Rude v. Intel Corporation Long Term Disability Plan et al

Filing 68

ORDER granting 45 Motion for Summary Judgment; denying 47 Motion for Summary Judgment. IT IS FURTHER ORDERED DENYING as moot the parties' motion for direction from the court (doc. 67 ). Signed by Senior Judge Frederick J Martone on 3/27/13. (LAD)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiff,
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vs.
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Intel Corp. Long Term Disability Plan;)
Intel Corp.; Aetna Life Insurance Co., )
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Defendants.
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No. CV-11-01966-PHX-FJM

Allen Rude,
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ORDER

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The court has before is defendants’ motion for summary judgment (doc. 45),

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plaintiff’s response (doc. 57), defendants’ reply (doc. 63); plaintiff’s motion for summary

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judgment (doc. 47), defendants’ response (doc. 52), and plaintiff’s reply (doc. 64). We also

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have before us the parties’ motion for direction from the court (doc. 67).

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I

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Plaintiff, a claimant under the Intel Corporation Long Term Disability Plan (Plan),

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brought this action against the Plan and Aetna Life Insurance Company, the plan

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administrator, challenging the denial of LTD benefits. Aetna determined that plaintiff does

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not qualify for benefits under Intel’s LTD Plan because he did not submit Objective Medical

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Findings (as that term is defined in the Plan) which establish that he is incapable of

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performing his sedentary systems analyst position.

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Intel provides a self-funded LTD Plan for its employees. It delegated claims

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administration responsibility to Aetna, who has “the discretionary authority to interpret the

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Plan in order to make eligibility and benefit determinations as to whether any individual is

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entitled to receive benefits under the Plan.” DSOF ¶ 6. The Plan is designed to cover only

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those conditions that are “substantiated by Objective Medical Findings and which render[ ]

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a Participant incapable of performing work.” DSOF ¶ 4. The Plan defines “Objective

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Medical Findings” as:

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measurable, independently-observable abnormality which is evidenced by one
or more standard medical diagnostic procedures including laboratory tests,
physical examination findings, X-rays, MRIs, EEGs, ECGs, “Catscans” or
similar tests that support the presence of a disability or indicate a functional
limitation.

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AR 1215. Specifically excluded from the definition of “Objective Medical Findings” are

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“tests that depend on Participant self-reports,” “[t]ests whose results vary depending on the

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Participant’s expenditure of effort,” “physicians’ opinions or other third party opinions based

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on the acceptance of subjective complaints,” and “labor market and other non-medical

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factors.” Id.

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Plaintiff first filed a claim for a leave of absence and short-term disability under

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Intel’s short-term disability plan. Dr. Connie Sterling, plaintiff’s primary care physician,

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supported the claim for benefits “at plaintiff’s request” due to plaintiff’s self-reports of pain,

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fibromyalgia, and nonrestorative sleep. DSOF ¶¶ 16, 22. On May 28, 2009, Dr. Sterling

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submitted her final attending physician report stating that she did “not feel qualified to certify

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absence beyond 6/30/2009.” DSOF ¶ 22. In other words, Dr. Sterling was unwilling to

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certify disability beyond the short-term disability period.

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Once the short-term benefits had been exhausted, plaintiff filed a claim for LTD

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benefits. In support of his initial claim, plaintiff submitted reports by his new treating

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physician, Dr. Steve Fanto. After examining plaintiff one time, and based upon plaintiff’s

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self reports of “severe pain [and] fatigue,” Dr. Fanto concluded that plaintiff had “no ability

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to work” and would “never” be able to return to work. DSOF ¶ 24. Six months later, Dr.

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Fanto reported that plaintiff’s “pain complaints [are] adequately controlled with medication

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management.” DSOF ¶ 27.

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On January 8, 2010, Aetna denied plaintiff’s claim for LTD benefits, concluding that
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plaintiff had not submitted Objective Medical Findings to substantiate that he is incapable

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of performing work on a full-time basis. DSOF ¶ 31.

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Plaintiff filed an administrative appeal and submitted additional medical records for

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Aetna’s Appeals Committee’s consideration, including X-ray and MRI reports, attorney-

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generated checklists by Dr. Steve Fanto and Dr. Haagen Diener, a functional capacity

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evaluation (“FCE”), and an employability and earning capacity assessment (“EECA”).

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DSOF ¶ 36. Dr. Diener filled out a checklist indicating that he had reviewed plaintiff’s

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medical records and in his opinion the “objective medical findings . . . substantiate

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[plaintiff’s] inability to perform the duties of his prior and/or any other occupation.” AR 717.

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Specifically, Dr. Diener stated only that “X-rays demonstrate arthritis, [and] physical exam

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demonstrates decreased range of motion.” Id.

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On appeal, Aetna retained four medical experts in specialized fields to review

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plaintiff’s medical records.

Aetna sent plaintiff’s treating physicians copies of the

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specialists’ reports and informed plaintiff’s lawyer that he could submit additional

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documentation for review on appeal. DSOF ¶ 47. Plaintiff did not submit additional records.

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The Appeals Committee considered the evidence of record and upheld the denial of

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benefits. DSOF ¶¶ 49-50. The Committee explained that reviewing physician, Dr. Tamara

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Bowman, an internal medicine specialist, found that “[f]rom an internal medicine standpoint,

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there is no documentation of clinical findings to support any functional impairment.” AR

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548. Dr. Philip Marion, a physical medicine and rehabilitation specialist, concluded that the

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FCE findings and Dr. Fanto’s report that plaintiff was incapable of working were “contrary

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to the lack of objective findings via physical examination or radiological studies to support

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such a degree of restricted activity.” DSOF ¶ 46. Reviewer Dr. Kelly Agnew, a board

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certified orthopedist, opined that the “results of the [FCE] would not be consistent with

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imaging data,” DSOF ¶ 42, and “[e]ven with arthritic complaints, there is nothing which

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would preclude full time sedentary duties.” DSOF ¶ 46. Finally, Dr. Agnew opined that Dr.

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Fanto’s “suggestion that [plaintiff] is unemployable would not withstand scientific scrutiny.”

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DSOF ¶ 42. Dr. Agnew concluded that “[a]ll in all a full time sedentary level of activity
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could be expected.” DSOF ¶ 46, AR 859. The Appeals Committee concluded that “there

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[is] insufficient medical evidence as required by the Plan to support his inability to perform

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the work of his regular occupation as of 01/15/10 and thereafter.” AR 548.

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II

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A claim challenging the denial of benefits will be reviewed for an abuse of discretion

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where the plan gives the administrator discretionary authority to determine eligibility for

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benefits or to construe the terms of the plan. Metropolitan Life Ins. Co. v. Glenn, 554 U.S.

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105, 111, 128 S. Ct. 2343, 2348 (2008); Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955,

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963 (9th Cir. 2006). Here, the Intel Benefits Administrative Committee unambiguously

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delegated to Aetna “the discretionary authority to interpret the Plan in order to make

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eligibility and benefit determinations.” DSOF ¶ 6. Therefore, we apply an abuse of

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discretion standard, under which we will uphold a plan administrator’s decision to deny

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benefits if it is based on a reasonable interpretation of the plan’s terms and if it was made in

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good faith. McDaniel v. Chevron Corp., 203 F.3d 1099, 1113 (9th Cir. 2000).

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The presence of a conflict of interest does not affect the standard of review. Abatie,

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458 F.3d at 965 (“[A]buse of discretion review applies to a discretion-granting plan even if

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the administrator had a conflict of interest.”). Instead, a reviewing court will consider the

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conflict as a factor in determining whether the plan administrator abused its discretion in

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denying benefits. Glenn, 554 U.S. at 108, 128 S. Ct. at 2346. “An egregious conflict may

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weigh more heavily (that is, may cause the court to find an abuse of discretion more readily)

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than a minor, technical conflict might.” Abatie, 458 F.3d at 968.

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A

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The Intel Plan defines “disability” as “[a]ny illness or injury that is substantiated by

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Objective Medical Findings and which renders a Participant incapable of performing work.”

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DSOF ¶ 4. Plaintiff contends that he is disabled “due to a host of medical problems

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including degenerative disc disease of the spine with a lumbar radiculopathy, both

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objectively confirmed by MRI Scan.” PMSJ at 4.

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Aetna denied plaintiff’s LTD claim, concluding that “[m]ultiple radiological studies
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were consistently documented as normal, negative, or age appropriate. . . . Neurological

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examination was consistently documented as normal. There was no evidence of specific

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inflammatory joint disease on physical examination.

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demonstrate age appropriate degenerative changes without evidence of acute significant

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pathology.” AR 548. The MRI of the lumbar spine was “essentially negative” and two other

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MRIs “reflect[ed] mild degenerative changes” to the mid-cervical spine and “no evidence of

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acute osseous traumatic injuries of the shoulder with only degenerative changes of

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acromioclavicular joints with the right greater than the left.” AR 526. Aetna determined that

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the MRIs did not “substantiate [that plaintiff was] incapable of performing work on a full

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Multiple radiological studies

time basis.” Id.

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Plaintiff contends that Aetna abused its discretion by failing to credit Dr. Fanto’s

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opinion that plaintiff is unable to work. Dr. Fanto’s examination revealed that plaintiff is “in

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moderate distress secondary to pain. Ambulates with a marked antalgic gait. Range of

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motion of the low back limited in forward flexion and extension.” PSOF ¶ 17. Dr. Fanto’s

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diagnosis was severe osteoarthritis, degenerative joint disease, and myofascial dysfunction.

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PSOF ¶ 16. However, Dr. Fanto’s opinions are largely based on plaintiff’s subjective

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complaints and therefore are not Objective Medical Findings under the Plan. See Plan § 2.13

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(“physicians’ opinions . . . based on the acceptance of subjective complaints” such as pain

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do not constitute “Objective Medical Findings.”). AR 1215.

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Plaintiff also relies on the FCE and EECA reports which concluded that he is unable

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to perform any work. But these reports also do not constitute Objective Medical Findings

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under the Plan. The FCE relies on test results that depend on plaintiff’s “expenditure of

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effort,” id., and the EECA analyzes “local labor market and other non-medical factors,” id.

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Although this type of evidence may be considered “corroborative evidence of Disability, if

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the Participant also presents other test results or clinical evidence that independently satisfy

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the Objective Medical Findings definition,” id., these records will not establish disability

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alone. Plaintiff did not provide any other Objective Medical Findings that support a finding

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of disability.
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Plaintiff next contends that defendants improperly interpreted and applied the terms

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of the Plan, acknowledging on the one hand that Objective Medical Findings exist, but still

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refusing to find that he is eligible for benefits. The Appeals Committee determined that,

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“although certain of [plaintiff’s] diagnoses have been supported by objective medical

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findings,” there remained “a lack of documentation to support that [plaintiff] has been

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prevented from performing the work of his regular occupation.” AR 548-49. There is no

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inconsistency in this conclusion. Aetna acknowledged that Objective Medical Findings

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existed showing some impairment, but none of the findings was severe enough to establish

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that plaintiff is unable to work.

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We also reject plaintiff’s argument that Aetna abused its discretion by failing to

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engage plaintiff “in a dialogue so he knew what to submit and could perfect the record on

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appeal.” PSMJ at 7. Aetna sent plaintiff three letters describing the type of information

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needed to support his LTD claim. DSOF ¶¶ 28-30. The initial denial letter specifically

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described additional documentation that he should submit with his appeal. DSOF ¶ 33.

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Aetna also attempted to contact plaintiff’s treating physicians to allow them to comment on

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the peer reviewer’s findings, but plaintiff’s treating physicians refused to participate. DSOF

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¶¶ 47-48. Moreover, plaintiff’s counsel “indicated that no other information was intended

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for the appeal review. There does not appear to be any additional information that is

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available, but not submitted for review.” DASOF ¶ 15. Plaintiff had ample opportunity to

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perfect the record on appeal.

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Finally, plaintiff contends that Aetna’s Appeals Committee abused its discretion by

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ignoring the Social Security Administration’s finding of disability. But plaintiff did not

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submit the report until February 3, 2011, after the Appeals Committee issued its decision.

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DSOF ¶ 54. A plan administrator cannot abuse its discretion by failing to consider evidence

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that was not before it. Moreover, the standard for granting benefits under the Plan is

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markedly different from the regulatory standards under the Social Security Act.

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B
Plaintiff argues that we must apply a “heightened scrutiny” to our abuse of discretion
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analysis because defendants’ significant bias led to the denial of plaintiff’s claim. P’s

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Response at 7. Plaintiff contends that a conflict of interest is demonstrated by the fact that

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Intel’s Quality Assurance Review Unit (IQAR) reviewed his claim after Aetna’s final denial.

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However, the IQAR does not provide a substantive review of disability decisions. Instead,

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it offers a review of processes and procedures used in the determination of claims in order

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to ensure that correct procedures are followed. DSOF ¶¶ 51, 53; AR 1126.

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On May 25, 2011, plaintiff requested a review by the IQAR team, and acknowledged

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that the team “does not have the authority to overturn or supersede Aetna’s February 3, 2011

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claim determination.” DSOF ¶ 54. On September 9, 2011, the IQAR notified plaintiff that

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its review “did not reveal errors in processing [his] LTD appeal.” Id. The IQAR decision

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also offered plaintiff the opportunity to engage in an additional appeals process with an

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independent reviewer at no cost to plaintiff. DSOF ¶ 55. Plaintiff chose not to pursue

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another appeal and instead filed this lawsuit.

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By reviewing the processes and procedures, without authority to overturn claims

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decisions, Intel did not act as a claims administrator so as to create the kind of structural

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conflict of interest identified in Abatie, 458 F.3d at 965. Instead, the initial claims decision

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and the decision on appeal were made by Aetna, a third-party Plan Administrator. It is the

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Plan Administrator’s decision that is the subject of this review. Any conflict of interest

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attributable to Intel’s review for procedural compliance does not affect our abuse of

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discretion review of Aetna’s claims decision.

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Plaintiff also argues that a conflict is demonstrated by the fact that Intel paid Aetna

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for its claims administration services. However, the fee for processing an LTD claim was

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fixed at $690 per claim, without regard to the Aetna’s disability determination. DASOF ¶

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3. Moreover, the Services Agreement between Intel and Aetna required Aetna to process

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claims accurately and “in accordance with the highest professional standards,” DASOF ¶ 4,

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and subjected Aetna’s performance to audit in order to “ensure compliance with th[e]

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Agreement.” DASOF ¶ 5. If Aetna incorrectly denied a claim, it was required to correct the

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error at no cost to Intel. Id. An improper claims denial subjected Aetna to a penalty. Id.
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The fact that Intel paid Aetna for claims administration by itself does not demonstrate a

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conflict. The contractual safeguards imposed by the Services Agreement serve to ensure

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accurate and reasonable claims determinations and reduces any possibility of a conflict of

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interest.

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Finally, plaintiff argues that a conflict is demonstrated by defendants’ history of

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parsimonious claims handling. Plaintiff submitted evidence that only 35.71% of Intel’s

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initial LTD claims were approved in 2010, and 41.27% of initial claims were approved in

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2009. Plaintiff also submitted evidence showing that reviewing physician Dr. Tamara

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Bowman found in 88.14% of the cases that the claimant was not disabled.

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The evidentiary value of these figures is questionable. First, we note that these are

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approval rates for initial claims, not final claims decisions. Our task is to review final

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disability determinations. Moreover, without expert testimony regarding an acceptable

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benchmark for approval rates, or evidence that Dr. Bowman or other reviewing physicians

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wrongly denied claims, these statistics provide minimal evidence of a conflict.

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Plaintiff’s proposed evidence of conflict, though considered in our abuse of discretion

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review, does not alter our conclusion that Aetna reasonably determined that plaintiff is not

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disabled under the terms of the Plan.

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III
We conclude that plaintiff failed to establish that Aetna acted arbitrarily or
capriciously in denying plaintiff LTD benefits.

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IT IS ORDERED GRANTING defendants’ motion for summary judgment (doc. 45).

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IT IS FURTHER ORDERED DENYING plaintiff’s motion for summary judgment

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(doc. 47). The clerk shall enter final judgment.
IT IS FURTHER ORDERED DENYING as moot the parties’ motion for direction
from the court (doc. 67).
DATED this 27th day of March, 2013.

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