Opinion
96-CV-0037C(H)
January 25, 1999
WALSH, FLEMING CHIACCHIA, P.C. (ANDREW P. FLEMING, ESQ., of Counsel), Blasdell, New York, for Plaintiff.
BOND, SCHOENECK KING, LLP (DEBORAH H. KARALUNAS, ESQ., of Counsel), Syracuse, New York, for Defendant.
DECISION and ORDER
BACKGROUND
In this action under the Employee Retirement Income Security Act of 1974, ("ERISA"), plaintiff challenges a decision of First UNUM Life Insurance Company ("First UNUM") that plaintiff was not entitled to further long term disability benefits under an employee benefit plan issued to his former employer, Schutte Company of Buffalo, Inc. ("Schutte"). The case was tried before the court without a jury, beginning in November 1997.
Plaintiff alleges, inter alia, that he was covered under Group Long Term Disability Insurance Policy No. 42745 issued by First UNUM to his employer, Schutte (the "Policy") (Item 1, ¶ 6, 11); that he became disabled on January 2, 1990 (Item 1, ¶ 9); that First UNUM's decision to deny him benefits was arbitrary and capricious (Item 1, ¶ 40); and that he is entitled to disability benefits under the Policy (Item 1, ¶ 41).
A. Standard of Review
The parties agree ERISA governs plaintiff's claim, the applicable plan documents give the plan administrator discretionary authority to determine eligibility for benefits and to construe the terms of the plan, and the standard of review to be applied by this court is "arbitrary and capricious." Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101 (1989); Miller v. United Welfare Fund, 72 F.3d 1066, 1070 (2d Cir. 1995).
B. Scope of Review
In O'Shea v. First Manhattan Co. Thrift Plan Trust, 55 F.3d 109 (2d Cir. 1995), the Second Circuit described the scope of review under the arbitrary and capricious standard, as follows:
Under the arbitrary and capricious standard, the scope of review is narrow. Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285, 95 S.Ct. 438, 442, 42 L.Ed.2d 447 (1974). Thus, "`we may overt urn a decision to deny benefits only if it was "`without reason, unsupported by substantial evidence or erroneous as a matter of law.'" Pagan, 52 F.3d at 442 (quoting Abnathya v. Hoffman-La Roche, Inc., 2 F.3d 40, 45 (3d Cir. 1993)). "Where both the trustees of a pension fund and a rejected applicant offer rational, though conflicting, interpretations of plan provisions, the trustees' interpretation must be allowed to control." Miles, 698 F.2d at 601.O'Shea 55 F.3d at 112. See also Whitney v. Empire Blue Cross Blue Shield, 106 F.3d 475, 477 (2d Cir. 1997).
A denial of a claim is supported by substantial evidence if it is such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the [decision maker] . . . [and it] requires "more than a scintilla but less than a preponderance." Sandoval v. Aetna Life Cas. Ins. Co., 967 F.2d 377, 382 (10th Cir. 1992), quoting Flint v. Sullivan, 951 F.2d 264, 266 (10th Cir. 1991).
Plaintiff must prove by a preponderance of proof that First UNUM acted in bad faith or with arbitrariness to succeed. Otherwise, the decision of First UNUM should be upheld. O'Shea v. First Manhattan Co. Thrift Plan Trust, 55 F.3d 109, 112 (2d Cir. 1995)("discretionary acts of [an administrator] should not be disturbed, absent a showing of bad faith or arbitrariness").
Usually, the review should be limited to the evidence that was before the plan administrator. See Miller v. United Welfare Fund, 72 F.3d 1066, 1071 (2d Cir. 1995). But cf. Zisel v. Prudential Ins. Co., 845 F. Supp. 949, 950 (E.D.N.Y. 1994) (allowing limited consideration of evidence not before the administrator). Thus, absent good cause, in reviewing First UNUM's determination, this court should consider only evidence that was presented to First UNUM when it made its decision on the claim. C. The Policy
Although plaintiff's counsel proffered testimony outside of the administrative record, he conceded the narrow scope of review afforded in this ERISA action. Transcript ("Tr.") 8, 5. When he offered the testimony of plaintiff's treating physicians, he made clear their testimony was "[f]or the limited purpose of confirming that PVD and CVA are progressive diseases" (Tr. 125).
The Policy is part of one or more employee benefit plans provided by Schutte to its eligible employees. It was issued by First UNUM to Schutte, effective April 15, 1981. The Policy covers all full-time employees of Schutte in accordance with its terms, and all agree that the plaintiff is covered by the policy. By its terms, benefits are payable as follows:
When the Company receives proof that an insured is disabled due to sickness or injury and requires the attendance of a physician, the Company will pay the insured a monthly benefit after the end of the elimination period. The benefit will be paid for the period of disability if the insured gives to the Company proof of continued:
1. disability; and
2. regular attendance of a physician.
The proof must be given upon request and at the insured's expense (Exh. at L-BEN-1).
The Policy defines "disability" and "disabled" for employees in plaintiff's class, as follows:
"Disability" and "disabled" mean that because of injury or sickness:
1. the insured cannot perform each of the material duties of his regular occupation; or
2. the insured, while unable to perform all of the material duties of his regular occupation on a full-time basis, is:
a. performing at least one of the material duties of his regular occupation or another occupation on a part-time or full-time basis; and
(Exh. A, at L-DEF-4).
The policy also contains a mental illness limitation:
Benefits for disability due to mental illness will not exceed 24 months of monthly benefit payments unless the insured meets one of these situations.
. . . .
"Mental illness" means mental, nervous or emotional diseases or disorders of any type.
(Exh. A, at L-DEF-5).
In addition, the Policy requires that First UNUM be given timely notice of claim,
1. Notice
a. Written notice of claim must be given to [First UNUM] within 30 days of the date disability starts, if that is possible. If that is not possible, [First UNUM] must be notified as soon as it is reasonably possible to do so . . .
(Exh. A, at L-GPP-2).
D. Plaintiff's Occupation
Plaintiff graduated from Loyola University in 1969 with a Bachelor of Science in Business Administration and a major in Marketing. Thereafter, he attended the University of Chicago Graduate School of Business for two years (Trial Tanscript ("Tr.") 10); and then commenced the first in a long series of marketing jobs (Tr. 10).
Plaintiff worked at Armour Dial for two years in new product development, Sara Lee in market research, Swift Co. for four years in new product development, Darcy McManis Macias (an advertising agency) for two years as an account supervisor, and First Federal Savings Loan Association in marketing and advertising (Tr. 11, 235-42). All of these jobs involved market research, strategic planning, writing plans, thinking, and communication. The positions also all entailed some travel, meeting deadlines, supervision of employees, and work with outside vendors (Tr. 240).
In 1982, plaintiff commenced work at Schutte (Tr. 11). He was one of five or six vice presidents (Tr. 24) and was responsible for several accounts (Tr. 18). As with each of his prior jobs, at Schutte plaintiff engaged in market research, strategic planning, writing plans, thinking, and communication. His position also entailed some travel, meeting deadlines, and supervision of employees (Tr. 13-14, 243). "[I]t was basically a thinking and communication job, and a lot of travel. That's what I would do, local, mostly local travel" (Tr. 19).
According to Mr. Chirumbolo, a former Executive Vice President of Schutte, plaintiff was "heavily involved in research." His job was also to mentor, nurture and write copy and proposals (Chirumbolo Tr. 454, 458). Mr. Jonathan Veher, another of plaintiff's colleagues, characterized plaintiff's job as "somewhat" sedentary; "I mean, it was either sitting around in the office or going out to meet with clients, and, you know, meeting with them" (Veher Tr. 463).
At Schutte, plaintiff was fairly autonomous; he would hear from his boss only if things were not going as expected (Tr. 24). According to plaintiff, the most difficult part of the job was keeping clients happy and staying ahead of what the clients were looking for (Tr. 20). Plaintiff described his work at Schutte as follows:
You were selling a product basically to somebody that's not tangible, it's communications. It's not a widget or a wrench or something. And that makes it kind of pressure filled because you have to sell. You're really selling to a great extent yourself, and also the pressure comes from the importance that the client puts on that. . . . [If your plan does not work], you lose the account, you lose the account, you lose your job, if it's a big enough one.
(Tr. 25). E. Plaintiff's Disability
To describe his occupation, the court permitted plaintiff to present James Chirumbolo and Jonathan Vehar as witnesses. These men were co-employees of the plaintiff. Their explanations of plaintiff's duties were similar to his description and do not affect the outcome of plaintiff's case.
Plaintiff resigned from Schutte on March 26, 1991, although he last worked there at the end of calendar year 1989 (Tr. 12). The plaintiff testified he stopped working then because of an inability to walk (Tr. 33).
Plaintiff submitted an application for long-term disability benefits to First UNUM on or about March 12, 1990 (Exh. B, at 256). On the application, plaintiff identified his disability as "depression, plus weakness in the lower body, chest pains, shortness of breath, [and] paralysis in left arm since last year." Plaintiff also stated that he did not "really know" whether his illness was related to [his] occupation.Id. The portion of the application completed by plaintiff's family doctor, Frank J. Voelker, provided a diagnosis of "stress, major depression, hypertension, CVA, chronic pancreatitis, claudication and probable emphysema" (Exh. B, at 257). Plaintiff was referred by Dr. Voelker to Dr. John Ricotta, a vascular surgeon, and was diagnosed with peripheral vascular disease (PVD) (Tr. 475-76). When the plaintiff saw Dr. Ricotta on March 12, 1990, he was experiencing claudication on walking fifty yards (Tr. 500). In lay terms, PVD is a hardening or narrowing of arteries that provide blood to the extremities, the arms, and legs (Tr. 987.) Treatment for symptomatic PVD is generally bypass surgery in the affected arm or leg. In plaintiff's case, Dr. Ricotta performed a femoral to popliteal bypass (Tr. 501). Dr. Harris explained the surgery as "going around a blockage in the thigh area, usually with a piece of vein, but it may sometimes also be a plastic type of material" (Tr. 182). In March 1990, Dr. Ricotta performed a renal angioplasty and bypass surgery with a cortex graft on plaintiff's right leg (Tr. 52-53; Tr. 475-76). F. Approval of Plaintiff's Claim
Claudication is "pain in skeletal muscle that comes on with exertion and is relieved with rest that is the result of narrowing in the arteries that supply blood and therefore oxygen to the muscles" (Tr. 10, 11-12).
Plaintiff continued under Dr. Ricotta's care for his vascular condition until October 1996, when Dr. Ricotta left Buffalo for New York. After he left, Dr. Linda Harris became Walsh's vascular surgeon. Defendant objected to her testimony because its decision to terminate was made before Walsh came under her care and First UNUM did not have the opportunity to consider her reports. Her testimony was received to corroborate the evidence in the file that peripheral vascular disease is progressive. In May of 1997 the progression of the disease forced Dr. Harris to amputate plaintiff's left leg above the knee (Tr. 199). She also testified that individuals who get the disease before the age of 50 die at a much more rapid rate than those who develop the disease at an older age (Tr. 188). At the time of termination, First UNUM was aware that the disease was progressive and took that into consideration when it issued the termination letter.
By letter dated May 8, 1990, plaintiff was advised by First UNUM that his application for long-term disability benefits had been approved with payments to begin on April 1, 1990. (Exh. B, at 243-44). In November 1990, plaintiff was hospitalized at Erie County Medical Center (Tr. 282). His doctors, Dr. Gergelis, a psychiatrist, and Dr. Voelker, determined plaintiff was disabled from work and opined that he would be unable to work until April 1, 1991, due to psychiatric reasons (Tr. 282, 284).
First UNUM continued to make payments under the policy from that time until February 1995, when his claim was finally denied.
In December 1990, because the cortex graft failed, to correct the problem plaintiff underwent a second right leg bypass procedure (Tr. 54-55; Tr. 476). The second surgery laid plaintiff up "a couple of months," although he believed he was able to work during that time (Tr. 57). First UNUM paid benefits to plaintiff throughout this period.
On January 30, 1991, Dr. Ricotta completed and forwarded to First UNUM an attending physician statement ("APS") (Exh. B, at 158-59) in which he noted that while plaintiff was then totally disabled from his "occupation" and "any other work," he would be able to return to his occupation. Thus, Dr. Ricotta answered "yes" to the question, "[d]o you expect a fundamental or marked change in the future" for "patient's occupation" and "any other work," and he estimated that in one to three months plaintiff would be sufficiently recovered to return to work in his own occupation or any other work (Exh. B, at 159; Tr. 514). Dr. Ricotta's opinion that plaintiff could return to his own occupation was confirmed in a letter he wrote on January 30, 1991, to Dr. Voelker:
I saw Richard in the office for a follow-up, one month after his saphenous vein bypass. He is doing well and is back to almost full activity. He still needs to work a little bit on his energy, but his walking is much improved. . . . I would think that he could return to work around April 1st [1991], at which time he should be able to resume completely normal activity.
(Exh. 1A; Tr. 513). At trial, Dr. Ricotta confirmed that this was his opinion (Tr. 513). It is noted that under the heading on the APS entitled "cardiac," Dr. Ricotta wrote N/A because plaintiff had no symptoms of cardiac disease (Tr. 513; Exh. B, at 159).
In the meantime, plaintiff's psychiatric condition worsened. By letter dated February 21, 1991, plaintiff conveyed to First UNUM, among other things, that Dr. Gergelis, his psychiatrist, had recommended plaintiff not return to work at Schutte "due to the stress factors involved in that type of work" (Exh. B, at 153).
Plaintiff had a history of mental illness. He was treated at Kenmore Emergency Hospital on January 4, 1989, because of pain and stress caused by his mother's death two days earlier; he was depressed (Tr. 1107; Tr. 598). Also, in the late 1980s, Dr. Voelker prescribed medication for plaintiff for depression and recommended that he see a psychiatrist (Tr. 264). In 1990, plaintiff began seeing Dr. Gergelis, a psychiatrist. Plaintiff was initially diagnosed with severe depression; the diagnosis was subsequently changed to manic depression (bipolar disorder) (Tr. 264-65; Tr. 641; Exh. B, at 199).
Plaintiff's trial testimony confirmed Dr. Ricotta's opinion that plaintiff could return to work at Schutte. In this regard, plaintiff testified that although he did not have a specific recollection of the date Dr. Ricotta had set for plaintiff to return to work, plaintiff admitted it "probably would have been about [April 1, 1991]" (Tr. 299).
Plaintiff testified at trial that in January 1991, he commenced part-time work as a consultant for a marketing company called Smartline (Tr. 47-48). Notably, plaintiff did not disclose his Smartline job to First UNUM in plaintiff's February 4, 1991, letter. First UNUM was not made aware of the Smartline job until plaintiff resigned from Schutte.
However, while plaintiff was working at Smartline, he did question First UNUM as to the effect a "hypothetical" change in employment would have on his receipt of benefits (Exh. B, at 168-70). During a January 18, 1991, conversation, plaintiff and Beth Heelan, a First UNUM disability benefits specialist, discussed plaintiff's psychological condition, Dr. Gergelis' supposed recommendation regarding Schutte, and the 24-month mental illness limitation contained in the Policy.
In his February 21, 1991, letter to First UNUM (Exh. B, at 153), plaintiff confirmed to First UNUM he was exploring career opportunities and requested a written response to his inquiry about the "implications regarding [his] future disability payments" if he were to accept another position (Id).
Following his conversation with Ms. Heelan, plaintiff requested a letter from Dr. Ricotta, his vascular surgeon, stating he was disabled from returning to work at Schutte (Exh. 1; Tr. 292, 300; Tr. 518-19). In pertinent part, plaintiff wrote to Dr. Ricotta:
Thank you for your willingness to send a letter to my insurance company regarding future employment. As you requested, this is to provide you with a description of my most recent position, as well as a description of the position that I would like to begin working in.
If I do not return to my old job I would lose all disability insurance protection unless I do so for medical reasons. Since my old job entails quite a bit of stress, rather I would pursue a career in a less stressful occupation. My insurance company requires that a letter be sent to them from a doctor (physician) substantiating/advising that I not return to my occupation as an advertising executive.
What the insurance company requires is a letter stating that "because of injury or sickness, (I) cannot perform each of the material duties of (my) regular occupation". Basically this means that I can accept another position and still be protected if another recurrence of my arterial problems occurs, as long as I am unable to perform each and every one of the duties of my old job.
(Exh. 1).
On March 14, 1991, Dr. Ricotta wrote to First UNUM (Exh. B, at 148). He stated that Walsh had significant peripheral vascular disease and had undergone two reconstructive procedures and wrote, in conclusory fashion, "I would give medical support to his change in occupation." However, Dr. Ricotta did not identify a single restriction or limitation that would prevent plaintiff from performing the material duties of his occupation (Id.).
In addition, the letter misstated the nature of plaintiff's medical condition, erroneously stating that plaintiff had cardiovascular disease. At trial, however, Dr. Ricotta admitted plaintiff had no evidence of coronary disease (Tr. 527-28). The absence of coronary disease was also confirmed at trial by plaintiff (Tr. 280) and by Dr. John Dodge who had reviewed the medical records (Tr. 989).
In his letter, Dr. Ricotta supported plaintiff's move to a less stressful job (Exh. B, 148-49), but his testimony confirmed "stress" was a non-issue. He admitted that prior to plaintiff's request for that letter, he did not know what plaintiff's occupation was (Tr. 515); he had no recollection of plaintiff's complaining to him about stress at work (Tr. 515). He said that many people with vascular disease continue to work — even in stressful professions (Tr. 506). He wrote to Dr. Voelker, plaintiff's internist, that "the cornerstone" of plaintiff's postoperative care was control of hypertension, smoking cessation and appropriate diet — with no mention of stress reduction (Tr. 506-07). He made no referral of plaintiff to stress reduction management or therapy (Tr. 538), and he could not identify a single study that suggested the effects of stress (Tr. 530). Dr. Ricotta also wrote on January 30, 1991, that plaintiff could return to work around April 1, 1991, at which time he could resume "completely normal activity" (Tr. 513). Indeed, on cross-examination, Dr. Ricotta admitted that his support for plaintiff's alleged "disability" was simply the view that the less stress you have, the better (Tr. 525).
G. Plaintiff's Return to Work
Almost immediately upon receipt of Dr. Ricotta's letter, plaintiff resigned his employment with Schutte and converted his part-time job with Smartline into a full-time position as the manager of market research (Tr. 314). In that capacity, plaintiff designed and conducted market research, wrote proposals, utilized thinking and communications skills, traveled, worked to keep clients happy, supervised other employees, and met deadlines (Tr. 315). His material duties resembled those he had performed at Schutte. During this time, plaintiff collected benefits from First UNUM (Tr. 50).
Prior to resigning, plaintiff did not explore with Schutte options to remain in its employ (Tr. 311-13).
At the end of 1991, plaintiff quit his job with Smartline to start his own marketing business called Richard Walsh Associates ("Walsh Associates") (Tr. 58, 86-87, 316-17). At trial he said that the job was not similar to his job at Schutte, but in his deposition he said that it was (Tr. 318). Plaintiff's duties at Walsh Associates included business development, meeting with clients, selling himself, market research, strategic planning, travel, budgeting, and costing (Tr. 320). Plaintiff's business ultimately was not successful (Tr. 86-87, 326). At trial, he testified that the local economy was not supportive of the type of work he did; as a result, his business did not take off — it did terribly in the first six months of 1993 (Tr. 87, 106-06), and plaintiff ultimately stopped operating in 1994 or 1995 (Tr. 86-87).
H. Plaintiff's Medical Condition in 1992 and 1993
In response to an inquiry from First UNUM, in September 1992, plaintiff informed Sam Gaidemak, a disability benefits specialist, that he was no longer seeing Dr. Gergelis, was working on his own, and was looking for full-time opportunities in Western New York (Exh. B, at 69-70). At the same time, Dr. Ricotta informed First UNUM that plaintiff was asymptomatic and doing reasonably well; his bypass graft was patent and his peripheral vascular disease was stable (Exh. B, at 44).
In September 1993, plaintiff had an endarterectomy for narrowing of his left carotid artery (Tr. 556). Dr. Ricotta explained that an endarterectomy is a procedure to remove blockage in the carotid artery to prevent a stroke (Tr. 557). Dr. Harris described the procedure as follows: "It's kind of like rotor-rooting out a blood vessel. We open the blood vessel, we clean out the plaque and the disease in the inside of it, we clean it out and close it back up" (Tr. 186). Plaintiff had no other carotid surgery between September 1993 and February 1995.
In 1992 through 1994, plaintiff was generally doing quite well (Tr. 372-82; Tr. 503-04, 507-12, 515-17, 539, 544-46, 548-50, 553, 555; Exh. B, 44, 45, 51-53, 57-60, 62, 63, 89-90, 92-95, 136, 138, 148-49, 156-57, 445, 470, 471, 479, 515). He was physically active (biking, jogging, and lifting weights) and managing his own affairs (working, shopping, cleaning, and doing errands) (Id.).
While he continued to see Dr. Ricotta, plaintiff's visits were merely periodic and primarily to monitor his lower extremity arterial velocities, virtually all of which were normal (Tr. 372-82; Tr. 503-04, 507-12, 515-17, 539, 544-46, 548-50, 553, 555; Exh. B, 45, 59, 60, 63, 89, 92-93, 138). In 1994, Dr. Ricotta saw plaintiff only twice, in February and September (Tr. 558-59). At trial, plaintiff admitted he was "never physically disabled except for recuperative periods" (Tr. 211).
Plaintiff's next visit to Dr. Ricotta was not until well after February 1995, the date established by the medical records as plaintiff's last date of disability under the policy.
On October 20, 1992, First UNUM sent plaintiff's medical records for review by a regional consulting physician, Dr. R.W. Holliday (Exh. B, at 37; Tr. 673). In a report dated November 2, 1992, Dr. Holliday noted that plaintiff's hypertension was under control, and he found no evidence of impairment from work (Tr. 673; Exh. B, at 37-38).
Based on Dr. Holliday's report, Mr. Gaidemak, called plaintiff and advised him of the need for an independent medical exam ("IME") (Exh. B, at 30-31; Tr. 674). The IME was scheduled (Exh. B, at 3-4), but did not take place because on the day of the scheduled examination, plaintiff was admitted to the hospital claiming depression (Exh. B, at 9; Tr. 675). Thereafter, First UNUM obtained an additional medical report from Dr. Ricotta, who said that plaintiff's only activity restriction was "walking any significant distance" He said that "It is expected that he could return to work approximately 11/8/93" (Exh. B, at 514; Tr. 680).
In his February 21, 1991, letter to First UNUM (Exh. B, at 153), plaintiff confirmed to First UNUM he was exploring career opportunities and requested a written response to his inquiry about the "implications regarding [his] future disability payments" if he were to accept another position (Id.).
I. Plaintiff's Work Capacity in 1994; First UNUM's 1994 Review and Denial of Plaintiff's Claim
In the summer of 1994, First UNUM conducted a review of plaintiff's claim. The review was coordinated by Ms. Carla Moore, a disability benefits specialist. Ms. Moore testified that she reviewed plaintiff's file from "top to bottom." Among other things, she looked at the diagnosis on plaintiff's application, the medical records, the medical file reviews, plaintiff's condition overtime, and plaintiff's rehabilitation (Tr. 621-25). During trial, she recounted what she believed were the pertinent records in the file (Tr. 621-83). According to Ms. Moore, following a review of the file, she did not have a clear understanding of what plaintiff's then-current occupational restrictions and limitations were, if at all. She was unable to determine what "he could and could not do as far as his occupation was concerned." Consequently, she decided to write to obtain additional medical records and have a medical review (Tr. 684). She received a statement from Dr. Ricotta dated July 6, 1994, in which he stated that plaintiff's only limitation would be walking any distance greater than one block. He also noted that "it is possible that the [plaintiff's] condition will stabilize" (Tr. 686; Exh. B, at 479). After receiving the statement, she spoke with plaintiff on July 13. He was working full-time in his own business. She told him that it appeared that his condition was under control. When asked what his plans for the future were, he said that he was planning to return to school for hospital administration (Exh. B, at 476-78; Tr. 686).
During the phone conversation, Ms. Moore brought up the suggestion of settlement. She told him that even though the medical evidence indicated that he was not disabled from any occupation at that time, because he was trying to pursue another career she thought that she should offer him some money to go back to school and start another business (Tr. 688; Exh. 476-78). But she also noted that "we know he is high risk for his OCC but he has been on claim with continued medical treatment that shows him what to avoid and how to stay stable . . . explained . . . we have to measure all factors, condition, age, ability to earn more income. . . ." They discussed the possibility of settling his claim for $150,000, with the understanding that if he did not accept the settlement within 30 days, the offer to settle would be withdrawn and First UNUM would continue to evaluate his claim (Tr. 690, 833). He said that he wanted to think about it. She mailed the settlement form to him with the understanding that he would reply soon (Exh. 458; Tr. 689). When Ms. Moore did not hear from Mr. Walsh, she sent him a letter on August 30, 1994, which said "On 7/13/94 we sent you a settlement offer which extended through 8/13/94. Since we have not received a response from you, please be advised at this time we are withdrawing our offer and will continue to evaluate your eligibility for benefits according to the policy provisions."
First UNUM filed a motion in limine prior to trial to exclude two settlement offers given to plaintiff on July 10, 1991, and July 13, 1994. However, the court found that Federal Rule of Evidence 408 did not preclude these offers from evidence because neither a dispute nor a difference of opinion existed when First UNUM made the two settlement offers to the plaintiff. See Item 23, Order of November 10, 1997.
Then she promptly sent the sent the file to Dr. Kimber Richter, a medical director of First UNUM, to evaluate the medical information (Tr. 691-92). Dr. Richter reviewed the claim file, including the current medical records. Her review dated August 30, 1994, concluded that plaintiff's condition was stable; his only restrictions and limitations were no prolonged walking or standing more than two out of eight hours, and that plaintiff appeared to have full-time work capacity in his own occupation (Tr. 691; Exh. B, at 463).
Ms. Moore also had the file reviewed by a vocational consultant, Gordon Sharpless (Tr. 691; Exh. B, at 462). Mr. Sharpless reviewed plaintiff's job duties and found that plaintiff's physical capacity was fully supportive of sedentary work capacity on a full-time basis, and plaintiff could return to work in his own occupation (Exh. B, at 462).
On September 6, 1994, Ms. Moore sent a letter to Mr. Walsh in behalf of First UNUM advising him that he was no longer disabled within the meaning of the Policy (Exh. B, at 441).
Recent medical information from your attending physician, Dr. Ricotta, indicates that your condition is stable and that your only restrictions and limitations are no prolonged walking or standing. The physical capacity evaluation completed by him supports that you can perform your sedentary occupation on a full-time basis. Accordingly we are unable to accept further liability on your claim for benefits.
We determine your eligibility for benefits based upon your occupation and your medical restrictions and limitations from performing the required duties of that occupation, as it exists in the National Labor Market.
There are no medical restrictions and limitations on file that support your inability from performing the material duties of your occupation as an Vice President of Account Planning.
Your medical file was reviewed by our medical department which concluded that your current medical restrictions and limitations are no prolonged walking and no prolonged standing.
We also had a Vocational Expert review our file, which concluded that your occupation as a Vice President of Account Planning is sedentary.
Therefore you are no longer disabled according to the above definition and we are denying all liability on your claim as of the date of this letter.
(Id.).
J. Review and Reversal of the First Denial
On October 6, 1994, Andrew Fleming, Mr. Walsh's attorney, sent a letter to First UNUM seeking review of the decision (Tr. 700; Exh. B, at 443). The file was sent to First UNUM's Quality Review Section in Maine for an impartial review under ERISA (Tr. 700; Exh. B, at 453). The Quality Review Section conducted an independent review of the entire file. In February 1995, while his file was under review and plaintiff was seeking further benefits, plaintiff began looking for a new job. He applied to at least 50 companies and worked with consultants and headhunters (Tr. 327). He sent out resumes to various companies for positions in their marketing departments and to an advertising agency (Tr. 323-32). In his cover letters, plaintiff touted his "heavy experience with strategic planning and market research," ability to work "in a fast paced environment," and "ability to manage multiple projects simultaneously." He urged-that he was "no stranger to hard work and long hours," and stated that he was "an aggressive go-getter" (Exh. 3 to 36). At that time, First UNUM was not aware that he was making these applications. The letters were not in the administrative file but were produced during discovery and were used during trial to impeach the credibility of plaintiff. Defendant argues that these letters are relevant because at a time when he claimed that he was unable to perform his duties in marketing and advertising, he was looking for work in the same field (Tr. 332).
The Quality Review Section referred plaintiff's file to Dr. John Dodge, a medical director of First UNUM, who reviewed it on March 31, 1995 (Exh. B, at 420-21; Tr. 981). Dr. Dodge's review included, among other things, a thorough reading of all of plaintiff's medical records in First UNUM's possession (Tr. 1032). In his written report (Exh. B, at 420), Dr. Dodge concluded that plaintiff had work capacity for his occupation from a physical perspective. Nonetheless, Dr. Dodge recommended referral of the matter to Dr. Robbie Haines, a psychiatrist and neurologist, to clarify the appropriate psychological restrictions and limitations, if any, that plaintiff had (Exh. B, at 420; Tr. 995-96, Tr. 701).
The medical records he reviewed included those found in Exh. B, at 37, 38, 44-48, 50-54, 57-64, 85, 87-95, 101, 111, 136-38, 148-49, 156-57, 163, 169, 177-78, 186-90, 200, 214-24, 257, 420-21, 424-25, 436-37, 445, 463, 468-71, 479, 514-15, 520 and 560-72 (Tr. 986).
In the file was a report received from plaintiff's psychiatrist and neurologist, Dr. Ellen Dickinson, dated December 5, 1994, advising that plaintiff was hospitalized in December 1993 for an acute manic episode (Tr. 701; Exh. B, at 436). A subsequent report was received from Dr. Dickinson in February 1995, stating plaintiff was still disabled due to mental illness (Tr. 701; Exh. B, at 24-25).
Dr. Haines conducted a medical review on or about April 26, 1995. His report sets forth a detailed history of the entire medical record (Exh. 415-18). He noted that based upon the information given by Dr. Dickinson "the insured would appear to have a severe form of bipolar disorder with considerable impairment," but he said "there is very little specific information regarding the insured' symptoms and level of impairment other than Dr. Dickinson's comments about his psychiatric history and hospitalizations." He concluded that he could not comment on plaintiff's restrictions or limitations. Dr. Haines recommended that the notes and records of Drs. Gergelis and Dickinson be obtained; that substance abuse issues be explored; and that the type of psychotherapeutic intervention plaintiff was receiving, if any, be ascertained (Exh. B, at 415-18; Tr. 708).
On May 2, 1995, Beth Scholten of the Quality Review Section wrote a note to the file saying that she had advised Mr. Fleming that the claim was reopened and that benefits would be paid under the mental nervous provisions of the policy with a reservation of rights. (Tr. 722; Exh. B, at 399-400). Usually under the mental illness, provision payment could not exceed twenty-four months (Tr. 725-26). By letter dated May 23, 1995, First UNUM advised plaintiff's attorney, among other things:
The Quality Review Division has approved Mr. Walsh for benefits under our Reservation of Rights and Mental Nervous Provisions:
This payment or any future payments made cannot be construed as an admission of present or future liability, and we reserve our right to enforce any and all provisions of the policy.
At this time we are requiring that you provide us with detailed medical information from all his attending physicians.
(Exh. B, at 392-93).
K. Further Investigation and the Second Denial
Subsequent attempts by Ms. Moore to obtain additional medical records from plaintiff were rebuffed (Tr. 736-37; Exh. B, at 384). When she did not receive requested information, she called Mr. Fleming on June 19, 1995. He said that we have nothing else to produce, deny the claim and we will sue (Tr. 737).
As a result of that conversation Ms. Moore had the file reviewed by Dr. Kenneth Berc, a board certified psychiatrist and neurologist (Tr. 734; Exh. B, 374, 381). On June 27, 1995, Dr. Berc spoke with Dr. Dickinson about plaintiff's condition. Dr. Dickinson explained that she was certain of plaintiff's diagnosis — it was drug addiction — and that it worsened plaintiff's bipolar disorder. She also explained plaintiff did not have organic or other vascular-related neurologic disease; and plaintiff's abuse of marijuana led to a chronic mood problem and a divorce. She estimated plaintiff became disabled from the effects of marijuana in September 1994. She informed Dr. Berc that plaintiff had been symptom-free for six months and was then capable of returning to work — it would just take time for him to build up his business (Exh. B, at 374).
By letter dated June 27, 1995, First UNUM summarized the reasons for the denial of plaintiff's claim, as follows:
We have received medical information indicating that you have been partially disabled since 1991 from a psychological condition. According to our records, your physical condition was successfully treated by Dr. Ricotta as of 11/94. The hospitalization in December of 1994 was the basis of our current investigation and our decision to pay benefits under Reservation of Rights.
On May 23, 1995 we requested that your Attorney provide us with detailed medical information to support your Disability. We explained the Reservation of Rights Provision and indicated that he had thirty days to provide proof of your medical restrictions and limitations from our denial date to present. We received a verbal response from your attorney on 6/20/95, indicating that we have all the information that is forthcoming.
Your attending physician, Dr. Dickinson had recently stated that you have been stabilized on medication and free of symptoms for the past six months. We have no evidence of a neurological or vascular limitation. (Please note, Dr. Dickinson is Board Certified in Neurology and Psychiatry).
Since we have no evidence of continued Disability beyond 2/95 we are closing your claim.
Therefore under Reservations of Rights we have overpaid you benefits in the amount of $15,600.72 which may be requested for repayment.
If you have new, additional information to support your request for disability benefits, please send it to my attention at the above address.
(Exh. B, at 370-71).
L. Review and Uphold of the Second Denial
Plaintiff sought review by First UNUM of the June 27, 1995, denial of benefits (Exh. B, at 370-71, 348-49). By letter dated October 31, 1995, First UNUM advised plaintiff (though his counsel) that the denial of benefits had been upheld on appeal. In the letter, First UNUM summarized its reasoning in the letter as follows:
We have reviewed the medical documentation currently in file from Dr. Ellen Dickinson and Dr. John Ricotta. In our 6/17/95 teleconference with Dr. Dickinson an attempt was made to clarify Mr. Walsh's condition and how that condition would prevent him from returning to work. Dr. Dickinson advised that his condition was caused by drug abuse which exacerbated his bipolar disease. . . . Dr. Dickinson did say that he has been free of symptoms for the past 6 months. When asked about return to work ability, Dr. Dickinson indicated that Mr. Walsh had to rebuild his client base which would take about 6 months to accomplish, however, he could start now. With regard to the vascular disease, Dr. Dickinson stated that he does not have evidence of organic neurological disease or any other vascular related neurological disease since the completion of the vascular surgery.
. . .
In our review of the treatment notes of Dr. Ricotta, on 7/10/95 the notes indicate that he was in follow-up after the carotid endarterectomy and with the exception of a bit of hematoma he was doing well.
(Exh. B, at 336-37).
Plaintiff refused to accept the denial of his claim to further benefits, and commenced this action on or about January 18, 1996.
DISCUSSION
The proof in the company file and at trial revealed that plaintiff's duties included market research, strategic planning, writing plans, thinking, communication, some local travel, meeting deadlines, and supervision of employees. Plaintiff's activities support this conclusion, because after leaving Schutte he worked at Smartline in 1990, and in his own business after that. In both places, he was doing essentially the same work he did for Schutte. His ability to carry out the duties as a marketing or advertising consultant was dramatically displayed in 1995 when he sent 50 resumes to prospective employers and headhunters confidentially asserting his ability to undertake marketing or advertising employment.
Plaintiff also conceded at trial that he had a modest recovery period of no more than a couple of months after his surgeries. Plaintiff was generally doing well and able to work between surgeries. Consistent with the evidence establishing plaintiff's good physical health, plaintiff admitted at trial that he was "never physically disabled except for recuperative periods."
In his testimony, plaintiff emphasized the stressful nature of his work at Schutte and claimed that stress increased his blood pressure which in turn speeded up the progression of his vascular disease (Tr. 13). Defendant does not argue that plaintiff's work was not stressful, but contends that stress did not increase his blood pressure nor the progression of his vascular disease. The evidence revealed that between January 1, 1990, and February 1995 several stressful events occurred in plaintiff's life, including marital difficulties, substance abuse, divorce, medical problems, starting a business, watching his business fail, unsuccessful job hunting efforts, and unemployment (Tr. 72-74, 86-87, 145, 254-56, 261-64, 326, 1115-16, 1144). Through all of these stressful events, plaintiff's blood pressure remained controlled. The credible evidence reveals that while plaintiff has a diagnosis of hypertension, at all times his blood pressure has been controlled and within normal limits (Tr. 990; Tr. 499, 507, 531, 538, 545, 549-50, 558, 561; Tr. 594-95).
There is no evidence in the record that PVD is accelerated in people with controlled hypertension. In this regard, Dr. Ricotta could not identify any medical literature, stating that people that have hypertension controlled by medication are at a higher risk for PVD or coronary vascular disease (Tr. 532-34). Likewise, Dr. Harris testified "if the hypertension is controlled so the patient is normal tensive, that would not accelerate their PVD" (Tr. 604).
Plaintiff's principal argument is that Carla Moore, Dr. Dodge, and other reviewers were either unscrupulous or incompetent (Item 39). Indeed, the record is to the contrary. Carla Moore and the other examiners were entitled to periodically demand updated medical reports from plaintiff. In September 1994, she was justified to rely upon Dr. Ricotta's reports which indicated that plaintiff was physically capable in carrying out the duties of his occupation. Upon plaintiff's request, the file was sent for further review by Dr. Dodge, who agreed with Carla Moore's decision as to physical capacity, but after a careful review, decided that the file should be reviewed by a psychiatrist. Although Dr. Haines, the psychiatrist, found "that there is very little specific information regarding the insured's symptoms and level of impairment other than Dr. Dickinson' comments. . . ." The file was reopened under a reservation of rights to give plaintiff an opportunity to submit further information. After First UNUM received the report of Dr. Dickinson, in which she stated that he had been free of symptoms for at lest 6 months, First UNUM's decision to deny benefits cannot be challenged.
Furthermore, there is no merit to plaintiff's argument that when Carla Moore reviewed plaintiff's file in September 1994 she was obliged to consider in detail the history of events in 1993 and earlier. It made sense to determine what plaintiff's capacity was at that time and make her decision based upon the entire file while giving special consideration to the most recent reports from his physicians. The conclusions reached by Carla Moore, Beth Scholten and the First UNUM physician reviewers were logical, sensible and based upon the reports in the file. At the time that the decision was made to terminate benefits he was not disabled from performing the duties of his occupation.
CONCLUSION
Applying the standards previously discussed, it is apparent that on this record plaintiff has failed to prove that First UNUM's action in terminating his benefits was arbitrary and capricious. The Clerk is directed to enter judgment in defendant's favor and dismiss the complaint.
So ordered.