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Barbara Lopes v. First Unum Life Insurance Company

March 30, 2011

BARBARA LOPES, PLAINTIFF,
v.
FIRST UNUM LIFE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Mauskopf, United States District Judge.

MEMORANDUM AND ORDER

Plaintiff Barbara Lopes brings this action against Defendant First Unum Life Insurance Company under the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., challenging Defendant's denial of disability benefits. (Compl. (Doc. No. 1) ¶¶ 1, 10.) Defendant counterclaimed, seeking judgment for collateral offset, i.e., monies from collateral sources Plaintiff received as disability benefits. (Answer and Conditional Countercl. (Doc. No. 3) 2.) Before the Court are the parties' cross-motions for summary judgment. (Def.'s Mot. for Summ. J (Doc. No. 11) 1; Pl.'s Mot. for Summ. J. (Doc. No. 15) 1.) For the reasons below, the Court denies Lopes' motion for summary judgment, grants Defendant's motion for summary judgment and thereby dismisses Plaintiff's claims in their entirety, and denies with leave to renew Defendant's motion on its counterclaim for collateral offset.

BACKGROUND

The undisputed facts of this case are taken from Defendant's Local Civil Rule 56.1 Statement (Doc. No. 12), Plaintiff's Local Civil Rule 56.1 Statement (Doc. No. 16), and the Administrative Record ("A.R." (Doc. No. 20)). Plaintiff has expressly conceded all of the material facts set forth in Defendant's Rule 56.1 statement, and those facts are taken in the light most favorable to Plaintiff.

Plaintiff reports that an unknown attacker assaulted her while she was returning home on February 5, 2005, throwing her to the ground, and causing her injury. (A.R. at 25.)*fn1 At the time, Plaintiff was a Vice President in the Compliance Department of Morgan Stanley, a sedentary position. (Def. 56.1 Stmt. ¶ 10; A.R. at 448.) Morgan Stanley provided disability insurance to its employees under a policy issued by Defendant (the "Plan"). (Id. at ¶ 2.) In July of 2005, Plaintiff filed a claim for long-term disability ("LTD") benefits under the Plan. (Pl. 56.1 Stmt. ¶ 6; Def. 56.1 Stmt. ¶¶ 10--11). Plaintiff's claim reported that the assault caused her back pain, "headache," Post-traumatic Stress Disorder (PTSD), high blood pressure, "anxiety with panic and agoraphobia." (Pl. 56.1 Stmt. ¶¶ 5--6; Def. 56.1 Stmt. ¶¶ 10--12.)

As applicable to Plaintiff's claim, a claimant is "disabled" under the Plan, and entitled to LTD benefits if, "because of injury or sickness[,] he cannot perform each of the material duties of his regular occupation." (Id. at ¶ 5.) LTD benefits are subject to a "mental illness limitation," according to which, subject to exceptions not applicable here, "benefits for disability due to mental illness will not exceed 24 months of monthly benefit payments." (Id. at ¶ 6.)

On August 23, 2005, Defendant notified Plaintiff by letter that it had approved her claim for LTD benefits, noting that Plaintiff was "unable to work due to [PTSD], anxiety, and depression." (Id. at ¶ 12.) The letter noted also that Plaintiff's benefits were subject to the mental illness limitation and therefore will "not exceed 24 months of monthly benefit payments." (Id. at ¶ 14.) The letter asked Plaintiff to provide further information from her treating physician regarding her back condition. (Id. at ¶ 16.) Plaintiff's benefits were retroactive from August 6, 2005. (Id. at ¶ 14.) Therefore, LTD benefits for Plaintiff's mental illness would run until, at the latest, August 5, 2007. (Id.)

As the 24-month limit drew near, Defendant took steps to determine whether Plaintiff's disability was physical, in which case the limit would not apply. In April 2007, Defendant notified Plaintiff by letter that the 24-month limit would take effect in August 2007. (Id. at ¶ 26.) In the same letter, Defendant informed Plaintiff that LTD benefits would continue beyond August 2007 if her "physical diagnoses [were] determined to be disabling." (Id. at ¶27.) In May 2007, Dr. Marc Levinson, Plaintiff's pain management and rehabilitation physician, sent Defendant a report stating that Plaintiff's back condition, lumbar radiculitis,*fn2 restricted her from "lifting [more than] 5 pounds . . . bending . . . or prolonged sitting or standing." (Id. at ¶ 30.) Plaintiff's job duties did not meet these restrictions. (Id. at ¶¶ 23--24.) To perform its evaluation, Defendant engaged Nurse Kay O'Reilly; Dr. Neil McPhee, a specialist in physical medicine and rehabilitation; and Dr. Susan S. Council, a specialist in pain management and rehabilitation. (Id. at ¶¶ 31, 38, 44.) They disagreed with the restrictions set out in Dr. Levinson's May 2007 report, recommending a less restrictive set of physical limitations, which would not have prevented Plaintiff's return to work at her sedentary position with Morgan Stanley (Id. at ¶¶ 23--24, 33, 39, 45.) Dr. McPhee raised these conclusions with Dr. Levinson, and Dr. Levinson agreed that they were "reasonable." (Id. at ¶ 40.)

On September 17, 2007, Defendant closed Plaintiff's claim and terminated her benefits, informing her by letter that the 24-month mental injury limitation had run, that her "physical conditions [were] judged not be impairing," and that she had a right to an administrative appeal.

(Id. at ¶ 48.) Plaintiff appealed Defendant's determination, contending that her back condition and the side effects of her pain medications combined to render her physically disabled and unable to return to work. (Id. at ¶¶ 52, 55, 63, 66.) Under the Plan, disabling side effects of medicine taken to treat a physical condition can constitute a "physical" disability even if those side effects themselves are cognitive or psychological. (See id. at ¶ 66; A.R. at 1169--70.) Thus, if suffering from such a physical disability, Plaintiff could be eligible for benefits separate and apart from those limited by the policy's 24-month mental illness benefit.

Defendant evaluated Plaintiff's appeal through further independent analysis by four medical professionals, and communication with Plaintiff's doctors. Defendant retained Dr. Kenneth Freundlich, an independent psychologist, to administer neuropsychological tests to gauge the effects of Plaintiff's various medications on Plaintiff's cognitive functioning. (Def. 56.1 Stmt. ¶ 68.) Plaintiff performed very poorly on the tests. (Id. at ¶ 69.) However, Dr. Freundlich concluded that Plaintiff's performance was caused by intentional "malingering," and not the side effects of Plaintiff's medication. (Id. at ¶ 69.) Plaintiff's treating psychiatrist, Dr. Sidney Fein, reviewed Dr. Freundlich's report, deemed it "thorough and professional," and stated that he was unaware of Plaintiff's claimed cognitive dysfunction. (Id. at ¶¶ 76--77.) Defendant upheld its previous determination to terminate LTD benefits because Plaintiff was not physically disabled, notifying Plaintiff by letter dated April 16, 2008 that "the claim records and testing provide no medical basis for restricted function of a physical nature that would preclude you from performing the material duties of your regular occupation because of your reported systems of back pain and cognitive deficits, relating to pain medication side effects." (Id. at ¶¶ 73--74.)

Nevertheless, upon request by Plaintiff's attorney, Defendant agreed to provide an additional level of review, although the Plan did not require it. (Id. at ¶ 82.) Dr. Levinson suggested that Plaintiff should have stopped taking her medication before being tested to determine the effects of the medication -- a position he later abandoned. (Id. at ¶¶ 80--81, 89.) Defendant retained Dr. Peter Brown, a psychiatrist, who agreed with Dr. Freundlich's analysis of the test results, and spoke with Dr. Levinson about the analysis. Dr. Levinson noted that evidence of Plaintiff's malingering was "unequivocal." (Id. at ¶ 89.) Dr. Levinson said that Plaintiff's performance on the neuropsychological testing did not indicate cognitive deficits caused by the side effects of medication, and that Dr. Levinson based his conclusion that Plaintiff was disabled on Plaintiff's subjective reports. (Id. at ¶ 89.) By letter dated September 25, 2008, Defendant informed Plaintiff of its decision to uphold its initial determination to discontinue Plaintiff's benefits.

On June 22, 2009, Plaintiff filed this suit seeking reversal of Defendant's decision denying benefits for physical disability under the Plan. (See Compl. 3.) The Plan is an "employee benefits plan" governed by ERISA, and the Court has subject-matter jurisdiction under 29 U.S.C. §§ 1132 and 1003. See Arnold v.Lucks, 392 F.3d 512, 517--18 (2d Cir. 2004). Defendant has filed a counter-claim for collateral offset under the policy, based on Plaintiff's receipt of Social Security Disability Insurance ("SSDI") benefits.

STANDARD OF REVIEW

I.ERISA standard

ERISA permits a person denied benefits under an employee benefit plan to challenge the denial in federal court. See 29 U.S.C. § 1132(a)(1)(B); Feifer v. Prudential Ins. Co., 306 F.3d 1202, 1213 (2d Cir. 2002). When a plan grants the administrator the authority to determine a claimant's eligibility for benefits, the reviewing court must apply a deferential standard. See McCauley v. First Unum Life Ins. Co., 551 F.3d 126, 131--32 (2d Cir. 2008) (citing Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111--12 (2008)).

"Under the deferential standard, a court may not overturn the administrator's denial of benefits unless its actions are found to be arbitrary and capricious, meaning without reason, unsupported by substantial evidence or erroneous as a matter of law." Id. at 132--33 (internal quotation marks omitted). Where the plan administrator and the claimant offer rational, but conflicting interpretations of the plan, the administrator's interpretation must control. See id. "Nevertheless, where the administrator imposes a standard not required by the plan's provisions, or interprets the plan in a manner inconsistent with its plain words, its actions may well be found to be arbitrary and capricious." Id. (internal quotation marks omitted).

When applying the deferential standard, courts must take into account any conflict of interest that the plan administrator may have. See id. at 133 (citing Glenn, 554 U.S. at 112); see also Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111--15 (1989). A conflict of interest is present where the plan administrator is also the payor of benefits. See McCauley,551 F.3d at 133. While courts must consider any such conflict when reviewing claims denials, it remains "but one factor among many that a reviewing judge must take into account." Id. at 132--33.

The presence of a conflict of interest does not change the standard of review from deferential to de novo. See id. "Rather, a conflict of interest, like any relevant consideration, should act as a 'tiebreaker' when other considerations are closely balanced, particularly 'where circumstances suggest a high likelihood that it affected the benefits decision, including but not limited to, cases where an insurance company administrator has a history of biased claims administration.' " Van Wright v. First Unum, 740 F. Supp. 2d 397, 406 (S.D.N.Y. 2010) (quoting Glenn, 554 U.S. at 117); see McCauley,551 F.3d at 133. A conflict of interest is " 'less important (perhaps to the vanishing point) where the administrator has taken active steps to reduce potential bias and to promote accuracy.' " McCauley,551 F.3d at 133.

Finally, under the deferential standard, courts are generally "required to limit their review to the administrative record." Miller v. United Welfare Fund, 72 F.3d 1066, 1071 (2d Cir. 1995). A court may look beyond the administrative record only if it finds good cause to consider other ...


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