Opinion
01-CV-709S.
April 4, 2004
DECISION ORDER
I. INTRODUCTION
In this case, Plaintiff Karin E. Kaus-Rogers challenges Defendant Unum Life Insurance Company of America's decision to terminate payment of her long-term disability insurance benefits. Plaintiff brings this action pursuant to § 502 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132 (a)(1)(B).
Currently before this Court is Defendant's motion in limine to limit the evidence in this case to the materials contained in the administrative record.
II. BACKGROUND
A. Facts
The following facts are undisputed for purposes of the instant decision.
Plaintiff was born in 1953 and resides in North Tonawanda, New York. Defendant is an insurance company authorized to conduct business in New York. After graduating from high school, Plaintiff obtained an associate's degree in Interior Design from the Art Institute of Pittsburgh. Thereafter, she completed additional course work, passed a professional examination, and became a licensed interior designer. In 1982, Plaintiff began working as an interior/architectural designer at Kideney Architects ("Kideney").
In July of 1988, Plaintiff underwent surgery for removal of a tumor located on her cervical spine. At that time, Plaintiff was covered by a group long-term disability insurance benefit plan ("the Plan") issued by Defendant to Kideney. Plaintiff returned to work in October 1988 and continued working there until January of 1990.
In July of 1990, Plaintiff filed a claim for disability benefits under the Plan, claiming that she had been unable to work since January due to neck and head pain. Defendant approved the claim in November 1990 and began paying disability benefits to Plaintiff under the terms of the Plan.
Plaintiff began working on a part-time basis in November 1990 as an interior/architectural designer with Carmina Silvestri Architects. However, Plaintiff continued to experience severe neck pain and mild vertigo symptoms. During the summer of 1992, Plaintiff started working from her home. This arrangement allowed her to rest immediately upon the onset of pain. Plaintiff eventually stopped working altogether due to severe and frequent vertigo, which severely limited her ability to perform daily activities. In 1996, Plaintiff applied for and was awarded Social Security disability benefits.
Throughout this period, Defendant continued to pay disability benefits to Plaintiff under the Plan. In May of 1999, at Defendant's request, Plaintiff underwent a functional capacity evaluation ("FCE") and independent medical examination ("IME"). On May 28, 1999, Defendant sent a letter to Plaintiff. The letter stated that after reviewing the FCE and IME, Defendant had determined that Plaintiff was no longer "disabled," as that term is defined under the Plan. Defendant advised that it was terminating Plaintiff's benefits and suggested that she return to work on a part-time basis with a gradual increase in hours as tolerated. Defendant offered to provide three months of additional benefits to help Plaintiff during the transition period.
By letter dated July 19, 1999, Plaintiff filed an administrative appeal of Defendant's decision. In support of her appeal, Plaintiff submitted letters from her neurologist and primary care physician. Plaintiff argued that she was unable to work even on a part-time basis due to frequent vertigo episodes. Defendant issued a decision denying Plaintiff's appeal on December 22, 1999.
In May of 2000, Plaintiff requested further administrative review of the benefit termination decision based upon, inter alia, a new Magnetic Resonance Imaging ("MRI") report. The MRI, which was performed in February 2000, indicated that Plaintiff might have a tethered spinal cord, which was causing her to suffer from a condition known as "Lhermitte's phenomenon." On March 28, 2001, Defendant sent a letter to Plaintiff's counsel stating that it had completed its second appellate review with respect to Plaintiff's claim. Defendant advised that it was adhering to its prior determination that Plaintiff was no longer eligible for benefits under the Plan.
Lhermitte's phenomenon, also referred to as Lhermitte's "sign," is defined as: "[a] brief, stabbing, electric-shock-like sensation that runs from the back of the head down the spine, brought on by bending the neck forward." Diseases Conditions, Pain Multiple Sclerosis (Continued), at http://my.webmd.com/content/Article/82/97221.htm?pagenumber=2 (last visited March 22, 2004).
B. Procedural History
Plaintiff commenced this action on August 23, 2001, by filing a Summons and Complaint in New York State Supreme Court, Niagara County. Defendant removed the case to the United States District Court for the Western District of New York by filing a Notice of Removal on October 9, 2001.
On February 21, 2003, counsel for the parties appeared before the Honorable Richard J. Arcara, Chief Judge for the Western District of New York. At that conference, Defendant's counsel asked Judge Arcara for a ruling that the evidence in this case would be limited to the materials contained in the administrative record. Plaintiff opposed this request, arguing that there was good cause to admit evidence outside of the administrative record. Judge Arcara directed counsel to file submissions outlining their respective positions.
Plaintiff filed a memorandum of law in response to Judge Arcara's order. Defendant filed a reply memorandum of law.
Thereafter, this case was reassigned to this Court. After a status conference on April 28, 2003, the parties were directed to file supplemental submissions. On November 6, 2003, this Court requested further briefing with respect to certain issues. This Court deemed oral argument unnecessary and reserved decision on December 9, 2003.
Plaintiff filed a supplemental memorandum of law in compliance with this Court's order. Defendant filed a memorandum of law and the administrative record in response. Thereafter, Defendant filed a Statement of Supplemental Authority.
In response to that order, Plaintiff and Defendant filed supplemental memoranda of law.
III. DISCUSSION
A. Legal Standard
A participant or beneficiary of an employee benefit plan may commence an action under ERISA § 502(a)(1)(B), "to recover benefits due to him under the terms of the plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132 (a)(1)(B).
In an action commenced under ERISA § 502, the district court reviews the plan administrator's decision to deny or terminate benefits "under a de novo standard unless the benefit plan gives the administrator . . . discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Muller v. First Unum Life Ins. Co., 341 F.3d 119, 123-24 (2d Cir. 2003) (quoting Firestone Tire Rubber Co. v. Branch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989)).
Because there is no right to a jury trial under ERISA, the district court typically acts as the finder of fact and conducts a bench trial "on the papers." Muller, 341 F.3d at 124. The court's review of the plan administrator's decision is generally limited to the administrative record, i.e. "the record in front of the claims administrator." Id. at 125 (quoting DeFelice v. Am. Int'l Life Assurance Co. of N.Y., 112 F.3d 61, 66 (2d Cir. 1997)). However, the district court may, in its discretion, conclude that there is "good cause" to consider additional evidence. DeFelice, 112 F.3d at 67.
The plaintiff bears the burden with respect to the admission of additional evidence. Krizek v. Cigna Group Insurance, 345 F.3d 91, 98 (2d Cir. 2003). Specifically, the plaintiff must "allege facts, with sufficient specificity that would support the existence of `good cause' permitting the admission of additional evidence beyond the administrative record." Id. at 98 n. 2 (2d Cir. 2003) (collecting cases).
B. Analysis
In the present case, Plaintiff challenges Defendant's decision to terminate payment of her disability benefits. The parties agree that this Court will review the termination decision under a de novo standard because the Plan did not give the administrator discretionary authority. The question presently before this Court is whether that review should be limited to the administrative record. Specifically, this Court must decide whether Plaintiff has demonstrated good cause for the admission of additional evidence.
Plaintiff contends that this Court should consider evidence from outside of the administrative record for the following three reasons: (1) because the benefit termination notice provided to Plaintiff was defective, (2) because Defendant was operating under a conflict of interest when it terminated Plaintiff's benefits, and (3) because the administrative record is incomplete. This Court will address each argument in turn.
1. Defective Notice
When an ERISA plan administrator denies a claim for benefits, it must provide the beneficiary with notice of its decision.Camarda v. Pan Am. World Airways, Inc., 956 F. Supp. 299, 310 (E.D.N.Y. 1997). Under the applicable Department of Labor regulations, the plan administrator must provide the beneficiary with written notice that (a) states the specific reason for the denial, (b) references the plan provision or provisions on which the denial is based, (c) describes any additional information necessary to perfect the claim and explains why the additional information is necessary, and (d) provides appropriate information concerning the steps to be taken if the beneficiary wishes to challenge the denial of benefits. Id. (citing 29 C.F.R. § 2560.503-1).
In this case, Defendant sent Plaintiff a letter on May 28, 1999, stating that her benefits were being terminated. Plaintiff argues that there is good cause to admit evidence outside of the administrative record because that letter did not satisfy the notice requirements referenced above. For the following reasons, this Court finds Plaintiff's argument unavailing.
Courts faced with defective notice claims under ERISA have held that "precise compliance with the regulations is not necessary as long as the plan administrator has substantially complied with such regulations and has provided the beneficiary with sufficient information to appeal the denial." Camarda, 956 F. Supp. at 311 (collecting cases). The critical issue is not strict compliance, but whether the beneficiary was "apprised of why [his or her] benefits were being altered and what [he or she] could do to correct the deficiencies of [the] benefit claim." Id.
In the instant case, the May 1999 letter advised Plaintiff that Defendant had determined that she was no longer disabled. According to the letter, this decision was "[b]ased upon the independent medical examination and functional capacities evaluation" that Plaintiff had recently undergone. (Administrative Record, at p. 415). The letter referenced the Plan's definition of "disability" and explained that Plaintiff no longer met that definition because she had "the capacity to perform work at the light occupation level. . . ." Id. Further, the letter stated that Plaintiff could appeal the termination decision by sending a written request within sixty days. Id. at 416. Plaintiff was advised to submit any additional documentation or information along with that request. Id.
This Court finds that the May 1999 letter provided Plaintiff with sufficient information concerning the reasons underlying the denial of benefits and the methods by which she could appeal Defendant's decision. Indeed, the fact that Plaintiff twice sought review of Defendant's decision by submitting additional medical records demonstrates that the letter provided adequate notice. As such, this Court finds that any technical non-compliance with ERISA notice regulations is not actionable in this case and does not justify the admission of evidence outside of the administrative record.
2. Conflict of Interest
The Second Circuit has held that a "conflict of interest in the administrative reviewing body is an example of `good cause' warranting the introduction of additional evidence." DeFelice, 112 F.3d at 67. However, the law requires a " demonstrated conflict of interest,' . . . which places an affirmative burden on the plaintiff to establish that the plan administrator was sufficiently conflicted so as to expand the administrative record." Krizek, 345 F.3d at 97-98 (emphasis in original) (internal citation omitted).
In the instant case, there is no dispute that Defendant both determined eligibility for benefits under the Plan and then, if necessary, paid those benefits itself without reimbursement. Plaintiff argues that this "dual role" created a conflict of interest that per se constitutes good cause to admit evidence beyond the administrative record.
For purposes of the instant decision, this Court will assume that, by virtue of its dual role, Defendant was operating under a conflict of interest when it reviewed Plaintiff's claim. However, for the reasons set forth below, this Court finds that, in this particular case, that conflict does not constitute good cause sufficient to justify the admission of additional evidence.
The key case with respect to this issue is the Second Circuit's decision in DeFelice. Several district courts in this Circuit, relying on DeFelice, have concluded that a conflict of interest "constitutes good cause per se, and that the plaintiff does not have to show that the conflict of interest actually caused the record to be underdeveloped." Suozzo v. Bergreen, No. 00-Civ-9649, 2003 WL 22387083, at *4 (S.D.N.Y. Oct. 20, 2003) (collecting cases).
However, this Court finds those cases unpersuasive. The Second Circuit did not announce a per se rule in DeFelice. Rather, the appeals court held that under the de novo review standard, a district court may find good cause "to admit evidence not available at the administrative level if the administrator was not disinterested." DeFelice, 112 F.3d at 66 (emphasis added). The Second Circuit found that the admission of additional evidence was necessary in DeFelice because "the fairness of the ERISA appeals process [could] not be established using only the record before the administrator." Id. Moreover, the court noted that a "demonstrated conflict of interest may provide a district court with good cause to exercise its discretion to admit [additional] evidence. . . ." Id. (emphasis added).
The language of the DeFelice decision and the facts presented in that case suggest that a plaintiff seeking to introduce additional evidence must do more than simply identify a conflict of interest. Moreover, a per se rule would effectively eliminate the broad discretion afforded to district courts with respect to the admission of additional evidence. See Critchlow v. First Unum Life Ins. Co. of America, 340 F.3d 130, 133 n. 2 (2d Cir. 2003) (noting that the decision to "consider information outside the administrative record is a discretionary one even where there is `good cause'").
This Court finds that good cause is established underDeFelice only if the plaintiff can demonstrate (a) that the defendant was operating under a conflict of interest and (b) that the additional evidence "should have been included in the administrative record but was not, because of no fault of the claimant." Suozzo, 2003 WL 22387083, at *4. In other words, the plaintiff must show that the additional evidence could have and should have been included as part of the administrative record, but was not included for some reason outside of his or her control.
However, assuming that a plaintiff can make such a showing,DeFelice indicates that the plaintiff would not be required to prove that the conflict of interest actually caused the record to be underdeveloped. 112 F.3d at 67 (noting that "the plaintiff need not demonstrate that the conflict caused her actual prejudice in order for the court to consider the conflict to be `good cause'").
In the present case, the additional evidence that Plaintiff seeks to introduce falls into three major categories: (a) letters describing her job responsibilities, (b) medical and vocational reports concerning her condition, and (c) expert and eyewitness testimony. As discussed above, to establish good cause to admit this evidence, Plaintiff must show that it was not included in the administrative record for some reason outside of her control. This Court finds that Plaintiff has not made such a showing.
Plaintiff also seeks to introduce evidence related to the calculation of her benefits and the amount of her attorneys' fees. However, that evidence is not relevant to this Court's review of Defendant's decision to terminate benefits. Such evidence, if it is relevant at all, is only relevant with respect to the issue of dam ages (an issue not currently before this Court).
Plaintiff offers no explanation concerning why she was unable to submit this evidence to Defendant during the administrative review process — a process that lasted nearly two years. See Critchlow v. First Unum Life Ins. Co. of Am., 198 F. Supp.2d 318, 322 (W.D.N.Y. 2002) (refusing to admit additional evidence because plaintiff "offered no good reason why she could not have submitted these or similar expert opinions to UNUM before UNUM rendered its decision on her claim for benefits"); aff'd 340 F.3d 130 (2d Cir. 2003); see also Muller v. First Unum Life Ins. Co., 166 F. Supp.2d 706, 711 (N.D.N.Y. 2001) (finding that plaintiff had not established good cause because she "failed to articulate" why the additional evidence "could not have been presented during the approximately two and a half years that her claim was pending").
3. Incomplete Record
The Second Circuit has held that "the incompleteness of an administrative record might — under certain circumstances — constitute good cause for hearing additional evidence. . . ."Zervos v. Verizon N.Y., Inc., 277 F.3d 635, 646-47 (2d Cir. 2002). For example, good cause might be established in a case where the plaintiff was not afforded a reasonable opportunity to review the pertinent evidence or submit additional evidence prior to the defendant's decision to deny or terminate benefits. See, e.g. Sheehan v. Metro. Life Ins. Co., No. 01-Civ-9182, 2003 WL 22290230, at *3 (S.D.N.Y. Oct. 6, 2003) (finding that administrative record was incomplete because plaintiff's treating physicians were not afforded an opportunity to review relevant evidence prior to defendant's decision to terminate benefits).
In this case, Plaintiff argues that the administrative record is incomplete because Defendant did not provide her with an adequate opportunity to submit medical reports from her treating physicians. This Court finds Plaintiff's argument unpersuasive. The record demonstrates that Plaintiff had ample opportunity to submit additional evidence and reports during the lengthy administrative review process. Indeed, Plaintiff actually submitted additional evidence during that two-year period. The administrative record includes letters submitted by Plaintiff from Dr. Lazlo Mechtler (her neurologist), Dr. Frederic Hirsch (her primary care physician), as well as MRI reports from Dr. Kevin J. Gibbons and a letter from the Social Security Administration. Further, the record indicates that Defendant's physicians communicated with Plaintiff's physicians on several occasions, requesting additional information relative to Plaintiff's condition. An administrative record is not rendered "incomplete" simply because a party wishes to add new information that should have been, but for some reason was not, submitted while the claim was pending. See Zervos, 277 F.3d at 647; see also Critchlow, 198 F. Supp.2d at 322 (refusing to consider additional evidence because plaintiff only obtained it after she decided to challenge defendant's decision in court); Muller, 166 F. Supp.2d at 711 (refusing to admit evidence where plaintiff failed to articulate why it could not have been presented while his claim was pending).
IV. CONCLUSION
For the foregoing reasons, this Court's review of the benefit termination decision will be limited to the materials contained in the administrative record. Defendant's motion to limit the evidence in this case to the administrative record is granted.
V.ORDERS
IT HEREBY IS ORDERED that Defendant's Motion in Limine to Limit Review to the Administrative Record is GRANTED.
FURTHER, that trial counsel, parties, and persons with full authority to settle this case shall appear for a settlement conference before the Honorable Victor E. Bianchini, United States Magistrate Judge, on Friday, May 7, 2004, at 10:00 a.m. in 501 United States Courthouse, 68 Court Street, Buffalo, New York 14202.
FURTHER, that the parties shall file with the Clerk of the Court and serve any Motions for Judgment on the Administrative Record on or before Friday, June 11, 2004.
FURTHER, that said motions shall be supported by Proposed Findings of Fact and Conclusions of Law, which must include citations to the administrative record and applicable legal authority.
FURTHER, that the parties shall file and serve responses thereto on or before Friday, July 2, 2004.
SO ORDERED.