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Smith v. Novels

September 29, 2009

RICHARD SMITH, PLAINTIFF,
v.
NOVELIS; ALCAN ALUMINUM CORP.; LIBERTY LIFE ASSURANCE CO. OF BOSTON; AND LIBERTY MUTUAL, DEFENDANTS.



The opinion of the court was delivered by: Hon. Glenn T. Suddaby, United States District Court Judge

DECISION and ORDER

This action was filed pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001, et seq. Generally, in his Amended Complaint, Richard Smith ("Plaintiff") alleges that Novelis Corporation, Alcan Aluminum Corporation,*fn1 Great West Life and Annuity Insurance Company, Liberty Life Assurance Company of Boston, and Liberty Mutual revoked and terminated the Long Term Disability ("LTD") benefits to which he was entitled under the Novelis long-term disability plan (the "Plan") pursuant to 29 U.S.C. § 1132(a)(1)(B). (See generally Dkt. No. 12 [Plf.'s Am. Compl.].) Currentlypending before the Court are Defendants' motion for summary judgment (Dkt. No. 42), and Plaintiff's cross-motion for summary judgment (Dkt. No. 50). For the reasons set forth below, Plaintiff's motion is granted and Defendants' motion is denied.

TABLE OF CONTENTS

I. BACKGROUND.....................................................................................................................4

A. Relevant Procedural History......................................................................................4

B. Undisputed Material Facts..........................................................................................7

1. Plan Language.................................................................................................7

2. Liberty Mutual's Review of Plaintiff's LTD Benefits.................................9

a. Dr. Carbone's Review of Plaintiff's Disability.................................9

b. The FCE............................................................................................10

c. The Transferable Skills Analysis....................................................12

d. Dr. Saini's Response........................................................................12

e. The IME............................................................................................13

3. Liberty Mutual's Termination of Plaintiff's LTD Benefits......................16

C. Summary of Grounds in Support of Defendants' Motion.....................................18

D. Summary of Grounds in Support of Plaintiff's Cross-Motion.............................19

II. APPLICABLE LEGAL STANDARDS...............................................................................20

A. Legal Standard Governing Motions for Summary Judgment..............................20

B. Legal Standard Governing Plaintiff's Claim Under ERISA................................21

1. One Factor to Be Considered: Conflict of Interest.................................23

2. Another Factor to Be Considered: Procedural Irregularities..................25

III. ANALYSIS.............................................................................................................................26

A. First Factor: Conflict of Interest.............................................................................26

B. Second Factor: Procedural Irregularities...............................................................26

C. Whether Defendants' Decision Was Without Substantial Evidence....................29

1. FCE................................................................................................................29

2. Dr. Saini's Statement....................................................................................31

3. The IME.........................................................................................................32

4. Six-Week Pain Management Program in 1991..........................................35

5. Subjective Complaints and Lack of Objective Evidence..........................36

a. Objective Evidence of Disability.....................................................36

b. Subjective Complaints.....................................................................38

6. Three Entry-Level Sedentary Jobs.............................................................40

D. Conclusion.................................................................................................................41

E. Remedy.......................................................................................................................42

I. BACKGROUND

A. Relevant Procedural History

On July 28, 2005, Plaintiff commenced this action. (Dkt. No. 1.) On October 13, 2005, he filed an Amended Complaint, which superceded his Complaint in all respects. (Dkt. No. 12.) See N.D.N.Y. L.R. 7.1(a)(4); Rusyniak v. Gensini, 07-CV-0279, 2009 WL 1269911, at *1 (N.D.N.Y. May 5, 2009) (Suddaby, J.). Generally, the Amended Complaint asserts the following two causes of action: wrongful termination of benefits, and breach of fiduciary duty. (Dkt. No. 12.)

On December 12, 2005, the parties filed a Joint Motion to Stay the Proceedings, requesting that the Court "remand Plaintiff's disability determination to the Plan Administrator to make findings consistent with the definition of 'totally disabled' from the September 1989 Summary Plan Description and the Plan Administrator discretionary standards set forth in the Summary Plan Description document entitled 'Important Information About Your Benefits,' effective January 1998[,] . . . and that such remand be completed consistent with the terms of the 'Important Information About Your Benefits' document, effective January 1998." (Dkt. No. 19.)

On December 22, 2005, United States District Judge Gary L. Sharpe, of this District, issued an Order remanding the issue of Plaintiff's eligibility for LTD benefits to the Plan Administrator, and staying all proceedings in the matter until further order of the Court. (Dkt. No. 20.) In his Order, Judge Sharp stated that "the parties are required to provide the Court with a joint status report within 120 days from the date of the Order, and every 120 days thereafter, or to notify the Court of the result of the remand within 30 thirty days after administrative process [is] concluded, including (if applicable) after all administrative remedies are exhausted, whichever shall occur first." (Dkt. No. 20.)

The parties complied with the Court's request, and provided the Court with Joint Status Reports over the next year. (Dkt. Nos. 21, 23, 24.) The final Joint Status Report stated as follows:

Pursuant to the parties' joint status report of April 21, 2006, Plaintiff's claim file was returned to Liberty Mutual for professional review. On or about June 15, 2006, Liberty Mutual denied Plaintiff's appeal. On or about August 14, 2006, Plaintiff filed another administrative appeal to the Plan Administrator. Such appeal is pending. (Dkt. No. 24.)

On January 9, 2007, the parties stipulated to a dismissal of Plaintiff's claims against Great West Life and Annuity Insurance Company without prejudice pursuant to Fed. R. Civ. P. 41. (Dkt. No. 25.) On January 10, 2007, Judge Sharpe issued an Order accepting the Joint Stipulation. (Dkt. No. 26.)

On February 16, 2007, Plaintiff's attorney contacted the Court by letter, requesting that the Court restore the case to the calendar for further proceedings. (Dkt. No. 27.) In this letter, Plaintiff's attorney notified the Court that Novelis Corporation ("Novelis") contacted Plaintiff (through his attorney) on January 15, 2007, and notified him that the Novelis Employee Benefits Committee (the "Committee") had completed its administrative review of Plaintiff's claim for LTD benefits and upheld its denial of Plaintiff's claim. (Dkt. No. 27.) On February 22, 2007, Judge Sharpe ordered that the proceeding be restored to the calendar and that Defendants file and serve an Answer within thirty (30) days. (Dkt. No. 28.)

On March 30, 2007, Novelis and Alcan Aluminum Corporation ("Defendants") filed an Answer to the Amended Complaint.*fn2 (Dkt. No. 31.) On April 30, 2008, the parties stipulated to a dismissal of Plaintiff's Second Cause of Action for breach of fiduciary duty pursuant to Fed. R. Civ. P. 41. (Dkt. No. 40.) On that same day, Defendants filed a motion for summary judgment. (Dkt. No. 42.) On May 1, 2008, Judge Sharpe issued an Order dismissing Plaintiff's Second Cause of Action for breach of fiduciary duty with prejudice, pursuant to Rule 41. (Dkt. No. 46.) On May 19, 2008, Plaintiff filed a response to Defendants' motion and a cross-motion for summary judgment. (Dkt. No. 50.) On May 27, 2008, Defendants submitted a memorandum of law in reply to Plaintiff's response and in opposition to Plaintiff's cross-motion for summary judgment. (Dkt. No. 57.) On October 1, 2008, this case was reassigned to the undersigned. (Dkt. No. 60.)

As a result, currently pending before the Court are Defendants' motion for summary judgment and Plaintiff's cross-motion for summary judgment, both filed pursuant to Fed. R. Civ. P. 56. (Dkt. Nos. 42 and 50.)

B. Undisputed Material Facts*fn3

1. Plan Language

From 1988 to 2005, Alcan Aluminum Corporation had a long-term disability plan. In 2005, Alcan Aluminum Corporation became Novelis Corporation. From 2005 to the present, Novelis Corporation has had a long-term disability plan. While the disability plan of Alcan Aluminum Corporation and Novelis Corporation has been amended since 1988 years, it has retained the following common features, among others.

The Plan provides disability benefits to employees who satisfy the definition of "disability" found in the Plan documents. To qualify for long-term disability benefits, an employee must be "totally and continuously disabled for at least six full months," which is the "qualifying period."*fn4 Under the Plan, an employee is "totally disabled" if that employee has "an illness or injury [that] prevents [him] from performing the essential duties of [his] job."

The above definition of "totally disabled" applies only during the qualifying period and the first 24 months of monthly payments. After the initial 24-month period, the definition of "totally disabled" changes, whereby the employee "must be unable to perform the essential duties of any occupation anywhere for which [the employee is] suited based on [] education, training, experience, or for which [the employee] may become suited through a Rehabilitation Program." To continue to qualify for long-term disability benefits, employees must submit proof of continuing disability. Failure to show continued disability results in the termination of benefits payments.

Under the terms of the benefits plan, the Sponsor of the Plan (originally Alcan Aluminum Corporation and now Novelis Corporation) maintains a Benefits Committee that serves as the Plan Administrator. The Plan Administrator is in charge of the day-to-day operation of the Plans and for adopting and enforcing rules for Plan Administration. The . . . [Plan Administrator] has full discretion to interpret the terms of each plan (including administration, eligibility, receipt of benefits and all other policies), consistent with the terms of each Plan.

In 1988, the Plan Administrator was the Alcan Employee Benefits Committee. In 2000, the Plan Administrator became Liberty Mutual Assurance ...


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