The opinion of the court was delivered by: Townes, United States District Judge
Plaintiff Harvey Katzenberg, a former president and CEO of Acme American Repairs, Inc. ("Acme"), brings this action pursuant to Section 502 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132, for an order directing defendant First Fortis Life Insurance Company (now known as Union Security Life Insurance Company of New York) to pay disability benefits which plaintiff alleges are due him under the terms of a group long-term disability insurance policy covering Acme's employees. Defendant now moves for "Judgment on the Administrative Record and/or Summary Judgment," arguing that the arbitrary and capricious standard of review applies to this case and that its decision to deny plaintiff disability benefits was not arbitrary and capricious because it was reasonable and fully supported by substantial evidence contained in the Administrative Record. For the reasons set forth below, this Court concludes that defendant's motion is best construed as a motion for summary judgment, and that defendant is not entitled to summary judgment either on the issue of what standard of review applies to this case or on the merits of plaintiff's claim.
Prior to his retirement, plaintiff was a longtime employee of Acme, a company which services commercial kitchen equipment. In 1993, during plaintiff's tenure with the company, Acme purchased a group long-term disability insurance policy ("the Policy") to cover its employees. The Policy provided, inter alia, that outpatients would receive only 24 months of benefits for disabilities caused by "mental or nervous disorders." Plaintiff's Rule 56.1 Statement of Material Facts ("Pl. Stat.") at ¶ 4; Defendant's Rule 56.1 Counter-Statement of Uncontested Material Facts ("Def. Stat.") at ¶ 4. The Policy also provided that it could "be changed at any time by an endorsement or amendment agreed upon by the policyholder and [defendant]." See 1993 Policy at 21 (A. 1560).*fn1
In or about November 1996, defendant sent Acme a document entitled "Endorsements and Amendments," which stated that, effective November 1, 1996, the Policy would be modified by adding the following paragraph to the "Claims Provision" section:
We have sole discretionary authority to determine eligibility for participation or benefits and to interpret the terms of the Policy. All determinations and interpretations made by us are conclusive and binding on all parties.
(A. 1573). Unlike other "Endorsements and Amendments" contained in the Administrative Record, however, this document was not accompanied by a cover page which Acme could execute to indicate its approval. Compare A. 1567-72 with A. 1573. Plaintiff represents that this document was instead accompanied by a cover letter which stated that defendant had unilaterally "determined to amend" the Policy "[i]n light of a recent United States Supreme
Court decision." See Sample Form Letter to ABC Company from Terry J. Kryshak, defendant's Chief Administrative Officer, dated Oct. 15, 1996 (attached as Ex. A to Def. Stat.). That cover letter did not request that Acme sign anything, but stated:
The new provision expressly incorporates into your policy rights which First Fortis believes were already implicit in the policy from its inception.
Id. There is nothing in the Administrative Record to suggest that Acme took any action in response to this proposed amendment.
In April 1997, plaintiff's daughter died of asthma. Shortly thereafter, plaintiff developed psychological problems. According to Dr. Paula L. Grossman -- a psychiatrist whom plaintiff first visited in October 1997 -- plaintiff suffered from "Post Traumatic Stress Disorder with symptoms of panic attacks, flashbacks, nightmares, and insomnia" (A. 333). Dr. Grossman treated plaintiff with a combination of therapy and various medications and plaintiff, "although continuously suffering from internally painful symptoms was able to go to work" Id.
Sometime in 2000, plaintiff was diagnosed with polycythemia vera -- a blood disorder in which the body produces too many red blood cells, causing the blood to thicken. There is no cure for polycythemia, but it can be treated -- as it was in plaintiff's case -- through phlebotomies. Plaintiff had a unit of blood withdrawn periodically to thin his red blood cells.
Following his diagnosis, plaintiff's emotional state declined to the point where he was no longer able to work. On January 19, 2001, plaintiff completed and filed a pre-printed claim form requesting disability benefits. Where that form requested information concerning the "Nature of illness and when symptoms first appeared," plaintiff wrote, "Panic disorders - Post Traumatic Stress Syndrome 4/97" (A. 336). Plaintiff's claim also attached a copy of an "Attending Physician's Initial Statement of Disability" form on which Dr. Grossman listed plaintiff's diagnoses as:
Post Traumatic Stress Disorder (DSM IV - 309.81) Severe treatment resistant Panic Attack Disorder (DSM 300.01) Severe Major Depressive Disorder (agitated depression) - 296.23 - Treatment Resistant (A. 335). In describing plaintiff's subjective symptoms, Dr. Grossman wrote: Very frequent and severe panic attacks (1-2 attacks/day approximately 6 days/week), chronic anxiety and depression, intermittent agitation, lethargy and severe and chronic insomnia. Frequent flashbacks and nightmares about his daughter's death/dead body.
Id. Under "Objective findings," Dr. Grossman wrote:
Obsession/intrusive thoughts of his daughter's body as it appeared in the morgue when he had to identify it. Severe panic attacks -- occurring 1-2 times daily when at work with vomiting/fainting as sequelae. Agitated depression.
Id. On the form, Dr. Grossman made no mention of plaintiff's polycythemia, and wrote "N/A" in the space labelled "Physical Impairment." Id.
Plaintiff's claim for disability benefits was approved on March 21, 2001 (A. 230-31), shortly before plaintiff moved to Arizona (A. 314). In September 2001, plaintiff completed a Supplementary Report in which he listed the "symptoms or problems" which prevented him from returning to work as "polycythemia [--] acute panic attacks -- aggravated depression -- post traumatic stress syndrom [sic]" (A. 197). The "Attending Physician" portion of this Supplemental Report was completed by Dr. Grossman, who listed plaintiff's diagnoses as follows:
Axis I: (1) 309.81 (PTSD); (2) 300.01 (PAD); 296.23 (aggravated depression -- severe) Axis III: Polycythemia Axis IV: Severe stress -- sudden death of daughter Id. Under the heading, "Subjective Symptoms," Dr. Grossman wrote, "Polycythemia Vera -- needs very frequent phlebotomies," next to the word "Physical" (A. 198). However, while Dr. Grossman reported that plaintiff was fainting, on average, twice a day, she stated that these "syncopal episodes" were secondary to the 3 to 5 panic attacks plaintiff experienced daily. Id.
At the same time plaintiff completed his Supplementary Report, he completed an "Activities of Daily Living Claim Statement," in which he stated that he was unable to bathe without another person's assistance (A. 201). In explaining why he needed the assistance, plaintiff wrote, "because of panic attacks fainting may occur." Id. In the section reserved for comments, plaintiff wrote, "Panic attacks averaging 3 to 5 daily often include fainting vomitting [sic]" (A. 202).
On December 12, 2002, defendant mailed plaintiff a letter, requesting a Supplementary Report and informing him that, pursuant to the terms of his insurance policy, his disability benefits would end on March 20, 2003 (A. 190). On December 16, 2002, plaintiff completed the Supplementary Report (A. 124). Plaintiff's portion of that Supplementary Report, unlike the September 2001 report, omitted any mention of polycythemia, stating that the "symptoms or problems" that prevented plaintiff from returning to work were "panic attacks, aggravated depression, [and] post traumatic stress syndrom [sic]" (A. 124). The Attending Physician portion of the form, completed by Dr. Grossman on December 18, 2002, listed polycythemia and "syncopal episodes, dizziness" among the Axis III diagnoses. Id. Under "Subjective Symptoms," Dr. Grossman wrote "very frequent episodes of emesis with vasovagal fainting; insomnia, dizziness, syncopal episodes, vertigo" (A. 125). Under "Objective Findings," Dr. Grossman listed the following physical maladies: "Hyperlipidemia, polycythemia, vetebrobasilar syndrome with dizziness fainting frequent falls with resultant injuries." Id.
On December 26, 2002, Dr. Grossman faxed defendant's Claim Specialist, Laura Boswell, a one-page letter dated December 23, 2002. In contrast to earlier submissions in which she described the fainting as secondary to plaintiff's panic attacks, Dr. Grossman now stated that plaintiff's fainting episodes had two distinct causes. First, Dr. Grossman stated that the fainting episodes associated with plaintiff's panic attacks were "a result of valsalver and subsequent vaso-vagal stimulation which is a disability caused by a physical problem" (A. 180). Dr. Grossman then suggested that plaintiff's fainting was attributable to his polycythemia:
In addition to this condition [i.e., the fainting episodes associated with the panic attacks], he has had separate physical symptoms of intermittent episodes of dizziness and faint feeling that are not part of a panic attack. These symptoms were also disabling and interfered with his functioning. * * * In discussing these symptoms with a colleague who is an internist he suggested that they were consistent with circulatory problems in the veterbrobasilar system (i.e., circulatory problems in part of the brain) and the increased viscosity of his blood caused by his severe polycythemia could potentially create or exacerbate this problem. The suggestion was therefore made to the patient to try a daily aspirin for the blood thinning effect. The frequency of these dizzy episodes diminished with this treatment although episodes did still occur, including 2 episodes of fainting.
Id. (bracketed material added). Noting that she had "advised extreme caution with driving" and had instructed plaintiff "not to drive at all if he experiences any of the above symptoms or if he feels them coming on," Dr. Grossman concluded that these "conditions create a medical situation in which he is incapacitated and unable to work." Id. In addition, she noted:
Mr. Katzenberg also reports that he experiences light headness [sic] and dizziness on the days that he has his phlebotomies for the polycythemia and for the entire next day after this procedure. He receives phlebotomies every 2 weeks. * * * The episodes of dizziness and fainting are so frequent that they would interfere with his ability to consistently work or be gainfully employed.
In January 2003, plaintiff filed another Supplementary Report, which was received by defendant on January 22, 2003. Attached to that report was an Attending Physician Statement executed on January 7, 2003, by Dr. Lanny I. Hecker, plaintiff's hematologist in Arizona (A. 199). Dr. Hecker listed plaintiff's diagnoses as "(1) Polycythemia, (2) post traumatic stress disorder, (3) panic attacks." Id. Although defendant's Rule 56.1 Statement represents that Dr. Hecker's form also lists "(4) fainting spells," Def. Stat. ¶ 17, Dr. Hecker appears to have written a period after "(3) Panic attacks," and to have written, "Fainting spell vertebrobasilar insufficiency," thereafter. Id. However, in the section asking Dr. Hecker to explain how plaintiff's symptoms affected his ability to work, Dr. Hecker addressed only the fainting spells, stating:
He has persistent fainting spells and cannot drive or operate machinery. * * * Check with Dr. Grossman for psychiatric details.
Id. Dr. Hecker also wrote, "N/A," in the section entitled, "Physical Impairment." Id.
At some point in January 2003, defendant received a letter from Dr. Hecker, dated December 20, 2002, in which the doctor suggested that plaintiff's fainting spells might be related to his polycythemia (A. 177-78). After noting that he had treated plaintiff for several years for "polycythemia rubra vera" and that plaintiff required "phlebotomies very frequently," Dr. Hecker stated:
Two things about his polycythemia may contribute to his fainting spells -- One is the high concentration of blood in his cerebral capillaries, creating sludging and perhaps neurological changes.
The other, of course, is the syncope that he may experience from the blood loss required with his frequent phlebotomies. Either or both can contribute to his current symptomology. Thus, the sum of all his problems, especially the polycythemia and his treatments, has resulted in these severe problems.
(A. 177). In February 2003, defendant sent plaintiff medical records and the correspondence from Drs. Grossman and Hecker to Dr. Allen J. Parmet for a Clinical Service Review. Dr. Parmet, a Kansas City physician whose letterhead indicates that he is "Board Certified in Occupational Medicine and Aerospace Medicine" (A. 16), concluded plaintiff was not disabled as a result of his physical maladies. Dr. Parmet noted that plaintiff had received phlebotomies two or three times a month, and listed the hematocrit levels determined in 38 blood tests plaintiff underwent between July 10, 2001, and December 30, 2002 (A. 18-19). Dr. Parmet then stated:
The claimant's blood counts have remained in an acceptable level and there should not be episodes of vascular sludging as one provider speculated upon, particularly not 10 to 12 times per day without causing serious and permanent neurologic damage. The speculation by Dr. Hecker that the claimants [sic] multiple episodes of fainting are on a basis of polycythemia and hyperviscosity state are unsustainable on a scientific basis. This would be very easy to objectively demonstrate. (A. 20). After noting that "anxiety attacks with hyperventilation and vasovagal syncope are extremely common," id., Dr. Parmet concluded:
The physical diagnoses present do not substantiate functional limitations in performing the material duties of his occupation. Polycythemia vera does not impose physical limitations unless hyperviscosity is untreated resulting in coagulation in both the arterial and venous systems and infarctions of multiple organs. There is no objective evidence that this has take [sic] place. Mr. Katzenberg's physical condition has been adequately treated and there are no physical restrictions on this basis.
By letter dated February 27, 2003, defendant informed plaintiff that his long-term disability claim was denied (A. 2-4). That letter noted that the Policy provided that a person was disabled when a sickness prevented him or her "from performing the material duties of your regular occupation," and that defendant had concluded that plaintiff's physical condition did not prevent him from performing the material duties of a president (A. 2). The letter specifically stated that defendant had not given consideration "to the specific duties of a particular job with a particular employer," but rather had evaluated plaintiff's "ability to perform the occupational duties as they are typically performed in the labor market." Id. Defendant did "not consider activities such as driving to be material duties of the occupation of President" (A. 3), which defendant believed was "sedentary in nature" (A. 2).
Plaintiff pursued an administrative appeal. On March 21, 2003, plaintiff completed an Appeals Request Form, in which he stated his intention to appeal and stated that he was putting together an "appeal package," including doctors' diagnoses (A. 579). Defendant subsequently received a two-page letter from Dr. Hecker, dated April 1, 2003 (A. 580). That letter explained that plaintiff had asked Dr. Hecker "to write another letter for him because of the difficulty he is having and his inability to work," and noted that patients with polycythemia could experience "dizziness, visual disturbance and paresthesias." Id. Dr. Hecker also noted that the production of red blood cells, "particularly at an increased rate, is a very fatiguing process," making "weakness" one of the "symptoms of polycythemia that remains throughout, whether the patient is treated or not." Id. Dr. Hecker concluded his letter by stating:
Although I am not a psychiatrist and cannot comment on psychological problems that Mr. Katzenberg may be having, I do know that he does have physical symptoms that make it almost impossible for him to conduct himself in normal working situations and make it impossible for him to function as a president of any corporation. His frequent falls have been injurious and increasing in frequency. The added weakness from the hypermetabolic demands of polycythemia make his condition worse.
Just observing Mr. Katzenberg in our office when he comes for his treatments, it is impossible for me to imagine how he could possibly function in any setting of responsibility or one that requires a physical presence.
I think it would be wise to consider Mr. Katzenberg's request since I do not see how he would be able to function under his current physical condition. (A. 580-81).
In response to defendant's April 16, 2003, requests for further information, plaintiff sent over 150 pages of material (A. 424-578), which defendant received on May 21, 2003. The material was prefaced by a three-page letter from plaintiff, in which he explained that he was experiencing two different types of fainting episodes:
As explained to me, when I periodically faint from a panic attack it is because I choke on phlegm or bile coming up and the vasovagas nerve in the chest contracts causing a lack of air and subsequent fainting. The minute I faint this muscle relaxes and I come back to consciousness in a matter of seconds. * * * The other form of fainting I have begins as a dizzy spell, especially if I am bending over to pick something up. Sometimes the attack is only dizziness, sometimes the attack includes vomiting of food and sometimes the attack results in fainting. These attacks have resulted in my falling and injuring myself several times. When fainting occurs, I can be unconscious for as many as twelve minutes and have been. In addition to these dizzy and fainting spells, I have awakened with amnesia at least four times. During these spells, I could not remember my own name nor that of my wife. These attacks are extremely ...