Summary
stating in reliance on Wilkins that "[t]he Court may consider documents not before the administrator only to the extent that they bear on procedural issues"
Summary of this case from McCann v. Unum Life Insurance Company of AmericaOpinion
Case No. C-l-97-545
March 21, 2001
ORDER
This matter comes before the Court on Plaintiffs Renewed Motion for Judgment on the Administrative Record and to Strike (Doc. #30) and Defendant's Renewed Motion for Judgment on the Administrative Record (Doc. #32). Plaintiff Joan A. Heffernan seeks to reverse Defendant UNUM Life Insurance Company of America's denial of long-term disability benefits to her under an employee benefits plan. For the reasons that follow, the Court DENIES Defendant's Motion (Doc. #32) and GRANTS IN PART AND DENIES IN PART Plaintiffs Motion (Doc. #30).
I. FACTUAL BACKGROUND
Plaintiff Joan A. Heffernan was a lobbyist for the American Psychological Association before attending law school at George Washington University. After graduating with honors from that institution in 1986, she clerked for a judge of the United States District Court. Then, upon completion of her clerkship, she joined the law firm of Taft, Stettinius Hohister ("Taft" or "the Taft firm") as a litigation associate. She worked at Taft from 1988 to 1994. The parties now disagree on Ms. Heffernan's performance while at Taft. She has described herself as Taft's superstar and a workaholic. UNUM claims that Taft had reservations about Ms. Heffeman from the start.
In late 1991 Ms. Heffeman had a child. Problems then began to develop for her at work. Ms. Heffernan felt physically weak because of her separation from her child. Her motivation to work declined precipitously, as did the hours she billed. She had severe difficulty concentrating and remembering. She experienced troubling episodes that she termed "spells." Each spell was approximately one minute in duration and occurred without warning. During a spell Ms. Heffernan felt hot; although she remained conscious and was able to maintain cognitive functioning, she lost all desire to speak or concentrate. After a spell, she returned to normal but was exhausted. The record suggests that intervals between spells varied dramatically in length.
Fearing that the spells were seizures, Ms. Heffernan sought medical attention in 1993. Her physician, Dr. Robert Weber, treated her with Prozac but did not reach a definite diagnosis. In early 1994 she switched physicians, and her new doctor, Clifton Smith, examined her and referred her to a neurologist. Dr. Arthur Hughes. Dr. Hughes performed an array of tests on Ms. Heffeman and concluded that her spells were not seizures. Her CT scan revealed no obvious physical problems. Dr. Smith also referred Ms. Heffernan to Dr. David Helm, who then became her treating psychiatrist.
Ms. Heffernan ceased work at Taft on November 28. 1994. As an associate at Taft, Ms. Heffernan participated in a disability benefits plan administered by Defendant UNUM Life Insurance Company of America ("UNUM"). The Taft firm paid her short-term disability coverage. On May 16, 1995, she applied to UNUM for long-term disability benefits under the plan.
UNUM reviewed Ms. Heffernan's medical records and sent her to Dr. Robert Tureen, a Ph.D. psychologist, for an evaluation. In July 1995 UNUM offered to settle Ms. Heffernan's claim for the equivalent of three months' benefits. She considered this offer but rejected it. In a February 20, 1996 letter, UNUM rejected her claim for benefits. She promptly requested production of the record and administrative review. Dr. Helm submitted a new letter to UNUM on her behalf In a May 20, 1996 letter, UNUM informed Ms. Heffernan that the new information did not alter its decision. It is not clear whether this constituted an appeal and denial, or something considerably less formal. In any case, Ms. Heffernan retained legal counsel, and he sent UNUM a letter formally requesting review on May 21, 1996. In support of her appeal, Ms. Heffernan submitted reports by Drs. Helm, Henry Kenkel, arid Chris Haynor. In a June 25, 1996 letter, UNUM told Ms. Heffernan that this additional information was insufficient to change the previous decision but that, nevertheless, UNUM was forwarding along the complete record for further, impartial review. On October 30, 1996, UNUM sent a letter to Ms. Heffeman's attorney, informing him that it would require additional time to complete its review. Dr. Peter Mirkin, an employee of UNUM, then reviewed all of the evidence submitted and opined that Ms. Heffernan was not totally disabled. UNUM repeated most of his reasoning in its March 6, 1997 letter to Ms. Heffeman, once again denying her claim. She filed the instant suit on June 10, 1997.
II. STANDARD
Plaintiff has brought suit against Defendant pursuant to 29 U.S.C. § 1132 (a)(1)(B) to enforce her rights under a disability benefits plan governed by the Employee Retirement Income Security Act ("ERISA"). "[A] denial of benefits . . . is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). "In this latter case, the administrator's benefit determination is reviewed under an "arbitrary and capricious' standard." University Hosps. of Cleveland v. Emerson Elec. Co., 202 F.3d 839, 845 (6th Cir. 2000) (citation omitted). Here, the plan explicitly grants UNUM discretionary authority to determine eligibility for benefits and to construe the terms of the plan. See AR00123 ("In making any benefits determination under this policy, the Company shall have discretionary authority both to determine an employee's eligibility for benefits and to construe the terms of this policy.") Therefore, the arbitrary and capricious standard is appropriate.
This standard is the least demanding form of judicial review. "When it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious." Killian v. Healthsource Provident Adm'rs Inc., 152 F.3d 514, 520 (6th Cir. 1998) (citation and quotation marks omitted). The Sixth Circuit has further explained, "[T]he standard requires that the decision be upheld if it is the result of a deliberate principled reasoning process, and if it is supported by substantial evidence." Id. (citation and internal quotation marks omitted). At the same time, the Court notes that UNUM, as insurer and administrator of the plan, faced a conflict of interest in deciding whether Plaintiff was entitled to benefits. "[i]f a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest, that conflict must be weighed as a "facto[r] in determining whether there is an abuse of discretion.'" Firestone, 489 U.S. at 115 (citation omitted).
At oral argument on these Motions, Plaintiff conceded that the Court should employ an arbitrary and capricious standard of review (tempered by recognition of UNUM's conflict of interest) to the denial of benefits. One might otherwise read her pleadings to urge a de novo standard because UNUM did not decide her claim in a timely manner. Sixth Circuit case law is adverse to such a position. See Daniel v. Eaton Corp., 839 F.2d 263, 267 (6th Cir. 1988) ("the standard of review is no different whether the appeal is actually denied or is deemed denied. The role of the district court is the same in either event.").
III. ANALYSIS
a. Motion to Strike
Before reaching the merits of this case, the Court must decide which documents it may consider in reviewing UNUM's decision. With respect to the merits of a claim for benefits under an ERISA plan, it is well settled that "a court may consider only the evidence available to the administrator at the time the final decision was made. This limitation applies to both an "arbitrary and capricious' orade novo standard of review." Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 986 (6th Cir. 1991). The Court may consider documents not before the administrator only to the extent that they bear on procedural issues: "The district court may consider evidence outside of the administrative record only if that evidence is offered in support of a procedural challenge to the administrator's decision, such as an alleged lack of due process afforded by the administrator or alleged bias on its part." Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 619 (6th Cir. 1998) (Gilman, J., concurring, joined by Ryan, J.).
The question at issue in this case is which denial of benefits constitutes the final decision of the administrator. Defendant argues that its March 6, 1997 letter to Plaintiff was its final decision. Ms. Heffernan argues that Defendant made its final decision on August 24, 1996. She argues that the Court should strike from the administrative record any documents created after that date. This would exclude several documents from the administrative record, most prominently the Medical File Review of Dr. Peter Mirkin, mentioned above. Plaintiff characterizes that document as a postdecision rationalization that can only prejudice the Court. 29 C.F.R. § 2560.503-1 (h)(4) furnishes the basis for Ms. Heffernan's argument on this point. That ERISA regulation provides that an administrative appeal "shall be deemed denied on review" if not timely decided. That regulatory deadline was August 24, 1996.
The Court rejects Plaintiffs argument. First, the purpose of the regulation cited by Ms. Heffeman is to allow a plaintiff to file suit after the expiration of the time limit specified by regulation — instead of waiting ad infinitum for a final administrative denial that is not fortheoming. In such a situation, a reviewing court could deem the administrative appeal denied in order to allow judicial review. The Supreme Court seems to similarly understand this provision. It has explained, "[T]he regulations merely state that a claim may be treated as having been denied after the 60- or 120- day period has elapsed. . . . This provision therefore enables a claimant to bring a civil action to have the merits of his application determined, just as he may bring an action to challenge an outright denial of benefits." Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 144 (1985). Thus, Plaintiffs argument misconstrues the purpose of the regulation. Second, Plaintiff did not file suit when her administrative appeal could have been deemed denied. She waited until she received a formal denial from UNUM. It is that decision she is appealing to this Court. Cf. Mason v. Aetna Life Ins. Co., 901 F.2d 662, 664 n. 3 (8th Cir. 1990) ("This section permits rather than requires a claimant to treat his or her claim as denied upon expiration of the 60- or 120-day period. . . . We note that Aetna's subsequent issuance of a written decision on review indicates Aetna did not consider the matter closed at the end of 60 or 120 days.") Third, the Sixth Circuit has adopted a rule of substantial, not exact, compliance with the time limits set forth in ERISA regulations. See Kent v. United of Omaha Life Ins. Co., 96 F.3d 803, 807-08 (6th Cir. 1996) (explaining that the crucial inquiry is whether the claimant was notified of the reasons for denial and had a fair opportunity for review). Fourth, as a matter of policy, courts should discourage insurance companies from arbitrarily denying benefits, then letting their lawyers theorize conceivable justifications for that decision once the case is in litigation. Although the Court concludes that UNUM's denial of benefits was arbitrary and capricious, none of the documents created after August 24, 1996 constitutes a post-decision rationalization. These are not, therefore, the sort of documents that courts ought to discourage. Accordingly, the Court DENIES that portion of Plaintiffs Renewed Motion in which she seeks to strike documents from the administrative record.
b. UNUM's Denial Was Arbitrary and Capricious
Because "the summary judgment procedures set forth in Rule 56 are inapposite to ERISA actions and thus should not be utilized in their disposition," the Sixth Circuit has instructed, "As to the merits of the action, the district court should conduct a . . . review based solely upon the administrative record, and render findings of fact and conclusions of law accordingly." Wilkins, 150 F.3d at 619 (Gilman, J., concurring, joined by Ryan, J.). Although Wilkins concerned a case in which the proper standard of review was de novo, this Court has previously found the reasoning of Wilkins "equally applicable to arbitrary and capricious review, a more deferential standard." Washburn v. UNUM Life Ins. Co. of Am., 43 F. Supp.2d 848, 852 (S.D. Ohio 1998).
Defendant's denial of Ms. Heffernan's claim was arbitrary and capricious. Defendant's reasoning in denying Plaintiffs claim exhibits certain aspects of rationality; that is, the reasons UNUM provides make logical sense. They are not, however, supported by substantial evidence. Under the plan, a person is disabled when, because of injury or sickness, "the insured cannot perform each of the material duties of his regular occupation." AR00128. The plan further specifies, "For attorneys, "regular occupation' means the specialty in the practice of law which the insured was practicing just prior to the date disability started." Id. The parties agree that UNUM's task was to determine whether Ms. Heffernan could perform each of the material duties of a litigation attorney. Based on the medical evidence available to UNUM, no reasonable decision maker could conclude that she could so perform.
Since the Court has concluded that UNUM's March 6, 1997 letter constitutes its final decision, "that text should be the principal point of reference in our review of a challenged denial of benefits."University Hosps., 202 F.3d at 849 n. 7. The letter begins by reciting the relevant plan language. Then it properly notes the medical evidence of Drs. Weber, Smith, Hughes, Helm, Tureen, Kenkel, and Haynor. The letter summarizes, "All have found evidence of varying degrees of severity in her depression and all have made reference in different ways to the various social factors in her life that complicate the estimation of her diagnoses." AROO163. Then, however, the letter abruptly concludes, "The documentation contained in the claim file supports that Ms. Heffernan's decision to stop working was a life-style choice." Id. That conclusion simply does not follow from the evidence that precedes it. The evidence demonstrates beyond reasonable dispute that Ms. Heffernan is suffering from a mental illness, which prevents her from functioning as a litigation attorney. Since UNUM was aware of this evidence, and since the Court does not suppose that UNUM succumbed to the conflict of interest under which it was operating, the Court can surmise only that the administrators who made the final decision to deny benefits do not grasp the concept of mental illness.
Every physician who examined Ms. Heffernan concluded that she was disabled. Certainly, there are statements in the record that, viewed in isolation, could indicate otherwise. Thus, for example, in a November 1995 letter, Dr. Helm began a sentence about Ms. Heffernan as follows: "While probably not totally disabled . . ." ALR00394. In the context of the entire record, however, no one could reasonably maintain the position that Ms. Heffernan ceased working because she wanted to be a stay-at-home mom. Therefore, the following, brief recitation of the evidence should be understood as representative of the medical conclusions contained in this mammoth record, not as itself decisive.
When Ms. Heffeman appealed UNUM's initial denial ofher claim, she submitted as evidence letters from several physicians who had examined her. Dr. Kenkel concluded that Ms. Heffernan was disabled and stated so emphatically, telling UNUM, "[I]t is my clearly certain opinion that she is not capable of working as an attorney." AR00229. Similarly, Dr. Helm, Ms. UNUM's long-time treating psychiatrist, wrote in May of 1996, "I do not feel that Mrs. Heffeman can function as a litigation attorney, or indeed I do not feel that she can function in her training as an attorney at all at this point." AR00222. These conclusions are consistent with the notes of the various doctors who had treated Ms. Heffernan before she filed a claim. Although their diagnoses sometimes differed — from post-partum depression to atypical depression, for example — all doctors' notes reflect treatment for a serious and disabling mental illness.
Of course, when someone submits evidence to contest a denial of benefits, that person will put forward the evidence stating her position most forcefully. Perhaps for this reason, administrators of benefits plans understandably seek to have experts whom they select evaluate claimants for an independent opinion. UNUM did so in this case. As noted above, UNUM asked Ms. Heffeman to undergo an evaluation by Dr. Tureen, a psychologist. Dr. Tureen examined Ms. Heffeman and authored a dense report in September of 1995, in which he concluded, "At this time, it is not my opinion that she could function as a litigation attorney." AR00227.
Thus, every psychiatrist or psychologist who examined Ms. Heffernan — including the professional selected by UNUM — concluded that she was unable to function as a litigation attorney. The notion that Plaintiff ceased working because of a lifestyle choice seems to have originated not with a doctor but with Bob Stachler, a lawyer at Taft for whom Ms. Heffernan had worked. Elizabeth Crane, the UNUM employee responsible for processing Plaintiffs claim, noted on July 20, 1995 that she had spoken with Taft's broker. The broker advised her that Plaintiff's claim was "bogus" because Mr. Stachler was "shocked when she later submitted an LTD [long-term disability] claim;" instead, Mr. Stachler was sure that Plaintiffs cessation of work was a "lifestyle change." AR00603. Immediately thereafter, Ms. Crane forwarded the entire claim file to a senior risk specialist at UNUM, explaining that she had "some serious doubts about this claim and severity of condition and question if it is a lifestyle change." AR00590. That specialist, however, examined the file and returned it the next week: "I have decided not to keep the file because although the claim file has some peripheral issues around job satisfaction and performance, she appears to actually be suffering from depression." AR00589. Nevertheless, in its final denial of Ms. Heffernan's claim, UNUM relies on precisely this theory — that she had merely made a lifestyle choice to stop working.
Since Mr. Stachier has no medical expertise, it is difficult to imagine how his comment is probative of whether Ms. Heffernan is or was disabled. Instead, it suggests a disturbing noncomprehension of and lack of compassion for, mental illness. Although there is nothing improper in UNUM's consideration of Mr. Stachler's comment and investigation into its support, to deny benefits on the basis of his diagnosis, when all medical professionals who examined Ms. Heffernan reached a different conclusion, is patently absurd.
The administrative record in this case demonstrates beyond reasonable debate that mental illness has disabled Ms. Heffernan from functioning as a litigation attorney. UNUM's conclusion "that Ms. Heffernan's decision to stop working was a life-style choice" is without legitimate foundation and is certainly unsupported by substantial evidence. The Court therefore concludes that UNUM's denial of benefits was arbitrary and capricious.
IV. CONCLUSION
Plaintiff has contended that all documents created by IJNUM after Ms. Heffernan's appeal could have been deemed denied must be stricken from the administrative record. The Court disagrees, and therefore DENIES IN PART Plaintiffs Renewed Motion (Doc. #30), to the extent that it seeks to strike documents created by UNUM after August 24, 1996. Because the Court concludes that Defendant's denial of benefits to Ms. Heffernan was arbitrary and capricious, the Court GRANTS the remainder of Plaintiffs Motion (Doc. #30), seeking judgment on the administrative record. For the same reason, the Court DENIES Defendant's Renewed Motion for Judgment on the Administrative Record (Doc. #32).
IT IS SO ORDERED.