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applying substantial compliance doctrine under amended regulation
Summary of this case from Goldman v. Hartford Life Acc. Ins. Co.Opinion
Civil No. 03-1591-AA.
October 21, 2004
Megan E. Glor, Swanson, Thomas Coon, The American Bank Building, Portland, OR, Attorney for Plaintiff.
Sarah J. Ryan, Amy S. Campbell, Ball Janik LLP, Portland, OR, Attorney for Plaintiff.
Joseph E. Lambert, P.C., Commerce Center, Mesa, AZ, Attorneys for defendant.
OPINION AND ORDER
Plaintiff Gloria Oman filed this action under the Employee Retirement Income Security Act, 29 U.S.C. § 1132(a)(1)(B) ("ERISA") against defendant Intel Corporation Long Term Disability Plan ("the Plan"). The complaint alleges that defendant wrongfully denied plaintiff long-term disability benefits. The parties have cross-moved for summary judgment. The plaintiff has also moved to strike two sets of declarations as being "outside the administrative record."
BACKGROUND
In 1981, Intel Corporation ("Intel") established the Plan to provide short-term and long-term disability benefits for Intel employees. Glor Aff., Ex. 1 at 1. The Plan grants Intel, the named fiduciary, "the sole discretion to interpret the terms of the Plan and to determine eligibility for benefits." Id. at 13. The Plan also allows Intel to "delegate its fiduciary responsibilities . . . to any person or persons pursuant to a written contract. . . ." Id. at 14. In a 1994 written contract, Intel delegated its authority to interpret the terms of the Plan and determine eligibility for benefits to Matrix Absence Management, Inc. ("Matrix"). Def's. Concise Stat. Mat. Fact. ¶ 2.
Plaintiff was hired by Intel on June 3, 1996. AR. 4. On October 24, 2001, plaintiff applied for and received a medical leave of absence and short term disability benefits under a separate Intel Short Term Disability ("STD") plan. AR. 11. In her STD application, which was certified by Dr. Gary Sultany, plaintiff claimed disability due to firbomyalgia, fatigue, and osteoarthritis. AR. 11.
On October 3, 2002, plaintiff applied for long term disability (LTD) benefits under the Plan claiming continued disability due to fibromyalgia, chronic fatigue syndrome, osteoarthritis, and back pain. AR. 113. In order to determine her eligibility for benefits, Matrix requested additional information and records from plaintiff and from doctors she identified as her treating doctors on her LTD application. AR. 125-50.
In response to Matrix's request for information, Matrix received chart documents from Providence Medical Group/Sunset, AR. 152-260; treatment notes from Dr. Ashok Jayaram, AR. 263-72; chart documents from the Orthopedic Fracture Clinic, AR. 273-91; and Long Term Disability Claim Physician's Statement forms from Drs. Gary Sultany and Vien Luu.
The chart documents from Providence Medical Group/Sunset show complaints of chronic pain over several years, AR. 171, 194, 245; complaints of knee and back pain, AR. 177, 232, 237, 259; several diagnoses of firbomyalgia, AR. 177, 194, 207, 232, 247; diagnoses of depression, AR. 177, 194, 232, 247; diagnoses of osteoarthritis, and the subsequent replacement of both knees, AR. 183, 213, 232, 237.
The treatment notes from Dr. Jayaram show complaints of knee and back pain, unusual fatigue, nausea, numbness and tingling, headaches, loss of balance, and feelings of depression, AR. 263, 267; and diagnoses of osteoarthritis of both knees, lumbosacral radiculitis, chronic lower back pain with radicular extension, and mild depression, AR. 265,266-67, 270.
The chart documents from the Orthopedic Fracture Clinic list diagnoses by Drs. Mark Weston and Jay Butler. Dr. Butler, after reviewing an MRI, diagnosed degenerative disc disease. AR. 276. Dr. Weston diagnosed fibromyalgia, lumbar spondylosis, and some fairly significant disc degeneration with end plate changes. AR. 274, 279 However, in a March 14, 2002 note, he stated that firbomyalgia was the source of plaintiff's pain. AR. 279.
Dr. Gary Sultany, plaintiff's treating rheumatologist, submitted his physician's statement on October 8, 2002. AR. 98. The form listed plaintiff's symptoms as "pain, myalgia, trigger point pain, depression, and knee pain" and listed Dr. Sultany's objective findings as "trigger point pain and total knee surgery." Id.
Dr. Vien Luu, plaintiff's primary care provider, submitted his physician's statement on October 24, 2002. AR. 261. The form listed plaintiff's symptoms as "pain, of forearm, shoulder, hip knees" [sic] and listed Dr. Luu's objective findings as osteoarthritis and fibromyalgia. Id.
On December 20, 2002, Matrix had plaintiff undergo an independent medical examination by Dr. Peter Bonafede. AR. 326. Dr. Bonafede, after reviewing plaintiff's medical treatment history and conducting his own examination, concluded that plaintiff's "major problem" was depression. AR. 331. He further stated that she likely had fibromyalgia but that fibromyalgia "is not a disabling condition and would not preclude her from sedentary and light category activities." Id. Dr. Bonafede also noted plaintiff's knee replacements, degenerative disc disease, and controlled hypertension. Id.
On January 14, 2003, plaintiff received a letter from Matrix denying her LTD claim for lack of objective medical findings as defined in the Plan. AR. 358-67.
On June 25, 2003, Matrix received a letter from plaintiff's attorney appealing the denial of her LTD claim. AR. 373-74. The appeal asserted that plaintiff was disabled due to pain caused by degenerative disc disease and arthritis. Id. In support of her appeal, plaintiff submitted: a May 2, 2003, letter from Dr. Jayaram, AR. 375-76; a April 10, 2003, letter from Dr. Stephen Thomas, AR. 377-79; a March 5, 2003, letter from Dr. Jeffery Johnson, AR. 380-82; a January 26, 2003, MRI report from Providence St. Vincent Medical Center, AR. 383-84; and finally a March 3, 2002, MRI report from the Orthopedic Fracture Clinic, AR. 385.
Matrix submitted plaintiff's medical file to CORE, an independent clearinghouse which provides medical peer reviews of disability claims. Def's. Concise Stat. Mat. Fact. ¶ 15. Through CORE, Dr. Robert Marks, a neurologist, and Dr. F. Daniel Kharrazi, an orthopedic surgeon, provided peer review analyses of plaintiff's claim. AR. 412-19. Dr. Marks concluded that plaintiff's "complaints of back pain are not corroborated by objective findings on the MRI or physical examination." AR. 414. Dr. Kharrazi stated that "the MRI studies . . . showed some mild-to-moderate degenerative disc disease. . . . I do not believe that these are of a severe enough nature to prevent this individual from performing her regular or similar occupation at Intel Corporation." AR. 419.
On July 9, 2003, Matrix received a letter from plaintiff's attorney requesting that her appeal be submitted to the Disability Appeals Committee (DAC). AR. 422. Plaintiff's appeal was submitted to the DAC and was reviewed on July 17, 2003. AR. 448-49. On August 8, 2003, 44 days after plaintiff submitted her appeal, Matrix sent a letter to plaintiff's address of record, notifying plaintiff that the DAC had denied her appeal and affirmed Matrix's decision to deny her benefits. Antonson Decl. ¶ 12 and Exs. 2-5. On August 19, 2003, the letter was returned to Matrix because plaintiff no longer resided at her address of record.Id. Plaintiff had failed to notify Matrix of her changed address as required by the Plan. Id. at ¶ 11. Matrix re-mailed the letter to plaintiff's new address, and she received it on August 21, 2003. Id.; AR. 423-25; Oman Aff. ¶¶ 2-4 and Ex. 1, 2.
SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The materiality of a fact is determined by the substantive law on the issue. T.W. Electrical Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). The authenticity of a dispute is determined by whether 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).
The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324.
Special rules of construction apply to evaluating summary judgment motions: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Electrical, 809 F.2d at 630.
DISCUSSION
Plaintiff asserts that the denial of her appeal should be reviewed de novo because defendant did not render a timely decision as required by ERISA regulations and the Plan. Plaintiff further argues that the decision denying her LTD benefits should be reversed because she has demonstrated disability through objective medical evidence as required by the Plan.
1. Standard of review as to the denial of plaintiff's appeal
"A civil action may be brought by a [disability plan] beneficiary to recover benefits due to him under the terms of his plan." 29 U.S.C. § 1132(a)(1)(B). "[A] denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed 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." Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989.) If the plan gives such discretionary authority to the administrator, the "reviewing court applies an `abuse of discretion' or — what amounts to the same thing — an `arbitrary and capricious' standard." Jebian v. Hewlett-Packard Co., 349 F.3d 1098, 1103 (9th Cir. 2003) (quoting Taft v. Equitable Life Assurance Soc'y, 9 F.3d 1469, 1471 n. 2 (9th Cir. 1994).
In the instant case, the Plan and 1994 written contract explicitly grant the administrator, Matrix, "sole discretion to interpret the terms of the Plan and to determine eligibility for benefits." Glor Aff., Ex. 1 at 13. Ordinarily, this grant of discretion would be sufficient to warrant review under the deferential abuse of discretion standard.
However, when a claim for benefits is not decided within the applicable time limits and is "deemed denied," according to the plan language or ERISA regulatory requirements, review is de novo. Jebian, 349 F.3d at 1103. In Jebian, the administrator failed to issue a decision on the claimant's appeal within the absolute 120 day time limit, and the appeal was automatically "deemed denied" according to ERISA regulations and the plan language. Id. at 1104. The Ninth Circuit reasoned that when a claim is "deemed denied," the administrator has not exercised the discretion granted to him by the plan; therefore, the decision is not due deference by the courts. Id. at 1105.
Jebian was decided under a previous version of the ERISA regulations which provided that if the administrator did not issue a decision within certain time limits, "the claim shall be deemed denied on review." Id. at 1103; See 29 C.F.R. § 2560.503-1(h)(1998). The plan language in Jebian tracked the requirements of the ERISA regulations and required a decision within 60 days of the claim being filed, or "the claim shall be deemed to have been denied on review." Jebian, 349 F.3d at 1103.
Here, the plaintiff's appeal was filed after January 1, 2002; thus, the amended version of the ERISA regulations will apply.See 29 C.F.R. § 2560.503-1(o) (2002). Under the current regulations all references to claims being "deemed denied" due to expiration of time limits has been removed. See C.F.R. § 2560.503-1(h)-(i) (2002). Also, the Plan language, in the instant case, lacks any provision for deeming claims denied because time limitations have expired. The current version of the ERISA regulations and the Plan merely require the administrator to notify an appeals claimant of the determination on review within 45 days. C.F.R. § 2560.503-1(i)(3)(i) (2002); Glor Aff., Ex. 1 at 24.
Here, plaintiff did not receive a determination of her appeal within the required 45 day period. Defendant notified plaintiff in 55 days of its decision on her appeal. AR. 422-25, Oman Aff. ¶¶ 2-4 and Ex. 1, 2. Plaintiff urges this court to strictly applyJebian and review the denial of her appeal under the de novo standard.
This court, however, declines to hold that every decision issued after expiration of the deadlines is entitled to de novo review, without considering the cause. Such a result would encourage "manipulation of the deadlines [that] could be employed tactically by either ERISA claimants or plan administrators."Jebian, 349 F.3d at 1107. This is exactly the result the Ninth Circuit sought to avoid in Jebian.
The defendant argues that the changes in ERISA and differences in Plan language render Jebian distinguishable and non-controlling as to the instant case. However, the court, inJebian, noted that "deferential review under the `arbitrary and capricious' standard is merited for decisions regarding benefits when they are made in compliance with plan procedures."Jebian, 349 F.3d at 1105 (quoting Stanford v. Harvard Indus., 262 F.3d 590, 597 (6th Cir. 2001)) (emphasis added inJebian). "When decisions are not in compliance with regulatory and plan procedures, deference may not be warranted." Jebian, 349 F.3d at 1105. Furthermore, the court in Jebian, approvingly quoted Biodiversity Legal Found. v. Badgley, 309 F.3d 1166, 1178 (9th Cir. 2002), for the proposition that "[t]he exercise of discretion is foreclosed when statutorily imposed deadlines are not met." Jebian, 349 F.3d at 1105. Finally the court looked to University Hosps. v. Emerson Elec. Co., 202 F.3d 839, 846 n. 3 (6th Cir. 2000), for the observation that "there is undeniable logic in the view that a plan administrator should forfeit deferential review by failing to exercise discretion in a timely manner." Jebian, 349 F.3d at 1107. Under the above line of reasoning, failure to render a timely decision produces the same result whether, under the ERISA regulations and the Plan, a decision is "deemed denied" or not. Either way, a plan administrator's late decision is a failure to exercise discretion and may not be entitled to deference by the court.
Defendant further argues that the administrator "substantially complied" with the Plan procedures and ERISA regulations; thus,de novo review is not warranted. In Jebian, the court looked to Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 635 (10th Cir. 2003), for guidance and adopted the "substantial compliance" concept articulated in Gilbertson. Jebian, 349 F.3d at 1107. Under the "substantial compliance" concept "inconsequential violations of the deadlines . . . would not entitle the claimant to de novo review . . . in the context of an ongoing, good faith exchange of information between the administrator and the claimant." Id. (quoting Gilbertson, 328 F.3d at 635).
Another District Court recently applied this "substantial compliance" concept. Raithaus v. UNUM Life Ins. Co., 2004 WL 2008763 at 14-15 (D. Haw. 2004). In Raithaus, the plan administrator issued a decision denying the claimant's appeal 13 days after the deadline. Id. at 14. The court held that the administrator had substantially complied with the plan procedural requirements because the administrator actually rendered a decision and the denial of the claimant's appeal was not "a `mechanical result' of the deadlines." Id. at 15. The court found the 13 day deadline violation "inconsequential" considering that the administrator and claimant's attorney "were in regular contact during the appeal process and . . . the appeal denial was issued well before the absolute 120-day period under the Plan."Id. Thus, "de novo review [was] not warranted on the singular basis that [the administrator] failed to timely deny Plaintiff's appeal." Id.
In the instant case, I find that the administrator has substantially complied with the Plan's procedural requirements and ERISA regulations. Here, the administrator issued a decision denying the plaintiff's appeal 10 days after the deadline. As inRaithaus, the administrator did actually render a decision and the denial of the plaintiff's appeal was not "a `mechanical result' of the deadlines." Furthermore, the 10 day deadline violation was inconsequential given that the administrator rendered a decision within the absolute 90 day period under the Plan, and made a good faith attempt to render a decision within the proscribed 45 day period. The administrator's good faith attempt to render a timely decision was prevented through no fault of the administrator's but due instead to the plaintiff's failure to change her address of record. The Plan explicitly provides that:
[e]ach Participant shall be responsible for providing the Company with his or her current address. Any notices required to be given hereunder shall be deemed given if directed to such address and mailed by regular United States mail. The Company shall not have any obligation or duty to locate a Participant.
Glor Aff., Ex. 1 at 17. The administrator was attempting to conduct a "good faith exchange of information" with the plaintiff, but the plaintiff's own negligence precluded such an exchange. Therefore, de novo review is not warranted, and this court will review the administrator's denial of the plaintiff's appeal under the abuse of discretion standard.
2. The administrator did not abuse its discretion
An ERISA plan administrator has abused its discretion when (1) the administrator fails to provide an explanation for its decision; (2) the decision "conflicts with the plain language of the plan;" or (3) the decision "is based on clearly erroneous findings of fact." Atwood v. Newmont Gold Co., Inc., 45 F.3d 1317, 1323-24 (9th Cir. 1995). In the instant case, the Plan administrator did not abuse its discretion in denying the plaintiff's claim nor did the Appeals Committee abuse its discretion in declining to reverse the administrator's denial.
A. The administrator provided an explanation for its decision
Here the administrator provided a written decision which included a full explanation for the decision reached. Oman Aff., Ex. 1. Plaintiff has not argued that the administrator abused its discretion by failing to provide an explanation for its decision. Therefore, I find that the administrator did not abuse its discretion in this regard.
B. The administrator's decision does not conflict with the plain language of the plan
"The touchstone of `arbitrary and capricious' conduct is unreasonableness. [O]ur inquiry is not into whose interpretation of plan documents is most persuasive, but whether the plan administrator's interpretation is unreasonable." Barnett v. Kaiser Found. Health Plan, Inc., 32 F.3d 413, 416 (9th Cir. 1994) (quoting Clark v. Washington Teamsters Welfare Trust, 8 F.3d 1429, 1431 (9th Cir. 1993)). There has been an abuse of discretion only if the plan administrator's interpretation of plan language can not be viewed as reasonable. Id.
Here, the Plan defines "disability" as "any illness or injury that is substantiated by Objective Medical Findings and which renders a Participant incapable of performing work." Glor Aff., Ex. 1 at 19. "Objective Medical Findings" are "a measurable, independently-observable abnormality which is evidenced by one or more standard medical diagnostic procedures including . . . physical examination findings, X-rays, MRI's . . . or similar tests that support the presence of a disability or indicate a functional limitation." Id. However, the Plan states "tests that depend on Participant self-reports, such as trigger point/tender point tests, are not considered objective and do not establish eligibility for benefits. . . ." Id. The Plan further states "Objective Medical Findings do not include physicians' opinions or other third party opinions based on the acceptance of subjective complaints (e.g., headache, fatigue, pain, nausea). . . ." Id. Finally, "[n]o Participant shall be entitled to Disability benefits if his or her Disability arises out of, relates to, is caused by or results from . . . mental, emotional or psychiatric illness or disorder of any type. . . ."Id. at 6.
In its denial letter to plaintiff, the administrator stated that the plaintiff was not eligible for benefits because "there are no objective medical findings to support a disability based on the Plan definition." Oman Aff., Ex. 1 at 2.
The administrator rejected, as either subjective or excluded from Plan coverage, "complaints of pain all over the body including chronic low back pain and leg pain, fibromyalgia, and severe depression. . . ." Id. The plain language of the Plan expressly excludes "physicians' opinions . . . based on the acceptance of subjective complaints (e.g., . . . pain . . .) and "tests that depend on Participant self-reports, such as trigger point/tender point tests" from the definition of Objective Medical Findings. Glor Aff., Ex. 1 at 19. Therefore, it was proper to reject the plaintiff's pain complaints and diagnoses of fibromyalgia. Furthermore, the Plan excludes from coverage any disability "caused by . . . mental, emotional or psychiatric illness or disorder of any type. . . ." Id. at 6. Therefore, the administrator properly excluded the plaintiff's depression from consideration.
The administrator noted the only objective findings to be "arthritis at the L4-L5 joint," "some abnormalities in [the] spine with some mild stenos and mild degenerative disease," and "knee replacements [which] were successful." Oman Aff., Ex. 1 at 2. Under the plain language of the Plan the above findings fit the definition of "Objective Medical Findings" because they are "evidenced by one or more standard medical diagnostic procedures including . . . physical examination findings, X-rays, MRI's." Glor Aff., Ex. 1 at 19. However, for a participant to be disabled and eligible for benefits the Objective Medical Findings must "render a Participant incapable of performing work." Id. The administrator concluded that the Objective Medical Findings were not severe enough to render the plaintiff "incapable of performing work." See Oman Aff., Ex. 1 at 2. The Plan granted the administrator "sole discretion" to make that determination, and this court concludes that the determination was reasonable under the plain language of the Plan.
C. The administrator's decision was not "based on clearly erroneous findings of fact"
An administrator's decision is not "clearly erroneous" merely because it is contrary to some evidence in the record. Taft, 9 F.3d at 1473-74. No abuse of discretion has occurred when the administrator's decision has substantial evidence to support it in the record. Snow v. Standard Ins. Co., 87 F.3d 327, 333 (9th Cir. 1996), reversed on other grounds, Kearney v. Standard Ins. Co., 175 F.3d 1084, 1090 (9th Cir. 1999). "Substantial evidence is such relevant evidence as reasonable minds might accept as adequate to support a conclusion even if it is possible to draw two inconsistent conclusions from the evidence." Maynard v. City of San Jose, 37 F.3d 1396, 1404 (9th Cir. 1994).
Here, the administrator's decision has substantial support in the record. Specifically, plaintiff's own treating physician, Dr. Weston, stated that fibromyalgia was the main source of plaintiff's pain. AR. 279. As discussed above, disability from fibromyalgia is excluded from coverage under the Plan. Also, Dr. Bonafede, an independent examining physician, concluded that plaintiff's "major problem" was depression. AR. 331. Again, as discussed above, disability from depression is excluded from coverage under the Plan. Dr. Bonafede further stated that plaintiff likely had fibromyalgia but that fibromyalgia "is not a disabling condition and would not preclude [plaintiff] from sedentary and light category activities." Id. Dr. Marks, an independent peer review physician who analyzed plaintiff's medical file, concluded that plaintiff's "complaints of back pain are not corroborated by objective findings on the MRI or physical examination." AR. 414. Finally, Dr. Kharrazi, a second peer review physician who analyzed plaintiff's medical file, stated that "the MRI studies . . . showed some mild-to-moderate degenerative disc disease . . . I do not believe that these are of a severe enough nature to prevent this individual from performing her regular or similar occupation. . . ." AR. 419. Based on the evidence, it was reasonable for the administrator to conclude that plaintiff was not disabled or that her claimed disability was not evidenced by Objective Medical Findings as required by the Plan.
CONCLUSION
Although the administrator issued a denial of plaintiff's appeal that was not timely, the administrator substantially complied with the deadline. Thus, the standard of review of the denial of plaintiff's appeal is abuse of discretion.
There is no genuine issue of material fact as to whether the administrator abused its discretion in denying plaintiff's application for LTD benefits or in denying her appeal. Therefore, defendant's motion for summary judgment (doc. 46) is granted; and plaintiff's motion for summary judgment (doc.33), as well as plaintiff's motion to strike declarations (doc. 49), are denied. This case is dismissed.
IT IS SO ORDERED.