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Donlick v. Standard Insurance Co.

United States District Court, N.D. New York

May 2, 2017

STANDARD INSURANCE COMPANY, f/k/a StanCorp Financial Group, Inc., Defendant.

          OFFICE OF RONALD R. BENJAMIN RONALD R. BENJAMIN, ESQ. Attorneys for Plaintiff



          Frederick J. Scullin Jr. Senior United States District Judge


         Plaintiff filed this action on or around May 5, 2016, in New York Supreme Court, County of Broome, by summons and complaint, seeking to have Defendant's disability determination reviewed pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"). See 29 U.S.C. § 1132(a)(1)(b). Defendant removed the action to this Court. See Dkt. No. 1. Pending before the Court are the parties' cross-motions for summary judgment, see Dkt. Nos. 21, 24, and Plaintiff's motion to submit evidence outside the administrative record, see Dkt. No. 24.


         Defendant Standard Insurance Company administered an employee benefit plan ("the Plan"), which provided long term disability ("LTD") benefits. Defendant was "delegated the full and exclusive authority to control and manage the Plan, to administer claims, and interpret Plan provisions, including the right to determine entitlement to benefits." See Dkt. No. 21-2 at ¶ 1.

         Plaintiff Marybeth Donlick formerly worked as a truck driver for Chesapeake Energy Corporation. See id. at ¶ 9. On August, 7, 2012, she was injured in a motorcycle accident that resulted in an amputation below her right knee, left ankle fracture, and back wounds. See id. at ¶ 10. Plaintiff applied for LTD benefits in December 2012 after sustaining these injuries. See Id. at ¶ 22.

         Initially, Plaintiff bore the burden of proving that she had an injury that rendered her unable to perform the "Material Duties" of her "Own Occupation." See Id. at ¶ 6. The Plan defines "Material Duties" as "the essential tasks, functions and operations, and the skills, abilities, knowledge, training and experience, generally required by employers from those engaged in a particular occupation that cannot be reasonably modified or omitted." See id. at ¶ 8. Further, the Plan defines "Own Occupation" as "any employment, business, trade, profession, calling or vocation that involves Material Duties of the same general character as the occupation you are regularly performing for your Employer when Disability begins." See Administrative Record ("AR") at 831.

         On January 16, 2013, Defendant approved Plaintiff's claims for LTD benefits and began paying her $779.80 per month as of March 4, 2013. See Dkt. No. 21-2 at ¶ 27. The benefit approval letter explained that Defendant would periodically confirm Plaintiff's continued disability and eligibility for benefits and advised her that it was her responsibility to provide updated medical information. See Id. at ¶ 28. Importantly, it also explained the policy's definition of disability would change from the "own occupation" to the "any occupation" standard, which would require a review of her claim. See Id. at ¶ 29. In total, Defendant paid Plaintiff more than $20, 000 in LTD benefits.

         After paying LTD benefits for 24 months, Defendant reevaluated Plaintiff's claim under the "any occupation" standard. See id. at ¶ 47. Under the Plan, "Any Occupation" means

any occupation or employment which you are able to perform, whether due to education, training, or experience which is available at one or more locations in the national economy and in which you can be expected to earn at least 60% of your Indexed Predisability Earnings within twelve months following your return to work, regardless of whether you are working in that or any other occupation.

See AR at 831.

         To determine whether Plaintiff was disabled under the "any occupation" standard, Defendant ordered a medical records review from an orthopedic physician and consulted a vocational expert. Ultimately, Defendant determined that Plaintiff's LTD benefits would terminate because she did not satisfy the "Any Occupation" definition of disability. See id. at ¶ 72. Plaintiff appealed Defendant's decision and submitted a one-page letter and a report from a vocational expert opining that she was unemployable in any occupation. See id. at ¶ 82.

         On appeal, Defendant re-evaluated Plaintiff's file and consulted an additional orthopedic specialist as well as an additional vocational expert. The vocational expert considered the report Plaintiff provided but disagreed with its conclusions and identified other positions that Plaintiff could perform. See Id. at ¶ 90. Thereafter, on March 15, 2016, Defendant sent a letter informing Plaintiff that it was upholding its determination that she no longer qualified for benefits. See Id. at ¶ 92. Plaintiff then filed this action.


         A. Standard of review

         A court must grant summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The movant for summary judgment "always bears the initial responsibility of informing the district court of the basis for its motion" and identifying which materials "demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A fact is "material" if it "might affect the outcome of the suit under the governing law" and is genuinely in dispute "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). If the movant meets this burden, the nonmoving party must "'"set forth specific facts showing a genuine issue for trial."'" Id. (quotation omitted).

         The parties agree that "[s]ummary judgment provides an appropriate mechanism for a court to consider a challenge to the termination of disability benefits under ERISA." Alfano v. CIGNA Life Ins. Co. of N.Y., No. 07 Civ. 9661, 2009 WL 222351, *12 (S.D.N.Y. Jan. 30, 2009) (citations omitted). "In such an action 'the contours guiding the court's disposition of the summary judgment motion are necessarily shaped through the application of the substantive law of ERISA.'" Id. (quoting Ludwig v. NYNEX Service Co., 838 F.Supp. 769, 780 (S.D.N.Y. 1993)). In that regard, the parties disagree on the standard governing this Court's review of Defendant's disability benefits decision under ERISA.

         The Supreme Court first articulated the standard governing a court's review of an administrator's interpretation of an ERISA benefit plan in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). In Firestone, the Court explained that "a denial of benefits . . . is to be reviewed under a de novo standard unless the benefit plan gives the administrator . . . authority to determine eligibility for benefits or to construe the terms of the plan." Id. at 115. "Where such authority is given, the administrator's interpretation is reviewed for an abuse of discretion." McCauley v. First Unum Life Ins. Co., 551 F.3d 126, 130 (2d Cir. 2008) (citing [Firestone, 489 U.S.] at 115, 109 S.Ct. 948). Here, there is no dispute that Defendant has the exclusive authority to determine eligibility and to construe the terms of the Plan. See Dkt. No. 21-2, Def.'s Statement of Mat. Facts, at ¶ 1; Dkt. No. 24-1, Pl.'s Counter Statement of Mat. Facts, at ¶ 1.

         Nevertheless, Plaintiff asserts that Defendant's conflict of interest requires the Court to conduct a de novo review. However, following the Supreme Court's decision in Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008), the Second Circuit made clear that "a plan under which an administrator both evaluates and pays benefits claims creates the kind of conflict of interest that courts must take into account and weigh as a factor in determining whether there was an abuse of discretion, but does not make de novo review appropriate." McCauley, 551 F.3d at 133 (citing Glenn, [554 U.S. at 111, ] 128 S.Ct. at 2348). "This is true even where the plaintiff shows that the conflict of interest affected the choice of a reasonable interpretation." Id. (citing Glenn, [554 U.S. at 111, ] 128 S.Ct. at 2348). Thus, rather than change this Court's standard of review, Defendant's conflict of interest is a factor that the Court must consider when reviewing Defendant's benefits decision.

         Plaintiff's arguments to the contrary are unpersuasive. First, Plaintiff's citation to Waksman is erroneous as that decision clearly acknowledged that a conflict of interest alone is insufficient to warrant de novo review. See Waksman v. IBM Separation Allowance Plan, 138 F.App'x 370, 371 (2d Cir. 2005) (summary order) (stating that "[t]he mere fact that the administrator is employed by a party that could suffer financially under the administrator's decision is not enough to lessen the deference due to the administrator" (citations omitted)).

         Furthermore, Plaintiff argues that Defendant failed to comply with DOL regulations in denying her claim. See Dkt. No. 24-8 at 7. Plaintiff contends that the regulations require a "meaningful dialogue between the plan administrator and their beneficiaries." See Dkt. No. 24-6 at 7. Plaintiff argues that she received a letter from Defendant's employee Shannon Teed that asked her to contact her, and she called back but never received a return call. See Id. Therefore, according to Plaintiff, Ms. Teed's failure to return her call violated 29 C.F.R. § 2560.503-1(f)(2)(iii)(B). This regulation provides that,

[i]n the case of a post-service claim, the plan administrator shall notify the claimant, in accordance with paragraph (g) of this section, of the plan's adverse benefit determination within a reasonable period of time, but not later than 30 days after receipt of the claim. This period may be extended one time by the plan for up to 15 days, provided that the plan administrator both determines that such an extension is necessary due to matters beyond the control of the plan and notifies the claimant, prior to the expiration of the initial 30-day period, of the circumstances requiring the extension of time and the date by which the plan expects to render a decision. If such an extension is necessary due to a failure of the claimant to submit the information necessary to decide the claim, the notice of extension shall specifically describe the required information, and the claimant shall be afforded at least 45 days from receipt of the notice within which to provide the specified information.

29 C.F.R. § 2560.503-1(f)(2)(iii)(B).

         The Second Circuit has held that "a plan's failure to comply with the Department of Labor's claims-procedure regulation, 29 C.F.R. § 2560.503-1, will result in that claim being reviewed de novo in federal court[.]" Halo v. Yale Health Plan, Dir. of Benefits & Records Yale Univ., 819 F.3d 42, 57-58 (2d Cir. 2016). However, as Defendant points out, the only regulation with which Plaintiff alleges Defendant failed to comply pertains to Group Health Plans, not disability benefits plans. Further, it is difficult to understand how Defendant's alleged failure to return Plaintiff's phone call violates this, or any other, regulation.[1]

         Moreover, Plaintiff argues that the Court should review Defendant's decision de novo because Defendant erred in assigning weight to the different types of records that it reviewed. See Dkt. No. 24-8 at 7 (citing Easter v. Cayuga Med. Ctr. at Ithaca Prepaid Health Plan, __ F.Supp.3d __, No. 514CV1403, 2016 WL 6820464 (N.D.N.Y. Nov. 15, 2016)). However, like Plaintiff's citation to Waksman, her citation to Easter provides no support for her overall contention. Rather, the court in Easter reviewed the plan's decision de novo because the plan administrator failed to comply with DOL regulations. See Easter v. Cayuga Med. Ctr. at Ithaca Prepaid Health Plan, No. 5:14-CV-1403, F.Supp.3d, 2016 WL 6820464, *17 (N.D.N.Y. Nov. 15, 2016).

         Finally, Plaintiff argues that Defendant, or the reviewing physicians, should have obtained additional medical reports regarding Plaintiff's difficulty fitting in a prosthesis and should have ordered an IME. See Dkt. No. 24-8 at 7-8. However, it was Plaintiff's responsibility to provide the relevant medical reports. Indeed, Plaintiff notes that "[a] combination of plaintiff's lack of communication skills and perhaps her counsel's failure to properly probe into the actual treatment resulted in none of the prosthetic records be (sic) made part of the administrative record." See id. at 8.

         Based on the foregoing, the Court concludes that de novo review is not appropriate in this case; and, therefore, the Court will review Defendant's decision under a deferential standard, meaning that this 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.'" McCauley, 551 F.3d at 132 (quoting Pagan [v. NYNEX Pension Plan], 52 F.3d [438, ] 442 [(2d Cir. 1995)]).

         B. Evidence outside ...

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