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McDonnell v. First Unum Life Insurance Co.

United States District Court, Second Circuit

August 2, 2013

GAIL MCDONNELL, Plaintiff,
v.
FIRST UNUM LIFE INSURANCE CO., et al. Defendants.

OPINION & ORDER

ROBERT P. PATTERSON, Jr., District Judge.

On October 27, 2010, Plaintiff Gail McDonnell ("McDonnell") filed this action, arising under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C.A. § 1001, against Defendants Morgan Stanley & Company Incorporated Disability Plan[1] and First Unum Life Insurance Company ("First Unum"). (Compl. ¶ 1.) Plaintiff argues that Defendant First Unum improperly denied her application for long-term disability benefits; Plaintiff seeks to "recover benefits due under an employee benefit plan, to clarify the rights of plaintiff to future benefits under such plan, and to recover attorney fees and costs." (Id.)

On April 2, 2012, McDonnell and First Unum filed cross-motions for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure. On June 16, 2012, both parties timely filed their opposition papers. On July 6, 2012, both parties timely filed their reply papers. Oral argument was held on August 16, 2012. For the reasons stated below, the parties' cross-motions for summary judgment are denied.

I. Facts

From 1993 through 2007, McDonnell was employed as a Managing Director of Morgan Stanley & Company Incorporated ("Morgan Stanley"). (See Pl.'s Statement Pursuant to Local Rule 56.1 ("Pl.'s 56.1 Stmnt") ¶¶ 1, 5; First Unum's Local Civil Rule 56.1(b) Statement ("Def.'s 56.1 Resp.") ¶¶ 1, 5; Administrative Record[2] ("R.") 2, 62, 146-85, 1409.) McDonnell describes her job as "managing a global group of over 40 people in New York and London, which required frequent travel to London, frequent meetings with senior management regarding the performance of the group; and extensive travel to visit clients and to present Morgan [Stanley's] capabilities for asset-based financing solutions." (Pl.'s 56.1 Stmnt ¶ 6; R.899, 1409.)

As an employment benefit, Morgan Stanley provided McDonnell with long term disability insurance coverage under a group policy ("the Plan") issued by First Unum. (See Pl.'s 56.1 Stmnt ¶¶ 2, 3; Def.'s 56.1 Resp. ¶¶ 2, 3; R.146-85.) Under the heading "Mental Illness Limitation" ("MIL"), the Plan contains a provision that "[d]isabilities, [3] due to a sickness or injury, which are primarily due to a mental illness[4] have a limited pay period up to 24 months." (Pl.'s 56.1 Stmnt ¶ 201; Def.'s 56.1 Resp. ¶ 201; R.171.) The Plan grants First Unum full discretionary authority "to determine an employee's eligibility for benefits and to construe the terms of this policy." (Pl.'s 56.1 Stmnt ¶ 8; Def.'s 56.1 Resp. ¶ 8; R 155.)

Since the mid-1990s, McDonnell has experienced back pain; joint pain in the knees and hips; severe headaches; difficulty walking; and fatigue. (See Pl.'s 56.1 Stmnt ¶ 15; Def.'s 56.1 Resp. ¶ 15; R.305-15, 416-17, 1475.) She consulted with many doctors due to these symptoms. (See Pl.'s 56.1 Stmnt ¶ 15; Def.'s 56.1 Resp. ¶ 15; R.305-15, 416-17, 1475.) In 2006, McDonnell complained to one or more of her doctors that she was experiencing a progressive decline in her physical stamina and cognitive functioning. (See Pl.'s 56.1 Stmnt ¶ 16; Def.'s 56.1 Resp. ¶ 16; R.386.)

McDonnell informed one or more of her doctors that on or about January 29, 2007, while on a business trip to Las Vegas, she was hospitalized for two days due to sharp chest pains, heavy chest pressure, difficulty breathing, and extreme fatigue. (See Pl.'s 56.1 Stmnt ¶ 17; Def.'s 56.1 Resp. ¶ 17; R.386, 417, 586-622.) On January 31, 2007, McDonnell stopped working for Morgan Stanley. (See Pl.'s 56.1 Stmnt ¶ 18; Def.'s 56.1 Resp. ¶ 18; R.141, 215.) On February 6, 2007, McDonnell was hospitalized again due to continuing symptoms plus an inability to stand, which was accompanied by dizziness and confusion. (See Pl.'s 56.1 Stmnt ¶ 19; Def.'s 56.1 Resp. ¶ 19; R.386, 417.)

A. McDonnell's Benefits Claim Submission

On or about July 2008, McDonnell submitted an application for long-term disability ("LTD") benefits to First Unum.[5] (See Pl.'s 56.1 Stmnt ¶ 145; Def.'s 56.1 Resp. ¶ 145; R.133.) By letter dated August 18, 2008, First Unum notified McDonnell's counsel that her claim had been filed late, that the reasons she provided did not excuse the late filing, and that First Unum was therefore closing her claim. (First Unum's Rule 56.1 Statement ("Def.'s 56.1 Stmnt") ¶ 13; Pl.'s Response to Def.'s Rule 56.1 Statement ("Pl.'s 56.1 Resp.") ¶ 13; R.214-27.) Nevertheless, by letter dated January 6, 2009, First Unum notified McDonnell's counsel that while the claim remained closed, "we will be reviewing her medical records, once requested and received, to make a decision on her claim for benefits.'" (Def.'s 56.1 Stmnt ¶ 14; Pl.'s 56.1 Resp. ¶ 14; R.270-71.) First Unum then asked McDonnell to provide a list of the treatment providers she had seen since January 2007, along with the dates of service. (See Def.'s 56.1 Stmnt ¶ 15; Pl.'s 56.1 Resp. ¶ 15; R.270.)

On February 5, 2009, Leo Shea, Ph.D. ("Dr. Shea"), a neuropsychologist, completed a Neuropsychological Evaluation Report, which assessed McDonnell's cognitive function and her ability to meet the demands of her position at Morgan Stanley based on his July 8, 2008, July 28, 2008, and September 22, 2008 examinations of McDonnell. (See Pl.'s 56.1 Stmnt ¶ 149; Def.'s 56.1 Resp. ¶ 149; R.385-401.) Dr. Shea noted that while McDonnell's "clinical picture might be seen as one representing a Conversion Disorder or Somatization Disorder, her diagnosed Lyme disease represents a true organic disorder that has contributed to her multiple functional, emotional, and cognitive reductions.'" (Def.'s 56.1 Stmnt ¶ 42; Pl.'s 56.1 Resp. ¶ 42; R.396-97.) Dr. Shea concluded that McDonnell "does not have the mental stamina or consistent cognitive ability'" to meet the demands of her job at Morgan Stanley or "any work she might attempt'" for the foreseeable future. (Pl.'s 56.1 Stmnt ¶¶ 150-52; Def.'s 56.1 Resp. ¶¶ 150-52; R.397-98.)

In support of her application for LTD benefits, McDonnell submitted to First Unum, by letter dated February 19, 2009, Dr. Shea's neuropsychological evaluation, medical records and reports from her treating doctors and medical professionals, and a response to the Claimant's Supplemental Statement form provided by First Unum. (See Pl.'s 56.1 Stmnt ¶ 148; Def.'s 56.1 Resp. ¶ 148; R.283-759.) McDonnell also submitted an eleven-page list of 133 medical providers;[6] however, the list did not contain treatment dates.[7] (See Def.'s 56.1 Stmnt ¶ 15; Pl.'s 56.1 Resp. ¶ 15; R.270, 865-66.) On April 28, 2009, McDonnell provided a consolidated list of her nine "main doctors" that included treatment dates. (See Def.'s 56.1 Stmnt ¶ 27; Pl.'s 56.1 Resp. ¶ 27; R.865-66.)

In May 2009, McDonnell submitted a statement prepared by her attending physician, Dr. Alan Pollock ("Dr. Pollock"), who diagnosed her as suffering from Lyme Disease. (See Def.'s 56.1 Stmnt ¶ 16; Pl.'s 56.1 Resp. ¶ 16; R.1109-10.) Although Dr. Pollock stated that McDonnell had "no significant physical restrictions, " he also stated that she should sit, stand, and walk for no more than one hour each during a workday and concluded that she was unable to engage in "intellectual work, processing new material, recent memory, judgment[, or] verbal expression." (See Def.'s 56.1 Stmnt ¶ 16; Pl.'s 56.1 Resp. ¶ 16; R.1109-10.)

B. First Unum's Evaluation of McDonnell's Claim

i. Dr. Leverett's OSP Review and Follow-Up

In August 2009, First Unum asked Dr. Steven Leverett ("Dr. Leverett"), who is boardcertified in family medicine and one of First Unum's in-house medical consultants, to complete an on-site physician ("OSP") written review of McDonnell's claim. (See Pl.'s 56.1 Stmnt ¶ 155; Def.'s 56.1 Resp. ¶ 155; Def.'s 56.1 Stmnt ¶ 29; Pl.'s 56.1 Resp. ¶ 29; R.1374-75.) Dr. Leverett's OSP report is dated September 10, 2009.[8] (See Def.'s 56.1 Stmnt ¶ 29; Pl.'s 56.1 Resp. ¶ 29; R.1374-88.) After summarizing the medical evidence, [9] Dr. Leverett stated that although McDonnell reported symptoms consistent with Lyme disease, "there is no documentation of physical exam findings that would be consistent with Lyme disease....'" (Def.'s 56.1 Stmnt ¶¶ 33, 35; Pl.'s 56.1 Resp. ¶¶ 33, 35; Pl.'s 56.1 Stmnt ¶ 156; Def.'s 56.1 Resp. ¶ 156; R.1386, 1388.) Moreover, Dr. Leverett asserted that the Lyme disease blood tests administered to McDonnell "did not meet the [Center for Disease Control ("CDC")] threshold criteria[10] for a definitive diagnosis of Lyme disease, '" and thus he characterized the positive results of those Lyme disease blood tests as false positives. (Def.'s 56.1 Stmnt ¶¶ 35-36; Pl.'s 56.1 Resp. ¶¶ 35-36; Pl.'s 56.1 Stmnt ¶ 156; Def.'s 56.1 Resp. ¶ 156; R.1386, 1388.)

Dr. Leverett further noted that McDonnell had previously received courses of antibiotics that he contended "would be more than adequate treatment for Lyme disease." (Def.'s 56.1 Stmnt ¶ 39; Pl.'s 56.1 Resp. ¶ 39; R.1386.) Accordingly, although Dr. Leverett acknowledged that the physical symptoms McDonnell reported were consistent with Lyme disease, he concluded that a Lyme disease diagnosis was nevertheless unsupported by the medical evidence; thus, he concluded that McDonnell's symptoms were "more consistent with" a psychiatric cause, specifically Somatoform Disorder.[11] (See Pl.'s 56.1 Stmnt ¶¶ 160-62; Def.'s 56.1 Resp. ¶¶ 160-62; Def.'s 56.1 Stmnt ¶¶ 40, 44-45; Pl.'s 56.1 Resp. ¶¶ 40, 44-45; R.1386-88.)

On September 10, 2009, Dr. Leverett wrote to Dr. Pollock, who had submitted the Attending Physician's Statement diagnosing McDonnell with Lyme disease. (See Def.'s 56.1 Stmnt ¶¶ 16, 46; Pl.'s 56.1 Resp. ¶¶ 16, 46, 44-45; R.1109-10, 1394-95.) After explaining why he believed that "McDonnell's clinical presentation is more consistent with a Somatoform Disorder, rather than sequelae of her chronic Lyme disease, " Dr. Leverett asked Dr. Pollock two questions: "Do you agree with my analysis...? If no, what is the clinical rationale that supports your opinion?" (Def.'s 56.1 Stmnt ¶ 46; Pl.'s 56.1 Resp. ¶ 46, 44-45; R.1394-95.)

Dr. Pollock did not respond by November 3, 2009, at which point Dr. Leverett recommended that a designated medical officer ("DMO") review the file to resolve the disagreement on McDonnell's diagnosis. (See Pl.'s 56.1 Stmnt ¶ 186; Def.'s 56.1 Resp. ¶ 186; Def.'s 56.1 Stmnt ¶ 47; Pl.'s 56.1 Resp. ¶ 47; R.1472.) Dr. Gary P. Greenhood ("Dr. Greenhood"), an internal medicine and infectious diseases specialist, completed the DMO review on November 9, 2009, and concluded that he concurred with Dr. Leverett.[12] (See Pl.'s 56.1 Stmnt ¶ 188; Def.'s 56.1 Resp. ¶ 188; R.1479.) Dr. Greenhood stated that McDonnell's blood testing did not support a diagnosis of Lyme disease and that "[n]o other cause of a physically based illness... is supported.'" (Def.'s 56.1 Stmnt ¶¶ 61, 65; Pl.'s 56.1 Resp. ¶¶ 61, 65; R.1479.)

ii. Dr. Black's OSP Review and Follow-Up

In September 2009, First Unum requested a second OSP written review of McDonnell's claim file. (See Pl.'s 56.1 Stmnt ¶ 170; Def.'s 56.1 Resp. ¶ 170; R.1398-1400.) In his OSP review, [13] dated September 23, 2009, F. William Black, Ph.D. ("Dr. Black"), [14] a neuropsychologist and in-house medical consultant for First Unum, also concluded that McDonnell's diagnosis of Lyme disease "is not supported by the medical evidence.'"[15] (Pl.'s 56.1 Stmnt ¶ 173; Def.'s 56.1 Resp. ¶ 173; R.1403-04.) Accordingly, Dr. Black dismissed Dr. Shea's neuropsychological findings, which were based on a Lyme disease diagnosis, and instead concluded that that McDonnell's cognitive problems - which he acknowledged were supported by her test data - were the result of a "primary behavioral condition, " not "an organic etiology." (Pl.'s 56.1 Stmnt ¶¶ 173-75; Def.'s 56.1 Resp. ¶¶ 173-75; Def.'s 56.1 Stmnt ¶¶ 49-50; Pl.'s 56.1 Resp. ¶¶ 49-50; R.1403-04.)

On October 5, 2009, Dr. Black requested clarification from Dr. Shea concerning "what clinical indications or medical information you have seen that would support a diagnosis of chronic Lyme disease, resulting in cognitive dysfunction.'" (Pl.'s 56.1 Stmnt ¶ 178; Def.'s 56.1 Resp. ¶ 178; R.1425-26.) Dr. Shea responded by stating that whether or not McDonnell suffers from Lyme disease "is a determination made by an M.D. not a Ph.D. - it is in my report because that is the medical DX she was given[.]'" (Pl.'s 56.1 Stmnt ¶ 179; Def.'s 56.1 Resp. ¶ 179; R.1431-32.) Dr. Black did not follow up by contacting any of the other physicians who diagnosed McDonnell with Lyme disease. (See Pl.'s 56.1 Stmnt ¶ 180; Def.'s 56.1 Resp. ¶ 180.) On October 13, 2009, Dr. Black stated that "[a]s a difference of opinion [exists]... between the conclusions[] of Dr. Shea and [Dr. Black], a DMO Review is necessary[]y to resolve this difference.'" (Pl.'s 56.1 Stmnt ¶ 181; Def.'s 56.1 Resp. ¶ 181; R.1435.)

On October 13, 2009, First Unum asked psychologist D. Malcolm Spica, Ph.D. ("Dr. Spica"), an in-house medical consultant, to complete a DMO written review of McDonnell's case file.[16] (See Pl.'s 56.1 Stmnt ¶ 182; Def.'s 56.1 Resp. ¶ 182; R.1437-39.) In his DMO review, dated October 16, 2009, Dr. Spica concluded that he concurred with Dr. Black's opinion. (See Def.'s 56.1 Stmnt ¶ 59; Pl.'s 56.1 Stmnt ¶ 59; R.1442-43.) Dr. Spica disagreed with Dr. Black and found that McDonnell was not cognitively impaired, and that "[t]he mild variability in the claimant's performance is most reasonably attributed to her detected behavioral health issues, " not a physical cause. (Pl.'s 56.1 Stmnt ¶ 183; Def.'s 56.1 Resp. ¶ 183; R.1441-43.)

C. First Unum's Benefits Decision

By letter dated November 11, 2009, Elizabeth Cleale ("Cleale"), a Senior Disability Benefits Specialist for First Unum, informed counsel for McDonnell that First Unum had approved benefits of $459, 600, which covered only the twenty-four month period of July 31, 2007 through July 30, 2009. (See Pl.'s 56.1 Stmnt ¶ 199; Def.'s 56.1 Resp. ¶ 199; Def.'s 56.1 Stmnt ¶¶ 66-67; Pl.'s 56.1 Resp. ¶¶ 66-67; R.1482-89.) This was the maximum benefit allowable under the Plan's MIL for a disability resulting from a mental illness. (See Def.'s 56.1 Stmnt ¶ 66; Pl.'s 56.1 Resp. ¶ 66; R.1482-89.) In explaining the decision to apply the MIL to McDonnell's claim, Cleale's November 11, 2009 letter summarized the medical evidence that First Unum had gathered and the evaluations of its reviewing doctors.[17] (See Def.'s 56.1 Stmnt ¶ 68; Pl.'s 56.1 Resp. ¶ 68; R.1482-89.)

D. McDonnell's Administrative Appeal

By letter dated August 6, 2010, McDonnell timely appealed First Unum's "wrongful discontinuation of her benefits under the MIL, " and submitted additional medical evidence in support of her claim. (See Pl.'s 56.1 Stmnt ¶¶ 216-17; Def.'s 56.1 Resp. ¶¶ 216-17; R.1551-1727.) This additional medical evidence included a functional capacity evaluation (FCE) report by Ellen Rader Smith ("Rader Smith"); a neuropsychological reevaluation conducted by Dr. Shea; and updated medical records, "including the residual functional capacity questionnaires from five of McDonnell's treating doctors and medical professionals, " each of whom opined that she was disabled from any occupation. (Pl.'s 56.1 Stmnt ¶ 217; Def.'s 56.1 Resp. ¶ 217; R.1558-1727.)

i. Rader Smith's FCE Report

On April 14, 2010, Rader Smith performed a FCE of McDonnell. (See Pl.'s 56.1 Stmnt ¶ 218; Def.'s 56.1 Resp. ¶ 218; R.1573-86.) In her report, dated May 4, 2010, Rader Smith concluded that "McDonnell... cannot resume work in a corporate environment as she cannot remain in one seated, standing or alternate posture without the onset of distracting pain that limits her physical and intellectual thinking abilities, concentration, memory, and ability to remain task focused." (Pl.'s 56.1 Stmnt ¶ 219; Def.'s 56.1 Resp. ¶ 219; R.1583.)

ii. Dr. Shea's Reevaluation

On July 30, 2010, Dr. Shea completed a Neuropsychological Re-Evaluation Report based on his May 25, 2010, June 1, 2010, and June 5, 2010 evaluations of McDonnell. (See Pl.'s 56.1 Stmnt ¶ 221; Def.'s 56.1 Resp. ¶ 221; R.1558-70.) In his report, Dr. Shea ruled out the possibility that McDonnell suffered from Cognitive Disorder, Conversion Disorder, Somatization Disorder, or Undifferentiated Somatoform Disorder "given the multiple confirmations of her medical diagnosis for [tick]-borne illnesses.'" (Pl.'s 56.1 Stmnt ¶¶ 223-24; Def.'s 56.1 Resp. ¶¶ 223-24; R.1560-61, 1566.) Dr. Shea also observed that his re-evaluation of McDonnell revealed a decline in cognitive and adaptive functioning since he first examined her in 2008. (See Pl.'s 56.1 Stmnt ¶¶ 225-26; Def.'s 56.1 Resp. ¶¶ 225-26; R.1560-67.) Dr. Shea's report concludes that "because of the deficits exhibited on this evaluation, [McDonnell] is incapable of holding a full-time (or even part-time) position of a competitive and complex nature. For all practical purposes, given her diagnosed medical condition, its sequelae and her performance on present testing she is fully disabled." (Pl.'s 56.1 Stmnt ¶ 222; Def.'s 56.1 Resp. ¶ 222; R.1567.)

iii. Questionnaires from Treating Doctors and Medical Professionals

Five of McDonnell's treating doctors and medical professionals filled out residual functional capacity questionnaires in which they indicated that McDonnell was disabled from performing her job at Morgan Stanley or any other occupation.[18] (See Pl.'s 56.1 Stmnt ¶¶ 229-243; Def.'s 56.1 Resp. ¶¶ 229-243; R.1587-92, 1608-13, 1617-28, 1633-38.)[19]

E. First Unum's Review of McDonnell's Appeal

As part of its evaluation of McDonnell's administrative appeal, First Unum ordered two additional medical reviews of McDonnell's claim file. (See Pl.'s 56.1 Stmnt ¶¶ 248, 266-68; Def.'s 56.1 Resp. ¶¶ 248, 266-68; R.1769-70, 1775-80.) In his OSP written review, dated September 14, 2010, Dr. Costas Lambrew ("Dr. Lambrew") concluded that McDonnell's "diagnosis of Lyme disease has not been established, '" (Pl.'s 56.1 Stmnt ¶ 249; Def.'s 56.1 Resp. ¶ 249; R.1772), "by CDC criteria as accepted by the New York state [ sic ] Department of Health, nor have there been clinical manifestations, or complications of Lyme disease, " (R.1772.)[20] Dr. Lambrew also ruled out McDonnell's alternative diagnoses of Babesiosis and Chronic Fatigue Syndrome ("CFS"), noting that although McDonnell "meets some of the criteria'" for CFS, her testing did not support such a diagnosis. (Pl.'s 56.1 Stmnt ¶¶ 255, 257-58; Def.'s 56.1 Resp. ¶¶ 255, 257-58; R.1771-72.) Dr. Lambrew deferred "evaluation of cognitive function... to a Neuropsychologist.'" (Pl.'s 56.1 Stmnt ¶ 262; Def.'s 56.1 Resp. ¶ 262; R.1770.)

On September 22, 2010, Daniel Benincasa, Psy.D. ("Dr. Benincasa"), who is boardcertified in Forensic Psychology-Neuropsychology, completed a written review of McDonnell's claim file[21] in which he concluded that he agreed with the opinions of First Unum's OSP psychologists Dr. Black and Dr. Spica that McDonnell's "primary condition is behavioral and psychiatric in the form of Conversion and Somatoform Disorders."[22] (Pl.'s 56.1 Stmnt ¶¶ 268, 270; Def.'s 56.1 Resp. ¶¶ 268, 270; Def.'s 56.1 Stmnt ¶ 89; Pl.'s 56.1 Resp. ¶ 89; R.1775-80.) Dr. Benincasa further stated that Dr. Shea, McDonnell's neuropsychologist, "mistakenly believes that the claimant has Lyme disease... [but] he does not have the benefit of all the medical data on hand and the professional medical reviews completed.'" (Def.'s 56.1 Stmnt ¶ 90; Pl.'s 56.1 Resp. ¶ 90; R.1779.)

By letter dated October 1, 2010, Denise Laverriere ("Laverriere"), First Unum's Lead Appeals Specialist, informed McDonnell of First Unum's determination to uphold its determination on administrative appeal and thus apply the MIL to McDonnell's benefits claim. (Pl.'s 56.1 Stmnt ¶ 281; Def.'s 56.1 Resp. ¶ 281; R.1785-92.) In reaching this determination, First Unum relied on the OSP written review by Dr. Lambrew, the written review by Dr. Benincasa, and the other evidence in the administrative record. (Pl.'s 56.1 Stmnt ¶ 282; Def.'s 56.1 Resp. ¶ 282; R.1785-92.) Laverriere testified that when the medical review on appeal is the same as the DMO review at the claims level, "that essentially ends the inquiry." (Def.'s 56.1 Resp. ¶ 294; see also Pl.'s 56.1 Stmnt ¶ 294.)

II. Appropriate Standard of Review

This action concerning the denial of disability benefits is governed by ERISA, 29 U.S.C.A. § 1001, but "ERISA does not set out the applicable standard of review for actions challenging benefit eligibility determinations." Fay v. Oxford Health Plan , 287 F.3d 96, 103 (2d Cir. 2002) (internal quotations and citations omitted). The Supreme Court has held that an insurer's "denial of benefits challenged under [ERISA] is to be reviewed under a de novo standard unless" the benefit plan provides the plan's administrator or fiduciary with "discretionary authority to determine eligibility for benefits or to construe the terms of the plan" (hereinafter, "discretionary authority"). Id. at 104 (quoting Firestone Tire and Rubber Co. v. Bruch , 489 U.S. 101, 115 (1989)).

In situations where the benefits plan gives the plan administrator or fiduciary such discretionary authority, courts "will not disturb the administrator's ultimate conclusion unless it is arbitrary and capricious." Pagan v. NYNEX Pension Plan , 52 F.3d 438, 441 (2d Cir. 1995). In contrast, if Plaintiff's benefits determination was made by an unauthorized party who lacked such discretionary authority or improperly exercised it, the Court will review the unauthorized party's benefits determination under a de novo standard of review. Sharkey v. Ultramar Energy Ltd., Lasmo plc, Lasmo (AUL Ltd.) , 70 F.3d 226, 229 (2d Cir. 1995).

The plan administrator bears the burden of proving that the deferential standard of review applies. Id . (citing Kinstler v. First Reliance Standard Life Ins. Co. , 181 F.3d 243, 249 (2d Cir. 1999)). Although express use of the terms "deference" and "discretion" in the plan is not necessary to avoid a de novo standard of review, courts construe ambiguities in the plan's language against the insurer. Id . (citing Kinstler , 181 F.3d at 251-52).

Here, both parties agree that the benefit plan issued by First Unum to Morgan Stanley explicitly granted discretionary authority only to First Unum. (Pl.'s 56.1 Stmnt ¶ 8; Def.'s 56.1 Stmnt ¶ 2). The parties also agree that Cleale and Laverriere, the individuals who made and upheld the decision to apply the MIL to McDonnell's long-term benefits claim, were employees of Unum Group, [23] not First Unum. (Pl.'s 56.1 Stmnt ¶ 12; Def.'s 56.1 Resp. ¶ 12.) The parties disagree, however, about whether or not Cleale and Laverriere (the "Unum Group employees") properly exercised discretionary authority under the Plan to make this benefits determination, and therefore the parties disagree about which standard of review - de novo or arbitrary and capricious - the Court should apply here.

McDonnell argues that the Unum Group employees were not granted discretionary authority of their own under the Plan, and that First Unum did not properly delegate its discretionary authority to the Unum Group employees either. (Pl.'s 56.1 Stmnt ¶¶ 9-12; Pl.'s Mem. of Law in Supp. of Summ. J. ("Pl.'s Mem.") at 3). Accordingly, McDonnell asserts that the Court should review the Unum Group employees' benefits decision de novo. (Pl.'s Mem. at 3); see Muller v. First Unum Life Ins. , 341 F.3d 119, 123-24 (2d Cir. 2003) (quoting Firestone , 489 U.S. at 115 (holding that where the person who made benefits decisions does not have discretionary authority, the court applies a de novo review).

First Unum, however, argues that the Unum Group employees were acting as agents of First Unum, and therefore no delegation of discretionary authority was necessary. (Def.'s 56.1 Resp. ¶ 12; First Unum's Br. in Opp. of Pl.'s Summ. J. Mot. ("Def.'s Opp.") at 11.) By First Unum's logic, the Unum Group employees stood in the place of First Unum and therefore properly exercised First Unum's discretionary authority to make benefits decisions. (Def.'s Resp. Pl.'s 56.1 Stmnt ¶ 12; Def.'s Opp. at 11.) In the alternative, First Unum argues that even if the Court were to find that the Unum Group employees did not act as First Unum's agents, First Unum nevertheless properly delegated its discretionary authority to Unum Group. (See Def.'s Opp. at 5.) Accordingly, First Unum argues that the Court should review the denial of benefits to the McDonnell under the arbitrary and capricious standard of review. See Pagan , 52 F.3d at 441 (ruling that the arbitrary and capricious standard of review is used where a fiduciary is acting within its discretionary authority).

For the reasons stated below, the Unum Group employees were not acting as First Unum's agents and First Unum did not properly delegate its discretionary authority to Unum Group. Accordingly, the denial of benefits to McDonnell is reviewed under the de novo standard of review.

A. The Unum Group Employees as Agents of First Unum

In support of its argument that the Unum Group employees who made McDonnell's benefits denial were acting as agents of First Unum and thus properly within its discretionary authority, (Def.'s Opp. at 10), First Unum relies on two well-established principles of state contract law: (1) a corporation can only act through its agents, see Braswell v. United States , 487 U.S. 99, 110 (1988), and (2) a corporation's agents need not be employees of the corporation, see Sullivan v. LTV Aerospace and Defense Co. , 82 F.3d 1251, 1255 (holding that outside directors of a corporation, who were not employees, were ERISA fiduciaries). Accordingly, First Unum argues that it could only act through agents to render a decision on McDonnell's application for benefits, and that it engaged the Unum Group employees for this purpose. (See Pl.'s 56.1 Stmnt ¶ 8; Def.'s 56.1 Stmnt ¶ 2). Therefore, First Unum contends that because it had discretionary authority ...


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