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applying "modicum less deference" standard and noting that the Plaintiff "has advanced no evidence specifically indicating a conflict . . . has offered no evidence of [Defendant's] financial arrangements that would illuminate the nature of the alleged conflict"
Summary of this case from Marziale v. Hartford Life Accident Ins. Co.Opinion
Civil Action No. 01-0046 Section: "C" (4)
January 2, 2002
ORDER AND REASONS
This matter comes before the Court on a claim filed by Plaintiff, Luther J. Bowers, Jr. ("Bowers") against Defendant, Provident Life and Accident Insurance Co. ("Provident"), seeking recovery of long-term disability benefits under a group insurance policy provided by Provident through Bowers' former employer, Philip/SECO Industries, Inc. ("SECO"). Bowers also seeks penalties and attorney's fees. The parties submitted their case for decision on the written record and a joint stipulation. For the reasons that follow, the Court GRANTS Bowers' claim for recovery of benefits, DENIES his request for penalties, and GRANTS his request for prejudgment interest, attorneys' fees, and costs.
Defendant contends, and Plaintiff does not deny, that the caption erroneously refers to Provident as Unum Provident Corporation. See Rec. Doc. 16 at 1.
Facts
The record indicates that Bowers has suffered three heart attacks, resulting in bypass surgery in 1991, angioplasty in 1994, and another bypass surgery in 1999. See Rec. Doc. 15, Ex. C at PLACL00015-17, 29, 33. Bowers claims that his disability began on August 11, 1999 and continues to the present. See Rec. Doc. 15 at 4. Bowers filed his first claim with Provident on October 26, 1999, seeking long-term disability benefits due to his latest heart attack and bypass surgery. See id., Ex. C at PLACL00001-06. The claim included a statement by Bowers' attending physician, Dr. Stanley D. Bleich, that Bowers was continuously unable to work in his occupation as SECO's Chief Estimator due to coronary artery disease, unstable angina, and chest pain. See id. at 00006.
The policy provides long-term disability benefits of 60 percent of a covered employee's salary minus offsets such as social security payments after an elimination period of six months upon a finding that the insured is totally disabled. See id., Ex. B at PLALMS00063. In this case, Bowers earned $6, 466.98 per month before the disability-onset date and received $1, 486.00 per month in Social Security disability benefits, placing his monthly benefit amount at $2, 394.19. See id., Ex. C at PLACL00408-11, 458, Ex. B at PLAMS00055. To receive coverage, those insured must be, in pertinent part, "unable to perform all the material duties of their own occupation on a full-time or part-time basis because of an Injury or Sickness that started while insured under this Policy[.]" Id., Ex. A at PLAMS00114.
The elimination period is the time prior to benefits being payable during with the insured is continuously disabled. In this case, eligibility began February 11, 2000.
After Bowers applied for benefits, Provident began investigating the claim. In a letter dated November 17, 1999, Provident requested a job analysis from SECO. See id., Ex. C at PLACL00025. The analysis stated that Bowers' daily job requirements included standing 1-2 hours, walking 1-2 hours, sitting 6-8 hours, and driving 1.5 hours. See id. at PLACL00272-74. In addition, the job required Bowers to lift items weighing 30 pounds frequently and 70 pounds occasionally. See id. Bowers' job also necessitated that he occasionally spend 2-8 hours walking through refineries, chemical plants, offshore platforms, and drilling rigs. See Id. These visits required that Bowers climb ladders and stairways and work at heights up to 100 feet. See Id. Moreover, the on-site work exposed Bowers to heat, cold, noise, and fumes. See id.
Provident also requested Plaintiffs medical records. See id. at PLACL00024. Shirley Yeager, R.N., Provident's Clinical Review Specialist, reviewed the records and concluded that Bowers would be able to return to work December 19, 1999. See id. at PLACL00335-36. Yeager's report made no mention of Bowers' on-site work. Provident, however, did not send Bowers notification that it had denied his claim until February 4, 2000. See id. at PLACL00347-49.
Bowers appealed his claim by letter dated February 18, 2000 and purportedly received by Provident on March 7, 2000. See id. at PLACL00352-54. On March 15, 2000, Plaintiff submitted a letter from Dr. Bleich recommending that Bowers "be disabled on the basis of his cardiac pathology" and concluding that Bowers' return to work "would put him and potentially others at risk"; a letter from SECO Managing Director Bryan Landry asking Provident to reconsider its denial of the claim and noting that Bowers' job is stressful; and records from a February 2000 hospital visit Bowers claimed resulted after he fainted three times. See id. at PLACL00389-98. Bowers later submitted a June 10, 2000, Social Security Administration Notice of Award of Benefits. See Id. at PLACL00408-12.
The record reflects no action taken by Provident until May 12, 2000, more than two months after Bowers' appeal letter, when the company referred Bowers' case, as a medium priority, to its Claim Department medical consultant, Dr. Jeanie Woo, a board certified cardiologist. See Id. at PLACL00405. Not until June 29, 2000, did Dr. Woo conclude, based on the medical records she reviewed, that Bowers' condition did not preclude him from returning to his work. See id. at PLACL00413-15. According to Dr. Woo, it appeared that Bowers' latest surgery resulted in complete revascularization; although Bowers developed arrhythmias following that surgery, his then-current medications did not show he was being actively treated for arrhythmias, and office notes did not document continued arrhythmias; a September 1999 follow-up echocardiogram revealed that left ventricular (LV) ejection fraction and LV chamber size were normal; Bowers' October 8, 1999, stress test showed no ischemia up to a heart rate of 168 beats per minute; his prognosis appeared good; and it appeared he was receiving appropriate and optimal treatment. See id. Dr. Woo noted the stress of Bowers' job but did not mention his on-site job requirements.
At Provident, according to its Quality Review Appeals Medical Referral form, the time frame for High Priority referrals is five days or less and "require reason for priority and Director's sign off prior to referral," Medium Priority 15 to 30 days, and low priority 30-60 days. See id. at PLACL00405.
In a letter dated July 6, 2000, Provident notified Bowers it had denied his appeal. See id. at PLACL00417-20. The letter conceded that there was medical substantiation for cardiac diagnoses but concluded that no "objective" findings substantiated Dr. Bleich's indication that Bowers should not work at his job. See id.
On October 25, 2000, Bowers sued Provident in the 29th Judicial District Court, St. Charles Parish, State of Louisiana. See Rec. Doc. 1 at Pet. Provident removed January 5, 2001, see id. at Notice of Removal, and on September 20, 2001, the parties stipulated that the trial should be limited to the record evidence and that no new evidence would be received. See Rec. Doc. 13.
Analysis
It is undisputed that the policy under which Bowers seeks recovery is a qualified employee benefit plan ("plan") under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq. Provident both funds and administrates the plan. See Rec. Doc. 16 at 10. The theory of recovery asserted by Bowers and the basis of Provident's denial of that recovery rest upon whether Provident as the plan administrator abused its discretion in determining that Bowers was unable to perform all the material duties as Chief Estimator because of his heart problems. See Dowden v. Blue Cross Blue Shield of Tex., Inc., 126 F.3d 641, 643-44 (5th Cir. 1997).
As an initial matter, "[a] denial of ERISA benefits by a plan administrator is reviewed by the courts de novo unless the plan gives the plan administrator discretionary authority to determine the eligibility for benefits or to construe the terms of the plan." Id. (internal quotations omitted). "[B]ecause ERISA does not dictate the appropriate standard of review for evaluating benefit determinations of plan administrators, courts must first look to the plan terms to determine if the plan administrator has the discretionary authority to interpret the plan terms." Id. "The abuse of discretion standard is the appropriate standard of review to challenges to a plan administrator's interpretation of the plan terms when that plan grants the administrator the authority to make a final and conclusive determination of the claim." Id. at 643-44.
Here, the plan grants the plan administrator: "full, exclusive, and discretionary authority to control, manage, and administer claims, and to interpret and resolve all questions arising out of the administration, interpretation, and application of this Policy." See Rec. Doc. 15, Ex. A at PLAMS00097. Thus, because the plan grants the administrator full, exclusive, and discretionary decision-making authority, the abuse of discretion standard is the appropriate standard of review here.
When applying the abuse of discretion standard, it is necessary to analyze whether the plan administrator acted arbitrarily or capriciously. See Dowden, 126 F.3d at 644. "An arbitrary decision is one made without a rational connection between the known facts and the decision or between the found facts and the evidence." Id.
Before reaching the merits of Bowers' claim, the Court must address Bowers' assertion that, despite the abuse of discretion standard under which Provident's decision must be assayed, the Court's deference must be tempered by the conflict of interest under which Provident operates as both insurer and administrator. See Vega v. Nat. Life Ins. Services, Inc., 188 F.3d 287, 297 (5th Cir. 1999). Vega reaffirms the Fifth Circuit's sliding scale standard for assessing the effect of a conflict: "The greater the evidence of conflict on the part of the administrator, the less deferential our abuse of discretion standard will be." Id.
Here, Provident took more than three months to deny Bowers' initial claim and another four months to deny his appeal. Although such a dilatory process might very well result in savings, if only because it would induce some frustrated claimants to abandon their claims, Bowers has advanced no evidence specifically indicating a conflict. Bowers does assert that a conflict exists because denying claims saves Provident money. See Rec. Doc. 15 at 3. Bowers, however, has offered no evidence of Provident's financial arrangements that would illuminate the nature of the alleged conflict. See Duhon v. Texaco, Inc., 15 F.3d 1302, 1309 n. 6 (5th Cir. 1994). Accordingly, the conflict must be reviewed "with only a modicum less deference" on the sliding scale balancing against the default standard of deference. See Vega, 188 F.3d at 301.
As to the merits, the Court first takes up Bowers' assertion that the final denial was an abuse of discretion because it failed to accord proper weight to the letters of those intimately familiar with Bowers' medical condition and the stresses of his job, namely Dr. Bleich and Managing Director Landry. Bowers points out that Provident, on the other hand, examined firsthand neither Bowers nor the conditions of Bowers' job. It is not necessarily an abuse of discretion, however, simply for a plan administrator to give more weight to the conclusions of its own sources in determining coverage or lack thereof. See Sweatman v. Commercial Union Ins. Co., 39 F.3d 594, 602-03 (5th Cir. 1994). Nor does an administrator abuse its discretion by failing to make a reasonable investigation of a claim. See Vega, 188 F.3d at 298. The focus, rather, is whether the record "adequately supports the administrator's decision." Id. Accordingly, the familiarity of Dr. Bleich and Landry with Bowers and his job does not necessarily entitle their opinions to conclusive weight over those of Provident's personnel.
Nevertheless, the Court finds that Provident abused its discretion to deny benefits. The Court acknowledges Provident's evidence in support of its denial, including Dr. Woo's report indicating complete revascularization, a good prognosis, and appropriate and optimal treatment, as well as office notes failing to document continued arrhythmias. See Id., Ex. C at PLACL00413-15. The Court also recognizes the normal September 2, 1999, echocardiogram and an October 8, 1999, stress test as some proof that Bowers could work. See Rec. Doc. 15, Ex. C at PLACL00418. Nonetheless, just because Provident produced some basis for its conclusion does not mean that it did not abuse its discretion. First, in relying on the results of the physical tests, Provident fails to analyze them in their proper context — Bowers underwent these tests while off work and hence away from its highly stressful environment. Moreover, as Bowers notes, he produced numerous previous normal echocardiograms and treadmill test results from 1991 through 1999 and suffered three heart attacks nevertheless. See Rec. Doc. 15, Pl.'s Trial Mem. at 6-7. Provident fails to explain how, in light of these previous results preceding heart attacks, the more recent results would indicate different results.
Furthermore, Provident erroneously based its decision to deny benefits by examining solely whether he could perform his duties in the largely sedentary, though highly stressful environment, see id., Ex. C at PLACL00004, of Bowers' office work. As Bowers points out, the physical requirements of his on-site work are decidedly different. A Chief Estimator not only must travel to refineries, chemical plants, offshore platforms, and drilling rigs, but once there, must climb ladders and stairs as well as face exposure to heat, cold, fumes, and noise. See Id. at PLACL00274.
Provident argues that nothing in the record shows that Bowers cannot perform the important duties of his job. See Rec. Doc. 17 at 3. Provident apparently contends that the important duties of Bowers' job do not include his on-site work. Provident points to Bowers' own assertion of the five most essential factors required to perform his occupation: making adjustments/decisions, directing the activities of others, risk taking, tangible productivity, and a wide variety of tasks. See Rec. Doc. 16 at 4. Whether Bowers can perform the so-called "important" duties of his job is not the issue, however. The policy states, in pertinent part, that "Covered Persons . . . are unable to perform all the material duties of their own occupation on a full-time or part-time basis[.] . . . "Rec. Doc. 15, Ex. A at PLAMS00114 (emphasis added).
The Job Analysis submitted by Bowers' employer shows that the ability to work on-site is decidedly material. Bowers' work required, from time-to-time, that he visit refineries, chemical plants, offshore platforms, and drilling rigs. The record simply contains no showing that Bowers could perform this work with appropriate accommodations on- or off-site or that another could adequately replace him as required. Additionally, the occasional nature of Bowers' on-site work does not necessarily render it non-material. See Kinstler v. First Reliance Standard Life Ins. Co., 1997 U.S. Dist. LEXIS 10284, at 25-27, 27 n. 6 (S.D. N.Y. July 16, 1997), aff'd, 181 F.3d 243 (2d Cir. 1999) (responding to health crises as needed was material to job of Director of Nursing Services at a drug rehabilitation center under either de novo or arbitrary and capricious standard of review).
Provident further contends that no evidence indicates it disregarded Bowers' ability to perform the on-site tasks. The proper inquiry here, however, is whether evidence in the record supports denial of the claim. "Without some concrete evidence in the administrative record that supports the denial of the claim, we must find the administrator abused its discretion." Vega, 188 F.3d at 302. Here, although Provident may well have properly concluded that Bowers could work at his desk, no evidence supports a conclusion that Bowers could perform his duties in the field. Provident's denial of Bowers' appeal mentions in passing its conclusion that Bowers is able to satisfy these requirements. See Rec. Doc. 15, Ex. C at PLACL00418-20. Significantly, however, neither Provident's nurse nor doctor once considered the demands of Bowers' on-site duties. It might be one thing if Bowers' job permitted him to avoid facing the elements of field work. Nothing in the record, however, suggests that Bowers, as Chief Estimator, would be able to avoid such work or to escape its combined physical, mental, and atmospheric stresses.
The Court thus concludes that Provident abused its discretion. Accordingly, Bowers is entitled to the amount due on his claim and postjudgment interest in accordance with 28 U.S.C. § 1961(a).
Penalties, interest, and attorney's fees
Provident claims that Bowers' seeks penalties and attorney's fees under state law. The Court, however, reads Bowers' claim for these amounts as asserted only under ERISA.
Bowers seeks "penalties," interest, and attorney's fees as a result of Provident's arbitrary and capricious conduct. ERISA does not provide for punitive damages, however. See Medina v Anthem Life Ins. Co., 983 F.2d 29, 32-33 (5th Cir. 1993).
As indicated above, Bowers is entitled as a matter of course to postjudgment interest. Prejudgment interest, however, also is available under ERISA. See Hansen v. Cont'l Ins. Co., 940 F.2d 971, 984 n. 11 (5th Cir. 1991). The Fifth Circuit further indicated in Hansen that an "award of prejudgment interest under ERISA furthers the purposes of that statute by encouraging plan providers to settle disputes quickly and fairly, thereby avoiding the expense and difficulty of federal litigation." Id. This Court may therefore exercise its discretion to award prejudgment interest here. In so doing, the Court notes that Bowers has been denied access to funds owed him for a significant time. See Roig v. Ltd. Long Term Disability Program, 2000 U.S. Dist. LEXIS 11379, at 44 (E.D. La. Aug. 4, 2000). To compensate him for this loss and to encourage plan administrators to resolve disputes quickly and fairly without recourse to litigation, an award of prejudgment interest is appropriate. See id. at 44-45. ERISA is silent on prejudgment interest. See Hansen, 940 F.2d at 984. Therefore, the Court has discretion to select an equitable rate of interest and may look to state law for guidance. See id. Looking to Louisiana, the law of the situs of Bowers' employment, the Court finds that Bowers is entitled to prejudgment interest from February 11, 2000, at the rate set by La. Civ. Code art. 2924.
In addition, ERISA expressly permits a federal court, in its discretion, to award reasonable attorney's fees and costs. See 29 U.S.C. § 1132(g)(1). Nevertheless, there is no presumption under ERISA in favor of awarding attorney's fees and costs. See Todd v. AIG Life Ins. Co., 47 F.3d 1448, 1458-59 (5th Cir. 1995). To determine whether to award attorney's fees and costs to a party pursuant to ERISA, a court should consider the following factors:
1. The degree of the opposing party's culpability or bad faith;
2. The ability of the opposing party to satisfy an award of attorney's fees;
3. The deterrent effect of an award on other persons under similar circumstances;
4. Whether the party requesting fees sought to confer a common benefit on all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and
5. The relative merits of the parties' positions.
Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255, 1266 (5th Cir. 1980)). "No one of these factors is necessarily decisive, and some may not be apropos in a given case, but together they are the nuclei of concerns that a court should address in applying section 502(g)." Id. at 1266.
Here, the Court finds that Provident's dilatory processing of Bowers' claim amounts to bad faith. The policy provides that a claimant will receive a written decision on his claim "within a reasonable time" after Provident receives it. See Rec. Doc. 15, Ex. B at PLAMS00044. If that decision is not received within 90 days, the claimant may request immediate review. See id. If a claimant appeals an adverse decision, Provident states that it will notify him within 60 days of the receipt of such appeal, but within 120 days "if special circumstances require an extension." Id.
Here, Provident did not inform Bowers it had initially denied his claim until three months had elapsed, though, to be fair, it appears that hospital records Provident ordered were not sent until two months after they were requested. See Id. at PLACL00329, 383-84. The Court is, frankly, disturbed, however, that another four months passed from the receipt by Provident of Bowers' appeal to the denial of that appeal. During the latter period, the only additional evidence submitted to Provident, if the record is any indication, was a five-page hospital record, see id. at PLACL00389-93, a one-page letter from Dr. Bleich, see Id. at PLACL00400, a two-page letter from Landry, see id. at PLACL00402-03, a two-page report from Dr. Woo, see id. at PLACL00413-15, and the Social Security Administration benefits award letter, see id. at PLACL00408-11. It is hardly clear that the processing of such documentation constitutes special circumstances. Therefore, the Court finds that Provident exhibited bad faith such that this factor weighs in favor of an award of attorney's fees and costs. Accordingly, the third factor also favors such an award, which will no doubt deter Provident and other administrators from drawing out the claims process. Cf. Eddy v. Colonial Life Ins. Co. of Am., 59 F.3d 201, 208 (D.C. Cir. 1995) ("By awarding attorneys' fees, the courts make . . . delay . . . less likely, thereby encouraging earlier resolution of claims and the information-gathering to facilitate their resolution.").
As to the other factors; the Court grants that Bowers was not seeking to confer a common benefit on all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; nor did Bowers' position, though correct, lopsidedly outweigh that of Provident. Nevertheless, Provident does appear to be able to pay attorney's fees. Thus, based on the foregoing, an award of reasonable attorney's fees and costs is appropriate here.
CONCLUSION
For the foregoing reasons,
IT IS ORDERED that:
Provident shall pay to Bowers:
(1) long-term disability benefits of $2, 394.19 per month, retroactive to February 11, 2000, or as adjusted if Bowers' social security benefits have changed since initially awarded;
(2) continuing long-term disability benefits at the same rate or as adjusted by either party pursuant to the policy;
(3) pre-judgment interest on this amount in accordance with La. Civ. Code art. 2924 and post-judgment interest pursuant to 28 U.S.C. § 1961(a); and
(4) reasonable attorney's fees and costs. Bowers shall submit to the Court within 10 days of the date of this order a properly authenticated affidavit establishing the amount of attorney's fees and costs expended in this matter. The Court shall then determine the proper award using the "lodestar" method. See Todd, 47 F.3d at 1459.