Opinion
Case No. 5:05CV1928, [Resolving Docs. 18 22].
September 26, 2006
MEMORANDUM AND OPINION
I. Introduction
This matter comes before the Court on a Motion for Summary Judgment by Plaintiff, Michelle McGuire ("Plaintiff"). Hartford Life and Accident Insurance Company ("Defendant") filed a Cross-Motion for Judgment on the Merits and a Memorandum in Opposition to Plaintiff's Motion. The Court has reviewed the Motion, Cross-Motion and Memorandum, pleadings, exhibits, and applicable law. For the reasons discussed below, Plaintiff's Motion is DENIED, and Defendant's Cross-Motion is GRANTED IN PART and DENIED IN PART.
II. Background
Plaintiff suffered severe injury to her spine and left ankle on April 4, 2001. As a result of this injury, she allegedly developed reflex sympathetic dystrophy, a pain syndrome. At all relevant times, Plaintiff participated in Aeropostale, Inc.'s welfare benefit plan (the "Plan"), which included a group long-term disability insurance policy managed by Defendant. Following her injury, Plaintiff initiated a claim with Defendant for short-term disability benefits. She received the short-term benefits from April 11, 2001 to October 9, 2001. Beginning on October 10, 2001, Plaintiff received long-term disability benefits. Pursuant to the Plan, Defendant reviewed Plaintiff's claim roughly 24 months after Plaintiff first received long-term disability benefits. Defendant contracted with Medical Advisory Group, LLC to have a physician, Dr. William Sniger, review Plaintiff's claim. On Dr. Sniger's recommendation, Defendant terminated Plaintiff's benefits effective January 16, 2004. Plaintiff appealed the termination decision in accordance with Defendant's procedures, and Defendant hired Dr. Barry Turner through the University Disability Consortium to again review the claim and write a report. On September 20, 2004, Defendant tendered the final denial of Plaintiff's claim based on Dr. Turner's recommendation.
While still receiving benefits under the Plan, Plaintiff applied for Social Security Disability ("SSD") benefits at Defendant's urging. Though her eligibility was initially denied, Plaintiff ultimately succeeded in her appeal and the Commissioner of Social Security granted Plaintiff SSD benefits on September 20, 2004, retroactive to October 2001.
Because Plaintiff did not notify Defendant of Plaintiff's favorable SSD determination at the time of either the initial termination of benefits or the denial on appeal, the Court may not consider this information in ruling on the claim of wrongful termination of benefits. See Crews v. Central States, 788 F.2d 332, 336 (6th Cir. 1986). However, the receipt of SSD benefits is central to the counterclaim.
The Plan provides that a participant is entitled to disability benefits for up to 24 months if the participant cannot perform essential duties of her occupation due to accidental bodily injury and, as a result, is earning less than 20 percent of her previous earnings. To qualify for disability benefits after the initial 24-month period, the participant must not be able to perform the essential duties of any occupation. The Plan further provides that Defendant retains full discretion and authority to determine eligibility for benefits and to construe the terms of the Plan.
Plaintiff brought suit under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., alleging that Defendant wrongfully denied her long-term disability benefits. Defendant counterclaimed for reimbursement of long-term benefits it allegedly overpaid due to the subsequent award of SSD benefits. Previously, the Court denied a motion to dismiss the counterclaim for lack of subject matter jurisdiction. The Court now considers the parties' cross-motions for judgment.
III. Wrongful Termination of Benefits Claim
A. Standard of Review
This Court generally grants summary judgment when "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). However, "[t]raditional summary judgment concepts are inapposite to the adjudication of an ERISA action for benefits . . . because the district court is limited to the evidence before the plan administrator at the time of its decision[.]" Buchanan v. Aetna Life Ins. Co., No. 05-3380, 2006 WL 1208069, at *2 (6th Cir. May 3, 2006) (citing Wilkins v. Baptist Healthcare System, Inc., 150 F.3d 609, 619 (6th Cir. 1998) (Gilman, J., concurring)); contra Bucks v. Reliance Standard Life Ins. Co., 215 F.3d 1325, No. 99-3398, 2000 WL 659020, at *3 n. 1 (6th Cir. May 12, 2000) (finding summary judgment improper for de novo review but appropriate for review under the arbitrary and capricious review).
Under ERISA, federal courts generally review a plan administrator's decision to deny benefits de novo. McDonald v. Western-Southern Life Ins. Co., 347 F.3d 161, 168 (6th Cir. 2003). However, when a plan explicitly gives the administrator full discretion to construe the terms of the plan and to determine eligibility for benefits, the administrator's determination will be upheld unless shown to be arbitrary and capricious. Id. The arbitrary and capricious standard defers to plan administrators, requiring only that "it is possible to offer a reasoned explanation, based on evidence, for a particular outcome." Williams v. International Paper Co., 227 F.3d 706, 712 (6th Cir. 2000).
In ERISA claims for wrongful termination of benefits, this Court may review only those facts known by the administrator at the time of termination. Crews v. Central States, 788 F.2d 332, 336 (6th Cir. 1986). The parties may introduce other evidence only to substantiate claims of bias or lack of procedural due process. Wilkins, 150 F.3d at 619.
B. Discussion
Based on the explicit language of the Plan, both parties agree that the arbitrary and capricious standard applies in this case. Plaintiff argues that Defendant's decision to terminate her disability benefits was arbitrary and capricious for the following reasons: (1) Defendant has a conflict of interest because it is both the decision-maker and payor of benefits under the Plan; (2) Defendant arbitrarily disregarded the opinions of Plaintiff's treating physicians; and (3) Defendant's file review of Plaintiff's claim shows a lack of thoroughness.
1. Potential conflict of interest
In determining whether a plan administrator's decision to terminate benefits is arbitrary or capricious, this Court takes into consideration potential conflicts of interest. Univ. Hosp. of Cleveland v. Emerson Elec. Co., 202 F.3d 839, 847 (6th Cir. 2000). As explained by the Sixth Circuit, a potential conflict of interest exists when an administrator serves as both the decision-maker and payor of benefits. Id. at 847 n. 4. However, a potential conflict of interest does not change the arbitrary and capricious standard — it is merely one factor this Court considers. Peruzzi v. Summa Medical Plan, 137 F.3d 431, 433 (6th Cir. 2004).
Defendant argues that hiring independent physicians to review Plaintiff's file dissolved the potential conflict of interest. The Court finds this argument unpersuasive. Though Drs. Sniger and Turner are employed by independent companies, the potential remains for them to be influenced by the financial stakes of the Defendant, who ultimately pays for their services. The Court is mindful, however, that a plaintiff must present specific evidence of how the conflict affected the decision to terminate benefits in order to succeed in demonstrating that a conflict of interest resulted in an arbitrary and capricious decision. See Perlman v. Swiss Bank, 195 F.3d 975, 981 (7th Cir. 1999). Here, Plaintiff merely asserts that a conflict of interest existed because Defendant served as both the decision-maker and the payor of benefits. Plaintiff has not shown specific evidence of how this potential conflict affected Defendant's decision to terminate benefits. As a result, Plaintiff has not satisfied the arbitrary and capricious standard as it relates to her conflict-of-interest argument. See id. 2. Opinions of treating physicians
Plaintiff argues that the reviewing physicians disregarded the opinions of her treating physicians. Although special weight is afforded to a treating physician's opinion in decisions regarding SSD eligibility, the Supreme Court found no corresponding rule governing private employee benefits plans covered by ERISA. Black Decker Disability Plan v. Nord, 538 U.S. 822, 825 (2003). While plan administrators "may not arbitrarily refuse to credit a claimant's reliable evidence, including the opinions of a treating physician," administrators are not required to "automatically . . . accord special weight to the opinions of a claimant's physician; nor may courts impose on plan administrators a discrete burden of explanation when they credit reliable evidence that conflicts with a treating physician's evaluation." Id. at 834.
In deciding to terminate Plaintiff's benefits, Defendant relied on the medical opinions of Drs. Sniger and Turner. (Administrative Record ["AR"] AR 112-13). According to their reports, Drs. Sniger and Turner based their opinions on both a review of Plaintiff's file and telephone conversations with Plaintiff's treating physicians. (AR 115-19, 285-92). Contrary to Plaintiff's position, it does not appear that the treating and reviewing physicians disagreed as to whether Plaintiff fit within the Plan's definition of "disabled." Even assuming the physicians disagreed, the reviewing physicians substantiated their positions by citing evidence from Plaintiff's file — strongly indicating that Defendant did not disregard the opinions of Plaintiff's treating physicians. Because a plan administrator need not favor the treating physician's opinion over that of another qualified medical professional — and because it is within the administrator's discretion to agree with the recommendation of a reviewing doctor's substantiated report — the Court finds that Defendant's reliance on the opinions of its reviewing physicians was neither arbitrary nor capricious. See Black Decker Disability Plan, 538 U.S. at 834.
Although Plaintiff argues that the letters memorializing these conversations contained in the administrative record should be inadmissible as hearsay, the Court agrees with the Defendant that the Federal Rules of Evidence do not apply to exclude evidence from an administrative record in an ERISA case. See Karr v. National Asbestos Workers, 150 F.3d 812, 814 (7th Cir. 1998).
While some of Plaintiff's treating physicians concluded that Plaintiff was totally disabled, all of the physicians involved — whether treating or reviewing — appear to agree that Plaintiff could perform sedentary work. (AR 112, 120-23, 293-94). As a result, it appears the physicians agreed that Plaintiff was not prevented from performing the essential duties of any occupation.
3. Lack of thoroughness and failure to conduct a physical examination
Plaintiff contends that Defendant did not thoroughly review her claim, as demonstrated by its decision to conduct a file review of Plaintiff's claim rather than conduct a physical examination as authorized by the Plan. In determining whether the termination of benefits was arbitrary or capricious, this Court examines the administrator's method of review. Calvert v. Firstar Finance, Inc., 409 F.3d 286, 295 (6th Cir. 2005). Even if a plan authorizes administrators to conduct a physical exam, ERISA does not require administrators to do so. The decision to forego an authorized physical examination, however, "may raise questions about the thoroughness and accuracy of the benefits determination." Id.
Here, Defendant did not exercise its option to conduct a physical examination. The Court finds, however, that Defendant's review of Plaintiff's claim was not unreasonably limited. The reviewing physicians had the benefit of both the extensive medical records already on file and an opportunity to speak with Plaintiff's treating physicians. (AR 115-19, 285-92). Plaintiff attempts to bring her case in line with Calvert, which involved a situation where the reviewer arguably had not even read the claimant's file. Id. In contrast, the reviewing physicians here each made detailed findings based on Plaintiff's medical records. (AR 115-19, 285-92). As a result, the Court finds that Defendant's decision to forego a physical examination of Plaintiff was not arbitrary or capricious.
Plaintiff contends that the reviewing physicians' opinions are conclusory and, thus, belie a finding that they fully reviewed Plaintiff's claims. Specifically, Plaintiff points to Dr. Turner's statement that Plaintiff "is capable of performing full-time sedentary to light duty work without further restrictions and limitations." The Court disagrees with Plaintiff and notes that Dr. Turner's statement was not offered independently. Instead, Dr. Turner's statement was simply a summary and conclusion based on all of the information set out previously in his report. (AR 115-19).
C. Conclusion
Based on the administrative record and the arguments before it, the Court cannot say that the decision by Defendant to terminate the long-term disability benefits of Plaintiff was arbitrary or capricious. Defendant administered a full review of Plaintiff's claims and determined, as it is in its discretion to do, that Plaintiff was not "disabled" as defined by the Plan. Therefore, the Court DENIES Plaintiff's Motion for Summary Judgment and GRANTS Defendant's Motion for Judgment on the Merits as it relates to the claim of wrongful termination of benefits.
IV. Reimbursement Counterclaim
A. Standard of Review
Traditional summary judgment concepts apply to Defendant's reimbursement counterclaim. Buchanan, 2006 WL 1208069 at *3. Summary judgment is appropriate only when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).
B. Discussion
Defendant counterclaimed against Plaintiff for reimbursement of benefits overpaid to Plaintiff. Plaintiff did not address Defendant's counterclaim in her motion for summary judgment and also did not reply to Defendant's cross-motion for judgment.
Pursuant to the Plan, Defendant subtracts the amount a participant receives from other disability-benefit sources, including SSD benefits, from the amount of monthly benefits it otherwise would be obligated to pay to the participant. Further, the Plan entitles Defendant to obtain reimbursement for benefits it has overpaid. On September 20, 2004, Plaintiff received SSD benefits, retroactive to October 2001. Defendant avers that, in light of the subsequent SSD decision, it overpaid Plaintiff's long-term benefits a total of $26,389.10 from October 2001 to January 2004.
Under ERISA, a fiduciary may seek equitable relief to enforce the terms of a welfare benefit plan. 29 U.S.C. § 1132(a)(3). The Supreme Court has clarified equitable relief to mean those types of relief typically available in equity, as distinguished from those available at law. Great-West Life Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209-10 (2002). While money judgments are typically a form of relief available only at law, the Supreme Court recently ruled that, when in the form of a constructive trust or equitable lien, a money judgment may constitute equitable relief. Sereboff v. Mid Atlantic Medical Services, Inc., 546 U.S. ___, 126 S.Ct. 1869, 1877-78 (May 15, 2006). A key factor in this determination is whether the individual possesses the identifiable property or funds, or whether relief would amount to personal liability against an individual's general assets. Id. at 1873-74.
Because the Court has very limited evidence to consider in ruling on Defendant's motion, a grant of summary judgment at this time would be premature. It appears from the record that the Social Security Administration determined that Plaintiff was entitled to receive SSD benefits beginning in October 2001, and that Plaintiff also received benefits under the Plan until January 2004. However, it is not as clear that the reimbursement requested would be equitable or that the amount estimated by the Defendant is the accurate amount of overpayment. Because Sereboff represents a change in the law that has direct impact on the disposition of this case, the parties must address the requirements of equitable restitution set out in that ruling.
C. Conclusion
Having determined that genuine issues of fact remain as to whether Defendant is entitled to reimbursement pursuant to ERISA, both parties' motions for judgment are DENIED as to Defendant's counterclaim.
V. Conclusion
For the reasons outlined above, Plaintiff's Motion for Summary Judgment is DENIED. Defendant's Motion for Judgment as a Matter of Law is GRANTED as to the claim of wrongful termination and DENIED as to the reimbursement counterclaim.
IT IS SO ORDERED.