GENE E.K. PRATTER, District Judge.
After receiving occupational disability payments for two years as a result of injuries suffered in an auto accident, Darlema Bey filed this action against Reliance Standard Life Insurance Company to challenge its denial of long term disability benefits beyond the initial two-year period. The parties have filed cross-motions for summary judgment
Ms. Bey is a former employee of Virtua Health, which offered an employee benefit plan that included long-term disability coverage through Reliance. Ms. Bey was injured in a car accident in August 2011. By meeting the Policy's initial definition of "total disability"— requiring that she be disabled from performing material duties of her regular occupation—she was awarded long-term disability benefits under the Policy. A.R. 59-60. These benefits were paid for a period of two years, from February 4, 2012 to February 4, 2014. To receive benefits beyond the initial two year period, however, Ms. Bey was required to satisfy a different definition of "total disability" under the Policy. The post-two year definition of "total disability" under the Policy is:
A.R. 11. Further, the Policy included a maximum 24-month limitation for disorders caused, or contributed to, by mental or nervous disorders. See A.R. 24. In other words, in order for Ms. Bey to receive benefits beyond the first two years, she was required to show (1) that she was incapable of performing any occupation she was otherwise qualified for and (2) that a mental or nervous disorder did not contribute to her disability.
To determine whether Ms. Bey could meet the heightened Policy definitions requirements to receive benefits beyond two years, Reliance obtained and reviewed information in Ms. Bey's claim file. By letter dated December 30, 2014, Reliance notified Ms. Bey that her claim was denied because Reliance had concluded, among other things, that she had transferrable skills that enabled her to perform other occupations.
Following the adverse determination, Ms. Bey retained counsel and sent several letters to Reliance requesting all information that Reliance relied upon to make its determination. In correspondence between the parties throughout the first half of 2015, Reliance acknowledged that it did not have access to certain medical information while formulating and reaching its initial decision. Also, in addition to other medical appointments, in May 2015, Ms. Bey independently obtained a functional capacity evaluation ("FCE").
Ms. Bey formally appealed her termination of benefits on June 15, 2015, and a flurry of communications followed. Reliance requested an independent medical examination ("IME")
Reliance upheld its decision to deny benefits beyond February 2014 in a letter dated January 22, 2016. A.R. 236-45. It explained that Ms. Bey had not met her burden under the Policy to show total disability. The letter detailed that Danielle Ager, Psy.D. performed neuropsychological testing, which Reliance reviewed along with updated reports from Dr. Sackstein, Dr. Matalon, and Dr. Pressman. Reliance again concluded that depression and anxiety played a role in Ms. Bey's condition and noted inconsistencies with respect to Ms. Bey's physical "weakness." Consequently, Reliance concluded that the heightened definition of total disability and the mental/nervous disorder provision barred additional benefits.
Reliance referred to the IME request in October 2015 and clarified that it had the right to request an IME "as often as it is reasonably required while a claim is pending." A.R. 241. And "failure to attend such examination is, in fact, a direct violation of the Policy, and prevents [Reliance] from obtaining an independent opinion based on an examination and review of records, as to her physical ability, or lack thereof." A.R. 242. In lieu of an IME, Reliance had Ms. Bey's claims reviewed by an independent physician, Dr. Allen, who concluded that Ms. Bey's physical complaints, while documented, did not lead to an objective finding.
Ms. Bey's complaint here alleges violations of state law for breach of contract and bad faith, as well as ERISA benefit claims and claims for statutory penalties, interest and attorney's fees. These claims were initially brought in the Pennsylvania Court of Common Pleas but were later removed to federal court on the basis of the ERISA count. Reliance answered the ERISA benefit claim and moved to dismiss the remaining claims. The parties later filed cross-motions for summary judgment.
The standards by which a court decides a summary judgment motion do not change when the parties file cross-motions. Se. Pa. Transit Auth. v. Pa. Pub. Util. Comm'n, 826 F.Supp. 1506, 1512 (E.D. Pa. 1993). Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). An issue is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is "material" if it might affect the outcome of the case under governing law. Id.
In evaluating a summary judgment motion, the court "must view the facts in the light most favorable to the non-moving party" and make every reasonable inference in that party's favor. Hugh v. Butler Cty. Family YMCA, 418 F.3d 265, 267 (3d Cir. 2005). A party seeking summary judgment bears the initial responsibility for informing the district court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the moving party's initial burden may be met by "pointing out to the district court that there is an absence of evidence to support the non-moving party's case." Id. at 325. Summary judgment is proper if the non-moving party fails to rebut by making a factual showing "sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322.
Reliance moved for summary judgment as to all of Ms. Bey's claims. The summary judgment briefing focused on Ms. Bey's ERISA claim and Reliance incorporated arguments made in its motion to dismiss regarding the state law claims and the ERISA penalty claim. Although she is not explicit, Ms. Bey appears to move for summary judgment as to only her ERISA claim.
The Court finds that Ms. Bey's state law claims are preempted by ERISA and that Reliance is entitled to summary judgment in its favor in all respects.
Ms. Bey's state law claims are preempted by ERISA. The Third Circuit Court of Appeals has held that claims for breach of contract, breach of the implied covenant of good faith and fair dealing and breach of fiduciary duty, related to the administration of a long term disability plan governed by ERISA, are preempted by federal law. See Menkes v. Prudential Ins. Co. of Am., 762 F.3d 285, 296 (3d Cir. 2014). Such state law claims are expressly preempted by the ERISA statute, which states that the federal regulatory scheme "shall supersede any and all State laws insofar as they may now or hereafter related to any employee benefit plan [subject to ERISA]." Id. at 293 (quoting 29 § U.S.C. 1144(a)). Ms. Bey's claims are likewise subject to conflict preemption because the state law claims duplicate, supplement or supplant the ERISA civil enforcement remedy. Id. at 294. Congress intended for the causes of action and remedies available under ERISA § 502 to be the exclusive vehicles for actions by ERISA plan participants asserting improper plan administration. Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004) (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987)); Menkes, 762 F.3d at 294.
Ms. Bey argues that Reliance owed her a fiduciary duty and that its refusal to provide a definitive statement as to whether the claims at issue were covered by ERISA now estops Reliance from claiming that ERISA has preemptive effect. However, Ms. Bey's position is nonresponsive to the argument put forward by Reliance—namely, that the breach of contract and bad faith claims in the complaint are preempted by ERISA. Given that preemption is expressly delineated by statute, not left to exist only by the whim or engagement of a litigant, the Court can divine no reason why Reliance's failure to take a definite position as to the applicability of ERISA prior to the lawsuit should equitably bind it from later arguing ERISA's stated preemptive effect.
Ms. Bey requests that the Court award her benefits under § 502(a)(1)(B) of ERISA.
One of the factors a court should consider in determining if a plan administrator has been arbitrary or capricious is whether a conflict of interest exits such that a plan administrator both determines eligibility and pays benefits. See Metro Life Ins. Co. v. Glenn, 554 U.S. 105, 108 (2008). Ms. Bey urges that such a conflict exists here. Reliance does not deny that it serves a dual capacity, but contends that the conflict should only be considered to "break the tie." It also maintains that its decision was not motivated by self-interest and that it preserved the integrity of the review as demonstrated by, inter alia, independent physician review of Ms. Bey's file. The Court does not find this superficial conflict determinative.
Ms. Bey also argues that procedural irregularities weigh in favor of determining that Reliance's decision was arbitrary or capricious. Examples of procedural irregularities include, for example, reversal of an administrator's position, reliance on requirements extrinsic to the plan, non-compliance the ERISA statute and the accompanying regulations, failure to address all relevant diagnoses, or failure to consider claimant's ability to perform job requirements. See Miller v. Am. Airlines, Inc., 632 F.3d 837, 848-56 (3d Cir. 2011).
Ms. Bey primarily argues that Reliance's determination was arbitrary and capricious because it failed to give proper credence to her treating physicians.
Ms. Bey also argues that Reliance should not have relied on the in-house vocational report determining that she was capable of performing other occupations because the suggested alternate occupations involved frequent sitting, which she contends she cannot do. In Havens v. Cont'l Cas. Co., 186 F. App'x 207, 213 (3d Cir. 2006), the Court of Appeals concluded that an administrator "may reasonably rely on its vocational experts to help it identify alternate occupations, but it is not rational to defer to such experts in the absence of a threshold indication that their conclusions . . . are the product of reliable principles and methods applied reliably to the facts of the case." In Havens, the defendant did not make a determination as to either the claimant's capacity or the alternate occupation's requirements. That is not the case here. The denial letter explained Reliance's understanding of Ms. Bey's limitations, and there is no evidence that Mr. Zurick's report was anything other than the "product of reliable principles and methods applied reliably to the facts of the case." While there may be disagreement over the suitability of alternate occupations, the Court cannot say that Reliance was arbitrary or capricious in relying on the report.
Ultimately, an independent physician, Dr. Allen, reviewed Ms. Bey's records for Reliance and concluded that she was unable to make an objective finding of total disability.
Finally, Ms. Bey seeks penalties from Reliance for failure to adequately respond to the Ms. Bey's written requests for certain information regarding her claim. Under ERISA, a benefit plan's "administrator" is required to produce certain documents within 30 days of a written request from a beneficiary, and may be subject to penalties for the administrator's failure to do so. See Tetreault v. Reliance Standard Life Ins. Co., 769 F.3d 49, 58 (1st Cir. 2014) (citing 29 U.S.C. §§ 1021(a), 1132(c)(1)(B)). Under the statute the "administrator" is defined as
29 U.S.C. § 1002(16)(A); see Groves v. Modified Ret. Plan for Hourly Paid Employees of Johns Manville Corp. & Subsidiaries, 803 F.2d 109, 116 (3d Cir. 1986). The complaint refers to Reliance as a "fiduciary" of the plan, not the plan's administrator. While it is not entirely clear who the administrator is, Reliance cannot be sued as a de facto plan administrator simply because it responded to counsel's requests. See, e.g., Tetreault v. Reliance Standard Life Ins. Co., 769 F.3d 49, 60 (1st Cir. 2014) ("[T]he mere fact that Reliance Standard responded to a letter seeking documents relevant to the benefit plan does not make Reliance Standard the de facto `administrator.'").
Furthermore, Ms. Bey seeks statutory penalties on the basis of alleged violations of a regulation, not a statute. Count IV of the Complaint references two provisions—29 U.S.C. § 1132(c), which is the statutory penalty provision, and 29 C.F.R.§ 2560.503-1, which is a regulation detailing ERISA claims procedures. The Third Circuit Court of Appeals held in Groves v. Modified Ret. Plan for Hourly Paid Employees of Johns Manville Corp. & Subsidiaries, that § 502(c), codified at 29 U.S.C. § 1132(c), does not authorize sanctions for violations of agency regulations. 803 F.2d 109, 113 (3d Cir. 1986) ("[S]anctions may not be imposed on a plan administrator for his failure to fulfill obligations imposed only by regulations promulgated pursuant to ERISA."). The Court explained that § 502(c) of ERISA only authorizes sanctions for breach of duties imposed by "this subchapter," and reasoned that this only referred to obligations identified in statute—not in regulation. Id. at (citing 29 U.S.C. § 1132(c)(1)). So, even if the Court were to consider Reliance a plan administrator, penalties would not be appropriate where, as here, a regulation formed the basis of the alleged violation and the demand for sanctions.
For the foregoing reasons, the Court will deny Ms. Bey's motion for summary judgment and grant Reliance's. An appropriate order follows.
