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finding that the policy at issue merely set forth the mechanics of applying for and receiving benefits and, thus, did not sufficiently provide the administrator with discretionary authority; the court reviewed the matter under the de novo standard of review
Summary of this case from Moros v. Conn. Gen. Life Ins. Co.Opinion
Civil Action No. 99-10224-GAO.
April 22, 2002
MEMORANDUM AND ORDER
The plaintiff, Heather Hersee, claims that the defendant, First Allmerica Financial Life Insurance Co., ("First Allmerica"), terminated her total disability benefits in violation of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. First Allmerica has moved for summary judgment (Docket No. 9). For the reasons that follow, the motion is GRANTED.
29 U.S.C. § 1132(a) provides, in relevant part:
A civil action may be brought —
(1) by a participant or beneficiary —
. . . .
(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.
I. Background
Hersee began working for the Fenway Community Health Center ("Fenway") in 1985 and eventually became its Director of Development and Public Relations. In January 1988, Fenway purchased for its employees a group long-term disability insurance policy from First Allmerica. The policy is an employee welfare benefit plan governed by ERISA. In November 1988, Dr. Glen Rothfeld diagnosed Hersee with chronic fatigue syndrome ("CFS") and advised her to stop working. Shortly thereafter, Hersee left Fenway and applied for total disability benefits under the First Allmerica policy. First Allmerica approved the claim and paid Hersee monthly benefits for the next nine years.
As permitted by the policy, First Allmerica monitored Hersee's ongoing eligibility for total disability benefits by periodically requesting that Hersee submit statements describing her daily activities, by seeking opinions from third parties regarding Hersee's condition and ability to work, and by requiring Hersee to submit to independent medical evaluations. In Hersee's daily activity statements, she claimed that she could engage only in napping, limited reading and watching television, receiving occasional visits from family and friends, and attending doctors' appointments. Def.'s Mot. for Summ. J. Ex. H (Hersee's statements signed and dated 05/12/91, 04/23/92, 03/30/93, 06/12/96, 02/17/97, and 09/02/97). In 1990, at First Allmerica's request, Dr. Christopher Brigham reviewed Hersee's medical file and reported that he did "not find adequate documentation to support the diagnosis of a chronic fatigue syndrome. This diagnosis appears to be speculative, rather than based on established criteria." Id. Ex. I. In 1994, Hersee submitted to a psychological assessment by Dr. Jill Bloom, who found that with assistance, Hersee could "realistically and successfully re-enter work," although she recommended that "[a]ll plans for re-entry, importantly, should be undertaken in conjunction with the ongoing advice and review of her physician." Id. Ex. K at 2. Despite these evaluations, First Allmerica continued to pay total disability benefits to Hersee.
In May 1997, Hersee, through her attorney, requested a lump-sum settlement for her benefit payments from First Allmerica. Id. Ex. S at 9; Mercier Aff. Ex. G at 9. This request prompted First Allmerica to conduct a review of Hersee's claim of total disability. The investigation revealed that during the period of her claimed disability, Hersee had participated in physical and work-related activities that she had never reported in her periodic "statements of disability" submitted to First Allmerica. In particular, it was discovered that Hersee became a part-owner of a Boston Chicken fast-food restaurant franchise in 1991, and beginning later that year, she spent several hours per week performing various tasks at the restaurant, including paying bills and occasionally helping wait on customers at the counter. Mercier Aff. Ex. J, Hersee Aff. In 1997, Hersee began working at a retirement center as a companion to a resident there, reading to her and conversing with her. She worked up to fifteen hours per week at the center and was paid $12 per hour. Def.'s Mot. for Summ. J. Ex. Q at 2.
Based on these findings, in November 1997, First Allmerica determined that Hersee was no longer eligible for total disability benefits under the policy and terminated the benefits. Id. Ex. R at 2. Hersee appealed this determination, arguing that the "overwhelming evidence in Allmerica's file supports" the conclusion that she suffers from chronic fatigue syndrome ("CFS") and that she qualifies for total disability benefits under the language of the policy. Id. Ex. S at 1. First Allmerica denied Hersee's appeal, finding that Hersee's work at the Boston Chicken and the retirement center were "inconsistent with Hersee's claim to be totally disabled as that term is defined by [the] policy." Id. Ex. T at 1. Nevertheless, First Allmerica indicated that it would be willing to consider any further information in support of Hersee's claim. Id. Ex. U. Hersee submitted such information and requested that First Allmerica reconsider her claim. Id. Ex. U. First Allmerica asked Dr. Thomas J. Lane, an expert on CFS, to review Hersee's entire file. Id. Exs. V, W, Y. Dr. Lane determined that "[t]he inadequate medical and psychiatric documentation coupled with a concern about a formal (sic) eating disorder" prevented him from diagnosing Hersee with CFS. Id. Ex. X at 8. He found no support for a conclusion that Hersee's illness would worsen if she worked. Id. Ex. X at 9. First Allmerica declined to reinstate Hersee's benefits. Id. Ex. Y. Hersee now challenges First Allmerica's termination of her total disability benefits pursuant to 29 U.S.C. § 1132(a)(1)(B).
II. Standard of Review
A denial of benefits "challenged under [29 U.S.C.] § 1132(a)(1)(B) 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 and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). If a policy provides the administrator with discretionary authority, an arbitrary and capricious standard of review applies to the administrator's factual determinations. See Diaz v. Seafarers Int'l Union, 13 F.3d 454, 456 (1st Cir. 1994); Grady v. Paul Revere Life Ins. Co., 10 F. Supp.2d 100, 104 (D.R.I. 1998); Guarino v. Metropolitan Life Ins. Co., 915 F. Supp. 435, 443 (D.Mass. 1995). A benefits plan "must clearly grant discretionary authority to the administrator before decisions will be accorded the deferential, arbitrary and capricious, standard of review." Rodriguez-Abreu v. Chase Manhattan Bank, 986 F.2d 580, 583 (1st Cir. 1993) (holding de novo standard of review appropriate where delegated discretionary authority was unclear). While particular "magic words" are not necessary to find discretionary authority, "explicit language" is required. Allen v. Adage, Inc., 967 F.2d 695, 697-98 (1st Cir. 1992); Kiley v. Travelers Indem. Co. of Rhode Island, 853 F. Supp. 6, 10 (D.Mass. 1994). See also Coleman v. Metropolitan Life Ins. Co., 919 F. Supp. 573, 580 (D.R.I. 1996) (finding discretionary authority in a plan that gave its administrator the power "to interpret and construe the Plan, [and] to determine all questions of eligibility and the status and rights of Participants" and that provided that all decisions of the administrator "shall, to the extent not inconsistent with the provisions of the Plan, be final and conclusive and binding upon all persons having an interest in the Plan") (quoting Block v. Pitney Bowes, 952 F.2d 1450, 1452-53) (D.C. Cir. 1992).
The First Allmerica policy provides that the insured must (1) submit proof of claim no later than 90 days after the end of the elimination period, (2) provide proof of continued disability, (3) provide proof of regular attendance of a physician within 30 days of First Allmerica's request for such proof, and (4) submit to a medical exam by a doctor chosen by First Allmerica as often as reasonably required. The First Allmerica policy is analogous to the policy construed in Grady, 10 F. Supp.2d at 100, 110, which required the claimant to submit proof of claim, proof of loss, and written proof of entitlement, and to give the insurer the right to request additional information and to order an independent medical exam. The Grady court found that the policy provisions were "simply garden-variety contract terms specifying the procedure by which claims are to be processed, and by which the Policy is to be administered. It would require a logical leap of Olympic proportions to find that these provisions give defendant the last word in interpreting the contract, or in determining eligibility for benefits." Grady, 10 F. Supp.2d at 110. Similarly, the language of First Allmerica policy merely sets forth the mechanics of applying for and receiving benefits. The policy does not sufficiently provide the administrator with the discretionary authority necessary to trigger the arbitrary and capricious standard, and the Court will review the termination of Hersee's benefits under the de novo standard.
III. Discussion
With respect to an employee in Hersee's position at Fenway, First Allmerica's policy defines "totally disabled" to mean "that because of injury or sickness:
1. the insured cannot perform all of the material duties of [her] regular occupation; and
2. after benefits have been paid for [60] months, the insured cannot perform all of the material duties of [her] own or any other occupation for which [she] is reasonably fitted by training, education and experience."
Def.'s Mot. for Summ. J. Ex. A at 10. The key words in the definition are that she "cannot perform all of the material duties" of the relevant occupation. The phrase is problematic. On the one hand, it could mean that the insured cannot perform each and every duty of the occupation. That is, the words "all of the material duties" could be understood to denote the comprehensive sum of all duties of the occupation. Understood this way, the standard is meant to express the idea that total disability means an inability to perform the totality of the duties of the position. This standard could also be expressed alternatively: the employee "can perform none of the duties." On the other hand, the policy language "cannot perform all of the material duties" could be understood to mean that the employee can perform some, but not all, of the duties.
Of the two possible understandings of the phrase, the former is the one that ought to be accepted. It is more consistent than the latter with the concept of "total" disability, which is what the phrase is intended to define. An insured is "totally disabled" when she is totally unable to perform the duties of the relevant occupation.
This understanding is confirmed by consideration of the same policy's definition of the term "partially disabled." That term is defined to mean "that as a result of the injury or sickness which caused the total disability the insured is:
1. able to perform one or more, but not all, of the material duties of [her] regular or any other gainful occupation on a full-time or a part-time basis; or
2. able to perform all of the material duties of [her] regular or any other gainful occupation on a part-time basis."
Def.'s Mot. for Summ. J. Ex. A at 8. Thus, when an insured can perform some, but not all, of the duties of the position, she is considered "partially disabled." It would be inconsistent with this explicit definition of partial disability to adopt the second possible interpretation of the crucial phrase in the definition of total disability. Adopting that interpretation would mean that the same standard would apply to determining whether a person was totally disabled or whether she was partially disabled, erasing any distinction between the two statuses. That is not a reasonable interpretation of the policy language.
Therefore, in order to be entitled to benefits for total disability, Hersee must establish that she meets the policy standard, which is that she is unable to perform any of the duties of the relevant occupation. On the record of undisputed facts, it is clear that she cannot meet this standard.
According to Hersee's former supervisor at Fenway, her duties as Director of Development and Public Relations required strong verbal written and communication skills and included, but were not limited to, formulating and implementing fund raising goals, coordinating individual solicitation, researching and identifying public and private funding sources, submitting periodic reports to donors, compiling and expanding the computerized donor file and mailing list, and overseeing the dissemination of all public information. Mercier Aff. Ex. I, Orlando Statement at 2-3. To qualify as "totally disabled" under the First Allmerica policy, Hersee would have to prove that at the relevant times she was unable to perform any of those duties.
While the parties dispute the extent of Hersee's unreported activities, there is no dispute that while receiving total disability benefits throughout 1991-1993, she performed some office work, such as writing checks, for the Boston Chicken franchise and occasionally worked at the counter at the restaurant. See Mercier Aff. Ex. J, Hersee Aff. Nor is there a dispute that in 1998, Hersee conversed with and read to patients at a retirement center two to three mornings a week for three hours at a time. See id. Both of these activities require written and verbal communication skills. Regardless of the duration or intensity of these activities, Hersee's conduct indicates that she is capable of performing at least some of the material duties of her former occupation at least some of the time. It follows that First Allmerica properly found that Hersee was not totally disabled under the terms of the policy.
Whether Hersee would be entitled to partial disability benefits under the policy for any period of time is not presented by the plaintiff's complaint. (It does not appear that Hersee ever applied for partial disability benefits.) Her qualification for such benefits is not resolved in this case.
IV. Conclusion
For the foregoing reasons, the defendant's motion for summary judgment is GRANTED. Judgment shall enter dismissing the complaint with prejudice.
It is SO ORDERED.