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Diamond v. Reliance Standard Life Insurance

December 3, 2009

ELIZABETH DIAMOND PLAINTIFF,
v.
RELIANCE STANDARD LIFE INSURANCE DEFENDANT.



The opinion of the court was delivered by: Sidney H. Stein, U.S. District Judge

OPINION

Plaintiff Elizabeth Diamond brings this ERISA action for insurance benefits allegedly due to her from defendant Reliance Standard Life Insurance Company. The parties have now each moved for summary judgment. Because Reliance's decision to terminate Diamond's benefits was arbitrary and capricious, this Court grants plaintiff's motion for summary judgment, orders defendant to reinstate Diamond's disability benefits pursuant to her insurance policy, and denies Reliance's motion for summary judgment.

I. BACKGROUND

The following facts are undisputed.

While working for Paine Webber as a desktop publishing operator, Elizabeth Diamond was covered by a Group Long Term Disability Insurance policy ("LTD policy" or "Plan") issued by Reliance Standard Life Insurance Company ("Reliance"). (Administrative Record ("AR") at 218-224; 229-255; Pl.'s Local Civil Rule 56.1 Statement of Undisputed Facts ("Pl.'s 56.1") ¶ 1; Def.'s Local Civil Rule 56.1 Response to Undisputed Facts ("Def.'s 56.1") ¶ 1.) Diamond ceased work on September 9, 2000 and first applied for benefits under the LTD policy on or about March 8, 2001. (Pl.'s 56.1 ¶ 3; Def.'s 56.1 ¶ 3.)

In a letter dated March 26, 2001, Reliance instructed plaintiff that if she thought her illness would prevent her from working for more than 12 months, she "should apply for Social Security Disability Insurance Benefits." (AR 216.) Attached to this letter was a fact sheet entitled "Advantages of Social Security Disability Benefits." (AR 217.) In a letter dated August 24, 2002, the Social Security Administration found that plaintiff was disabled and awarded her benefits accordingly. (AR 276.) Two years later, the Social Security Administration reviewed plaintiff's claim and found that her disability was continuing. (AR 286.)

On September 8, 2004, Dr. Scott Bernstein (Diamond's treating physician) listed her diagnoses as "Bechet's disease, Fibromyalgia, Hyperlipidemia, Hypothyroidism, Migraine headaches, Metabolic syndrome, Depression, and Gastritis," and he reported that Diamond indicated symptoms of "Chronic fatigue and myalgias, [d]aily debilitating headaches," and "[f]requent breakouts of sores on [Diamond's] outer body and GI tract," and "nausea." (Pl.'s 56.1 ¶ 5; Def.'s 56.1 ¶ 5; AR 20.) Bechet's disease is a chronic lifelong disorder, with no cure, that causes the inflammation of small blood vessels throughout the body. (Pl.'s 56.1 ¶ 6; Def.'s 56.1 ¶ 6.) Dr. Bernstein noted in his records that Diamond needed "daily rest" and that she had reported she was often so tired that she couldn't even take a shower or get out of bed. He further noted that Diamond was not able to work even part time due to her condition. (Pl.'s 56.1 ¶¶ 7-8; Def.'s 56.1 ¶¶ 7-8; AR 21.) On July 12, 2005, Dr. Bernstein indicated that Diamond had 20% of her "functional abilities" and had "severe symptoms, even at rest." (Pl.'s 56.1 ¶ 11; Def.'s 56.1 ¶ 11.)

In addition to the diagnoses made by Dr. Bernstein, plaintiff was also diagnosed with "chronic migraine[s]" by Dr. Mark Green at Columbia University Headache Center where Diamond sought treatment on July 12, 2004, (Pl.'s 56.1 ¶ 15; Def.'s 56.1 ¶ 15; AR 321), and she was also treated by Dr. Melissa Yu in July 2005, who diagnosed Diamond has having an "intractable migraine." (Pl.'s 56.1 ¶ 17; Def.'s 56.1 ¶ 17; AR 348.) Dr. Yu also stated that Diamond "was stable, but has failed multiple medications in the past," and that Diamond had "a degree of neurological impairment," bust still had the ability "to carry out most activities of daily living" despite suffering from "4-5 disabling migraines per month." (Pl.'s 56.1 ¶ 17; Def.'s 56.1 ¶ 17; AR 349.)

Reliance initially denied benefits to Diamond on June 14, 2002 on the grounds that she suffered from no physical impairment that would prevent her from performing the duties of her sedentary occupation. (Pl.'s 56.1 ¶ 18; Def.'s 56.1¶ 18; AR 3-4.) The relevant part of the LTD policy states as follows:

"Totally Disabled" and "Total Disability" mean that as a result of an Injury or Sickness:

(1) . . . for the first 24 months for which a Monthly Benefit is payable, an Insured cannot perform the material duties of his/her regular occupation . . . .

(2) after a Monthly Benefit has been paid for 24 months, an insured cannot perform the material duties of any occupation. Any occupation is one that the Insured's education, training, or experience will reasonably allow. We consider the Insured Totally Disabled if due to an Injury or Sickness he or she is capable of only performing the material duties on a part-time basis or part of the material duties on a [f]ull-time basis. (Pl.'s 56.1 ¶ 19; Def.'s 56.1 ¶ 19) (emphasis added). After exhausting her administrative remedies, Diamond filed an action in federal court in 2003. See Diamond v. Reliance Standard Life Insurance Company, 03 Civ. 6757 (SHS) (Pl.'s 56.1 ¶ 20; Def.'s 56.1 ¶ 20.) That litigation was settled in July 2004. Pursuant to the settlement agreement, Reliance agreed to pay Diamond disability benefits with interest and attorney's fees. (Pl.'s 56.1 ¶ 21; Def.'s 56.1 ¶ 21.) Reliance maintains that the reason it settled was because, at the time, it could not locate plaintiff's file in order to properly defend the suit. They contend that they never conceded that Diamond was "disabled" pursuant to her policy with Reliance.

After the settlement, Reliance located Diamond's file and issued a letter dated August 30, 2005, denying LTD benefits to Diamond effective October 8, 2005. Specifically, Reliance concluded that Diamond was capable of performing the duties of her own occupation. (Pl.'s 56.1 ¶ 27; Def.'s 56.1 ¶ 27.) Diamond appealed that denial of benefits, citing the various diseases Dr. Bernstein diagnosed her with and how the symptoms of those diseases prevented her from returning to even a part-time work schedule. (Pl.'s 56.1 ¶¶ 30-34; Def.'s 56.1 ¶¶ 30-34.)

To evaluate Diamond's appeal, Reliance had Diamond's file reviewed by Dr. Mark Burns. (Pl.'s 56.1 ¶ 30-34; Def.'s 56.1 ¶ 36.) Dr. Burns did not examine Diamond but determined that Reliance was correct to terminate Diamond's LTD benefits because the "medical records lack evidence of an impairment that would prevent Ms. Diamond from performing sedentary work." (Pl.'s 56.1 ¶ 37; Def.'s 56.1 ¶ 37.) According to Dr. Burns, the records documented esophageal lesions and abdominal pain attributable to Bechet's disease but did not document other symptoms Diamond complained of. (Pl.'s 56.1 ¶ 38; Def.'s 56.1 ¶ 38.) Dr. Burns also concluded that while "flares of the skin could cause absence from work during the flares," there was "no evidence of physical injury that would limit work in between flares." (Pl.'s 56.1 ¶ 40; Def.'s 56.1 ¶ 40.) Dr. Burns stated that he could not identify the cause of Diamond's ...


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