Opinion
Case No. OO-CV-70870-DT.
November 21, 2000.
OPINION AND ORDER GRANTING JUDGEMENT FOR DEFENDANT
This ERISA denial of benefits action arises out of defendant's refusal to pay plaintiff long-term disability benefits after October 1, 1994, on the grounds that the Group Long Term Disability Policy (policy) limits recovery for psychiatric illnesses to two-years, and plaintiff has already received those benefits for her severe depression. Plaintiff is Bernice McClanahan, and she was insured by her employer through a policy issued by defendant the Hartford Life and Accident Insurance Company (Hartford). Plaintiff claims that she suffers from a physical ailment known as "chronic fatigue syndrome," not only depression, which prohibits her from performing any work and thus, continues to qualify her for benefits. The parties agree that this lawsuit may be resolved by motion based on the court's review of the administrative record, much in the same way that the court would decide an appeal of a denial of social security disability benefits. Both sides have submitted competing motions for judgment on the administrative record. In support of its motion, defendant submitted voluminous exhibits, purporting to be the entire administrative record. Plaintiff relies on defendant's exhibits and agrees that they represent the complete administrative record from the proceedings below. The court has carefully reviewed that record, the parties' briefs, and entertained oral argument on November 6, 2000. As the court ruled from the bench and for the reasons stated below, defendant is entitled to judgment as a matter of law.
I. REVIEW OF ERISA DENIAL OF BENEFITS CLAIMS
The parties agree that this court should resolve plaintiff's denial of benefits claim on the parties' motions for judgment based solely on a review of the administrative record below. See Wilkins v. Baptist Healthcare Sys., 150 F.3d 609, 619 (6th Cir. 1998). As explained in Wilkins, summary judgment and bench trials are not to be used to review ERISA denial of benefit claims. Id. at 619-20. In accordance with Wlkins, this court will join the growing number of district judges adjudicating denial of benefit claims by reviewing the administrative record, rendering findings of fact and conclusions of law, and entering judgment for the prevailing party. See Guzy v. Ameritech, 50 F. Supp.2d 706, 709 (E.D. Mich. 1999) (Gadola, J.); Eriksen v. Metropolitan Life Ins. Co., 39 F. Supp.2d 864, 865 (E.D. Mich. 1999) (Rosen, J).
II. FINDINGS OF FACT
A. The Parties and the Policy
Plaintiff Bernice McClanahan is a forty-six year old female who was employed as a cashier at Sam's Club, a division of Wal-Mart, at their Flint location, from June, 1989 to March, 1990. She has not worked at Sam's Club or any other place since she allegedly became disabled in March, 1990. She received disability benefits under a policy issued to her employer by defendant Hartford. Under the policy, workers must complete an "elimination period" before they may qualify for disability benefits. The "elimination period" is the period of time that an employee must be disabled before disability benefits are payable. (Exhibit C at 5). After completing her elimination period, plaintiff filed a claim for total disability benefits on October 29, 1990 which defendant approved on December 17, 1990 because plaintiff showed that she was unable to carry out the duties of her occupation as cashier. (Exhibit E).
The policy defines an employee to be "Totally Disabled" as follows:
Totally Disabled means:
(1) during the Elimination Period; and (2) for the next 24 months,
you are prevented by Disability from doing all the material and substantial duties of your own occupation. After that, and for as long as you stay Totally Disabled, you are prevented by Disability from doing any occupation or work for which you are or could become qualified by:
(1) training; (2) education; or (3) experience.
(Exhibit C at 9). Under the policy, an employee is defined to be disabled during the elimination period and for the first twenty-four months after the onset of the disability under the "own occupation" test, which means that the employee is "prevented by Disability from doing all the material and substantial duties of [her] own occupation." (Exhibit C at 9). After the first two-years, an employee must establish eligibility for benefits under the "any occupation" standard, which the policy defines to mean that the employee is "prevented by Disability from doing any occupation or work for which [she is] or could become qualified by: (1) training; (2) education; or (3) experience." (Exhibit C at 9).
At the end of the two-years, which took place on October 1, 1992, plaintiff was required to show that she was totally disabled under the "any occupation" standard. Plaintiff attempted to show that she had both a physical and psychiatric disability. Defendant rejected the notion that she was physically disabled, but found that she was in fact totally disabled under the any occupation test based on the report of her treating psychiatrist, Jae C. Kim, M.D., who concluded that she suffered from totally debilitating depression and anxiety. (Exhibit G at 129). The parties agree that the policy limited long term disability benefits for psychiatric disabilities to a period of two-years. (Exhibit C at 12). Thus, plaintiff's disability benefits based on documented depression and anxiety ended on October 1, 1994. On September 9, 1994, defendant notified plaintiff of its decision to terminate long term disability benefits as of October 1, 1994.
The two-year limitation provides in full:
If you are Disabled because of:
1) psychosis or neurosis; 2) any condition caused, contributed, or made disabling by a psychosis or neurosis; . . . then, subject to all other provisions of this Plan, benefits will be payable only:
1) for so long as you are confined in a hospital or other place licensed to provide medical care for your Disability; or 2) when you are not so confined, a total of 24 months for all such disabilities during your lifetime.
(Exhibit C at 12).
B. Procedural Background
On September 26, 1994, plaintiff through counsel, filed an administrative appeal of defendant's decision to terminate benefits. (Exhibit J). Defendant denied the appeal and plaintiff brought a lawsuit which was brought before the Honorable Barbara K. Hackett, formerly of this court until her retirement in early 2000. In that case, the parties reached an agreement whereby plaintiff voluntarily dismissed the suit without prejudice and defendant allowed her to bring a second appeal of the denial of her claim. Plaintiff was allowed to supplement the first record to submit additional proofs in support of her claim. On November 4, 1999, defendant again denied plaintiff's appeal, ruling that the denial of benefits was supported by the evidence.
Arising out of this failed appeal, plaintiff filed suit in Genessee County Circuit Court alleging state law breach of contract claims against defendant based on its denial of her application for long term disability benefits. On February 15, 2000, defendant timely removed the matter to federal court on the grounds that ERISA preempted plaintiff's state law claims and controlled resolution of the dispute. The matter was assigned to Judge Hood who established the briefing schedule in this case and set a hearing date of November 6, 2000. On July 19, 2000, Judge Hood requested that this judge accept reassignment of the matter on the basis of its companionship status to the earlier filed case assigned to Judge Hackett. This court accepted reassignment despite its unfamiliarity with the earlier filed matter, based on the informal tradition in this district of accepting companion cases belonging to one's predecessor, and maintained the briefing schedule and oral argument date established by Judge Hood for the convenience of counsel. On August 1, 2000, this court entered a stipulated order providing that all of plaintiff's state law claims were preempted by ERISA, that plaintiff's claim arose under 29 U.S.C. § 1132(a)(1)(B) for denial of benefits, that the record was limited to the administrative record that was before Hartford when it rendered its November 4, 1999 decision, and that the court would decide the matter based on the parties' cross-motions for judgment on the administrative record.
C. The Administrative Record
The administrative record below shows that plaintiff failed to submit any objective medical verification to support her claims of physical disability distinct from her well documented depression and psychiatric disability. Plaintiff began treating with Jae C. Kim, M.D., on November 2, 1989, for depression and continues treating with him to this date. On May 6, 1993, Dr. Kim wrote Hartford that plaintiff was totally disabled due to severe depression and anxiety. (Exhibit G at 129). While plaintiff did submit medical reports of Stephen Evanoff, D.O., and Bruce Troutman, D.O., to support her claimed chronic fatique syndrome, their reports admit that no independent medical verification of the claimed condition exists and their diagnosis were based on plaintiff's own description of her symptoms. Dr. Evanoff treated plaintiff from September 25, 1992 through November 30, 1994. He specifically linked the chronic fatigue condition to plaintiff's psychiatric problems, stating in his February 15, 1994 progress notes, "[Plaintiff] has a very difficult time accepting the diagnosis of depression as the cause of her somatic complaints." (Ex. FF at 223). In addition, on February 15, 1994, Evanoff sent plaintiff's treating pyschiatrist a note stating, "[p]lease accept total management for this person's disability and sick leave based on your psychiatric diagnosis, treatment and prognosis. I am no longer permitted to authorize the leaves based on any other diagnosis." (Ex. GG).
Plaintiff also seeks to rely on a letter prepared by Dr. Troutman, her family doctor, on July 28, 1999, which was prepared solely to support the second administrative appeal of defendant's denial of benefits. In that letter, she claims he concluded that she was totally disabled from any and all occupations based on a physical disability. (Exhibit II). Defendant disputes that Dr. Troutman found plaintiff to be disabled. In addition, defendant correctly points out that Dr. Troutman only saw plaintiff once in 1994 when he saw her on August 16, 1994. On that date, he treated her for a cold by prescribing that she take Seldane and Augmentin. (Exhibit HH). He did not see her again until August, 1995. Id. The court has carefully reviewed Dr. Troutman's July 28, 1999 letter. Nowhere in the letter does Dr. Troutman state that plaintiff was unable to work in any capacity. The relevant portion of his letter, upon which plaintiff appears to rely, states:
Mrs. Bernice McClanahan has the following medical conditions:
1. Chronic cervical and lumbosacral pain. 2. Chronic fatigue. 3. Obesity. 4. Depression, chronic.
All of these medical problems seem to extend from events in March, 1990 when Mrs. McClanahan had flu-like symptoms, went to work and was kept at work, not allowing her to leave for the day to go home. The patient believes that the conditions at her work, in fact, aggravated her condition, which has left her with longstanding problems. It is possible that the patient did have a viral condition which disseminated itself and caused damage to the central nervous system and the immune system which lead to the medical problems and chronicity.
(Exhibit HH). Later, in the same letter, Dr. Troutman admitted that there were no diagnostic tests to support his findings, stating, "[i]n review of Mrs. McClanahan's chart and past history, as well as physical findings and lack of diagnostic findings, Mrs. McClanahan may, in fact, have some underlying neurological disease which could explain her current medical state; however, in absence of those confirmatory diagnostic studies, the cause and effect of those medical events in March, 1990 seem to explain the current medical situation." Id. (emphasis added).
In addition to the medical opinions of Dr. Evanoff and Dr. Troutman, plaintiff seeks to rely on the independent medical examination ordered by plaintiff's counsel and performed by Macolm K. Johnston, D.O., on December 20, 1995, whom she claims concluded that plaintiff's physical problems caused her psychological problems. (Exhibit L). Dr. Johnston examined plaintiff and prepared his report over a year after her claim for continuing long term disability benefits was denied. Plaintiff claims that this conclusion is corroborated by her treating psychiatrist's report, but the court does not agree. Although Dr. Kim noted that plaintiff complained that her depression worsened because of her physical conditions, Dr. Kim reported only that "she is totally disabled at the present time due to severe depression and anxiety." (Exhibit G at 129). Dr. Kim reported that plaintiff complained that the symptoms of her depression were "poor sleep, low energy, easy fatigability, tiredness, tearfulness, high sensitivity, preoccupation, and social isolation." Id. at 128. These are the same symptoms that Drs. Troutman and Johnson used to diagnose plaintiff as suffering from a chronic fatigue type syndrome.
Dr. Johnston reported that plaintiff could do no work or any repetitive activity for more than one minute. (Exhibit L at 7). In his final diagnosis of plaintiff as suffering from "chronic fibromyalgia syndrome secondary to chronic fatigue syndrome," however, he acknowledged that this diagnosis was based on plaintiff's subjective complaints and that no diagnostic tests exist to confirm the presence of the disease:
The final diagnosis for this patient is chronic fibromyalgia syndrome secondary to chronic fatigue syndrome, secondary to a viral etiology which has caused an underlying physical disturbance within the body. The disease, chronic fibromyalgia, is used to describe multiple signs and symptoms found within the body. It has been more recently studied and is in my medical experience and opinion, an entity that has been elusive and invasive. It will need further study and the exact etiology understood but today we are, due to lack of medical knowledge, only able to understand the symptomatology as well as signs of the disease.Id. In addition to the lack of objective medical evidence to support his conclusions, he examined her over a year after the date on which she was required to prove her disability and did not review any of her other medical records.
In addition to the conclusions of the above three doctors, plaintiff argues that this court should reject the conclusions of Todd Lyon, M.D., who, at defendant's request, analyzed plaintiff's medical records but did not examine the plaintiff personally and prepared a report dated October 19, 1999. (Exhibit M). Dr. Lyon concluded that, "[b]y far the diagnosis of depression is the most substantiated." Id. at 0056. He explained, "[i]t's well known that fatigue is a common symptom of depression and it is likely in my opinion that her ongoing fatigue is related to this diagnosis rather than the unsubstantiated diagnosis of chronic fatigue syndrome. The depression diagnosis predated the chronic fatique diagnosis and therefore is the most likely cause of her fatigue." Id. In addition, he reported that from 1993 through 1994 and at the present time, plaintiff had the capacity for at least light duty work." Id. He also noted that "the medical records overall reveal very little objective substantiation to most of her somatic complaints." Id.
Besides Dr. Lyon's report, Hartford contends that the denial of benefits was reasonable given the lack of objective medical evidence to support plaintiff's alleged disability. Medical tests performed at Hurley Medical Center from November 7, 1997 to April 1, 1999, showed that other than slightly elevated cholesterol levels, plaintiff's test results were insignificant. (Exhibit M). In addition, chest x-rays taken on November 7, 1997 were negative. (Exhibit QQ). An electrocardiogram taken on November 5, 1997 was normal. Dr. Evanoff's own notes reported that an examination by the University of Michigan Rheumatology Department concluded that plaintiff's complaints related to her depression, not physical problems. (Exhibit FF at 223). Numerous other diagnostic tests taken in 1990 and 1991 were also unremarkable. (Exhibits Q through EE).
III. CONCLUSIONS OF LAW
A. Standard of Review
Although the parties disagree on whether the arbitrary and capricious standard of review or the de novo standard of review applies, based on unequivocal Plan language giving the fiduciary the discretion to determine eligibility for benefits, there can be no serious dispute that the arbitrary and capricious standard applies in this case. See Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Perez v. Aetna Life Ins. Co., 150 F.3d 550, 555-56 (6th Cir. 1998); Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376, 380-81 (6th Cir. 1996). Under the heading, "Proof of Loss," the Plan plainly states, "The Hartford reserves the right to determine if proof of loss is satisfactory." (Exhibit C at 596). Based on well-established Sixth Circuit precedent cited above, there is no dispute that this provision conferred discretion on the fiduciary to determine an employee's eligibility for benefits. Accordingly, the arbitrary and capricious standard of review applies.
Under the arbitrary and capricious standard, the fiduciary's decision to deny benefits will be upheld as long as it is "rational in light of the plan's provisions." Daniel v. Eaton Corp., 839 F.2d 263, 267 (6th Cir.), cert. denied, 488 U.S. 826 (1988). "[T]his deferential standard is applied `in the interest of efficient pension administration'" in order "to avoid excessive judicial interference with plan administration. Id. (citations omitted). The standard "is the least demanding form of judicial review of administrative action [w]hen it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious."Perry v. United Food Commercial Workers Dist. Unions 405 442, 64 F.3d 238, 242 (6th Cir. 1995) (citations omitted).
B. The Denial of Benefits Was Reasonable
Defendant's decision to deny benefits was rational based on the evidence presented at the time the decision to deny benefits was made. The Plan specifically required an employee to submit satisfactory written proof of loss:
Proof of Loss Written proof of loss must be sent to The Hartford within 90 days after the start of the period for which The Hartford owes payment. After that, the Hartford may require further written proof that you are still Disabled. If proof is not given by the time it is due, it will not affect the claim if:
(1) it was not possible to give proof within the required time; and (2) proof is given as soon as possible; but (3) not later than 1 year after it is due, unless you are not legally competent. . . .
The Hartford reserves the right to determine if proof of loss is satisfactory. (Exhibit C at 596). Based on the limited evidence plaintiff presented, none of which was documented with conclusive diagnostic tests performed during the relevant time period, Hartford was reasonable in denying plaintiff's claim to continue to pay her long term disability benefits beyond the two-years worth of benefits it had already paid based on her documented depression and anxiety.
The fiduciary's decision to reject Dr. Troutman's assessment that plaintiff suffered from chronic fatigue syndrome was reasonable given that he only examined plaintiff once during the relevant time period for a complained cold and did not diagnose the alleged disease during the relevant time period. His July, 1999 letter in which he identified the alleged condition for the first time was prepared solely at plaintiff's request to support her claim for disability benefits. Nowhere in the letter does he state that plaintiff could not perform any work as required under the policy. In addition, he admits that no objective diagnostic tests corroborate his diagnosis which was based solely on plaintiff's subjective complaints about her symptoms. Dr. Evanoff's findings do not support plaintiff's claim of total disability either given his February, 1994 letter to plaintiff's treating psychiatrist asking her to take full responsibility for plaintiff's care and authorizations for sick leave. Dr. Johnson's examination in 1995, long after the written proof of loss was required under the policy, also fails to state any objective verifiable medical reason that plaintiff could not work. His conclusions were based solely on plaintiff's complained symptoms. While physicians undoubtedly rely on patient's reported symptoms to diagnose a condition, Hartford acted reasonably in rejecting his diagnosis, which admittedly lacked independent medical support, given that it conflicted with the report of Dr. Lyon that plaintiff's physical problems stemmed from her psychiatric problems as had been well documented by Dr. Kim in her five years of treatment of plaintiff. In addition, none of the objective medical tests plaintiff underwent supported that diagnosis.
Taking the record as a whole, this court cannot find that Hartford acted unreasonably in denying plaintiff's claim for long term disability benefits after October 1, 1994. This is especially true in light of the plan's provision that a disability "caused, contributed, or made disabling by a psychosis or neurosis" is only covered for 24 months unless the individual is hospitalized for the condition. (Exhibit C at 12). Here, plaintiff suffered from severe depression in 1994 and continues to treat with Dr. Kim for that condition. Plaintiff's own physician, Dr. Evanoff, as well as defendant's reviewing physician, Dr. Lyon, concluded that plaintiff's depression caused or significantly contributed to her claimed physical disabilities. Accordingly, Hartford's decision to deny coverage was reasonable given proof that her mental disability "caused or contributed" to her physical ailments.
IV. CONCLUSION
For the reasons stated above, JUDGMENT is ORDERED for defendant Hartford and its denial of plaintiff's claim for long term disability benefits is AFFIRMED.
SO ORDERED.