Filed: Dec. 11, 2007
Latest Update: Mar. 02, 2020
Summary: Opinions of the United 2007 Decisions States Court of Appeals for the Third Circuit 12-11-2007 Tylwalk v. Prudential Ins Co Precedential or Non-Precedential: Non-Precedential Docket No. 06-4525 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2007 Recommended Citation "Tylwalk v. Prudential Ins Co" (2007). 2007 Decisions. Paper 97. http://digitalcommons.law.villanova.edu/thirdcircuit_2007/97 This decision is brought to you for free and open access by the
Summary: Opinions of the United 2007 Decisions States Court of Appeals for the Third Circuit 12-11-2007 Tylwalk v. Prudential Ins Co Precedential or Non-Precedential: Non-Precedential Docket No. 06-4525 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2007 Recommended Citation "Tylwalk v. Prudential Ins Co" (2007). 2007 Decisions. Paper 97. http://digitalcommons.law.villanova.edu/thirdcircuit_2007/97 This decision is brought to you for free and open access by the O..
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Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
12-11-2007
Tylwalk v. Prudential Ins Co
Precedential or Non-Precedential: Non-Precedential
Docket No. 06-4525
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2007
Recommended Citation
"Tylwalk v. Prudential Ins Co" (2007). 2007 Decisions. Paper 97.
http://digitalcommons.law.villanova.edu/thirdcircuit_2007/97
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_________
NO. 06-4525
_________
LOU ANN TYLWALK,
Appellant
v.
PRUDENTIAL INSURANCE COMPANY;
RELIANT ENERGY
_________
Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil No. 04-cv-222J)
District Judge: Honorable. Kim R. Gibson
_________
Argued October 31, 2007
BEFORE: RENDELL and NYGAARD, Circuit Judges,
and McCLURE,* District Judge
Filed: December 11, 2007
_________
Carl A. Belin, Jr. [ARGUED]
Belin & Kubista
15 North Front Street
P.O. Box 1
Clearfield, PA 16830
Counsel for Appellant
*
The Hon. James F. McClure, Jr., Senior Judge, United States District Court for the
Middle District of Pennsylvania, sitting by designation.
Jonathan Dryer
Salvatore A. Clemente [ARGUED]
Wilson, Elser, Moskowitz, Edelman & Dicker
601 Walnut Street
The Curtis Center, Suite 1130
Philadelphia, PA 19106
Counsel for Appellee
_________
OPINION OF THE COURT
_________
McCLURE, District Judge.
Appellant Lou Ann Tylwalk filed a complaint against appellee, Prudential
Insurance Company (“Prudential”) pursuant to the Employee Retirement Income Security
Act, 29 U.S.C. § 1001 et seq. (“ERISA”). After cross-motions for summary judgment
were filed, the district court granted Prudential’s motion and denied Tylwalk’s motion.
For the reasons provided below, we will reverse and remand.
I. FACTUAL AND PROCEDURAL BACKGROUND
Tylwalk was a full-time employee of Reliant Energy (“Reliant”) working as a
control room operator and a member of Local 459 of the International Brotherhood of
Electrical Workers AFL-CIO (“the Union”). Under the collective bargaining agreement
between the Union and Reliant, employees were provided with life insurance which
included disability benefits (“the Plan”). The Plan provided disability benefits for
individuals who became “totally disabled” and also provided a one-time $20,000
disability payment for an employee who became “totally and permanently disabled.”
2
On August 24, 2001, Tylwalk was camping with her family when a large tree fell
onto a tent occupied by Tylwalk. As a result of the accident, Tylwalk suffered severe
head injuries. These injuries included a closed head injury, multiple facial skeletal
fractures, a fractured right frontal bone and supraorbital rim, nasal bone fractures,
blowout fracture of the right orbital floor, LeFort I maxillary fracture, fracture of the right
coronoid process of the mandible, and facial and scalp fractures and abrasions. Tylwalk
underwent an extensive recovery period involving multiple surgeries.
Tylwalk’s treating physician was Dr. Guy A. Catone. On May 5, 2003, Dr. Catone
opined that “the prognosis for her facial injuries is good and she will be left with some
residual disabilities related to moderate double vision in the right eye.” Similarly, he
stated that “[t]he double vision and psychological problems will be permanent albeit
somewhat improved over time.”
Tylwalk also received psychological counseling and treatment from Ronald
Lingle, a licensed psychologist. On May 16, 2003, Lingle opined that Tylwalk had
difficulty working with memory, spatial reasoning, speeded response, and processing
multiple sources of information. He stated that he had met with Tylwalk a total of thirty-
five times over a fourteen month period and that she could not return to her job as a
control-room operator now or in the future. Furthermore, he stated that “it has been over
a year and a half since the accident and brain injury, with very little further cognitive
recovery expected from this point.” Lingle also stated that “[h]er continued
reconstructive surgical status combined with her ongoing mood fluctuations would also
3
preclude any other gainful work in the near future (2-3 years). Further prognosis past this
point will require neuropsychological, psychological, and occupational testing to
determine physical, cognitive, and emotional readiness for employment.” Finally, at the
end of the report, Lingle stated that he was “hopeful that she can eventually return to the
workforce in some capacity as her past excellent work record is a source of pride and self-
esteem for [her].”
On March 24, 2004 in a letter, Lingle further opined:
I would like to clarify that when [the May 16, 2003] report was
written, Lou Ann was having a difficult time grieving the loss of her former
active and working life and I did not want to imply in a document that she
may have access too [sic], that she could never work in any capacity, ever
again. As Lou Ann was/is on two antidepressants, and [sic] anti-anxiety
pill, and a sleeping pill, I wanted to express some hope in my letter to you,
even though I do not now and never believed that she would work in any
capacity again. Please understand that in my profession, we write every
note and letter as if the patient is reading them. As you know, they own the
medical record and can see it at any time by law.
Therefore, as Lou Ann Tylwalk’s treating psychologist, it is my opinion
that Lou Ann Tylwalk is totally and permanently disabled from performing
any work in any capacity for the remainder of her life.
(emphasis in original).
On February 28, 2003, an Administrative Law Judge for the Social Security
Administration determined that Tylwalk was disabled within the meaning of the Social
Security Act. The ALJ concluded that Tylwalk’s mental condition met the requirements
of Listing 12.02, which is met “when the claimant has psychological or behavioral
abnormalities associated with brain dysfunction, with a history and physical examination
4
or laboratory tests demonstrating the presence of a specific organic factor judged to be
etiologically related to the abnormal mental state and loss of previously acquired
functional abilities.”
Tylwalk applied for disability benefits under the Plan. On September 22, 2003,
Prudential determined that Tylwalk was “totally disabled” under the Plan but that there
was no evidence that she was “totally and permanently disabled” and therefore she was
not entitled to the one-time $20,000 disability payment. On December 22, 2003,
Prudential denied Tylwalk’s request for reconsideration. On June 1, 2004, Prudential
denied Tylwalk’s appeal.
Following the final denial, Tylwalk filed a complaint in the Court of Common
Pleas of Clearfield County, Pennsylvania pursuant to ERISA. The action was removed
by Prudential to the United States District Court for the Western District of Pennsylvania.
On September 28, 2006, after cross-motions for summary judgment were filed, the district
court granted Prudential’s motion and denied Tylwalk’s motion. This appeal followed.
II. JURISDICTION AND STANDARD OF REVIEW
The district court had jurisdiction pursuant to ERISA, 29 U.S.C. § 1132(e)(1). We
have appellate jurisdiction to review the district court’s final order pursuant to 28 U.S.C.
§ 1291.
We exercise plenary review of the district court’s resolution of cross-motions for
summary judgment. Brentwood Med. Assoc. v. United Mine Workers of Am., 396 F.3d
5
237, 240 (3d Cir. 2005) (citation omitted). Therefore, we apply the same test the district
court applied: 1) whether there are no material facts in dispute; and 2) whether one party
is entitled to judgment as a matter of law. Int'l Union, United Mine Workers of Am. v.
Racho Trucking Co.,
897 F.2d 1248, 1252 (3d Cir. 1990) (citing Fed. R. Civ. Pro. 56(c)).
Under ERISA, an administrator’s decision to deny benefits is by default reviewed
de novo unless the plan gives the administrator discretionary authority to determine the
employee’s eligibility. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115,
109
S. Ct. 948,
103 L. Ed. 2d 80 (1989). If the plan gives the administrator discretionary
authority, then the decision is reviewed for abuse of discretion.
Id. at 115. In the instant
case, there is no dispute that the Plan gives the administrator discretionary authority to
determine eligibility.
In Firestone, the Supreme Court noted that if the administrator has discretion but is
operating under a conflict of interest, that conflict should be weighed as a factor when
considering whether there was an abuse of discretion. Id. In accordance with this
requirement, we established a sliding scale approach in Pinto v. Reliance Standard Life
Ins. Co.,
214 F.3d 377, 392 (3d Cir. 2000). The sliding scale allows for the court to
intensify its scrutiny of the administrator’s decision to match the degree of conflict that
may be present in the administrator’s decision-making process.
Id.
Recently, in Post v. Hartford Ins. Co., we elaborated on the process set out in
Pinto.
501 F.3d 154, 160-165 (3d Cir. 2007). We emphasized that the sliding scale
6
approach requires the consideration of both structural and procedural factors. Id. at 162
(citing
Pinto, 214 F.3d at 392-93). The structural inquiry focuses on financial incentives
to deny claims while the procedural inquiry focuses on how the administrator treated the
particular claimant.
Id.
Turning first to the structural inquiry in the instant case, we begin by noting that in
Pinto, we listed four nonexclusive structural factors to consider: “1) the sophistication of
the parties; 2) the information accessible to the parties; 3) the exact financial arrangement
between the insurer and the company; and 4) the status of the fiduciary, as the company’s
financial or structural deterioration might negatively impact the ‘presumed desire to
maintain employee satisfaction.’”
Pinto, 214 F.3d at 392. The only factor which appears
to have any applicability to the instant case is the financial arrangement of the plan. In
the instant case, the record is scant as to the precise financial arrangement between the
employer and plan administrator. In fact, the record simply contains a stipulation that
states that “the claim review is handled by the Plan Administrator Prudential Insurance
Company” who “has the sole discretion to interpret the terms of the [contract], to make
factual findings, and to determine eligibility for benefits.” Furthermore, the stipulation
states that “Prudential also funds the plan through insurance.” Finally, the stipulation
states that “the proper standard of review is a sliding scale of heightened scrutiny of the
arbitrary and capricious standard.” Thus, although the exact financial arrangement is
unclear, Prudential has stipulated to the fact that it both funds and administers the plan.
7
Therefore, the fact that Prudential has a financial incentive to deny claims warrants a
heightening of our review.
Turning to the procedural inquiry, we now consider any procedural irregularities
that raise suspicion in the plan administrator’s decision-making. We have again already
set out a nonexclusive list of procedural irregularities to consider: 1) reversal of position
without additional medical evidence; 2) self-serving selectivity in the use and
interpretation of physician’s reports; 3) disregarding staff recommendations that benefits
be awarded; and 4) requesting a medical examination when all the evidence indicates
disability. Post, 501 F.3d at 165 (citations omitted). We find that the instant case does
present some procedural irregularity. As we will discuss in more detail in our analysis of
Prudential’s decision, it appears that Prudential completely disregarded the opinion
expressed in Lingle’s March 24, 2004 letter when it denied Tylwalk’s appeal on June 1,
2004. We find this especially relevant because Prudential had already heavily relied on
Lingle’s opinion when it made its September 22, 2003 and December 22, 2003 denials.
In fact, it appears that the only reason Lingle sent the letter was because he believed that
Prudential had misinterpreted the opinions he expressed in his previous report. We
believe this irregularity constitutes a selective use of medical reports and warrants yet
another heightening of our review.
Having found both that Prudential has a strong financial incentive to deny claims
(a weighty structural factor) and that Prudential selectively used medical reports (a
8
weighty procedural factor), we will conduct a significantly heightened form of arbitrary
and capricious review. Under this review, we will give less deference to Prudential than a
pure arbitrary and capricious review, but our review will not be a de novo review.
Therefore, our inquiry is not whether Prudential made the same decision as we would
have made. Abnathya v. Hoffmann-La Roche, Inc., 2 F.3d 40, 45 (3d Cir. 1993) (citation
omitted). Rather, we will searchingly review both the merits and the process to determine
whether Prudential’s decision to deny permanent disability was the product of reasoned,
disinterested discretion.
Post, 501 F.3d at 168.
III. DISCUSSION
A. Prudential’s Decision to Deny Permanent Disability Benefits
As a preliminary matter, we note that Prudential was not required to determine that
Tylwalk was not “totally and permanently disabled” in order to deny her the $20,000
permanent disability benefit. Instead, it only had to conclude that there was not sufficient
evidence to determine that she was “totally and permanently disabled.” In other words,
Tylwalk had to show the permanence of her disability, rather than Prudential’s having to
show a lack of permanence.
On September 22, 2003, Prudential made its first denial of Tylwalk’s claim for
permanent disability. When Prudential made its decision, it had before it the medical
reports of Dr. Catone and Lingle, as well as the Social Security Administration’s decision.
The claim was referred to Prudential’s medical director, Dr. Kowalski, who concluded
9
that the medical records did not support a finding of permanent disability. In its letter of
denial sent to Tylwalk, Prudential relied on Lingle’s reference to two to three years of
recovery and his statement that he was hopeful that Tylwalk would be able to return to the
workforce in some capacity in the future.
On November 26, 2003, Tylwalk submitted an appeal of the denial. In her request,
Tylwalk emphasized her belief that Prudential had taken Lingle’s statement out of context
and that the report read as a whole expresses the opinion that Tylwalk is permanently
disabled. On December 22, 2003, Prudential denied the request for reconsideration and
once again found that there was no evidence to suggest that Tylwalk was permanently
disabled. Prudential again relied on Lingle’s reference to two to three years of recovery
and his statement that he was hopeful that Tylwalk would be able to return to the
workforce in some capacity.
With respect to these first two denials, it is important to note that Prudential had
yet to receive Lingle’s March 24, 2004 letter in which he clarified his earlier report and
stated that he has never believed that Tylwalk would be able to work in any capacity ever
again. This is important because our heightened form of arbitrary and capricious review
is limited to the record before the plan administrator. Kosiba v. Merck & Co., 384 F.3d
58, 67 n.5 (3d Cir. 2004) (citing Mitchell v. Eastman Kodak Co.,
113 F.3d 433, 440 (3d
Cir. 1997)).
On April 5, 2004, Tylwalk submitted her second appeal. This appeal did contain
10
Lingle’s March 24, 2004 letter. Although not entirely clear from the record, it appears
that the letter was not sent to Dr. Kowalski because the claims examiner concluded that it
did not contain any objective medical evidence requiring a physician’s review. Thus,
having dismissed Lingle’s letter, Prudential once again rejected Tylwalk’s claim of
permanent disability on June 1, 2004.
B. Was the Decision Arbitrary and Capricious?
Having already concluded that the instant case warrants a significantly heightened
form of arbitrary and capricious review, we will first consider whether Prudential’s
decisions were arbitrary and capricious under a pure arbitrary and capricious review.
Only if we conclude that the decisions were not arbitrary and capricious must we consider
whether the heightening of our review and the decreased deference that it requires
warrants a different conclusion.
Even considering Lingle’s statements about returning to work, we have concerns
with Prudential’s initial denial on September 22, 2003 and the denial of her first appeal on
December 22, 2003. When making these denials, Prudential had before it the medical
reports from Dr. Catone and Lingle which both appeared to opine that Tylwalk’s injuries
were permanent. In his report, Dr. Catone opined that “[Tylwalk] will be left with some
residual disabilities related to moderate double vision in the right eye” and that “[t]he
double vision and psychological problems will be permanent albeit somewhat improved
over time.” Similarly, Lingle opined that Tylwalk had difficulty working with memory,
11
spatial reasoning, speeded response, and processing multiple sources of information” and
that there would be “very little further cognitive recovery expected from this point.”
Considering these opinions, we do not understand how Prudential could conclude
that Tylwalk was “totally disabled” but was not “totally and permanently disabled” when
the very same issues that led Prudential to the conclusion that she was “totally disabled”
were opined to be permanent by Dr. Catone and Lingle. If we were reviewing this case
de novo, we would have never relied on Lingle’s discussions about returning to work as
evidence that her injuries were not permanent. Instead, we would have relied on Dr.
Catone and Lingle’s opinions regarding the permanence of her injuries. Nevertheless, we
will decline to rule on whether Prudential’s first two denials were arbitrary and
capricious. We simply emphasize that these first two denials are suspect, which only
strengthens our belief that the third denial was arbitrary and capricious.
We now turn to Prudential’s third denial which occurred on June 1, 2004. Unlike
the previous two denials, Prudential did have Lingle’s March 24, 2004 letter before it
when it made this denial. Yet, the letter was discounted because Prudential believed that
it contradicted Lingle’s prior report and because it contained no medical evidence.
At the very least, Lingle’s prior report was subject to interpretation as to whether
he opined that Tylwalk’s disability was permanent. We say at the very least because, as
we have just discussed, interpreting the prior report as suggesting that her disability was
not permanent was borderline unreasonable. The other more reasonable interpretation is
12
that the report expresses the opinion that Tylwalk is permanently disabled. Considering
that the earlier report is open to interpretation, it is inaccurate to characterize the March
24, 2004 letter as a contradiction of the earlier report. This could only be the case if the
earlier report unequivocally expressed the opinion that her disability was not permanent.
Rather, the letter clarifies any ambiguity that may have existed in his report and should
have indicated to Prudential that it had misinterpreted the opinion expressed in the earlier
report. Similarly, we do not believe that the letter can be discounted due to a lack of
medical evidence. Because the letter’s purpose was to clarify his earlier report, rather
than a change in his opinion, he was obviously still relying on the medical evidence in the
earlier report.
Having found that there is no basis to disregard Lingle’s March 24, 2004 letter, we
believe our decision becomes quite simple. Lingle’s letter unequivocally expresses an
opinion of permanent disability. Furthermore, Dr. Catone’s report suggests that
Tylwalk’s vision problems are permanent. Finally, there is no evidence in the record that
would contradict either of these two opinions, such as an independent medical review
performed by Prudential. Therefore, we find that Prudential’s decision to deny permanent
disability on June 1, 2004 was arbitrary and capricious even under a pure arbitrary and
capricious standard of review, and this is sufficient to warrant a reversal of the district
court.
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IV. CONCLUSION
Because Prudential’s decision to deny permanent disability benefits was arbitrary
and capricious, we reverse the District Court’s grant of summary judgment in favor of
Prudential and grant Tylwalk’s motion for summary judgment. We will remand the case
for a determination of whether an award of attorney’s fees is appropriate.
14
