Opinion
CIVIL NO. 98-5423 (JBS),
November 29, 1999
Steven L. Rothman, Esq., Gary D. Wodlinger, Esq., Lipmann, Antonelli, Batt, Dunlap, Wodlinger Gilson, Vineland, N.J., Attorneys for Plaintiff Gregory Forchic.
Maeve E. Cannon, Esq., Hill Wallack, Trenton, N.J., Attorney for Defendant Standard Insurance Company.
OPINION
Plaintiff Gregory Forchic was injured on January 12, 1996 when a roof caved in under the pressure of snow at his workplace. In 1997, he filed for long term disability insurance benefits under his company's Long Term Disability Insurance Policy with defendant Standard Insurance Company, who acted as both insurer and ERISA plan administrator. Defendant determined, based on the forms plaintiff's company filled out when obtaining insurance, on plaintiff's tax returns, and on plaintiff's high salary, that plaintiff was a Chief Executive Officer ("CEO"), and it further determined, in four separate evaluations of plaintiff's records, that plaintiff was released to, and could, perform the material duties of that position within ninety days of the accident. Having made those determinations, defendant found that plaintiff was not entitled to long term disability benefits under the policy because he did not satisfy the ninety day benefit waiting period and because plaintiff ceased to be a member eligible for benefits when he did not return to work after he was released to do so. Plaintiff challenged those determinations, arguing that defendant was aware, based on the claim form that plaintiff filled out over a year after the accident, that plaintiff was, in reality, a pressman, and not a CEO. Plaintiff filed this lawsuit against defendant for damages and declaratory relief that the policy remains in full force, arguing that defendant's decision to deny benefits was improper.
As explained in more detail below, the lawsuit, originally filed in state court, had additional plaintiffs and additional defendants, but the counts involving those extra plaintiffs and defendants were remanded to state court by consent order. Only the two parties remain, and only these issues remain in dispute.
Now before the Court is defendant's motion for summary judgment. Defendant contends that its decision to deny benefits was neither arbitrary nor capricious, and thus that this Court should uphold its decision. Plaintiff contends that this Court should conduct de novo review of the decision, and that regardless of whether this Court conducts de novo review or limited review under an arbitrary and capricious standard, defendant's decision cannot withstand scrutiny. This Court is called upon to decide what the proper standard of review is, and then to apply that review to the record. As the rest of this Opinion explains, this Court agrees with defendant that its interpretation of the policy was legally correct and that its factual findings and ultimate decision were neither arbitrary nor capricious. As a result, this Court will grant summary judgment to the defendant, and this case will be dismissed.
In support of its motion for summary judgment, defendant submitted (via the Frank Certification) the entire record which it considered when denying benefits, as well as a copy of the policy and the census form which AFL filled out in applying for a policy. Plaintiff also submitted the policy, as well as an affidavit of Gregory Forchic (which provides background information describing what his job at AFL actually entailed), as well as a newspaper article, a police report of Mr. Forchic's accident, doctors' reports, insurance forms, and various other documents. To the extent that these documents are copies of portions of the defendant's exhibits (the policy, insurance forms, and other documents contained within the record before Standard), this Court will consider them but will cite to the exhibit number and page number listed in the Frank Certification. To the extent that plaintiff's submissions contain documents and information (such as the newspaper article or the statements in the Forchic Affidavit) which were not in the record before Standard, this Court will not consider them. For the reasons explained below, this Court's review is limited to the record as it existed when defendant made its decisions to deny LTD benefits.
A. The Policy
Defendant Standard Insurance Company ("defendant" or "Standard") issued a Group Long Term Disability Policy to AFL Quality, Inc. ("AFL"), Policy No. 622087 ("the policy"), that became effective on August 14, 1995. (Defendant's Local Rule 56.1 Statement of Undisputed Material Facts ¶ 1.) The policy provides coverage for all members, defined as active employees who are citizens or residents of the United States or Canada, regularly working at least thirty hours a week. (Frank Cert. Ex. C at Bates 292.) Eligibility begins on the Group Policy Effective Date so long as one was a member on that date; for all persons who become members after that date, eligibility begins on the first day of the calendar month following 90 consecutive days as a member. (Id.) Eligibility for insurance ends on the date one ceases to be a member, except that if the reason that one ceases to be a member is because he or she is not working the required thirty hour a week minimum, insurance continues through the benefit waiting period and while Long Term Disability benefits ("LTD benefits") are payable. (Id. at Bates 306.)
Hereinafter cited as "Defendant's 56.1 Statement ¶."
The policy provides that if a member becomes "Disabled while insured under the Group Policy, we [Standard] will pay LTD Benefits according to the terms of the Group Policy after we receive satisfactory Proof of Loss." (Id. at Bates 295.) The policy provides several definitions of what constitutes a member, none of which are relevant to the present dispute except for the "Own Occupation Definition of Disability": if, during the Benefit Waiting Period ("BWP") and the Own Occupation Period ("OOP"), "as a result of Sickness, Injury, or Pregnancy, you are unable to perform with reasonable continuity the material duties of your own occupation." (Id.) The BWP is 90 days (id. at Bates 293), during which time an individual "must be under the ongoing care of a Physician." (Id. at Bates 302.)
Under the policy, defendant reserved the discretion and authority to interpret the policy and "resolve all questions arising in the administration, interpretation, and application of the policy." This includes the right to determine entitlement to benefits, and any decision in the exercise of defendant's authority is said to be "conclusive and binding." (Id. at Bates 303-Bates 304.)
B. The Injury and Doctor's Visits
On January 12, 1996, plaintiff was injured in a work-related accident when the roof over the pressroom at the AFL site collapsed. (Defendant's 56.1 Statement ¶ 6.) It is undisputed that at the time of the accident, plaintiff was a member under the insurance policy and was eligible for insurance.
After the accident, in connection with his worker's compensation claim, plaintiff was sent to see Dr. Burton Pearl, who examined him on numerous occasions. The record contains letters from Dr. Pearl dated February 19, March 5, March 26, and April 8, 1996. The February 19 report indicates that upon examination, plaintiff (who had been treated with rest and medication by his family physician, Dr. Carey) had full motion of the cervical spine, local tenderness on the chest wall, full flexion in the lumbosacral spine and full lateral bending, normal straight leg raising, and neurologically sound lower extremities. (Frank Cert. Ex. C at Bates 166-Bates 167.) Though Dr. Pearl's review of the x-rays found some mild degenerative changes in the lumbosacral spine, he found that the rib cage injury and back strain were healing. (Id. at Bates 167.) He encouraged plaintiff to increase his activities and stretch, and he anticipated that plaintiff could return to work in a relatively short amount of time. (Id.) On March 5, 1996, Dr. Pearl found that there was some residual pain, local tenderness, and loss of extension in plaintiff's low back, but that plaintiff was neurologically sound. (Id. at Bates 153.) By March 26, 1996, Dr. Pearl found essentially the same results and noted that plaintiff "has reached a plateau as far as recovery is concerned." (Id. at Bates 156.) He suggested that plaintiff exercise, lose weight, and lift with his knees, and he stated that plaintiff "should be able to return back to employment on Monday, April 1, 1996." (Id.) Dr. Pearl saw plaintiff one last time on April 8 as a result of plaintiff's subjective complaints; again he noted that plaintiff had reached a plateau in recovery and stated "[a]gain, I have discharged Gregory and will see him back as needed." (Id. at Bates 168.)
The record does not include any information from Dr. Carey, though it does include a January 18, 1996 letter from Dr. Linda Schmuker, M.D., to Dr. Carey which indicates no evidence of fracture or skeletal abnormality and which made normal findings.
After that April 8 visit, plaintiff next visited Dr. Lambert of the University of Medicine and Dentistry of the New Jersey School of Osteopathic Medicine. The record contains Dr. Lambert's notes and records of July 15 and 29, August 12 and 23, 1996, which describe plaintiff's complaints and note that plaintiff swims daily, though his shoulder hurts afterwards. (Id. at Bates 93-Bates 95.)
A July 23, 1996 report of physical therapist Jim Shimp, indicates that he saw plaintiff and recommended therapy three times a week for four weeks. (Id. at Bates 97.) The record does not contain further notes from the physical therapist, but plaintiff did indicate to Dr. Henry David (in July of 1997) that he did go to those four weeks of physical therapy. (Id. at Bates 73-Bates 74.)
Dr. Goldstein first saw the plaintiff on January 13, 1997, at which point plaintiff indicated that he had been treated by Dr. Pearl after the accident, as well as several other doctors. (Id. at Bates 65-Bates 66.) Based on physical examination and a review of plaintiff's records, Dr. Goldstein found degenerative left knee disease that had been aggravated by the accident, plus lumbosacral sprain and right hip symptomology. (Id. at Bates 69.) He prescribed medicine but believed that plaintiff could not return to his pre-accident status as a result of his permanent symptoms. (Id.)
Dr. Goldstein ordered MRIs of plaintiff's left knee and lumbar spine, which were performed on January 16, 1997. The lumbar spine MRI found degenerative disk disease, broad-based annular bulging without significant spinal canal or neural foraminal stenosis, and narrow signal abnormality, while the left knee MRI found severe tricompartmental osteoarthritis, chronic avulsion, sprain patterns, moderately large joint effusion, and nonvisualization of the medial meniscus. (Id. at Bates 54-Bates 56.) A January 27, 1997 follow up consultation led Dr. Goldstein to believe that plaintiff's functional status would not change and that plaintiff should adapt his behavior. (Id. at Bates 136-Bates 137.) He also saw plaintiff on March 6, 1997, at which time he gave plaintiff more medication. (Id. at Bates 134.)
Dr. David saw plaintiff on July 17, 1997 and evaluated him as having an acute and chronic lumbosacral strain, degenerative lumbar arthritis, degenerative disease of the left knee, and a contusion and strain of the left knee. (Id. at Bates 76.) Dr. David did find some permanent impairment. (Id.) Additionally, Dr. David described (as plaintiff related to him) plaintiff's continuing treatment in physical therapy in 1996 and visits with various doctors in 1997 (including Drs. Goldstein, Mahoney, and Cotler). (Id. at Bates 73-Bates 74.)
Finally, Dr. Richard Rubin examined plaintiff psychiatrically on August 26, 1997, diagnosing plaintiff as having post traumatic stress disorder which lapsed into chronic adjustment disorder with mixed emotional features. (Id. at Bates 80.)
C. Plaintiff's Filing of Claim
On March 25, 1997, defendant received plaintiff's claim for LTD benefits. (Id. at Bates 212-Bates 219.) On his form, plaintiff stated that his occupation was "Owner-Pressman" and claimed that he became disabled on January 12, 1996. (Id. at Bates 217.) He explained: "I am a pressman and can not stand on my feet or bend over for any length of time because of the pain in my back and knee there for I can not run the press." (Id.) He stated that his salary was $15,000 a week. (Id. at Bates 219). Though the claim form asks the claim applicant to attach a job description, an employment application or resume, an enrollment form for LTD insurance, and documents reflecting income from other sources (id. at Bates 216), the job description and employment application/resume do not appear in the record.
D. The First Evaluation
Defendant undertook an evaluation of plaintiff's claim on May 19, 1997. Based on its review of the record, defendant concluded that plaintiff did not satisfy the 90-day BWP. (Id. at Bates 25.) According to the letter denying benefits, defendant reviewed the medical documentation in the file, including records from Dr. Goldstein (who plaintiff listed as his treating physician) and information forwarded from the AFL worker's compensation carrier, including the reports of Dr. Pearl. (Id.)
Based largely on Dr. Pearl's reports and citing the 90-day BWP, defendant stated that since plaintiff first became disabled on January 13, 1996, his 90-day BWP would have ended April 12, 1996. (Id. at Bates 25.) Noting that "[c]urrent medical information indicates you were released to return to work on April 1, 1996," defendant found that plaintiff did not satisfy the BWP and denied his claim. (Id.) The denial letter further indicated that plaintiff never returned to work in his "own occupation" of Executive/CEO; because plaintiff was released to work and did not return to do so (and was thus not working 30 hours a week or more), defendant noted that plaintiff ceased to be a member on April 1, 1996 and was no longer covered as an insured. (Id. at Bates 26.)
In this first evaluation letter, defendant noted that plaintiff began to seek treatment with Dr. Goldstein on January 16, 1997 as a result of a motor vehicle accident. (Id.) Defendant did not describe the contents of Dr. Goldstein's reports. Regardless of the origin of plaintiff's back problems, defendant said, Dr. Goldstein's comments were not relevant because plaintiff's insurance had ended on April 1, 1996, prior to the time he first sought treatment with Dr. Goldstein on January 16, 1997. (Id.) Further, defendant indicated that there appeared to be a gap in treatment from April 8, 1996 (when plaintiff last saw Dr. Pearl) until January 14, 1997, thus leading defendant to conclude that plaintiff had not been "under the regular care and treatment of a physician during the entire" BWP, as required by the policy. (Id.)
Defendant recognized that plaintiff claimed on his claim form (which was filled out over a year after the accident) that his occupation was as a pressman, but found that the statement on the claim form was inconsistent with the census information provided by AFL when it purchased the policy, which stated that plaintiff was CEO (see id. at Ex. C, Bates 286), and with plaintiff's statements in his income tax returns that his occupation was as Executive (see id. at Ex. A, Bates 231-Bates 284 [returns for 1995 and 1996]). (Id. at Bates 26.) Noting that plaintiff might have performed some of the pressman duties despite the fact that he was a CEO/Executive, "these are not considered to be material duties of your own occupation as CEO." (Id.)
Thus, defendant denied plaintiff's claim because he failed to meet the 90-day BWP and because any disability after that time would not be covered because plaintiff was no longer insured under the policy. (Id.) Plaintiff was given sixty days in which to seek review of this determination and to submit documentation of limitations which would prevent him from performing the material duties of his job as CEO beginning April 1, 1996 as well as documentation of ongoing care between April 1, 1996 and January 14, 1997. (Id.)
E. The Second Evaluation
On September 12, defendant (through an independent quality assurance department) completed a second evaluation. Defendant noted that plaintiff did not send the additional information that he had promised, and so defendant evaluated plaintiff based on the evidence already in plaintiff's file. (Id. at Bates 22.) Defendant agreed with the findings and conclusions of the earlier review. (Id.)
Defendant's second letter reviewed Dr. Goldstein's findings and noted that while plaintiff might have been experiencing continuing pain, the evidence did not support that he could not perform the material duties of his own occupation beyond the 90-day BWP, especially because plaintiff was no longer insured by the time he saw Dr. Goldstein. (Id. at Bates 23.) The letter emphasized that defendant determined that the material duties of plaintiff's occupation at Executive/CEO by looking to the definition of that job as it exists in the general labor market; more specifically, the U.S. Department of Labor's Dictionary of Occupational Titles classifies this as a sedentary occupation. (Id.) Plaintiff was given thirty days in which to submit any additional information. (Id.)
F. The Third Evaluation
Defendant undertook a third independent evaluation on April 2, 1998. This included review of newly submitted evidence including the letter from Dr. Schmuker to Dr. Carey, the July 23 report of physical therapist Jim Shimp, Dr. Lambert's records from July and August of 1996, Dr. David's July 1997 report, and Dr. Rubin's August 1997 report. Defendant also re-reviewed Dr. Goldstein's findings, as well as reports by defendant's own physician consultants specializing in orthopaedics, which noted that individuals with chronic lumbosacral sprain can usually do sedentary or light work on a full-time basis, as can people with degenerative knee arthritis, and that plaintiff's records do not indicate otherwise. (Id. at Bates 19.)
Defendant again noted that income tax returns and the census form establish him as CEO, as does plaintiff's very high salary. (Id.) Finding that none of the records of degenerative changes of osteoarthritis discredit Dr. Pearl's assessment of work capacity, especially because there was no regular treatment or objective findings between April 8, 1996 and January 13, 1997, other than short term physical therapy. (Id. at Bates 20.) Further, defendant reemphasized that plaintiff's insured status thus ended after April 1, 1996, and any claims after that date would be denied because plaintiff was no longer insured. (Id. at Bates 21.)
All of the other doctors' visits were in 1997.
G. The Fourth Evaluation
On June 26, 1998, defendant (through its independent quality assurance department) evaluated plaintiff's claim. Based on its review, defendant noted that plaintiff received no treatment between March 26, 1996 and July 15, 1996, when plaintiff saw Dr. Lambert on the first of four occasions, and between August 12, 1996 (plaintiff's last appointment with Dr. Lambert) and the January 1997 visit to Dr. Goldstein. (Id. at Bates 6.) The four weeks of physical therapy, as defendant noted, took place in July and August; there was no treatment for approximately three months after Dr. Pearl released plaintiff for work and four months between the end of visits with Dr. Lambert before plaintiff saw Dr. Goldstein.
Defendant stated that plaintiff was no longer insured when he sought treatment in the summer of 1996, so none of the reports of doctors after April 1996 support that his condition was so severe as to preclude him from doing his job in the 90 days following his accident.
Plaintiff having exhausted the administrative review process, defendant's review of the situation was complete and its decision final.
H. This Lawsuit
On September 20, 1998, plaintiff Forchic (along with his wife and AFL) filed the instant Complaint in the Superior Court of New Jersey, Law Division, Gloucester County against Standard Insurance Company and a host of individuals and firms that plaintiff believed was responsible for the roof caving in at the AFL worksite. On the basis of federal question jurisdiction under 28 U.S.C. § 1441 and 1446 (because the Policy is subject to the Employee Retirement Income Security Act ["ERISA"], 29 U.S.C. § 1001 et seq.), defendants removed the matter to this Court. The Complaint alleges a total of thirteen counts. The first eleven counts allege various acts of state law negligence and breach of duty against the individual and firm defendants based on the roof caving in under the weight of snow. The Complaint also names Forchic's wife and AFL as plaintiffs for those counts. On February 9, 1999, Magistrate Judge Joel B. Rosen signed a consent order entered into by the parties which remanded those eleven counts back to the District of New Jersey.
Remaining in the case are the last two counts, which solely involve Forchic as a plaintiff and Standard as a defendant. In Count Twelve, plaintiff alleges that defendant wrongfully denied his claim and that he is entitled to damages in the amount of monthly payments due and owing as well as future monthly payments. In Count Thirteen, plaintiff asks for declaratory judgment that the Policy is in full force and effect such that Forchic is still an insured and is to be provided benefits on a continuous basis.
On May 28, 1999, defendant moved for summary judgment. This Court's task is to first determine the proper standard of review and then to apply that standard. Carrying out these tasks, this Court finds that defendant's decision on plaintiff's claim was proper. This Court will grant summary judgment, and this case will be dismissed.
II. DISCUSSION
A. Summary Judgment Standard
Summary judgment is appropriate when the materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c);see Hersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir. 1986). A dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the non-moving party." See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is "material" only if it might affect the outcome of the suit under the applicable rule of law.Id. Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment. Id. In deciding whether there is a disputed issue of material fact the court must view the evidence in favor of the non-moving party by extending any reasonable favorable inference to that party. See Aman v. Cort Furniture Rental Corp., 85 F.3d 1074, 1080-81 (3d Cir. 1996). The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party."Liberty Lobby, 477 U.S. at 250.
B. What Level of Review Applies
Both parties recognize that the instant case falls under ERISA, 29 U.S.C. § 1001 et seq., because the policy which defendant issued to plaintiff's company is an ERISA plan, but they disagree as to the appropriate standard of judicial review of benefit determinations. Plaintiff urges this Court to review defendant's decision de novo, while defendant argues that this Court should determine simply whether defendant's decision to deny benefits was arbitrary and capricious based upon the evidence before defendant at the time defendant made its decision. As explained below, this Court finds that while case law would require this Court to conduct de novo review as to whether defendant correctly interpreted the language of the policy as a matter of law, because defendant did correctly interpret the language, defendant's factual determinations that plaintiff did not satisfy the 90-day BWP and that plaintiff was no longer eligible for insurance after April 1, 1996 are subject only to arbitrary and capricious review.
As the Supreme Court explained in Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989), ERISA provides "a panoply of remedial devices for participants and beneficiaries of benefit plans," including the right to sue to recover benefits due under the plan and to obtain a declaratory judgment that the plaintiff is entitled to continuing benefits. Id. (internal citation omitted) (discussing 29 U.S.C. § 1132(a)(1)(B)). The Court then went on to discuss the appropriate standard of judicial review of denials of benefits based on plan interpretations, finding that courts should engage in de novo review of a denial of benefits "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility of benefits or to construe the terms of the plan," in which case arbitrary and capricious review is appropriate. Firestone, 489 U.S. at 115. The Supreme Court noted, however, that where the fiduciary who has been given discretionary authority operates under a conflict of interest, the conflict must be weighed in determining whether there was an abuse of discretion. Id.
In 1996, the Third Circuit agreed that a conflict of interest may be a factor when deciding if a denial of benefits was arbitrary and capricious. Epright v. Environmental Resources Mgmt, Inc., 81 F.3d 335, 340 (3d Cir. 1996). However, because of other issues in that case, the Third Circuit did not need to consider in that case whether the plan administrator, who was also a part owner of the company for which the plaintiff worked, was operating under a conflict of interest. Id. Consequently, the Third Circuit neither defined what constitutes a conflict of interest nor explained how to integrate such a conflict into arbitrary and capricious review.
In Brown v. Blue Cross and Blue Shield of Alabama, Inc., 898 F.2d 1556 (11th Cir. 1990), the Eleventh Circuit set out to develop "a coherent method for integrating factors such as self-interest into the legal standard for reviewing benefits determinations." Id. at 1561. The appellate court noted that "[t]he inherent conflict between the fiduciary role and the profit-making objective of an insurance company makes a highly deferential standard of review inappropriate." Id. at 1562. Nonetheless, the Eleventh Circuit found that de novo review was inappropriate, for that would deny the insurer of the bargain that it made (that it would have discretionary review), and that the arbitrary and capricious (or abuse of discretion) standard of review applies, although in a manner shaped by the conflict of interest. Id. at 1563. The Eleventh Circuit explained that courts should not concern themselves with the self-interest of the fiduciary unless the fiduciary's interpretation of the policy provisions is "`wrong from the perspective of de novo review.'" Id. at 1567 n. 12. By this, the Eleventh Circuit meant that the first step is to determine whether the fiduciary's interpretation of the plan was legally correct. Id. at 1567 n. 12 and 1570. If the interpretation is wrong but reasonable, the decision may still be called arbitrary and capricious "if it advances the conflicting interest of the fiduciary at the expense of the affected beneficiary unless the fiduciary justifies the interpretation on the ground of its benefit to the class of all participants and beneficiaries." Id. at 1567. If the interpretation of the policy provision is legally correct, the reviewing court then turns to arbitrary and capricious review of the decision. Id. at 1568.
In applying this step of the test, the Eleventh Circuit stated that it must first determine if the beneficiary "proposed a sound interpretation of the plan, one that can rival the fiduciary's interpretation." Id . at 1570. If the beneficiary does not propose a different sound interpretation of the language, or if the fiduciary can show that its interpretation benefits more beneficiaries as a whole, then the interpretation is neither arbitrary nor capricious. Id .
Though the Third Circuit itself has not spoken on this subject, several district courts in the Circuit have. More specifically, Judge Orlofsky of the District of New Jersey adopted this test in Rizzo v. Paul Revere Ins. Group, 925 F. Supp. 302 (D.N.J. 1996), and the Third Circuit affirmed the judgment, Rizzo v. Paul Revere Ins. Group, 111 F.3d 127 (3d Cir. 1997). In Rizzo, Judge Orlofsky, applying the Brown test, first determined that the insurance company/plan administrator correctly construed the relevant policy provisions. Rizzo, 925 F. Supp. at 310. Next, he reviewed the administrator's decision, based on the record before the administrator, under the "arbitrary and capricious" standard. Finding that the plan administrator's factual determinations and choices of evidence upon which to rely did not abuse its discretion, Judge Orlofsky granted summary judgment to the plan administrator. Id. at 311.See also Morris v. Paul Revere Insurance Group, 986 F. Supp. 872 (D.N.J. 1997).
This Court agrees with the Third Circuit and the Supreme Court that where conflicts of interest exist, reviewing courts should be more careful in applying arbitrary and capricious review. The situation in which an insurance company plays dual role of insurer and plan administrator is not one in which a disqualifying conflict is present. Nonetheless, "where the plan administrator is itself the insurance company which stands to lose money by paying benefits, the decision to deny benefits `inherently implicate[s] the hobgoblin of self-interest," warranting the heightened level of arbitrary and capricious review. Id. at 881 (quoting Brown, 898 F.2d at 1568). The remainder of this Opinion, then, shall apply the standard of review delineated by Judge Orlofsky inRizzo and the Eleventh Circuit in Brown.
C. Application of the Heightened Arbitrary and Capricious
Standard of Review
As explained above, the first step under Brown and Rizzo is to determine whether defendant correctly interpreted the policy provisions as a matter of law. In this case, defendant determined that plaintiff was not entitled to benefits because he did not satisfy the 90-day BWP because he was able to return to his own occupation within 90 days of his accident. Defendant further determined that plaintiff ceased to be a member when he failed to return to work at his own occupation when he was released to do so, and thus he is not entitled to continuing benefits.The three relevant policy provisions are (1) the 90-day BWP provision, (2) the definition of "Disabled," and (3) the definition of "Member." Defendant interpreted the 90-day BWP requirement to mean that plaintiff must have remained continuously disabled from January 12, 1996 (the date of the accident) through April 12, 1996, and thus if he was not continuously disabled during that time, he did not satisfy the BWP. Defendant interpreted the definition of Disability to mean that plaintiff only had to show that he could not continue in the material duties of his own occupation (rather than the broader category of work in the "Any Occupation" section of the Disability definition); if plaintiff could continue with reasonable continuity the material duties of his job, then he would not be considered disabled. Finally, defendant interpreted the definition of Member to mean that while plaintiff could continue to get benefits during the BWP period if LTD benefits are otherwise payable, plaintiff would no longer be an insured Member if he fails to work the policy-required 30-hours per week after being medically cleared to return without satisfying an exception.
For example, if AFL continued to pay plaintiff his same predisability earnings even though he was not working 30-hours per week, or if he was on a leave of absence protected by law of by the employer, plaintiff would still be an insured member. However, it is undisputed that plaintiff has not received any earnings from AFL since the accident and that he is not on a leave of absence. Plaintiff's only argument that he is still a member is that he was still disabled (not medically cleared to go back to work), such that he satisfied the BWP and caused LTD benefits to be payable.
There is no real dispute that defendant correctly interpreted these policy provisions. Plaintiff challenges many of defendant's factual determinations and defendant's decisions to rely on certain sources of information, but plaintiff does not argue that defendant misinterpreted policy language. Having found that defendant's interpretations of policy language are correct and reasonable, this Court need only determine whether defendant's decision was arbitrary and capricious.
Plaintiff points out that the policy language states that LTD benefits are paid during the time that a beneficiary cannot perform the material duties of his own job, after a 90-day waiting period. Based on that, plaintiff argues that defendant misinterpreted the definition of Disabled by looking to whether plaintiff could perform the material duties of a CEO as defined by the U.S. Department of Labor's Dictionary of Occupational Titles. However, plaintiff does not dispute that the policy would not consider him disabled if, as a matter of law, he was able to complete the material duties of his own occupation; for example, if plaintiff was a fireman, defendant could not determine under the "own occupation" definition of Disabled that plaintiff is not disabled because he could do work as secretary. Much as plaintiff would like to argue that defendant misinterpreted a policy provision as a matter of law, plaintiff's true gripe is over the defendant's factual determination that plaintiff was a CEO whose work, materially, was sedentary and the defendant's evidentiary decision to rely upon the Dictionary of Occupational Titles instead of plaintiff's statement that he does pressman work.
The arbitrary and capricious standard of review, which is essentially the same as review for an abuse of discretion, Rizzo, 925 F. Supp. at 310, requires this Court to uphold the defendant's decision unless that decision is "`without reason, unsupported by substantial evidence or erroneous as a matter of law.'" Abnathya v. Hoffman-La Roche, Inc., 2 F.3d 40, 45 (3d Cir. 1993) (citing Adamo v. Anchor Hocking Corp., 720 F. Supp. 491, 500 (W.D.Pa. 1989)). This is a narrow scope of review, and "the court is not free to substitute its own judgment for that of the defendants in determining eligibility for plan benefits." Abnathya, 2 F.3d at 45 (citing Lucash v. Strick Corp., 602 F. Supp. 430, 434 (E.D.Pa. 1984)). In determining whether defendant's decision was arbitrary and capricious, the Court's review is limited "to the evidence before the administrator at the time the challenged decision was made."Mitchell v. Eastman Kodak Co., 113 F.3d 433, 440 (3d Cir. 1997), cited in Irvin v. Metropolitan Life Ins. Co., No. 96-2909 WL 410690 (E.D.Pa. June 30, 1998). "Substantial evidence" means the same thing in this context as when the Court reviews denials of social security benefits by the Commissioner of Social Security: more than a "mere scintilla."Richardson v. Perales, 402 U.S. 389, 401 (1971) (defining substantial evidence in the social security context).
Plaintiff argues that defendant's denial of benefits was arbitrary and capricious for five reasons. First, plaintiff argues that there is no substantial evidence in the record to support the determination that plaintiff was a CEO instead of a pressman. Second, plaintiff argues that even if there is substantial evidence to determine that he was a CEO, it was erroneous as a matter of law for defendant to determine the material duties of that position by looking to the U.S. Department of Labor's Dictionary of Occupational Titles. Third, defendant contends that there is no substantial evidence to support the determination that there was a gap in medical treatment from April 8, 1996 to January 15, 1997. Fourth, plaintiff contends that the defendant erred as a matter of law by relying on Dr. Pearl because Dr. Pearl was not his treating physician, and that defendant also erred by relying on its own in-house physicians' opinions. Finally, plaintiff argues that there is no substantial evidence to support the finding that he could perform sedentary work, especially in light of the fact that the Social Security Administration found plaintiff totally disabled from any occupation. As the following discussion explains, this Court has considered each of these arguments, but finds that there is no genuine issue of material fact that defendant relied on proper evidence and that there was substantial evidence in the record to support defendant's factual determinations.
1. The Finding that Plaintiff was a CEO
Plaintiff first contends that there is no substantial evidence to support the finding that he was a CEO. Plaintiff's argument is based on the fact that in his Long Term Disability Claim Statement, which inquired into plaintiff's employment duties, plaintiff wrote that he was an Owner/Pressman. (Pl.'s Br. Ex. L.) However, as defendant carefully documented in their numerous letters explaining the denial of benefits, the record is also replete with evidence that plaintiff was a CEO or Executive. While plaintiff's claim form, filled out over a year after the accident, noted that he was a pressman, several documents created before the accident (i.e., before plaintiff would have had any reason to note that he did more strenuous work than originally indicated) noted that he was a CEO/Executive, including plaintiff's income tax returns from 1995 and 1996 and the census form which AFL filled out when it purchased the policy. Additionally, plaintiff's high salary was more indicative of a CEO than of a pressman. Whether or not this Court, faced with the evidence as a matter of first review, would have made the same determination is irrelevant; there is substantial evidence in the record to support the defendant's determination that plaintiff was a CEO.
2. Relying on the Dictionary of Occupational Titles
Plaintiff next contends that even if there is evidence that he was a CEO/Executive, defendant erred as a matter of law and reason when it chose to define his job as sedentary by looking to the U.S. Department of Labor's Dictionary of Occupational Titles instead of to his own description of his material duties. Plaintiff stresses that he described the duties of his work on his claim form for LTD benefits and argues that defendant should have relied on that instead of on the Dictionary of Occupational Titles definition. Plaintiff's argument is incorrect.
Defendant suggests that it was required to inquire as to whether plaintiff could perform the material duties of his position as it exists it in the general labor market. This Court disagrees. As the Second Circuit stated in Kinstler v. First Reliance Standard Life Insurance Co., 181 F.3d 243, 253 (2d Cir. 1999), the employee's regular occupation "may not be defined without some consideration of the institution where [the employee] was employed." However, as the Second Circuit elaborated, that does not mean that the plan administrator must look only at the very narrow scope of the characteristic of the employee's job at the place where he or she worked at the time she was injured, but rather that the plan administrator must define the employee's regular occupation "as a position of the `same general character' as [the employee's] job." Id. For example, in Kinstler, the plaintiff was a director of nursing services at a drug rehabilitation center, and in defining the duties of her regular occupation, the Court (which was conducting a de novo review, rather than arbitrary and capricious review) looked to the duties and skills required of a director of nursing "at a small health care agency, as distinguished from a large general purpose hospital." Id.
Here, defendant, like the defendant in Kinstler, should have looked to the duties of a CEO in a comparably sized company, as opposed to the CEO generally. It was not required, however, to consider the idiosyncracies of plaintiff's particular job. Thus, if plaintiff's job at AFL did require him to perform pressman duties but it is unusual that a CEO of a comparably sized company would be required to do the same sort of work, then defendant may ignore the particular requirements of his job. The record in this case does not indicate the size of the company, but plaintiff's own statements to this Court in opposition to the motion for summary judgment indicate that AFL was a $12,000,000.00 a year operation that could afford to pay plaintiff $15,000.00 a week, rather than a small, solo business. (Forchic Aff. ¶ 5.) In the absence of other evidence describing the material duties of a CEO in a similarly sized company, defendant was certainly entitled to turn to the Dictionary of Occupational Titles. If a district court judge could take judicial notice of a definition on the Dictionary of Occupational Titles, then it is not unreasonable for an ERISA plan administrator to rely on that source.
Even if the particular duties of plaintiff's job were relevant, defendant was entitled to find that plaintiff did not put forth sufficient evidence that his job required him to do anything more than a CEO would normally do. The only evidence in the record before defendant that defendant's job involved pressman duties was his claim form for LTD benefits, on which plaintiff stated: "I am a pressman and can not stand on my feet or bend over for any length of time because of the pain in my back and knee there for I can not run the press." (Frank Cert. Ex. C. at Bates 217.) That statement, which was filled out over a year and two months after the accident, did not state at all that plaintiff was a CEO but that pressman work was part of his material duties. Rather, it listed an alternative job of pressman, which was contrary to all of the forms which stated only that plaintiff was a CEO/Executive. The record before defendant contained no other evidence that plaintiff's work involved anything but typical CEO duties.
Plaintiff now presents evidence that though he was the CEO of the company because he had built and owned the company, he had very little to do with the administrative running of the company, which was actually done by his son. (Forchic Aff. ¶ 11.) However, plaintiff never put this evidence before defendant, and, as explained above, this Court's review is limited to the record before defendant at the time that the benefits decision was made. Plaintiff contends that the Court should nonetheless consider this evidence because "[a]t no time did they ask me what I did for the company" and "[i]f they had ever talked to me or to anyone in my company about this matter, they would understand that that assertion [that plaintiff's work was sedentary] was wrong." (Id.) It would indeed be problematic if plaintiff was not given the opportunity to put critical evidence into the record. However, that did not occur here. Defendant's letters denying benefits stated that while plaintiff might perform some pressman duties, those are not material duties of his own occupation as a CEO, as defined by the Dictionary of Occupational Titles (Frank Certif. Ex. C at Bates 23, Bates 26), and after the first two evaluations, defendant gave plaintiff a time period in which he could submit documentation of limitations that would prevent him from performing the material duties of his job at the relevant time period (id. at Bates 23, Bates 26). Defendant was therefore on notice that defendant considered his duties to be sedentary, and he was given an opportunity to provide additional information, such as that presented now, that his job was otherwise. He chose not to submit that evidence to defendant, and this Court cannot consider it now.
Therefore, under these circumstances, defendant did not err by relying on the Dictionary of Occupational Titles. Though there is some evidence from which defendant could have concluded that plaintiff's work involved pressman duties, there is substantial evidence in the record that the material duties of plaintiff's own occupation as a CEO involved sedentary work.
3. Finding that there was a Gap in Treatment
In defendant's first letter to plaintiff denying benefits, defendant indicated that there was a gap in treatment from April 8, 1996 (when plaintiff last saw Dr. Pearl) until January 14, 1997 (when plaintiff first saw Dr. Goldstein), and thus defendant concluded that plaintiff had not been "under the regular care and treatment of a physician during the entire" BWP, as required by the policy. (Frank Cert. Ex. C. at Bates 25.) The fourth denial letter went into the gap in treatment in further detail, recognizing that in the interim, plaintiff did receive some physical therapy. Plaintiff argues that there is no substantial evidence to support the determination that there was a gap in treatment and thus that plaintiff had not satisfied the BWP.
Though plaintiff is correct that it cannot be said that there was a gap in all treatment from April 8, 1996 to January 14, 1997, there is substantial evidence in the record that there was a gap in treatment by a medical doctor in that time (only physical therapy intervened). Moreover, the evidence is clear that there was at least a gap of treatment for three months between the time that Dr. Pearl released plaintiff for work and the time that plaintiff began physical therapy, and that there was a second gap of four months between the end of physical therapy and plaintiff's first visit with Dr. Goldstein. Defendant could have relied on that evidence alone to find that there was a gap in treatment.
In any case, whether there was a gap in treatment is irrelevant. Defendant determined that plaintiff was released to go back to his own work as of April 1, 1996 and that because he failed to return to work for thirty or more hours a week after that time, he ceased being a member under the policy and was no longer entitled to insurance benefits. As explained below, this Court finds that there is substantial evidence to support that determination. Once plaintiff was no longer a member under the policy, it is made no difference if he continued to see doctors regularly or irregularly; even if doctors agreed at that time that he was totally disabled, he would not be entitled to benefits under the policy.
4. Relying on Dr. Pearl and Defendant's House Physicians
In the several letters denying benefits, defendant relied heavily on the opinion of Dr. Pearl, who stated that plaintiff was cleared to return to work as of April 1, 1996. Plaintiff argues that defendant should not have given such great weight to Dr. Pearl, noting that Dr. Pearl was not a treating physician who plaintiff himself chose, but rather a physician chosen by Kemper Insurance Company (the worker compensation carrier handling plaintiff's claim) who was more interested in documenting plaintiff's ability to return to work than in administering tests and treatment. Plaintiff also argues that Dr. Pearl merely stated that should be able to return to work, that he actually was able. By contrast, plaintiff points out, Dr. Goldstein performed numerous tests, including an MRI, and his opinion should control.
Defendant, however, was not legally wrong to rely on Dr. Pearl's opinion. While Dr. Pearl was not a treating physician of plaintiff's choosing, he nonetheless was plaintiff's treating physician. Though he may not have performed tests such as an MRI, he did examine plaintiff and he did review plaintiff's x-rays. Though in his March 26, 1996 letter, Dr. Pearl stated that plaintiff should be able to return to work as of April 1, it is clear that this was not simply an approximation, but rather an actual release to return to work, especially since Dr. Pearl's April 8, 1996 letter states that "I have discharged Gregory." (Frank Cert. Ex. C at Bates 168.) Therefore, Dr. Pearl released plaintiff to work by April 8, 1996 at the very latest, still a few days short of the 90-day BWP.
This Court understands plaintiff's concerns about Dr. Pearl's bias and also recognizes that the record is full of evidence from other doctors, such as Dr. Goldstein, that plaintiff was in great pain. However, Dr. Pearl did examine the plaintiff, and he did so at the time of the accident and during the period that would have been the BWP if it had been completed, while other doctors, like Dr. Goldstein, saw him much after the fact. Defendant was entitled to rely on the opinion of Dr. Pearl because (other than hospital records from the day of the accident), Dr. Pearl's records are the only records of plaintiff's pain and treatment during the relevant 90-day period. That plaintiff may have been in even greater pain (as documented by doctors) many months after the 90-day period than he was during that period is unfortunate, but this Court cannot say that it was unreasonable for defendant to deem reports from after the 90-day period irrelevant, especially in light of the absence of evidence that a high level of discomfort was continuous.
It is especially unfortunate because if plaintiff had returned to work on April 1, 1996 when Dr. Pearl released him to do so and then was unable to complete the tasks of work, he could have begun anew a 90-day BWP. Instead, plaintiff chose not to return to work even though a doctor had released him to do so and consequently lost his status as a policy member, and so he could not begin a 90-day BWP at any later point.
Moreover, defendant did not rely solely on Dr. Pearl's assessments, but rather (through all four evaluation letters) reviewed and commented on all of the doctor's reports, finding that, on the whole, plaintiff was not so disabled that he could not perform sedentary work. More specifically, defendant relied on the medical evaluations performed by Drs. Fancher and Colletti. Neither Dr. Fancher nor Dr. Colletti actually examined the plaintiff, but they did review and specifically address all of the medical reports upon which plaintiff relies. (Pl.'s Br. Ex. O.) Dr. Fancher noted that the medical records conflict, but that "individuals with lumbosacral strain would [ordinarily] be capable of performing sedentary or light work on a full-time basis. Similarly, I would not expect the claimant's degenerative knee arthritis to prevent him from working in his usual occupation." (Id. at Ex. O, Bates 43.) Dr. Colletti found that there was nothing to prevent plaintiff from doing sedentary work, especially in the time period between plaintiff's last visit with Dr. Pearl and first visit with Dr. Goldstein. (Id. at Ex. O, Bates 34.)
Plaintiff argues that defendant should not have given so much weight to the opinions of Drs. Fancher and Colletti because they did not examine the plaintiff and because, as employees of defendant, they should be assumed to be biased. However, even if this Court would personally give more weight to the views of examining physicians than the views of nonexamining physicians, it is not improper to rely on the opinions of nonexamining physicians who had before them the entire record of medical evidence, more evidence than was available to any one doctor who saw plaintiff previously. Drs. Fancher and Colletti did have the entire record of evidence before them, and they carefully reviewed the reports, noting where their own views diverged, before opining that plaintiff could do sedentary work. That these doctors worked for defendant might cause this Court to give their opinions less weight, but defendant was entitled to rely upon them.
5. Finding that Plaintiff Can Perform Sedentary Work
Finally, plaintiff argues that, overall, there is no substantial evidence to support the finding that plaintiff is capable of sedentary work. Plaintiff argues that this is especially so because the Social Security Administration, which has a higher threshold for disability than does the language of the policy (because a claimant for social security benefits must demonstrate that he or she is incapable of performing any work in the national economy, including sedentary work) , granted plaintiff disability benefits, even without a hearing.
The Social Security Administration's decision has no bearing on the instant case, especially since it was not before defendant when defendant made its determination. It is not unreasonable for a claim administrator to find no disability even though the Social Security Administration has reached a contrary result. See Pagan v. NYNEX Pension Plan, 52 F.3d 438 (2d Cir. 1995); Anderson v. Operative Plasterers' and Cement Masons' Int'l Assn. Local No. 12, 991 F.2d 356 (7th Cir. 1993), cited in Pokol v. E.I. du Pont De Nemours and Co., Inc. 963 F. Supp. 1361, 1367 (D.N.J. 1997). Moreover, in this case, the Social Security Administration found that plaintiff was disabled beginning on March 6, 1997 (Pl.'s Br. Ex. J), and it says nothing about the 90 days after January 12, 1996.
All that matters is whether, based on the evidence before it at the time, defendant was unreasonable in finding that plaintiff was capable of sedentary work. As explained above, though there is certainly evidence in the record upon which defendant could have relied to find that plaintiff was not capable of sedentary work, defendant has relied upon valid reasons for discounting some of that evidence. More importantly, there is more than a scintilla of evidence, including the reports of Drs. Pearl, Fancher, and Colletti, to support defendant's finding that plaintiff was indeed capable of sedentary work. This Court cannot say that defendant's finding that plaintiff was capable of performing the sedentary work that is material to plaintiff's occupation as a CEO was arbitrary and capricious.
III. CONCLUSION
For the foregoing reasons, this Court will grant defendant's motion for summary judgment. Applying the heightened scrutiny version of the "arbitrary and capricious" standard of review, this Court has found that defendant correctly interpreted the relevant provisions of the LTD insurance policy, such that if plaintiff was capable of performing the material duties of his occupation in fewer than ninety days after his accident and yet did not return, he is not entitled to benefits. Moreover, this Court has found that there is substantial evidence to support defendant's determination that plaintiff was capable of performing the material duties of his job as a CEO, which are sedentary. Therefore, defendant's decision did not constitute an abuse of discretion. Defendant's motion for summary judgment will be granted. The accompanying Order is entered.
ORDER
This matter having come before the Court upon defendant Standard Insurance Company's motion for summary judgment; and the Court having considered the parties' submissions; and for the reasons expressed in an Opinion of today's date;
IT IS this day of November 1999 hereby
ORDERED that defendant Standard Insurance Company's motion be, and hereby is, GRANTED, and JUDGMENT is to be entered in defendant Standard Insurance Company's favor.
This Court finding that all other plaintiffs and defendants have been dismissed by prior stipulation dated February 9, 1999, this case is DISMISSED.