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Charles R. Jones v. Life Insurance Company of North America

May 20, 2011


The opinion of the court was delivered by: Michael A. Telesca United States District Judge



Plaintiff, Charles R. Jones ("Plaintiff"), brings this action pursuant to the Employee Retirement Security Act of 1974, 29 U.S.C. §§ 1001 et seq. ("ERISA"), seeking long term disability benefits under an employee benefit plan (the "Plan") offered by his former employer, Electronic Data Systems Corporation, and issued by Life Insurance Company of North America ("LINA"). Plaintiff alleges that he is disabled according to the Plan and therefore, he is entitled to long term disability benefits. He further alleges that LINA breached a fiduciary duty owed to the him by denying his claim for benefits. Defendants deny Plaintiff's allegations and counterclaim for restitution based on Plaintiff's receipt of Social Security Disability benefits, for which it alleges that it is entitled to offset under the Plan.

Defendant LINA asserts that defendants Electronic Data Systems Corporation ("EDS") and Cigna Group Insurance ("Cigna") were improperly named as defendants this case. LINA attests that Cigna is not a legal entity and is merely a service mark used by LINA. See Def. Resp. to Pl. Rule 56.1 Statement(Docket #46), note 1. Further, the Complaint does not contain any factual allegations against EDS, as LINA made all decisions regarding Plaintiff's claim for benefits, which are ultimately paid by LINA. (Docket #1.) Plaintiff has neither responded to LINA's arguments nor sought to amend his Complaint to include additional factual allegations against EDS or to contest LINA's assertion that Cigna is merely a service mark. Accordingly, EDS and Cigna are hereby dismissed as defendants in this case, and the Clerk of the Court is hereby directed to remove Electronic Data Systems Corporation and Cigna Group Insurance from the caption.

Both Plaintiff and LINA move for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure ("Rule 56"). Plaintiff argues that he was wrongfully denied benefits under the plan and that LINA breached a fiduciary duty owed to him pursuant to ERISA. See Pl. Mem's of Law (Docket # 36). LINA argues that its decision to deny Plaintiff benefits is supported by the administrative record ("AR LINA") and that, as the insurer, it does not owe the Plaintiff a fiduciary duty. See Def. Mem's of Law (Docket #40, 45). LINA further contends that according to the Plan and a reimbursement agreement signed by the Plaintiff, Plaintiff is required to reimburse LINA for any overpayment of benefits resulting from the receipt of other disability benefits, including Social Security Disability benefits. Id.

For the reasons set forth below, this Court grants in part and denies in part both Plaintiff and Defendant LINA's Motions for Summary Judgment. LINA is hereby Ordered to calculate and pay Plaintiff the benefits due under the contract, retroactive to October 26, 2006 with interest. Such benefits, however, shall be offset by $35, 877.40, the amount owed to LINA resulting from Plaintiff's receipt of Social Security Disability benefits, pursuant to the Plan and reimbursement agreement.


The following facts are taken from the parties' submissions pursuant to Local Rule 56.1 and the administrative record submitted in connection with the instant motion. See AR LINA and Docket #'s 36, 39, 46. Plaintiff began working for Electronic Data Systems Corporation ("EDS") on March 1, 2004 as a computer systems administrator. While employed by EDS, Plaintiff was a participant in an employee benefit plan, which included long term disability insurance, issued by LINA to EDS.

Plaintiff began experiencing neck and back pain and his treating physician, Dr. Nicolas Venci, took him out of work on April 20, 2004. After submitting medical records from Dr. Venci and Dr. James Maxwell, Plaintiff's treating neurosurgeon, indicating that Plaintiff was suffering from degenerative disc disease, which required surgery, and carpal tunnel syndrome, LINA approved Plaintiff's claim for short term disability benefits through October 25, 2004. Thereafter, based on additional documentation regarding his condition, Plaintiff was approved for an initial period of long term disability insurance coverage beginning on October 26, 2004. During the initial period under the Plan, which lasts 24 months, "The Employee is considered Disabled if, solely because of Injury or Sickness, he or she is: (1) unable to perform the material duties of his or her Regular Occupation; and (2)unable to earn 80% or more of his or her Indexed Earnings from working in his or her Regular Occupation." (AR LINA at 210, emphasis added).

Plaintiff underwent an anterior cervical fusion on December 2, 2004. Following the surgery and the estimated recovery period, in June 2005, LINA medical director, Dr. Scott Taylor reviewed Plaintiff's claim and determined that the initial period of long term disability should continue, as the medical records from Plaintiff's treating physicians and x-rays indicated that Plaintiff had not completely healed from the surgery. Accordingly, Plaintiff continued to receive long term disability benefits. See AR LINA at 71-2.

Plaintiff's claim was reviewed again in December 2005 by Ann Conaway, RN. Ms. Conway found that Plaintiff's condition had improved, based on an updated x-ray which showed healing of the surgical fusion, and a note from a nurse practitioner in Dr. Maxwell's office, who reported that Plaintiff's fusion was progressing slowly and that Plaintiff had reported some post-surgical improvements in his condition. Accordingly, Conaway concluded that the "available medical evidence did not support permanent functional impairment." See Def. Local Rule 56.1 Statement at ¶27.

Conaway made this determination, however, after reviewing evidence from Dr. Maxwell, opining that Plaintiff was permanently disabled due to neck and back pain that worsened with physical activity. See AR LINA 282. Dr. Maxwell also stated that Plaintiff was unable to devote more than an hour to any activity and that his pain was so severe that he could not work. Dr. Maxwell attributed the pain to post-surgical nerve scarring, but further surgery was not an option. Dr. Maxwell also noted the worsening of Plaintiff's carpal tunnel syndrome. At that time, Conaway noted that Plaintiff's pain medications included flexeril and sulindac. He was also taking medication for allergies, hypertension and depression. Physical therapy was discontinued because it aggravated Plaintiff's pain. See AR LINA at 49.

Thereafter, LINA arranged for Plaintiff to complete a Functional Capacity Assessment ("FCE") in January 2006. Daniela Morone, a physical therapist from Greater Rochester Physical Therapy, completed the FCE over a two day period. See AR LINA 445- 454. She stated that Plaintiff was cooperative during the FCE and "was willing to work to his maximum abilities." Id. at 452.

Morone found that Plaintiff was capable of performing sedentary level work, which requires the ability to "exert up to 10 pounds of force occasionally and/or a negligible amount of force frequently...[and] involves sitting most of the time, but may involve walking or standing for brief periods of time." See AR LINA 453. Morone stated that Plaintiff needed to restrict overhead lifting and forward bending, could only sit or stand for 34-66% of the work day each, and had significant deficits in cervical and lumbar range of motion, step ladder climbing and crawling. Morone also noted that during the exam, Plaintiff was limited to sitting for about 20 minutes during the physical exam and 20 minutes during the sitting portion of the exam. Plaintiff's ability to complete the tasks lessened towards the end of the exam and he needed to take stronger pain medication (gabapentin) after the first day and before the second day of the exam.

Plaintiff's claim was then reviewed by Ginny Schmidt, a vocational rehabilitation counselor at LINA. See AR LINA at 44. Schmidt, without examining the Plaintiff and reviewing only the FCE, determined that Plaintiff could carry up to 20 pounds; frequently sit and stand, continuously walk and reach below the waist; engage in fine manipulation and simple grasping; occasionally grasp approximately 95 pounds, push 70 pounds and pull 107 pounds; climb stairs continuously and ladders frequently; continuously balance, kneel and crouch; and frequently stoop and crawl. Accordingly, she found that Plaintiff could perform sedentary work and ordered a Transferable Skills Analysis ("TSA"). The TSA, dated April 6, 2006, states that, given Plaintiff's skills, education, experience and physical limitations, he can perform the following four jobs: Maintenance Scheduler, Service Clerk, Repair-Order Clerk and Maintenance Dispatcher. See AR LINA at 429.

Based on the FCE and the TSA, LINA determined that Plaintiff was ineligible for continued long term disability benefits after the expiration of the initial 24 month period on October 26, 2006. After the 24 month period, disability under the Plan is defined as follows: "After Disability Benefits have been paid for 24 months, you are Disabled if Injury or Sickness makes you unable to perform the material duties of any occupation for which you may reasonably become qualified based on education, training, or experience or solely due to Injury or Sickness you are unable to earn 60% or more of your Indexed Covered Earnings." Accordingly, because LINA determined that the Plaintiff was able to perform sedentary work, he would no longer be disabled after the 24 month period when the definition of disability changed to the "any occupation" definition. On May 13, 2006, Plaintiff was sent a letter explaining LINA's determination and instructing the Plaintiff on his right to appeal the determination and to submit additional information.

With the assistance of counsel, Plaintiff appealed LINA's May 13, 2006. Then, on October 27, 2006, LINA upheld their determination based on the same evidence. Plaintiff was advised, however, that he could submit additional information in support of his claim. See AR LINA at 249-50. Plaintiff's attorney submitted a ...

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