JOSEPH C. SPERO, Magistrate Judge.
Plaintiff Marcus May brings this action for disability benefits under 29 U.S.C. § 1132(a)(1)(B), which provides for civil actions against employee benefit plans governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq. Plaintiff alleges that short-term disability benefits to which he was entitled under the terms of the employee benefit plan offered by his employer, AT&T Umbrella Benefit Plan No. 1 ("the Plan"), were wrongfully terminated. The parties bring cross-motions for summary judgment, which are presently before the Court. The Court finds that the motions are suitable for determination without oral argument, pursuant to Civil Local Rule 7-1(b). For the reasons stated below, Plaintiff's summary judgment motion is GRANTED and Defendant's summary judgment motion is DENIED.
At all relevant times, Plaintiff has been covered by the AT&T Mobility Disability Benefits Program ("the Disability Plan"). Declaration of John D. Adkins in Support of Defendant AT&T Umbrella Benefit Plan No. 1's Motion for Summary Judgment ("Adkins Decl.") ¶ 3. The Disability Plan is a component of the larger AT&T Umbrella Benefit Plan No. 1 ("the Umbrella Plan"). Joint Statement of Undisputed Material Facts ("UMF") No. 1.
Under the terms of the Disability Plan, AT&T Inc. is the Plan Administrator and, as such, "has the sole and absolute discretion to interpret the provisions of the [Disability Plan], make findings of fact, determine the rights and status of participants and others under the [Disability Plan] and decide disputes under the [Disability Plan]." Administrative Recod ("AR") 000264 (Summary Plan Description at page 31); see also UMF No. 2. The Disability Plan further provides that "[t]he Plan Administrator may delegate any of its duties or powers [and that] [t]o the extent permitted by law, such interpretations, findings, determinations and decisions shall be final and conclusive on all persons for all purposes of the [Disability Plan]." AR 000264.
Effective December 2008, AT&T Inc. contracted with a third party claims administrator, Sedgewick Claims Management Services, Inc. ("Sedgewick"), to administer the Disability Plan and "delegated fiduciary responsibilities, as defined by [ERISA]" to Sedgewick. AR 000262; UMF Nos. 4, 6, 7. Thus, claims for Short-Term Disability ("STD") benefits under the Disability Plan must be made to Sedgewick, and Sedgewick has discretion to determine eligibility for STD benefits under the Disability Plan. UMF Nos. 5, 8. The team of Sedgewick employees assigned to decide claims for disability benefits under the Disability Plan is referred to as the AT&T Integrated Disability Service Center ("IDSC"). UMF No. 9. Appeals and denials of benefit claims under the Disability Plan are decided by Sedgewick's Quality Review Unit ("QRU"). UMF No. 10.
Under the terms of the Disability Plan, eligibility for STD benefits requires that a participant's condition meet the following definition:
AR 000262 (Summary Plan Description at page 29); see also UMF No. 11. "Customary Job" is defined as "the work activity that you were hired to regularly perform for the Employer and that serves as your source of income from the Employer." AR 000262 (Summary Plan Description at page 29).
To obtain STD benefits under the Disability Plan, the claimant must file a claim with the Claim Administrator, which "should contain all information requested on the forms and any additional information requested by the Claims Administrator." AR 00255 (Summary Plan Description at page 22). The Summary Plan Description further provides as follows:
A claim will not be considered to be submitted to the Program until all required and requested information is provided. All information should be provided as soon as practicable. . . .
Id.
Plaintiff Marcus May was hired on October 12, 2009 as a Retail Sales Consultant for AT&T Mobility. UMF No. 14. As a Retail Sales Consultant, Plaintiff was responsible for providing customer service, including answering questions for customers in the process of purchasing products and services. AR 000133 (Job Description). The physical requirements of the job are described as follows:
AR 000133.
On August 26, 2010, Plaintiff went on leave due to severe knee pain. UMF No. 17; AR 000067. On August 30, 2010, Plaintiff called his internist, Dr. Beth Schweitzer, at Fairmont Hospital/Winton Wellness Center, part of Highland Hospital (hereinafter "Fairmount"), complaining of "increasing pain in his" left knee. AR 00067. Plaintiff was advised to "rest and elevate [his] leg." AR 000067. An appointment was made for the following day. Id. The notes from that visit state, in part, as follows:
Subjective:
Objective:
Assessment:
AR 00068.
On September 10, 2010, Plaintiff returned to Fairmount for a follow-up appointment. AR 00069. The report of that visit states, in part:
Id. The report notes that x-rays showed "tricompartmental arthritis left knee." Id. Plaintiff was referred to an orthopedist and instructed to schedule an MRI. Id.
On September 10, 2010, Dr. Schweitzer completed a Claim for Disability Insurance Benefits — Doctor's Certificate ("Doctor's Certificate") in support of Plaintiff's disability claim. AR 000011, AR 000070.
On September 13, 2010, IDSC sent Plaintiff a letter informing him that it had submitted a claim for STD benefits on his behalf. UMF No. 18. Attached to the letter was a form to be completed by Plaintiff's physician, entitled "Initial Physician's Statement," as well as other forms, which he was instructed must be submitted by September 21, 2010. AR 00053; UMF 21. The letter cautioned that "[i]t is critical that your physician demonstrates by his/her observations and clinical findings that you are unable to perform your work with or without accommodations." Id.
On the same date, IDSC also issued a "Reported Disability Claim Notice" directed to the attention of Plaintiff's supervisor, Daniel S. Milanese. AR 51-52.
On September 14, 2010, IDSC Disability Specialist Dwight Dixon sent a request to Dr. Schweitzer's office for medical information, including "[c]opies of office/chart notes from 8/26/10," "[c]opies of all operative reports, hospital summaries, and discharge notes," "[c]opies of all medical data (i.e. x-ray/MRI reports, lab results, etc.)." AR 46-47. On the same day, Mr. Dixon spoke to Plaintiff about his claim. AR 0006. The following is an excerpt of Mr. Dixon's notes of that conversation:
Id.
On September 14, 2010, Mr. Dixon also sent an email to Plaintiff's manager, Daniel Milanese requesting information about Plaintiff's STD claim, including a "detailed description" of Plaintiff's job duties and the exertion level of Plaintiff's position (ie., sedentary, light, medium or heavy). AR 0007. Mr. Dixon asked if Plaintiff's department had "any accommodation for restrictions the employee may return to work with." AR 0008.
Records of the August 30, 2010 telephone call and the August 31, 2010 and September 10, 2010 visits to Dr. Schweitzer, as well as the Doctor's Certificate (discussed above) were faxed to IDSC on September 20, 2010. UMF Nos. 24-25. The Initial Physician's Statement form does not appear to have been submitted to IDSC.
On September 20, 2010, Mr. Dixon also received an email response from Plaintiff's manager, Daniel Milanese. AR 0008-0009. Mr. Milanese described Plaintiff's job duties as follows: "Assisting customers on the sales floor for the duration of his scheduled shift. Requires that he is on his feet during this time, moving around the store." AR 0009. In response to Mr. Dixon's question regarding possible accommodations, Mr. Milanese responded: "Chairs are not allowed on the sales floor. . . . Employee must be able to walk around and stand on his feet during his shift." Id.
On September 21, 2010, IDSC sent Plaintiff's manager an email informing him that Plaintiff's STD claim had been approved through October 3, 2010. AR 00071-00073. IDSC also sent Plaintiff a letter informing him that his claim had been approved. AR 00074. The letter further informed Plaintiff as follows:
AR 00074.
On September 28, 2010, Mr. Dixon called Plaintiff and Dr. Schweitzer's office to remind them that updated medical information would be required if Plaintiff sought to extend his STD benefits beyond October 3, 2010. AR 00012. Mr. Dixon called Plaintiff and Dr. Schweitzer again on Friday, October 1, 2010, to remind them that Plaintiff's STD benefits would expire soon if IDSC did not receive updated medical information in support of Plaintiff's claim. AR 00013. Both Plaintiff and Dr. Schweitzer informed Mr. Dixon that Plaintiff had an appointment to see Dr. Schweitzer at 2 p.m. that afternoon. Id.
On Monday, October 4, 2010, Plaintiff did not return to work and IDSC did not receive any further documentation, either from Dr. Schweitzer's office or from Plaintiff. AR 00015. At the end of the day, Mr. Dixon called Plaintiff to inquire whether he would be submitting updated medical records. Id. Plaintiff told Mr. Dixon that he had been having a bad day and hadn't been able to bend his knee at all and so had been unable to leave the house but that he had a form from his doctor that he would fax to IDSC the next day, with a return to work date of October 10, 2010. Id.
The next day, Plaintiff faxed to IDSC a form entitled Certification of Treatment/Return to Work, completed by Leslie Reynolds, PA. AR 00079.
On October 14, 2010, Plaintiff faxed to IDSC a form completed by Dr. Schweitzer on October 8, 2010 entitled "Physician's Supplementary Certificate." AR 00085. The form stated that Plaintiff was last seen on October 8, 2010 and listed his diagnosis as "Gout/knee pain." Id. In response to the request that the doctor "[d]escribe how the patient's present condition or impairment prevents him or her from returning to regular and customary work," Dr. Schweitzer wrote" "still having pain in [left] knee — referred to orthopedic." Id. Dr. Schweitzer further stated that the factor "disabling the patient longer than previously estimated" was that "pt. has not completely resolved knee pain." Id. Dr. Schweitzer estimated Plaintiff could return to work on November 1, 2010. Id.
On October 19, 2010, at 6:40 pm, Mr. Dixon contacted Dr. Schweitzer's office to set up a "PA review on 10/21/10 or 10/22/10." AR 00019. The assistant who took the call, Catalina, told Mr. Dixon that she didn't have Plaintiff's chart available and was just leaving the office so she would have to call back the next day. Id. Mr. Dixon called back the next day and spoke to Catalina again. AR 00020. Catalina informed Mr. Dixon that Dr. Schweitzer would have to call him back to set up PA review appointment. Id. Dr. Schweitzer did not return Mr. Dixon's call.
On October 20, 2010, IDSDC referred Plaintiff's claim to IPA Dr. David L. Hinkamp, Board Certified Occupation/Environmental Medicine, for further review of Plaintiff's functional abilities. UMF No. 43. Dr. Hinkamp was asked whether there were any objective findings that prevented Plaintiff from performing his job duties of talking, typing, standing, walking and lifting up to 25 pounds. AR 00020. He was also asked whether Plaintiff could return to work with modifications and if so, what restrictions and limitations would be required. Id.
On October 22, 2010, Dr. Hinkamp called Dr. Schweitzer's office and left a recorded message. AR 00021.
On October 25, 2010, Dr. Hinkamp reviewed the records from Dr. Schweitzer's office and the x-ray results.
The medical notes document that the EE had gout, and knee pain. On 9/10/10, the x-ray showed tricompartmental arthritis of the left knee. The EE was treated for gout. On 10/08/10, the say [sic] that the EE may RTW on 10/10/10 — working 4 hrs a day with may need chair to sit until his next appointment, on 10/25/10. There is a note that the EE is being referred to orthopedics.
Answer to CM questions:
AR 00023-00024.
In the meantime, on October 22, 2010, Leslie Reynolds, of Dr. Schweitzer's office, had returned Dr. Kinkamp's call (of the same day) and spoken to a different doctor, Dr. Inns.
Id. Apparently, Dr. HinKamp was unaware of this conversation when he concluded on October 25, 2010 that Plaintiff did not qualify for STD benefits. However, on October 26, 2010, Dr. Hinkamp wrote that "[t]his additional information does not provide additional objective medical findings that would support changes to the opinions expressed in the Physician's Advisor Review of 10/22/10." Id.
On November 2, 2010, Mr. Dixon, on behalf of the Disability Plan, sent Plaintiff a letter informing him that his claim for continued STD benefits had been denied effective October 4, 2010. AR 00087-00088. The letter stated the following reasons for the denial:
AR 00087-00088. The letter also advised Plaintiff that he had the right to appeal the decision and included an appeal form and instructions for filing an appeal. AR 00088-00094. The appeal form instructed that any new medical information should be submitted "as soon as reasonably possible." AR 00090.
On November 5, 2010, Plaintiff called IDSC to advise that he had additional medical documentation that he planned to submit. UMF No. 48. On November 8, 202, Plaintiff faxed to IDSC the following documents: 1) a letter from Plaintiff to IDSC asking it to correct an error regarding the amount of Plaintiff's state disability payments; 2) proof of state disability income earnings; 3) a second letter from Plaintiff explaining that an MRI had recently been performed and showed that he had a "valid disability" and was "unable to stand the eight hour shifts" that were required for his position; 4) an MRI report dated November 3, 2010; and 5) a Certificate of Treatment/Return to Work form dated November 5, 2010, completed by Leslie Reynolds, PA, stating that Plaintiff's return to work date was February 1, 2011 ("the November 5 Return-to-Work Form"). UMF No. 48, AR 00103-00109.
The November 3, 2010 MRI report stated, in part, as follows:
AR 000107-000108. The report was signed by Doctor Ravi Alagappan. AR 000108.
On November 10, 2010, Plaintiff faxed an appeal form to IDSC's Quality Review Unit ("QRU"). UMF No. 50. On the form, Plaintiff stated that the reason for his appeal was that he was "unable to stand for 8 hours a day which my current position requires." AR 000110.
On November 11, 2011, Mr. Dixon sent Plaintiff an "update," informing Plaintiff that IDSC had received the November 5 Return to Work Form completed by Leslie Reynolds on November 7, after it had denied Plaintiff's continued STD benefits claim. AR 00016. The letter stated that IDSC had reviewed this addition form "as a courtesy" but that it did "provide clinical evidence to support disability" from 10/04/2010 through Plaintiff's return-to-work date and did "not alter" IDSC's previous denial. Id. The letter made no mention of the MRI results. Included with the November 11, 2010 denial letter was another copy of the QRU appeal form. UMF No. 53.
On November 16, 2010, IDSC sent Plaintiff a letter acknowledging his appeal. AR 000125. The letter quoted the definition of "total disability" for STD benefits (quoted above) and stated that "[m]edical records including chart notes, diagnostic tests, and hospital summaries, relevant to this absence should be submitted regardless of the length of the disability." Id. On the same date, Appeals Specialist Deborah Patterson called Plaintiff to discuss the appeal process. UMF No. 56; AR 00032.
On November 29, 2010, Plaintiff provided IDSC with additional medical records. UMF No. 60; AR 00127-00130. First, Plaintiff provided a "Referral Form for Outside Medical Services" from Alameda County Medical Center dated November 23, 2010, requesting a hinged knee brace to treat Plaintiff's "ligamentous injury." AR 000128. Second, Plaintiff provided a "Treatment Authorization Form" for the hinged knee brace, signed by Dr. Solares. AR 000129. Third, Plaintiff provided a Certification of Treatment/Return to Work form dated 11/23/2010 ("the November 23, 2010 Return-to-Work Form"). AR 000130. This form stated that Plaintiff had been diagnosed with "ligamentous injury" and that he was expected to be able to return to work in March 2011 with the following limitations: "may not stand > 1 hr without break, if prolonged standing required, needs seated assistance." Id. Finally, Plaintiff provided a note from Dr. Shah, of Laurence Orthopedics, indicating that Plaintiff was seen on November 23, 2011 for a hinged knee brace. AR 000126.
On December 7, 2010, the QRU referred Plaintiff's claim to Dr. William C. Andrews Jr., Board Certified in Orthopedic surgery, for an independent review. UMF No. 62. Dr. Andrews reviewed the IDSC case notes, Plaintiff's job description, and records (including the MRI findings) from AIC Fairmount/Winton, Alameda County Medical Center, Dr. Schweitzer, Leslie Reynolds, Laurence Orthopedic and Dr. Alagappan. AR 00137. Dr. Andrews left voicemail messages with the office of Dr. Schweitzer and Leslie Reynolds and Drs. Solares and Shah. Id. In both, he stated that if the calls were not returned within 24 hours, the doctors' input would not be considered in Dr. Andrews' report. Id. As to all of the providers, Dr. Andrews' report states that "a call back was not received within 24 hours." Id.
Dr. Andrews concluded that Plaintiff was not disabled from his regular job as of October 4, 2010 and offered the following "rationale" in support of his conclusion:
AR 000139.
On December 10, 2010, Deborah Patterson, on behalf of the Disability Plan, sent Plaintiff a letter informing him that his appeal had been denied. AR 000146-000147. The letter cited the conclusions of Dr. Andrews that the "medical information did not support that [Plaintiff was] disabled from [his] regular job from October 4, 2010 through present." AR 000147.
Defendant asserts that it is entitled to summary judgment because the applicable standard of review is abuse of discretion and here there has been no abuse of discretion. Defendant AT&T Umbrella Benefit Plan No. 1's Motion for Summary Judgment ("Defendant's Motion") at 14. First, Defendant contends that it is Plaintiff's burden to prove his entitlement to continued Plan benefits; this burden does not shift simply because the Plan initially granted benefits. Id. at 15. According to Defendant, Plaintiff failed to meet this burden because, although there was evidence that Plaintiff needed a knee brace and physical therapy and the MRI showed some thickening of the ACL, "there was no tear." Id. at 16. Further, Defendant contends, "no examination or test results were provided to support the severity of [Plaintiff's] condition." Id. Therefore, Defendant argues, Sedgewick reasonably concluded that "Plaintiff's knee pain and stretch-type injury to his ACL did not rise to the level of rendering him unable to work as a Retail Sales Consultant." Id.
Second, Defendant contends that under the abuse of discretion standard, the claim administrator's findings must be upheld unless they are clearly erroneous. Id. Thus, a court may overturn the administrator's decision only where it has a "definite and firm conviction that a mistake has been committed." Id. (quoting Concrete Pipe & Products of Cal. In. v. Construction Laborers Pension Trust for Southern Cal., 508 U.S. 602, 623 (1993)). Here, Defendant asserts, that standard is not met because its decision was supported by substantial evidence in the administrative record, the decision does not conflict with the plain language of the disability plan and Sedgewick provided a detailed explanation of its decision. Id. at 17. Defendant points to Dr. Andrews' conclusion "that the MRI findings established that there was no tear to Plaintiff's knee, and that he did not require surgery, but instead only needed a knee brace." Id. Defendant further cited Dr. Andrews' opinion that "there was no significant damage to Plaintiff's knee, other than arthritis, and that Plaintiff's inability to work was based solely on his subjective pain." Id. at 17. In addition, Defendant notes that Dr. Solares and Ms. Reynolds "both agreed that Plaintiff could return to his regular job with restrictions that Plaintiff could work no more than 4 hours a day, and/or that he may need a chair to sit, and/or that he could not stand more than 1 hour at a time without a break." Id.
Finally, Defendant contends that "[e]ven if, arguendo, Plaintiff's treating physicians had a contrary view to the QRU and/or Dr. Andrews of Plaintiff's condition, Sedgewick's decision to uphold the denial of further STD benefits was not arbitrary and capricious because the plan administrator is not required to give special deference to a participant's doctor's opinions." Id. at 19. Because Dr. Schweitzer's opinion was conclusory and was based on Plaintiff's subjective complaints of pain rather than examinations or clinical findings, Defendant asserts, the administrator was not required to adopt Dr. Schweitzer's opinion. In contrast, Defendant contends, the opinion of Dr. Andrews was supported by the medical documents because "Plaintiff's MRI report showed no ligament tears or substantial damage to his knee, and not one of his doctors recommended surgery." Id.
In support of Defendant's Motion, Defendant filed two declarations: 1) Declaration of Susan Hagestad in Support of Defendant AT&T Umbrella Benefit Plan No. 1's Motion for Summary Judgment ("Hagestad Decl."); and 2) Declaration of John D. Adkins in Support of Defendant AT&T Umbrella Benefit Plan No. 1's Motion for Summary Judgment ("Adkins Decl."). In addition, in support of its Reply, Defendant filed the Supplemental Declaration of Susan Hagestad in Support of Defendant AT&T Umbrella Benefit Plan No. 1's Motion for Summary Judgment ("Supp. Hagestad Decl.").
In her opening declaration, Ms. Hagestad states that she is an employee of Sedgwick and holds the position of Manager of Total Performance. Hagestad Decl., ¶ 1. She goes on to address the relationship between Sedgwick and the Disability Plan and describe the claims process administered under the Disability Plan. Id., ¶¶ 3-11, 13-14. The remainder of the declaration summarizes the administrative record in this case. In her supplemental declaration, Ms. Hagestad addresses the process by which Independent Physician Advisors ("IPAs") are retained by Sedgwick. According to Ms. Hagestad, the IPAs are employed by third party vendors, and Sedgwick does not have any role in selecting the individual medical IPA who reviews a particular disability case. Supp. Segwick Decl., ¶ 2. Ms. Hagerstad further states that "[n]o Sedgwick employee receives monetary, or any other type of, incentive from AT&T Inc., nor does Segwick have any type of target or goal for the number of disability claims to approve and/or deny." Id., ¶ 3. The third declaration, by AT&T Services, Inc. Senior Benefits Analyst John Adkins, provides an overview of the Disability Plan and the Umbrella Plan, as well as Segwick's role in the administration of the Disability Plan.
Plaintiff seeks summary judgment reversing the denial of benefits on the grounds that he could not stand for eight hours, which was a required duty, and he had submitted his treating physician's reports verifying his knee injury, disease and physical limitations. Plaintiff's Motion for Judgment on the Administrative Record; FRCP Rule 65 ("Plaintiff's Motion") at 4. According to Plaintiff, "[h]aving never examined Mr. May (although the policy allowed for exams), defendant simply disagreed with the treating physicians, and arbitrarily substituted their own consultants' subjective determination of the degree of plaintiff's knee injury and pain instead of the findings and conclusions of plaintiff's treating physicians. Id.
As a preliminary matter, Plaintiff contends that the abuse of discretion standard should be applied with heightened scrutiny because Sedgwick, although a third party administrator, has a financial conflict of interest in light of "the strict performance standards imposed by the Plan severely limiting denials to be reversed on appeal." Id. at 5. Plaintiff has not offered any evidence in support of this contention, instead stating that "discovery responses marked `Confidential' will be available to the Court at argument." Id. Plaintiff also asserts that the value of the financial arrangement between the medical group consultants and Sedgwick creates a "financial incentive for the medical consulting group to deliver medical opinions in line with a pre-determined denial of benefits." Id. Plaintiff promises to offer at the hearing discovery marked "For Attorneys Eyes Only" in support of this position. Id.
Plaintiff further contends that the denial of benefits was an abuse of discretion because it was based on a conclusory determination of lack of objective medical evidence, with no analysis of the MRI results showing knee injury and disease and no explanation of how the treating physicians reached erroneous conclusions about Plaintiff's disability. Id. at 8-9. "A detailed analysis of the medical records combined with an in office examination is what should have been the basis for a disability decision, not one remote medical records review by a medical group deriving a large income from services to Sedgwick." Id. at 9. Plaintiff further notes that "Mr. May, uninsured, had all medical treatment through Alameda County Medical Services with no financial incentive whatsoever to appease Mr. May, and given a crushing work load, certainly no time to respond to frequent requests of the defendant for immediate explanations and justifications." Id.
Plaintiff requests an award of STD benefits from the date of denial for the full 22-week period for which short term disability benefits are available under the Disability Plan. Id. at 18. Should the Court enter judgment in his favor and award continued STD benefits, Plaintiff will then file an application for long term disability benefits in accordance with the Disability Plan requirements. Id. Plaintiff also requests an award of fees and costs under 29 U.S.C. § 1132(g), arguing that the Court should exercise its discretion to award fees under this section because Defendant acted arbitrarily in denying Plaintiff's request for continued STD benefits. Id. at 19.
In support of his motion, Plaintiff filed his own declaration. Declaration of Marcus May in Support of Plaintiff's Motion for Summary Judgment; FRCP 56 ("May Decl."). In his declaration, Plaintiff summarizes the history of his medical condition and of his claim for disability benefits. He states, inter alia, that when he attempted to return to work after his doctor told him he could try to return to work with some restrictions, he was told by AT&T that it would not allow him to return to work with restrictions and would not allow him to sit in a chair while working. May Decl., ¶ 6. He also states that he was terminated from his position when he failed to return to work after Sedgewick determined that Plaintiff could stand for his entire eight-hour shift. Id., ¶¶ 6-7. Finally, Plaintiff states that he suffered a stroke in November 2011 and has been unable to rehabilitate his knee as a result. Id., ¶ 9.
Defendant brings a motion to strike the May Declaration, asserting that the declaration should be stricken because it is not part of the administrative record. Docket No. 42 at 3. Defendant further contends that to the extent that the May Declaration states that Plaintiff suffered a stroke in November 2011, is irrelevant and also more prejudicial than probative. Id. at 3-4.
In his response to Defendant's Summary Judgment Motion, Plaintiff reiterates his position that a heightened scrutiny application of the abuse of discretion standard should be applied. Plaintiff's Opposition at 1. Even if no heightened scrutiny is applied, however, Defendant's denial should be reversed because it was arbitrary and unreasonable, Plaintiff contends. Id.
In response to Defendant's motion to strike the May Declaration, Plaintiff points to the Hagestad and Adkins declarations filed by Defendant, arguing that if his declaration is stricken, so too should Defendant's declarations, which are also outside of the administrative record. Plaintiff's Opposition at 10.
In its Opposition to Plaintiff's motion, Defendant rejects Plaintiff's contention that the denial of STD benefits should be reviewed with heightened scrutiny, pointing out that Plaintiff has offered no admissible evidence that establishes a conflict of interest. Defendant's Opposition at 14. Defendant also cites decisions in this district in which courts have rejected the same argument. Id. at 15 (citing Burrows v. AT&T Umbrella Benefit Plan No. 1, 2011 WL 996748, at *2-3 (N.D. Cal. Mar. 21, 2011); Edwards v. AT&T Disability Income Plan, 2009 WL 650255, at *11 (N.D. Cal. Mar. 11, 2009)). Finally, Defendant reiterates the arguments its motion, namely, that the administrator did not abuse its discretion in denying continued STD benefits.
"A denial of benefits challenged under [29 U.S.C.] § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit Plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the Plan." Firestone Tire and Rubber Company v. Bruch, 489 U.S. 101, 115 (1989). Where the administrator has been granted discretionary authority, a denial of benefits is reviewed for an abuse of discretion. Id. In applying the abuse of discretion standard, courts should take into account any conflict interest on the part of the plan administrator. Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 965 (9th Cir. 2006). "[A]n insurer that acts as both the plan administrator and the funding source for benefits operates under what may be termed a structural conflict of interest." Id (citing Tremain v. Bell Indus., Inc., 196 F.3d 970, 976 (9th Cir.1999)). Because a structural conflict gives the plan administrator an incentive to pay as little as possible in benefits, the Ninth Circuit has held that the court should apply the abuse of discretion standard in a manner that is "informed by the nature, extent, and effect on the decision-making process of any conflict of interest that may appear in the record." Id. at 967.
As stated above, under the Disability Plan, AT&T Inc. is the Plan Administrator and has "sole and absolute discretion to interpret the provisions of the [Disability Plan], make findings of fact, determine the rights and status of participants and others under the [Disability Plan], and decide disputes under the [Disability Plan]. Further, the "Plan Administrator may delegate any of its duties or powers." As it is undisputed that AT&T Inc. has delegated its authority to make benefits determinations under the Disability Plan to Sedgewick, the Court reviews the denial of Plaintiff's benefits for an abuse of discretion.
The Court further finds no conflict of interest has been established that affects its application of the abuse of discretion standard under Abatie.
When reviewing for abuse of discretion, the Court "cannot substitute [its] judgment for the administrator's . . . [and] can set aside the administrator's discretionary determination only when it is arbitrary and capricious." Jordan v. Northrop Grumman Welfare Benefit Plan, 370 F.3d 869, 875 (9th Cir.2004), overruled on other grounds by Abatie, 458 F.3d at 969. The Supreme Court has explained that "[a]pplying a deferential standard of review does not mean that the plan administrator will prevail on the merits [but rather] . . . means only that the plan administrator's interpretation of the plan "will not be disturbed if reasonable." Conkright v. Frommert, ___ U.S. ___, 130 S.Ct. 1640, 1651 (2010) (citation omitted). "An ERISA administrator abuses its discretion only if it (1) renders a decision without explanation, (2) construes provisions of the plan in a way that conflicts with the plain language of the plan or (3) relies on clearly erroneous findings of fact." Boyd v. Bert Bell/Pete Rozelle N.F.L. Ret. Plan, 410 F.3d 1173, 1178 (9th Cir.2005). A court may find clear error "when the reviewing court is left with the definite and firm conviction that a mistake has been committed.'" Linich v. Broadspire Services, Inc., 2009 WL 775471, at *2 (D. Ariz. March 23, 2009) (quoting Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Trust for S. Cal., 508 U.S. 602 (1993)). In Salomaa v. Honda Long Term Disability Plan, the Ninth Circuit held that in determining whether this standard is met, the court should consider "whether application of a correct legal standard was `1) illogical, 2) implausible, or 3) without support in inferences that may be drawn from the facts in the record.'" 642 F.3d 666, 676 (quoting United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009)).
Defendant brings a Motion to Strike the Declaration of Marcus May in Support of Plaintiff's Motion for Summary Judgment ("Motion to Strike"), objecting to the May Declaration on the ground that the Court may consider only documents contained in the administrative record in deciding whether the denial of benefits constituted an abuse of discretion. See Docket No. 42. Plaintiff, in turn, objects to the Hagestad and Adkins declarations on the same grounds.
The Court GRANTS the Motion to Strike. The May Declaration offers factual assertions relating to the question of whether the Plan abused its discretion in denying benefits, an inquiry that is limited to the administrative record. See Kludka v. Qwest Disability Plan, 2012 WL 1681983, at *14 (D.Ariz. May 14, 2012) ("Ordinarily, `[j]udicial review of an ERISA plan administrator's decision on the merits is limited to the administrative record'") (quoting Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623, 632 (9th Cir. 2009)). Similarly, the Court sustains Plaintiff's objections to the portion of the Hagestad Declaration that summarizes the administrative record, that is ¶¶ 16-36 of that declaration.
Plaintiff's objection is OVERRULED as to the remaining portions of the Hagestad Declaration and as to the Adkins Declaration, which address the question of whether there is a potential conflict of interest that may have implications for the applicable standard of review. Plaintiff has cited no authority suggesting that the Court may not consider evidence outside of the administrative record on these matters. To the contrary, courts have recognized that evidence outside of the administrative record may be required to decide what level of scrutiny to apply to a plan's denial of benefits under ERISA where, as here, there is an alleged conflict of interest. See Pacific Shores Hosp. v. United Behavioral Health, 2012 WL 1123870, at *2 (C.D.Cal., April 2, 2012) ("in this Circuit discovery beyond the administrative record is contemplated in establishing the nature, extent, and effect on the decision-making process of a conflict of interest) (citing Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir.2006)).
Having reviewed the entire administrative record in this case, the Court finds that the termination of Plaintiff's benefits was clearly erroneous because it was illogical and without support in inferences that may be drawn from facts in the record. The Court reaches this conclusion because: 1) Plaintiff was initially found to be disabled on the basis of Dr. Schweitzer's reports documenting Plaintiff's symptoms associated with knee pain, and the updated medical records reflect that Plaintiff's symptoms remained unchanged; 2) the only physician who conducted a paper review as part of the appeals process, Dr. Andrews, did not meaningfully address Plaintiff's subjective complaints of pain and did not explain why he rejected the findings of the physicians who had examined Plaintiff that Plaintiff's pain was disabling; 3) in the face of what IDSC considered to insufficient clinical findings supporting the conclusions of Plaintiff's treating physicians, IDSC did not conduct its own examination, even though the Disability Plan allowed for such an exam.
As discussed above, IDSC initially approved Plaintiff's STD benefits based on: 1) Schweitzer's diagnosis of arthritis in Plaintiff's left knee, accompanied by "severe" pain and "markedly decreased [range of motion]," see AR 00068-00070; and 2) an x-ray revealing "tricompartmental arthritis," AR 00069.
The updated medical records do not reflect any significant change in Plaintiff's symptoms as of October 4, 2010. To the contrary, Dr. Schweitzer and Leslie Reynolds reported that Plaintiff continued to experience knee pain and Reynolds stated Plaintiff could work only 4 hour shifts and might need a chair — an accommodation that was not available. AR 00079, 00085. In addition, a subsequent MRI supported the diagnosis of arthritis in Plaintiff's left knee (finding "[f]emoropatellar arthrosis with grade IV chondrosis of the lateral patellar facet and patellar appex and grade II chondrosis of the trochlear groove"). AR 000113. The MRI also revealed "[i]ncreased signal and thickening of the antererior cruciate ligament, compatible with mucinous degeneration or partial anterior cruciate ligament disruption" and "[m]ild thickening and increased signal in the posterior cruciate ligament, consistent with low-grade partial disruption." AR 000113. Dr. Shah prescribed a hinged knee brace for Plaintiff's "ligamentous knee injury," AR 000128, and Dr. Solares found that Plaintiff could not stand for more than an hour and would need "seated assistance" if he were required to stand for prolonged periods. AS 000130. In short, none of the updated medical records offer any reasonable basis for concluding that Plaintiff's condition had improved as compared to the initial period of STD benefits.
To the extent the updated medical records document essentially the same disabling symptoms that the Plan previously found to be disabling, the Plan's termination of Plaintiff's benefits was illogical and, in combination with the additional considerations discussed below, supports a finding of clear error. See Caesar v. Hartford Life and Acc. Ins. Co., 2012 WL 1118613 (6th Cir. Jan. 13, 2012) (holding that plan administrator acted arbitrarily in cutting off benefits that it had been paying previously where there was "no evidence that [the claimant's] condition had improved since the time that it found her disabled").
The plan administrator based its denial of Plaintiff's appeal on a paper review of the record by Dr. William Andrews. The review is cursory, at best. While acknowledging Plaintiff's "subjective complaints of left knee pain," and that the MRI revealed arthritis in Plaintiff's left knee, Dr. Andrews did not explain why he disagreed with the conclusions of all of the physicians and care providers who examined Plaintiff that Plaintiff was unable to stand for prolonged periods, as his customary position required. Indeed, Dr. Andrews did not even acknowledge that Plaintiff's examining physicians consistently found that he was unable to stand for prolonged periods. Nor did Dr. Andrews speak to Plaintiffs' health care providers. Rather, he left messages stating that if they did not return his call within 24 hours their opinions would be disregarded.
Plan administrators are not required to "automatically . . . accord special weight to a claimant's physicians." Black & Decker Disability Plan v. Nord, 538 U.S. 822, 834 (2003). On the other hand, "[p]lan administrators . . . may not arbitrarily refuse to credit a claimant's reliable evidence, including the opinions of a treating physician." Id. To the extent that Dr. Andrews did not offer any meaningful explanation for his rejection of the opinion's of Plaintiff's physicians, the Disability Plan's reliance on Dr. Andrews' conclusion was arbitrary.
The administrator's denial of continued STD benefits was also arbitrary to the extent that it was based on Dr. Andrews' implicit rejection of Plaintiff's subjective complaints of pain. Dr. Andrews did not offer any specific reason for rejecting Plaintiff's subjective pain, although he apparently relied on the absence of "comprehensive exam findings." See AR 000138-000139. It is unclear what sorts of findings Dr. Andrew felt were lacking. Plaintiff had been diagnosed with arthritis in his left knee, and that diagnosis was supported by both an x-ray and an MRI. His doctors had consistently noted that Plaintiff experienced severe pain and had prescribed pain medications accordingly. They had also found that Plaintiff's range of motion was "markedly decreased." Following the MRI, Plaintiff's doctors had also diagnosed a "ligamentous injury" and prescribed a knee brace. Whatever additional findings might have been required to determine whether Plaintiff's pain was severe enough to result in disability could have been obtained by ordering an independent examination be conducted to evaluate Plaintiff's condition. It is undisputed that the Disability Plan had the right to order such an examination, yet it failed to do so.
While a plan is not required to accept a claimants subjective complaints as to the degree of severity, it may be arbitrary and capricious to reject such complaints without a principled reason. DuPerry v. Life Ins. Co. of North America, 632 F.3d 860, 874-875 (4th Cir. 2011) (holding that while disability plan was not required to simply accept subjective pain complaints, it could not simply dismiss those complaints "out of hand, especially where there is objective medical proof of a disease that could cause such pain"). Further, in determining whether the denial was arbitrary, the court may consider the fact that the plan had the right to arrange for an independent medical evaluation but failed to do so. See Smith v. Continental Cas. Co., 450 F.3d 253, 263-264 (6th Cir. 2006) (holding that plan acted arbitrarily where it denied disability claim based on rejection of subjective pain evidence but failed to order independent medical examination, even though it had the right to conduct such an examination).
Based on all of the considerations discussed above, the Court concludes that the Plan abused its discretion when it terminated Plaintiff's STD benefits. Therefore, the Court remands for an award of benefits retroactive to the effective date of denial for the full 22 week period for which STD benefits would have been available. See Pannebecker v. Liberty Life Assur. Co. of Boston, 542 F.3d 1213, 1221 (9th Cir. 2008) (explaining that "[w]here an administrator's initial denial of benefits is premised on a failure to apply plan provisions properly, we remand to the administrator to apply the terms correctly in the first instance . . . [b]ut if an administrator terminates continuing benefits as a result of arbitrary and capricious conduct, the claimant should continue receiving benefits until the administrator properly applies the plan's provisions").
Plaintiff requests an award of fees pursuant to 29 U.S.C. § 1132(g). The Court concludes that an award of attorneys' fees and costs is appropriate.
Under 29 U.S.C. § 1132(g), a court in its discretion may award reasonable attorneys' fees and costs of an action by a plan participant to either party. The Ninth Circuit has held that in exercising this discretion, district courts should consider the following factors:
Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir.1980). Courts generally construe the Hummell factors in favor of participants in employee benefit plans. McElwaine v. U.S. West, Inc., 176 F.3d 1167, 1172 (9th Cir. 1999) ("When we apply the Hummell factors, we must keep at the forefront ERISA's purposes that `should be liberally construed in favor of protecting participants in employee benefit plans").
In light of the Court's conclusion that the denial of Plaintiff's request for continued STD benefits was arbitrary and capricious, the first, third and fifth Hummell factors favor an award of fees. The second factor also favors an award as Defendant has presented no evidence in response to Plaintiff's fee request suggesting that it would be unable to satisfy an award of fees. Only one of the Hummell factors — the fourth factor — arguably does not support an award of fees. Therefore, considering all of the Hummell factors, the Court finds that Plaintiff's request for fees and costs under § 1132(g) should be granted.
Plaintiff's Motion is GRANTED. Defendant's Motion is DENIED. The parties shall meet and confer to address the amount of STD benefits to which Plaintiff is entitled under this Order, as well as the amount of Plaintiff's reasonable attorneys' fees and costs. If the parties are unable to reach agreement on these issues, within 21 days of the date of this order Plaintiff shall bring a motion setting forth any issues that remain to be resolved by the Court. Defendant may file a response within fourteen (14) days thereafter.
