Summary
explaining that the Kinstler court's elaboration of the term “regular occupation” was inapposite because the plan “explicitly state[d] that ‘[the defendant] will look at [a claimant's] occupation as it is normally performed instead of how the work tasks are performed for a specific employer or at a specific location. ’ ” (first and second alterations added)
Summary of this case from DeCesare v. Aetna Life Ins. Co.Opinion
No. 04 CIV. 2076 (DLC).
February 28, 2005
Aba Heiman, Fusco, Brandenstein Rada, P.C., Woodbury, NY, for Plaintiff.
Edward J. Boyle, Kevin Fox, Julia Gorbovitsky, Wilson, Elser, Moskowitz, Edelman Dicker LLP, New York, NY, for Defendant Prudential Insurance Company of America.
OPINION ORDER
Plaintiff Thomas A. Simone ("Simone") brings this action, pursuant to the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1132(a)(i)(B), (d)(2), (e)(1), alleging that the defendants Prudential Insurance Company of America ("Prudential") and Benjamin Jacobson Sons, L.L.C. Long Term Disability Plan (the "Plan") improperly denied his claim for long-term disability ("LTD") benefits. On July 16, 2004, the parties agreed to dismiss the complaint without prejudice as against the Plan. Subsequently, Simone and Prudential filed cross-motions for judgment on the administrative record. On February 28, 2005, both parties consented to converting their motions into a bench trial on the administrative record and waived their rights to oral argument. The following constitutes this Court's findings of fact and conclusions of law.
Findings of Fact
The Administrative Record reflects the following relevant information. Beginning in 1982, Simone, who is now forty-four, was employed by Benjamin Jacobson Sons ("Jacobson") as a trading assistant on the floor of the New York Stock Exchange ("NYSE"). In 2000, his last full year of work, Simone earned nearly $150,000. According to Simone, his job entailed "inputting and processing buy/sell transactions on a computer." Doing this work "required him to be on his feet all day, in a cramped cubicle, where he often had to lift his head to view overhead screens and look down to execute orders received from traders." As the job necessitated an immediate response to trading orders, he was afforded "no opportunity to pace himself."
Benjamin Jacobson Sons was acquired by The Goldman Sachs Group, Inc. sometime in 2001, and subsumed by its Spear, Leeds, and Kellogg subsidiary.
On September 18, 2000, Simone first sought medical treatment for what he described as low back pain and upper back pain that had persisted for four months. His treating neurologist, Dr. Vincent Macaluso, observed that Simone demonstrated signs and symptoms of cervical radiculopathy and lumbar radiculopathy. Dr. Macaluso directed that Simone undergo MRIs of both the lumbar and cervical spine, receive physical therapy, and take anti-inflammatory medication. The MRIs were performed on October 1.
Radiculopathy is a "disease of the spinal nerve roots."Atty's Illustrated Med. Dict. R2 (Ida G. Dox, et al., eds. 1997). Cervical radiculopathy relates to the portion of the spine supporting the neck, whereas lumbar radiculopathy relates to the part of the back between the lowest rib and the pelvic bone on either side of the spine. Id. at C34, L49.
As his pain continued and then worsened, Simone continued to see Dr. Macaluso, and on September 27, 2001, he stopped working. On October 24, noting that Simone was experiencing "profound paracervical muscle spasm and low back pain and cervical pain to palpation," Dr. Macaluso ordered new MRI studies of Simone's neck and back, which were performed later that month. He further observed that Simone's ability to return to work would depend on his response to therapy, notably epidural injections. By the end of February 2002, Simone reported to Macaluso that his last epidural injection gave him minimal relief from the pain, and that he was considering applying for full-time disability benefits if the pain did not abate. A neurologic examination performed by Macaluso on that day revealed that Simone had pain throughout testing of all muscle groups.
On March 22, 2002, Simone applied to receive LTD benefits under the Plan, through which Jacobson provided its employees with disability insurance. In his application, Simone noted that his job required him to "stand stationery in [a] confined area for seven hours straight" and that his current condition rendered him unable to "stand or sit for more than ½ hour increments." Dr. Macaluso's statement accompanying the application stated that Simone had cervical and lumbar radiculopathy and that he could not tolerate "long periods of sitting," "constant neck motion," or "long periods of standing." In his statement, Dr. Macaluso did not respond to Prudential's request that he assess Simone's job on a scale from sedentary to very heavy or other. Instead, he wrote in the margin, "Pt. unable to work at this time." The required employer's statement, however, represented that Simone's job as a trader's assistant required light work and observed that Simone "works on the floor of the NYSE and must stand the entire day."
The details of the Plan are described in a Certificate of Coverage that is presented in booklet form. Under the heading "HOW DOES PRUDENTIAL DEFINE DISABILITY," the Certificate of Coverage provides:
You are disabled when Prudential determines that:
• you are unable to perform the material and substantial duties of your regular occupation due to your sickness and injury; and
• you have a 20% or more loss in your indexed monthly earnings due to that sickness or injury.
(Emphasis in original.) The Certificate of Coverage defines "material and substantial duties" as those that are "normally required for the performance of [one's] regular occupation" and "cannot be reasonably omitted or modified." The term "regular occupation" is defined to mean "the occupation [a claimant is] routinely performing when [his] disability begins." The Certificate of Coverage further states that "Prudential will look at [a claimant's] occupation as it is normally performed instead of how the work tasks are performed for a specific employer or at a specific location." (Emphasis supplied.)
With respect to the payment of benefits, the Certificate of Coverage mandates that a person must be continuously disabled for a 180-day "elimination period" before any benefits can be paid; after a claimant's initial eligibility is determined, benefits may be paid for twenty-four months. After this period, however, the criteria for disability change, and a person "is disabled when Prudential determines that due to the same sickness or injury, [he] is unable to perform the duties of any gainful occupation for which [he] is reasonably fitted by education, training, or experience." (Emphasis supplied.)
Prudential first denied Simone's claim for benefits in an April 10, 2002 letter, explaining that "the MRIs from October 31, 2001 indicate that your condition has remained unchanged when compared to the prior studies performed on October 1, 2000. There has been no change in your condition from, when you were working to [sic] compared to when you went out of work." Additionally, the letter continues, "the MRIs do not document any spinal cord compression," and overall, "there is no medical documentation to support a significant impairment from your occupation as a Trader's Assistant."
On September 10, 2002, Simone appealed Prudential's denial and submitted additional evidence in the form of treatment notes from Dr. Macaluso for the period between September 18, 2000 and April 23, 2002; treatment notes and worker's compensation reports prepared by his chiropractor between April and July 2002; and two evaluations conducted at his counsel's requests, one by an orthopedist in July 2002, and the other by an ergonomic specialist in August 2002. Pursuant to his appeal, Simone's medical file was reviewed on October 3, 2002 by Dr. Patrick Foye. According to notes prepared by a Prudential claim manager, Dr. Foye noted that there were no changes between the September 2000 and October 2001 MRIs, that the physical exams "show no neurological deficits," and that the "[a]vailable medical documentation does not prevent him from performing his occupation during the [elimination period]."
Five days later, in an October 8, 2002 letter, Prudential denied Simone's first appeal. While acknowledging that Simone's MRIs "document degenerative change and disc herniation," the letter reiterates that "there is no change in the cervical and lumbar MRIs or any documentation of spinal cord compression." Prudential concludes that "there ha[ve] been no significant physical exam findings or manifestation of neurologic deficits that would support an inability to work." On April 23, 2003, Simone submitted a second appeal to Prudential, which he did not supplement with any further documentation. In this second appeal, however, Simone's counsel characterized Prudential's denial as "arbitrary and capricious" and objected that
The denial suggests Mr. Simone's subjective complaints of neck and low back pain don't count (despite the fact that he was a high wage earner, worked the same job for 20 years, and struggled to remain at work despite a degenerative spinal disorder) and that unless an MRI report shows nerve root compression it doesn't count either.
This appeal was promptly denied in a May 1, 2003 letter, which expressed that since Simone did not provide any evidence beyond that which had previously been furnished, Prudential had "no basis upon which to reconsider [its] previous assessment."
Simone filed his third and final appeal on July 16, 2003, which he accompanied with treatment notes from a second orthopedist who saw him in late 2002; physical therapy records from roughly the same period; and treatment notes from a physician specializing in rehabilitation who saw Simone in summer 2003. Before making its final judgment, Prudential arranged for a review of Simone's file by Dr. Theodore Wallace, an orthopedic surgeon. In his October 20 report, Dr. Wallace methodically recounts Simone's medical records from September 2000 through the summer of 2003 and concludes that Simone has
As stated repeatedly in Prudential's correspondence to Simone, a claimant has properly exhausted his administrative remedies under ERISA after two appeals. A third appeal is entirely voluntary under the terms of the Plan.
significant pathology in both the cervical and lumbar spine with a significant disability resulting from those cervical and lumbar abnormalities.
The patient clearly has a chronic pain syndrome involving both the neck and the back. The patient has been persistent in his ongoing complaints. He has seen a number of physicians who have all documented the nature of the patient's ongoing complaints.
I will currently conclude that this patient is limited to light work only activities. The patient can do work in a standing and walking position with a minimum demand for physical effort involving the neck or back. He also requires the added provision of being allowed to intermittently sit during the course of the day as the need arises.
(Emphasis supplied.)
In his report, Dr. Wallace noted the disparity between Simone's job as described in the ergonomic assessment, which indicated that the job required "continuous standing on the floor" with "no opportunity to sit during the day," and the job description for "trader assistant" provided to him by Prudential, which lists the job as a sedentary occupation. As a result, he placed a caveat on his assessment of Simone's condition, writing, "If the job description provided by [the ergonomic consultant] proves to be accurate, then I would conclude that the patient could not perform that activity unless he was able to intermittently sit as necessary throughout the course of the work day."
In addition to Dr. Wallace's review of Simone's medical file, Prudential employee Thomas Virgilio ("Virgilio") conducted a vocational review. In his notes, Virgilio implies that the typical first step in a vocational review is to obtain the claimant's job description. In Simone's case, however, Virgilio explained that he could not locate such a description because Jacobson had been acquired by Goldman Sachs. Instead, Virgilio conducted online research to "identify available `trader assistant' jobs to identify a trend in how this occupation would normally be performed." After consulting three Internet sites listing job openings for trading assistants, Virgilio determined that Simone's job best fit into the category of brokerage clerk, which is defined by O*NET, a database of job characteristics maintained by the U.S. Department of Labor, as a generally sedentary position.
Armed with Dr. Wallace and Virgilio's respective findings, on January 21, 2004, Prudential rejected Simone's final appeal. In pertinent part, the denial letter reads:
Although Mr. Simone's position as Trader's Assistant on the New York Stock Exchange (NYSE) required constant standing, under the Policy definition of regular occupation, Prudential will look at an occupation as it is normally performed instead of how the work tasks are performed for a specific employer or at a specific location. The position of Trader's Assistant, and the material and substantial duties entailed, are considered sedentary in nature. As the consulting physician reviews have determined that Mr. Simone would be able to function at a level that would allow for the performance of sedentary work, we have determined that Mr. Simone is not disabled from his regular occupation as outlined in the group policy.
Having exhausted his administrative remedies, Simone filed the current action on March 11, 2004.
Conclusions of Law
"A denial of benefits under ERISA is reviewed by the District Court `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.'" Muller, 341 F.3d at 123-24 (citing Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). Where applicable, the de novo standard "applies to all aspects of the denial of an ERISA claim, including fact issues, in the absence of a clear reservation of discretion to the plan administrator."Muller, 341 F.3d at 124 (citation omitted).
"Where the plan reserves such discretionary authority," however, "denials are subject to the more deferential arbitrary and capricious standard." Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 249 (2d Cir. 1999). "The burden is on the plan administrator to prove that the deferential standard of review applies." Fay v. Oxford Health Plan, 287 F.3d 96, 104 (2d Cir. 2002). In order to obtain review under the arbitrary and capricious standard, "magic words such as discretion and deference may not be absolutely necessary." Kinstler, 181 F.3d at 251 (citation omitted). Nevertheless, the administrator must point to "either language stating that the award of benefits is within the discretion of the plan administrator or language that is plainly the functional equivalent of such wording." Id. at 252. "[C]ourts should require clear language and decline to search in semantic swamps for arguable grants of discretion."Id.
The Second Circuit has endorsed the following formulations as conveying with sufficient clarity that a plan administrator has been granted the discretion necessary to restrict review to the arbitrary and capricious standard: a trustee has "authority to resolve all disputes and ambiguities relating to the interpretation of the Plan;" the policy "used the phrase `in our judgment' to modify a determination of eligibility for benefits,"Kinstler, 181 F.3d at 251; and the Plan defined medically necessary services as those which "as determined by the Medical Director meet four" requirements, Fay, 287 F.3d at 104 (citation omitted). The Second Circuit has observed that policies that require submission of "satisfactory evidence" or "satisfactory proof of Total Disability" to the administrator do not confer discretion and require de novo review. Kinstler, 181 F.3d at 251-52.
Where a plan administrator succeeds in establishing its discretion, "federal courts have a narrow role" in reviewing its acts. Peterson v. Cont'l Cas. Co., 282 F.3d 112, 117 (2d Cir. 2002). A district court employing the arbitrary and capricious standard may not "substitute [its] own judgment for that of the plan administrator as if [it] were considering the issue of eligibility anew." Celardo v. GNY Auto. Dealers Health Welfare Trust, 318 F.3d 142, 146 (2d Cir. 2003). Rather, a district court may reverse a plan administrator's coverage decision "only if it is without reason, unsupported by substantial evidence, or erroneous as a matter of law." Burke v. Kodak Ret. Income Plan, 336 F.3d 103, 110 (2d Cir. 2003). Substantial evidence is that which "a reasonable mind might accept as adequate to support the conclusion reached by the administrator and requires more than a scintilla but less than a preponderance." Celardo, 318 F.3d at 146 (2d Cir. 2003) (citation omitted).
A plan administrator's actions may be found to be arbitrary and capricious where it "impose[s] a standard not required by the plan's provisions, or interpret[s] the plan in a manner inconsistent with its plain words, or by [its] interpretation render[s] some provisions of the plan superfluous." Gallo v. Madera, 136 F.3d 326, 330-31 (2d Cir. 1998). Where, however, both the plan administrator and the claimant "offer rational, though conflicting, interpretations of plan provisions, the [plan administrator's] interpretation must be allowed to control."Celardo, 318 F.3d at 146 (citation omitted).
A. Standard of Review Under ERISA
The Plan confers discretionary authority on Prudential to make a decision regarding eligibility for disability payments. The Certificate of Coverage reserves discretionary authority to it by stating that a claimant is disabled only "when Prudential determines" that he meets the specified criteria. As the Second Circuit found in Fay, a Plan invokes discretion when it describes eligibility as a condition "determined by" the identified decision-maker. Fay, 287 F.3d at 104. In determining that a plan participant was not entitled to 24-hour, in-home care, the Second Circuit wrote, "the Plan invokes discretion by defining `Medically Necessary' as those services which, `as determined by the Medical Director,' meet four listed requirements." Id. See also McGraw v. Prudential Ins. Co. of Am., 137 F.3d 1253, 1259 (10th Cir. 1998); Larsen v. Prudential Ins. Co. of Am., 151 F. Supp. 2d 167, 171 (D. Conn. 2001). But see Herzberger v. Standard Ins. Co., 205 F.3d 327, 332 (7th Cir. 2000); O'Sullivan v. Prudential Ins. Co. of Am., No. 00 Civ. 7915 (KNF), 2001 WL 727033, at *3 (S.D.N.Y. June 28, 2001). Various other provisions in the Certificate of Coverage and the Group Contract governing the Plan also endow Prudential with the right to interpret and amend the plan, thereby vesting it with discretionary authority in those roles as well. For example, the Group Contract states that "[i]f the provisions of the Group Contract do not conform to the requirements of any state or federal law or regulation that applies to the Group Contract," it will be "automatically changed to conform with Prudential's interpretation of the requirements of that law or regulation."
Variations on this language appear within the Certificate of Coverage. For example, the Certificate declares that "[d]isabilities which, as determined by Prudential, are due in whole or in part to mental illness have a limited pay period during your lifetime." (emphasis supplied). The Certificate also states:
If you have a recurrent disability, as determined by Prudential, we will treat your disability as part of your prior claim and you will not have to complete another elimination period if:
• you were continuously insured under this plan for the period between your prior claim and your current disability; and
• your recurrent disability occurs within 6 months of the end of your prior claim.
(Emphasis supplied.)
Even accepting that the language of the Certificate of Coverage vests Prudential with discretionary authority, Simone contends that de novo review is nonetheless required because Prudential has a conflict of interest. Simone is correct that "[s]uch a conflict may be inherent," where, as here, "a plan is both administered and insured by a single entity." Fay, 287 F.3d at 109 (citation omitted). Nevertheless, to justify replacing a review under the arbitrary and capricious standard with de novo review, a conflict of interest must "in fact" affect the outcome of review. Id. (citation omitted) (emphasis in original).
Aside from highlighting Prudential's dual roles as plan administrator and insurer, Simone has presented no evidence that Prudential's analysis of Simone's claims was tainted by a conflict of interest. Prudential obtained professional reviews of Simone's medical condition. These reviews, particularly the one undertaken by Dr. Wallace, reflect the exercise of independent judgment and analysis after a careful examination of the record. Similarly, Prudential's job classification rests on objective analysis and Simone has not been able to show otherwise. Hence, the arbitrary and capricious standard will apply here.
B. Prudential's Denial of LTD Benefits to Simone
Prudential has shown that its classification of Simone's job as a brokerage clerk was supported by substantial evidence. According to the ergonomic assessment Simone furnished to Prudential, "[t]he job of a Trading Assistant is to assist the broker, who's on the stock exchange floor. He inputs andprocesses all the buy/sell transactions, which are received electronically or verbally from the broker or the firm." (emphasis supplied). The definition of brokerage clerk reflects these responsibilities. According to the O*NET description relied upon by Prudential and provided in the administrative record, a brokerage clerk "[p]erform[s] clerical duties involving the purchase or sale of securities," including computing or "writing orders for stock purchases and sales."
By contrast, the description for floor broker that appears in the Dictionary of Occupational Titles — which Simone contends should have governed the disposition of his case — bears little resemblance to Simone's own description of his job within the administrative record. While a floor broker works "on [the] floor of a securities exchange," as did Simone, a floor broker also "[a]nalyzes market conditions and trends to determine best time to execute securities transactions orders," "[b]uys and sells securities based on market quotation and competition in market," and "[m]ust meet exchange requirements, which may include state license, to be member of exchange." U.S. Dep't of Labor,Dictionary of Occupational Titles § 162.167-034 (4th ed. 1991).
Relying on Kinstler, Simone asserts that Prudential's classification was erroneous as a matter of law, as the term "regular occupation" necessitates a "consideration of the nature of the institution at which the claimant was employed."Kinstler, 181 F.3d at 253. In Kinstler, however, the plan left the phrase "regular occupation" undefined. Id. at 252. Here, on the other hand, the Certificate of Coverage explicitly states that "Prudential will look at [a claimant's] occupation as it is normally performed instead of how the work tasks are performed for a specific employer or at a specific location." (Emphasis supplied.) Therefore, the Kinstler court's elaboration of the term "regular occupation" is inapposite, and Prudential's determination that Simone's regular occupation is a sedentary one is neither "unsupported by substantial evidence" nor "erroneous as a matter of law." Burke, 336 F.3d at 110.
Having concluded that Prudential's decision to treat Simone's regular occupation as a sedentary one was not arbitrary and capricious, Simone's remaining arguments need not be addressed at length. For example, Simone objects that Prudential relied too heavily on the assessment of Dr. Wallace, rather than the collective judgment of the four doctors who actually treated Simone. In a recent case, the Supreme Court held that while plan administrators may not "arbitrarily refuse to credit a claimant's reliable evidence, including the opinions of a treating physician," Black Decker v. Nord, 538 U.S. 822, 834 (2003), they need not accord "special deference" to a claimant's treating physician. Id. at 831. As a result, it was not unreasonable for Prudential to depend upon Dr. Wallace's report, especially as it considered all of the medical records presented by Simone in determining that Simone could perform a sedentary job "as long as he could get up intermittently and move about as necessary."
Simone further asserts that a lack of change in a claimant's condition does not necessarily justify a denial of benefits and that Prudential did not take appropriate account of his tremendous pain. It has "long been the law of this Circuit that the subjective element of pain is an important factor to be considered in determining disability." Connors v. Conn. Gen. Life Ins. Co., 272 F.3d 127, 137 (2d Cir. 2001) (citation omitted). Nonetheless, none of the doctors who treated Simone during his elimination period opined that he could not perform a sedentary job if given the opportunity to stand and/or stretch. At best, Dr. Macaluso, Simone's neurologist during the elimination period, expressed that Simone demonstrated "profound paracervical muscle spasm and low back pain and cervical pain to palpation" with "breakaway weakness that comes from his pain," leaving Simone unable to perform the duties of his job at a particular location, the NYSE. Without more, Prudential did not act arbitrarily or capriciously in denying Simone LTD benefits.
Conclusion
For the reasons stated above, Simone's motion for judgment on the administrative record is denied, and Prudential's motion for judgment on the administrative record is granted. The Clerk of Court shall enter judgment for Prudential and close the case.