Opinion
CIVIL ACTION NO. 02-2088, SECTION "C" (2)
March 21, 2003
ORDER AND REASONS
Before the court is Plaintiff's motion for summary judgment and Defendant's cross motion for summary judgment, both pursuant to Fed.R.Civ.P. 56. For the reasons that follow, both motions are denied. At the parties request, the trial date was vacated in this matter and the parties agreed to submit the action on the written record. (Fed. Doc. 10). However, the parties did not submit proposed findings of fact and conclusions of law. Therefore, the Court treats the cross motions for summary judgment and associated memorandum as such. By Minute Entry on December, 27, 2003, the Court acknowledged:
The parties in the above captioned matter have represented that the matter will be disposed of by the pending cross motions for summary judgment. Further, the parties have represented that should the matter proceed to trial, no new evidence would be presented that the Court does not presently have under consideration.
(Id.). Therefore, the Court conducts a trial on the record and finds by a preponderance of the evidence that CNA acted "arbitrarily and capriciously" when it denied Plaintiff long term disability benefits on October 12, 1999, based upon a determination that he was not totally disabled from performing any occupation.
I. Analysis on Summary Judgment
As a threshold matter of procedure, the Court must address the cross motions for summary judgment. The Court is not satisfied that Defendant's initial denial of benefits to the Plaintiff is sufficiently supported by the undisputed facts in the administrative record as to justify summary judgment in its favor. Nor is the Court satisfied that the undisputed facts in the administrative record support Plaintiff's contention that he is totally disabled as defined by the terms of the Plan under the proper standard for summary judgment. Genuine issues of material fact exist concerning whether CNA acted "arbitrarily and capriciously" when it denied Plaintiff long term disability benefits on October 12, 1999, based upon a determination that he was not totally disabled from performing any occupation. Therefore, both Plaintiff's and Defendant's motions for summary judgment are properly denied.
II. Trial on the Record
A. Findings of Fact
1. Winn Dixie Stores Inc. ("Winn Dixie") sponsored an employee welfare benefit plan, the Winn Dixie Stores Inc. Flexible Spending Accounts Plan (the "Plan").
2. The Plan was underwritten by Continental Casualty Company ("CNA") and administered by CNA Group Life Assurance Company.
3. In 1998, Plaintiff, Silas Rushing, Jr. ("Rushing") was an employee of Winn Dixie and a member of the Plan.
4. On May 7, 1998 Rushing was injured during his employment as a grocery warehouse associate with Winn Dixie Stores Inc.
5. As a result of the injury Rushing was terminated on October 4, 1999.
6. Rushing received all short term disability benefits to which he was entitled under the Plan.
7. Rushing qualified for coverage under the long term disability benefit plan, which provided for long term disability benefits for the first six months for an insured employee that has a "total disability" as defined by the plan. See Rec. Doc. 7, Flexible Benefits Plan Booklet, Ex. 1 at 92, (defining "total disability" during the first six months for which benefits are payable as the inability "to perform the substantial and material duties of your occupation.").
8. Rushing received full payment for the first six months of long term disability benefits during the period of October 5, 1998 through April 4, 1999.
9. To be eligible for long term disability benefits after expiration of the first six months of long term disability, the Plan requires that an insured employee meet the more restrictive definition of total disability, defined as being totally disabled from performing any occupation. ( See id.) (emphasis added).
10. On October 12, 1999 CNA denied Plaintiff long term disability benefits effective after October 4, 1999 based upon a determination that he was not totally disabled from performing any occupation.
11. Denial of long term disability benefits was based in part on Dr. Thirstrup's assessment that plaintiff's condition was "improving," that his "restrictions are temporary," and that he was "unable to lift greater than 15 pounds, walking as tolerated, 10 to 15 minutes." (Rec. Doc. 7, Ex. 2 at 48).
12. Also, denial of long term disability benefits was based in part on a vocational review, which concluded that "based on [Rushing's] physical limitations as well as taking into account [his] education, training and past work experience," he was able to perform the following jobs: "Receiving Clerk, Counter Clerk, Inventory Clerk and Desk Clerk." (Id. at 48-49).
13. On December 2, 1999, Plaintiff appealed the denial of long term benefits.
14. On appeal Plaintiff was represented by counsel, Albert Bensabat.
15. Counsel for Plaintiff submitted a letter to the Appeals Committee and a handwritten letter on a prescription pad by Dr. Thirstrup stating that "in no way should [Rushing] return to work." (Id. at 45-47).
16. The Appeals Committee denied Rushing's appeal on February 10, 2000. (Id. at 39-46).
17. On April 10, 2001, a suit was filed in this Court captioned, Civil Action Number 00-1071, " Silas Rushing v. CNA Insurance Companies." After the parties reached an apparent compromise, the Court entered a sixty day order of dismissal without prejudice on June 28, 2001. On October 17, 2001, Plaintiff repudiated the settlement.
18. On June 4, 2002, Plaintiff sought to renew the appeals process and requested submission of new evidence to the Appeals Committee. Plaintiff submitted a detailed report by Dr. Thirstrup, dated May 29, 2002, in which Dr. Thirstrup states that Plaintiff's condition is "permanent" and "is totally disabled from all occupations from which he is reasonably qualified by education, experience or training." (Id. at 12-14).
19. On June 19, 2002, Plaintiff's request for a renewed appeal was denied.
20. Plaintiff filed this lawsuit on July 8, 2002.
B. Conclusions of Law
III. Conclusion
1. The Winn Dixie Stores Inc. Flexible Spending Accounts Plan is governed by the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et seq. ("ERISA").
2. Factual determinations made by an administrator during the course of a benefits review are reviewed for an abuse of discretion. Meditrust Fin. Servs. Corp. v. Sterling Chems., Inc., 168 F.3d 211, 213 (5th Cir. 1999).
3. In applying the abuse of discretion standard, courts analyze whether the administrator acted arbitrarily or capriciously. Sweatman v. Commercial Union Ins. Co., 39 F.3d 594, 600 (5th Cir. 1994).
4. A plan administrator's decision will be affirmed if it is supported by "substantial evidence." Meditrust, 168 F.3d at 215. "Substantial evidence is `more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Girling Health Care, Inc. v. Shalala, 85 F.3d 211, 215 (5th Cir. 1990) (quoting Richardson v. Perales, 402 U.S. 389, 401, 28 L.Ed.2d 842, 91 S.Ct. 1420 (1971)).
5. The Court cannot substitute its own judgment for that of the plan administrator; the abuse of discretion "standard exists to ensure that administrative responsibility rests with those whose experience is daily and continual, not with judges whose exposure is episodic and occasional." Rigby v. Bayer Corp., 933 F. Supp. 628, 633 (E.D.Tex. 1996).
6. A denial of benefits under an ERISA plan shall be "reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine the eligibility or to construe the terms of the Plan." Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115, 103 L.Ed.2d 80, 109 S.Ct. 948 (1989).
7. Because CNA serves as both the insurer and the plan administrator, CNA is "self-interested, i.e. [it] potentially benefits from every denied claim." Vega v. National Life Ins. Servs., Inc., 188 F.3d 287, 295 (5th Cir. 1999). When an administrator operates under such a conflict of interest, the district court must take this factor into account when reviewing of a denial of benefits, and must view the administrator's determination with significantly less deference than would otherwise be appropriate. See Bruch, 489 U.S. at 115 ("Of course, if 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 `factor' in determining whether there is an abuse of discretion."). "In a situation where the administrator is conflicted, we will give less deference to the administrator's decision. In such cases, we are less likely to make forgiving inferences when confronted with a record that arguably does not support the administrator's decision." Vega, 188 F.3d at 299. Therefore, while the Court may not impose on a conflicted administrator any independent duty to reasonably investigate the facts of a claimant's case, see id. at 298, we must view the administrative record upon which the administrator relied with a more skeptical eye.
8. The only evidence of a conflict here is the fact that Defendant is both the insurer and the plan administrator. Therefore, the administrator's decision will be reviewed "with only a modicum less deference." Vega, 188 F.3d at 301; see also Marziale v. Hartford Life Accident Ins. Co., 2002 U.S. Dist. LEXIS 11321 at *12-13 (E.D.La., June 19, 2002) (J. Fallon) (applying "modicum less deference" standard where only evidence of conflict is defendant's status as insurer and plan administrator).
9. In this case, it is undisputed that whether the Plaintiff is "totally disabled" under the Plan is a factual determination which does not involve a legal interpretation of plan terms. Thus, the Court is not required to apply the two-step analysis set forth in Wildbur v. ARCO Chem. Co., 974 F.2d 631, 638 (5th Cir. 1992); see also Duhon v. Texaco, Inc., 15 F.3d 1302, 1307 n. 3 (5th Cir. 1994).
10. To be eligible for long term disability benefits after expiration of the first six months of long term disability, the Plan requires that an insured employee meet the more restrictive definition of total disability, defined as being "totally disabled" from performing "the duties of any occupation for which you are or become qualified by education, training or experience." (Rec. Doc. 7, Ex. 1 at 92).
11. CNA initially denied Plaintiff long term disability benefits on October 12, 1999. (Id., Ex. 2 at 48). A final denial issued on February 10, 2000. (Id. at 41-43). The Court notes that the administrator's decision to terminate Plaintiff's long term disability benefits relied on scant and contradictory evidence, namely two boilerplate forms sent by CNA to Plaintiff's treating physicians. These documents include a response by Dr. Thirstrup, dated July 22, 1999, in which he states that Plaintiff's restrictions are "temporary." (Id. at 62). Yet, in the very same document, Dr. Thirstrup states that Plaintiff was medically unstable and based on his progress Plaintiff's anticipated stability was indefinite. (Id.) In this "report" Dr. Thirstrup indicated Plaintiff was capable of "walking as tolerates 10-15 minutes" and "no lifting over 15 pounds." (Id.).
CNA also relied on a contradictory and conditional document by another treating physician, Dr. Provenza. (Id. at 82 91). In response to a similar boilerplate CNA inquiry, dated March 15, 1999, which includes a prepared comment by a CNA case manager, stating "it appears that his condition is improving," Dr. Provenza circled this quoted language and added "[t]his is not correct." (Id.). Also, in that same document, Dr. Provenza states that Plaintiff's condition is not permanent and subject to change after treatment with an estimated return to work in six to eight months. However, the Court recognizes that Dr. Provenza's assessment of Plaintiff's condition as temporary is conditional upon a future surgical treatment. ( See id.). Thus, it is not an assessment of Plaintiff's then present medical condition, but rather a speculation as to his future medical condition.
13. These two documents, dating from approximately 3 and 6 months prior to the initial denial and approximately 8 and 11 months prior to the final denial are the sole demonstration in the entire record to indicate that Plaintiff's physical condition was or would be anything other than permanent. In light of the prospect of conflict of interest, CNA's reliance on these contradictory and speculative representations to support the denial of benefits is cause for concern. Although the Court recognizes that the administrator was not required to conduct an independent investigation, see Vega, 188 F.3d at 299 ("district court may not impose a duty to reasonably investigate on the administrator."), based on the weight of evidence in the record supporting the conclusion that Plaintiff was incapable of performing any work, the administrator clearly placed undue emphasis on these two contradictory and speculative documents which indicated otherwise.
14. Additionally, although at the time of the initial denial of long term disability benefits on October 12, 1999, Drs. Thirstrup and Provenza had speculated that Plaintiff's condition was only "temporary," on appeal, Plaintiff presented new evidence by Dr. Thirstrup to contradict his earlier designation of Plaintiff's condition. Specifically, Dr. Thirstrup stated, "in no way should he be allowed to work — dangerous to spine." (Rec. Doc. 7, Ex. 2 at 45). On appeal, CNA discounted this statement as lacking "additional medical information that would alter our previous decision." (Id., Ex. 2 at 39). However, the "medical findings" which CNA relied on to conclude that Plaintiff was able to work, namely two contradictory and speculative boilerplate "reports" by Drs. Thirstrup and Provenza are no less conclusory or opinionated than this evidence rejected by CNA as lacking in medical findings.
15. Finally, by letter dated June 4, 2002, Plaintiff requested a review of his appeal and supplied further evidence of his total disability. In support thereof, Plaintiff provided a report by Dr. Thirstrup, dated May 29, 2002, indicating that Plaintiff's condition was "permanent," that he was "100% disabled," and that he "is totally disabled from all occupations from which he is reasonably qualified by education, experience or training." (Id., Ex. 2 at 12-13). On June 19, 2002, CNA denied the request for appeal stating, "we have reviewed this additional information. However, our determination remains unchanged as these statements do not support your client's inability to perform the duties such as a Desk Clerk, Receiving Clerk or Inventory Clerk." (Id., Ex. 2 at 7). Again, given the conflict of interest, even under the "modicum less deference" standard and given the fact that CNA's initial denial was based on two contradictory and speculative assessments of Plaintiff's physical condition, this cursory rejection of Plaintiff's proffered evidence of total disability is suspect.
16. The evidence relied on by the administrator in denying Plaintiff's claim was scant, contradictory, speculative and conditional. "Without some concrete evidence in the administrative record that supports the denial of the claim, we must find the administrator abused its discretion." Vega, 188 F.3d at 302.
The Court finds no "concrete evidence" to support the denial of long term benefits. None of the reasons identified in CNA's initial denial letter, dated October 12, 1999, (Rec. Doc. 7, Ex. 2 at 48) or the final denial letter, dated February 10, 2000, (id. at 41-43) nor any of the other evidence contained in the administrative record support the decision.
The Court's determination is based solely on the evidence in the administrative record, which at the time of the initial denial of benefits on October 12, 1999, and final denial on February 20, 2000, merely contained conditional evidence that Plaintiff's limitations were only temporary, as well as, a prognosis as to Plaintiff's future medical condition. Although the administrative record reveals that Plaintiff's treating physicians opined that Plaintiff would recover after surgery, it contains no "concrete evidence" that such a recovery occurred. Finally, and most importantly, the administrative record contains no "concrete evidence" of a lack of total disability.
17. Plaintiff seeks an award of interest based on the merits of his claim. Pursuant to 28 U.S.C. § 1961(a), Plaintiffs is entitled to an award of post-judgment interest. "The availability of pre-judgment interest depends upon whether the statute creating the cause of action precludes such an award and, if not, whether allowance of pre-judgment interest furthers the policies underlying the statute." Transitional Learning Cmty. v. Metro. Life Ins. Co., 913 F. Supp. 504, 508 (S.D.Tex. 1996). Although ERISA is silent on the issue of pre-judgment interest, "[it] does not preclude such an award" and "an award of prejudgment interest furthers the purposes of that statute by encouraging plan providers to settle disputes quickly and fairly, thereby avoiding the expense and difficulty of federal litigation." Hansen v. Cont'l Ins. Co., 940 F.2d 971, 984 n. 11 (5th Cir. 1991); see also Musmeci v. Schwegmann Giant Super Mkts., 159 F. Supp.2d 329, 356 (E.D.La. 2001) (awarding pre-judgment interest at a rate set by the Louisiana Civil Code, "the law of the situs of plaintiff's employment"). Guided by Louisiana law, the Court awards prejudgment interest from October 5, 1999, at the rate set in Louisiana Civil Code article 2924.
19. Plaintiff moves for an award of attorney's fees and costs. ERISA provides the Court with discretion to award attorney's fees to either party. 29 U.S.C. § 1132(g)(1). In determining whether to award attorney's fees and costs the district court should consider (1) the degree of the opposing party's culpability or bad faith; (2) the ability of the opposing party to satisfy an award of attorney's fees; (3) whether an award of attorney's fees would deter other persons acting under similar circumstances; (4) whether the party requesting attorney's fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA itself; and (5) the relative merits of the party's position. See Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255, 1266 (5th Cir. 1980).
Applying these factors to this case, the Court finds that an award of attorney's fees is not appropriate. Plaintiff filed this lawsuit after the parties had reached an apparent compromise in a previous lawsuit. On October 17, 2001, Plaintiff repudiated that settlement. The Court also notes that this litigation may have been avoided entirely had Plaintiff submitted additional medical evidence when he originally appealed CNA's decision.
It should be noted that both these documents conclude the Plaintiff would be able to work at some future date after surgery. However, CNA relied on these speculations to conclude that Plaintiff was able to work immediately. For example, on October 12, 1999, two months after Dr. Thirstrup first stated that Plaintiff's condition was temporary with "walking as tolerated 10-15 minutes" and "no lifting over 15 pounds," CNA identified four positions that Plaintiff was capable of performing with his physical limitations. ( See Rec. Doc. 7, Ex. 2 at 49-50).
This handwritten statement occurs on a page from a prescription pad. It appears to be impromptu opinion by Dr. Thirstrup and contains no medical findings.
The Court's determination that CNA's final denial, on February 10, 2000, was "arbitrary and capricious" is not dependent on this later submitted evidence.
The Court finds that genuine issues of material fact exist to preclude summary judgment in favor of either party. Accordingly, IT IS ORDERED that the Motions for Summary Judgment submitted by both parties are hereby DENIED.
Because the parties represented that this matter could be disposed of on cross motions for summary judgment and that no new evidence would be presented at trial that the Court does not presently have under consideration, the Court has conducted a trial on the record. For the above stated reasons, the Court finds that based on the evidence in the administrative record, Defendant's decision to terminate long term disability benefits was an abuse of discretion.
Accordingly, IT IS ORDERED that in accordance with the Plan's terms Plaintiff is entitled to long term disability benefits dating from October 5, 1999, for as long as he qualifies as totally disabled under the Plan. IT IS FURTHER ORDERED that Defendant pay pre-judgment interest on the award at the rate set in Louisiana Civil Code article 2924. An award of attorney's fees and costs is not warranted in this case.