleadings for any legal basis upon which the administrator could have based [its] interpretation." Lain, 279 F.3d at 346 (citing Kennedy v. Electricians Pension Plan, 954 F.2d 1116, 1124 (5th Cir. 1992).
Throughout the claim process, the Defendant consistently maintained that the medical information provided by the Plaintiff did not support any restrictions or limitations from her regular occupation. The Defendant did not dispute that the Plaintiff suffered from congestive heart failure and idiopathic dilated cardiomyopathy nor that her condition could be classified as NYHA Class II. However, the Defendant found that the medical information indicated that the Plaintiff's condition was improving and that the Plaintiff's functional capacity was such that she could perform the duties of her occupation as modified by her employer. In making this determination, the Defendant relied in large part on the following conclusions of its vocational rehabilitation consultant:
While it appears as though the insured's occupation in the national economy is in the sedentary exertional level, as performed for her employer it would be considered light due to her report of travelling [sic]. Per the referral and the original employer's statement, the insured was relieved of the duties that exacerbated her condition such as business travel, stressful assignments, and her hours were reduced. While the on site job analysis performed by John Yent on 10/15/01 indicated that the insured's job as performed for the employer was in the medium exertional level, this was apparently taking into consideration the weight of the luggage and business materials she traveled with. Traveling is considered to fall in the light exertional level given the walking and carrying of most individuals. With the availability of valets, sidewalk luggage check-in stations and motorized carriers inside airports, it is unusual for an individual to be required to carry their own belongings, other than a purse or briefcase, which would fall under the light exertional level. Therefore, per Dr. Hashaway's review and the on site job analysis description of tasks other than travel, it appears as though the insured is not precluded from her own occupation as it was modified by her employer or as it is described in the national economy.
(UACL 01018). Dr. DiDonna, the Defendant's main reviewing physician, concluded that the Plaintiff's condition limited her ability to perform some physical activity, but opined that patients who are in Class II:
can perform to completion any activity requiring less than 5 metabolic equivalents such as sexual intercourse without stopping, gardening, raking, reading, roller skating, dancing the Foxtrot, and walking at 4 miles per on level ground. However, they cannot perform to completion activities requiring greater than 7 metabolic equivalents. Some of these activities would include carrying objects of 80 lbs., doing outdoor work such as shoveling snow or spading, doing recreational activities such as skiing, basketball, handball, jogging, or walking 5 miles per hour.
(UACL 01214). Neither the vocational rehabilitation consultant nor Dr. DiDonna ever examined the Plaintiff in person. They based their conclusions merely on a review of the Plaintiff's medical record and a generic definition of the types of physical activities that one classified as NYHA Class II can perform. Importantly, the Defendant seemingly ignored the non-physical aspects of the Plaintiff's position.
Admittedly, the Plaintiff's occupation was not physically demanding. According to Dr. Bourgeois, the Plaintiff's treating physician, the Plaintiff could and should engage in moderate exercise. However, Dr. Bourgeois repeatedly advised that she modify her lifestyle to reduce stressful and tiring situations. Indeed, the Plaintiff's main complaints were lack of an ability to sustain mental concentration and fatigue when attempting to do so.
Even if the Plaintiff could perform the sedentary, but highly stressful, aspects of her position, she could not physically tolerate the amount of travel her position required. The Court is not persuaded by the conclusions drawn by the Defendant's vocational rehabilitation consultant regarding travel. In today's world, air travel is both physically and mentally demanding. One does not know what one will confront upon arrival at an airport. Thus, travelers must arrive early and often stand in long lines awaiting security screenings. With increased security concerns, travelers are routinely required to remove their shoes, belts, and jewelry, and to consent to a search of their bags. Upon arrival at the departing gate, one might discover that one's flight has been cancelled or delayed. Once aboard the plane, travelers often sit in cramped and uncomfortable seats for various lengths of time. All of these experiences are stressful, physically tiring, and mentally draining for even a healthy traveler, much less one with a heart condition such as the Plaintiff.
A fair reading of the Policy supports the view that in order to be considered disabled, the Plaintiff must be unable to perform the material duties of her regular occupation due to injury or sickness. Plaintiff's medical conditions and disability are sufficiently evidenced in the record. The Defendant based its denial on a incorrect definition of the Plaintiff's occupation and a myopic view of the demands of that position. The evidence before the Court indicates that the Plaintiff does qualify as disabled under the Policy. It was unreasonable for the Defendant to focus on the purely physical aspects of the modified position in making its determination. Accordingly, the Court finds that the Defendant abused its discretion in denying the Plaintiff's claim.
B. Active Employment
The Defendant contends that if the Plaintiff qualifies as disabled under the Policy, she is nonetheless ineligible to receive benefits because she was not "actively employed" as required when she filed her claim. Under the terms of the Policy, an employee must be in "active employment" to be enrolled in the plan. That is, an employee is not eligible to participate in the plan and be eligible for benefits under the Policy unless the employee meets the requirements of active employment. In order to be in active employment, an employee must work on a full-time basis, a minimum of thirty hours per week. (UACL 651). The Policy also provides that insurance coverage terminates upon cessation of active employment. That is, one is no longer enrolled or eligible to participate in the plan if one changes to a part-time position or ceases employment altogether.
The Defendant interprets this provision of the Policy to require a claimant to be working thirty (30) hours per week at the employer's usual place of business at the time a claim is made. Thus, according to the Defendant, the Plaintiff is not entitled to benefits because at the time she made her claim she was working sporadically and sometimes from home. That is to say, she was working under the temporary modifications Catlin allowed.
In support of its interpretation, the Defendant cites the Court to two cases: Self v. Life Assurance Company of Carolina, 227 S.E.2d 636 (N.C.Ct.App. 1976); Carazo v. Jefferson Pilot Life Insurance Company, 764 F. Supp. 4 (D. Puerto Rico 1991). The Court finds the facts of these two cases distinguishable from the case at bar.
Carazo involved death benefits on a life insurance policy. The plaintiff was ill and in the hospital when a new policy rider went into effect which would have provided greater benefits than the prior terms of the policy. The plaintiff died shortly after the rider went into effect and never returned to employment. The court found that the plaintiff's beneficiaries were not entitled to the benefits provided under the rider because the plaintiff had not been in active employment when the rider went into effect. Carazo dealt with an amendment to a policy that went into effect eleven days before the plaintiff died. There was no question in that case that the plaintiff was covered under the policy, just that the rider did not become effective as to him. The Court is not confronted with an amended policy in this case.
In Self, the plaintiff brought an action to recover medical and disability benefits under a group insurance policy issued to his employer. The policy at issue required employees to be employed on a full-time basis in order to be enrolled in the plan. In April 1974, the plaintiff changed his employment status to semi-retired. As such, his salary and work hours were officially reduced on a permanent basis. Thereafter, he became ill and applied for benefits under the policy. The court found that the plaintiff was not entitled to benefits because his enrollment in the plan ceased when his employment status changed. The court held, ". . . that a person, such as the plaintiff in this case, who is scheduled to work only two days a week when other employees work six, and who actually works even less than this limited schedule, cannot reasonably be considered as being `employed on a full-time basis'." Self, 227 S.E.2d at 639. Thus, the court based its holding on the fact that the plaintiff had changed permanently his position from that of a full-time employee to a part-time employee, one "scheduled to work only two days a week."
In contrast, the Plaintiff in the instant matter never changed her employment status. Had her sickness been temporary, it is reasonable to conclude that the Plaintiff would have taken off some time to recover, or worked for a period of time under some modified program, and then returned to work full time. Under the Defendant's interpretation of the Policy, an employee who took sick time, or vacation time, would fall in and out of coverage as that employee fell in and out of "active employment." That is, an employee would only be covered for those weeks that the employee literally worked at least thirty (30) hours at the employer's regular place of business. Such an interpretation strains logic. People get sick and take vacations and do not cease to be enrolled in their insurance plans. Once an employee becomes eligible for enrollment in a group insurance plan such as the Policy in this case, coverage is continuous until that employee's status changes. Under the Defendant's interpretation, an employer could prevent an employee from making a claim by simply prohibiting the employee from working thirty (30) hours per week regardless of the status of the employee or the temporary nature of allowing an employee to work reduced hours. The Court is not persuaded by the Defendant's interpretation.
The Court finds that the "active employment" provision in the Policy is ambiguous as a matter of law. Applying the doctrine of contra proferentem, the Court construes the ambiguous term in favor of the insured. See House, 2002 WL 31729483, *6. The Court concludes that the "active employment" provision in the Policy defines the beginning and ending points of an otherwise continuous period of coverage. An employee does not fall out of "active employment" when that employee's position is temporarily modified due to illness, vacation, or other reasons, unless the employee's status changes. Such was not the case here and, any other conclusion would lead to absurd consequences.
V. BENEFITS
The Court finds, therefore, that the Plaintiff has been disabled as defined by the Policy since the date of her separation from employment, May 31, 2001. Therefore, it follows that the ninety (90)-day elimination period commenced to run from that date. Thus, the Plaintiff is entitled to benefits beginning August 30, 2001.
The Policy defines disability in two stages: (1) the first twenty-four months of disability; and (2) the period after the first twenty-four months until the employee obtains the age of sixty-five years provided the employee continues to meet the definition of disability throughout that time (UACL 00414). The Plaintiff asks the Court to award both stages of benefits and find that the Plaintiff is currently disabled, as of the date of this Court's judgment. The Court declines to award benefits beyond the initial twenty-four (24) month period. The Plaintiff will have to pursue benefits under this second stage in a separate proceeding. Accordingly, the Court finds that the Plaintiff is entitled to benefits for the twenty-four (24) month period beginning August 30, 2001 and ending August 30, 2003.
VI. ATTORNEY'S FEES
The Fifth Circuit has held that a district court may award attorneys' fees upon finding an abuse of discretion of the part of an administrator in denying benefits. Vega, 188 F.3d at 302. In determining whether to award attorneys' fees, a district court should consider the following factors: (1) the degree of the opposing party's fault or bad faith; (2) the ability of the opposing party to satisfy an award of attorneys' fees; (3) whether an award of attorneys' fees would deter other persons acting under similar circumstances; (4) whether the party requesting the fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself; and (5) the relative merits of the respective parties' positions. Lain, 279 F.3d at 437-48 (citing Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255, 1266 (5th Cir. 1980).
In this case, the Court had found that the Defendant abused its discretion in denying benefits under the Policy. The Court finds the denial particularly abusive in this case because it involved an employee who was making her best effort to continue to work despite serious medical conditions and an employer who cared enough about its employee to allow her some reasonable recovery time before terminating her. The Court will not punish this laudable behavior by adopting the Defendant's flawed interpretation of the Policy. Under the circumstances of this case, the Court finds an award of attorneys' fees appropriate. The Court will hold a separate hearing at a future date to determine the appropriate amount of fees to award.
VII. CONCLUSION
In summary, the Court finds that the Plaintiff became disabled as of May 31, 2001. The Court further finds that the ninety (90)-day elimination period commenced to run on that date. Thus, the Plaintiff is entitled to receive benefits from the Defendant for twenty-four (24) months as provided under the Policy beginning on August 30, 2001. The benefits owed are $6000 per month less any Social Security benefits received by the Plaintiff during this twenty-four (24) month period.
Accordingly and for the foregoing reasons, the Defendant's Motion for Summary Judgment should be and hereby is DENIED, and the Plaintiff's Motion for Summary Judgment is GRANTED.