Johal v. United States Life Insurance Company in the City of New York et al

Filing 47

ORDER: IT IS ORDERED that Plaintiff's Motion to Supplement the Administrative Record with Extrinsic Evidence (Doc. 40 ) is GRANTED as specified above. IT IS FURTHER ORDERED that Plaintiff's Motion Regarding the Need for Discovery and i ts Scope (Doc. 40 ) is DENIED AS MOOT. IT IS FURTHER ORDERED that Plaintiff's Motion to Remand Case (Doc. 40 ) is GRANTED. This case is remanded to the Plan Administrator for further proceedings consistent with this Order. IT IS FURTHER ORDERED that the Clerk of Court shall terminate this action and enter judgment accordingly. (See Order for full details.) Signed by Senior Judge James A Teilborg on 10/13/20. (SST)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Ramina Johal,

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Plaintiff,

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ORDER

v.

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No. CV-20-00204-PHX-JAT

United States Life Insurance Company in the
City of New York,

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Defendant.

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Pending before the Court is Plaintiff Ramina Johal’s “Motion to Supplement the

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Administrative Record with Extrinsic Evidence and Motion Regarding the Need for

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Discovery and its Scope; and Motion to Remand Case” (Doc. 40). The motion has been

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fully briefed (Doc. 40; Doc. 44; Doc. 46), and the Court now rules.1

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I.

BACKGROUND2

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This case arises under the Employee Retirement Income Security Act of 1974

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(ERISA). Plaintiff’s employer purchased a group long-term disability (LTD) policy (the

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“Policy”) from Defendant United States Life Insurance Company in the City of New York.

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(Doc. 1 at 2; Doc. 20 at 2). In 2017, Plaintiff developed medical issues and applied for

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The Court finds that a hearing is unnecessary for the pending motion as the issues have
been fully briefed and oral argument would not have aided the Court’s decisional process.
See Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998); United States Liab. Ins. Co. v.
Xiangnan Gong, 413 F. Supp. 3d 987, 989 (D. Ariz. 2019).
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Because the administrative record has not yet been filed, the Court draws some
background facts from admitted allegations in the complaint or agreed-upon statements of
the parties.

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short-term disability (STD) benefits under her employer’s short-term disability policy also

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issued by Defendant. (Doc. 40 at 4; Doc. 44 at 3). The Hartford (the “Administrator”)

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served as a third-party administrator and made decisions regarding Plaintiff’s eligibility for

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disability benefits. (Doc. 30 at 2, 5). The Administrator approved Plaintiff for STD

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benefits, which she received until her eligibility expired. (Doc. 1 at 5; Doc. 20 at 4–5). The

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Administrator then approved Plaintiff for LTD benefits under the Policy. (See Doc. 40-3).

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About six months after Plaintiff began receiving LTD benefits, the Administrator

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scheduled Plaintiff for an independent medical examination with Dr. Brian McCrary. (See

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Doc. 40-15). Following the examination, Dr. McCrary issued a report in which he

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concluded:
The claimant has no limitations other than those secondary to
subjective fatigue. She should limit her walking and standing
to five hours per day. No frequent stair climbing and no lifting
over 30 lbs. on a frequent basis. Otherwise, no restrictions are
medically necessary.
(Doc. 40-7 at 6). Two weeks after Dr. McCrary’s report, the Administrator determined that
Plaintiff was no longer “disabled” within the meaning of the Policy and, consequently, no
longer eligible to receive LTD benefits. (Doc. 40-9 at 2–7).
Plaintiff appealed the benefit denial 20 days later. (Id. at 8). Dr. Benton Ashlock
reviewed Plaintiff’s medical records and the additional information she provided for her
appeal and provided a report to the Administrator. (Id. at 10–11). Following its review, the
Administrator denied Plaintiff’s appeal. (See Doc. 40-9). The appeal denial report stated:
Dr. Ashlock reports given consideration of both the subjective
and objective information reasonably supported restrictions
and limitations from August 18, 2018 to present would include
the capability of consistently and reliably performing work
activities for 8 hours per day, 5 days per week, for 40 hours per
work week with the following medically necessary work
activity restrictions: Sitting is unrestricted for 8 hours per day
in an 8 hour work day, you are capable of frequently standing
and walking for 5 hours each activity up in an 8 hour work day.
You are able to frequently lift/carry/push and pull up to 25
pounds and occasionally up to 50 pounds and constantly reach,
perform fine manipulation and simple/firm grasp, see, hear and
use your lower extremities for foot controls, and frequently
balance and stoop and occasionally climb stairs and ladders,
kneel, crouch and crawl. . . .
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(Id. at 10). Based largely on this evaluation, the Administrator concluded that Plaintiff

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“maintain[ed] the functional capacity to perform the duties of [her] occupation.” (Id. at 11).

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After the denial of her appeal, Plaintiff attempted three times to reopen the appeal

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and supplement the record with additional medical information. (See Doc. 40-1 at 55–57).

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Defendant denied each request, stating that “the administrative remedies provided by

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ERISA and the [Policy] have been exhausted.” (Id.).

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Plaintiff then filed the instant action. (See Doc. 1). She now moves to supplement

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the administrative record, for discovery regarding Dr. McCrary’s and Dr. Ashlock’s

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potential conflicts of interest, and to remand to the Administrator for consideration of the

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supplemented record. (Doc. 40).

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II.

DISCUSSION

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A.

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ERISA provides that “every employee benefit plan shall . . . afford a reasonable

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opportunity to any participant whose claim for benefits has been denied for a full and fair

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review by the appropriate named fiduciary of the decision denying the claim.”

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29 U.S.C. § 1133(2). If an administrator denies a claim for disability benefits and the

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subsequent appeal, the claimant may bring a claim in federal court. Id. § 1132(a)(1)(B).

Motions to Supplement the Record and Remand

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In the district court proceeding, a court reviews the denial of benefits de novo, unless

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the benefit plan grants the administrator discretion to determine eligibility for benefits or

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construe the plan, in which case a court reviews for an abuse of discretion. Firestone Tire

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& Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Conducting de novo review, a court

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may admit extrinsic evidence beyond the administrative record, Abatie v. Alta Health &

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Life Ins. Co., 458 F.3d 955, 970 (9th Cir. 2006), but may do so “only when circumstances

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clearly establish that additional evidence is necessary to conduct an adequate de novo

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review of the benefit decision,” Opeta v. Nw. Airlines Pension Plan for Cont. Emps., 484

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F.3d 1211, 1217 (9th Cir. 2007) (citation omitted) (emphasis in original). Under abuse of

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discretion review, a court generally may only consider the administrative record when

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reaching a decision on the merits. Abatie, 458 F.3d at 970.

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If, however, the claimant can demonstrate that procedural irregularities prevented

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the full development of the administrative record, a court may order supplementation of

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the administrative record to, “in essence, recreate what the administrative record would

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have been had the procedure been correct.” Abatie, 458 F.3d at 972. In such cases, a court

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may remand the claim to the administrator to consider the supplemented record in the first

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instance. See Mongeluzo v. Baxter Travenol Long Term Disability Ben. Plan, 46 F.3d 938,

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944 (9th Cir. 1995) (“We leave to the district court whether to remand to the plan

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administrator for an initial factual determination.”).

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Plaintiff describes several procedural irregularities that she argues merit
supplementing the record.3 The Court addresses each in turn.
1. Lack of Notice Regarding How to “Perfect the Claim”

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First, Plaintiff argues that her initial denial letter failed to comply with

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29 C.F.R. § 2560.503-1(g)(1)(iii), which requires that an adverse benefit determination

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include “[a] description of any additional material or information necessary for the

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claimant to perfect the claim and an explanation of why such material or information is

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necessary.” (Doc. 40 at 7). In other words:

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If benefits are denied in whole or in part, the reason for the
denial must be stated in reasonably clear language, with
specific reference to the plan provisions that form the basis for
the denial; if the plan administrators believe that more
information is needed to make a reasoned decision, they must
ask for it.

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Booton v. Lockheed Med. Ben. Plan, 110 F.3d 1461, 1463 (9th Cir. 1997).
Regarding her right to appeal, Plaintiff’s initial denial letter provides as follows:

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[ERISA] gives you the right to appeal our decision and receive
a full and fair review. You may appeal our decision even if you
do not have new information to send to us. You are entitled to
receive, upon request and free of charge, reasonable access to,
and copies of, all documents, records and other information
relevant to your claim. If you do not agree with our denial, in
whole or in part, and you wish to appeal our decision, you or
your authorized representative must write to us within one

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Throughout her argument, Plaintiff also makes several references to potential conflicts of
interest. The Court discusses the issue in Section B, supra.
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hundred eighty (180) days from the receipt of this letter. Your
appeal letter should be signed, dated and clearly state your
position. . . . Along with your appeal letter, you may submit
written comments, documents, records and other information
related to your claim.
(Doc. 40-9 at 6).

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Relying on Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623 (9th Cir. 2009),

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Plaintiff argues that the language in the initial denial letter was inadequate because it “did

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not provide any information regarding what was necessary to perfect the appeal . . . .” (Doc.

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40 at 7). Montour, however, is distinguishable.

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In Montour, the record considered by the plan administrator on appeal contained the

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Social Security Administration’s (SSA) favorable award, but did not include the opinion

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of the administrative law judge or the SSA administrative record. Id. at 636. The Montour

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court noted that Department of Labor regulations “authorize, if not require, plan

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administrators working with an apparently deficient administrative record to inform

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claimants of the deficiency and to provide them with an opportunity to resolve the problem

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by furnishing the missing information.” Id. (emphasis added); see also Salomaa v. Honda

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Long Term Disability Plan, 642 F.3d 666, 679–80 (9th Cir. 2011) (“The initial denial said

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[the claimant] should provide ‘x-rays, CT, MRI reports, etc. that support your physician’s

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assessment,’ but did not tell [the claimant] what x-rays etc. it wanted.”); Booton, 110 F.3d

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at 1464 (“[T]o deny the claim without explanation and without obtaining relevant

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information is an abuse of discretion.”).

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Here, by contrast, there was nothing specifically missing from the record that would

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render the initial denial letter deficient. The letter listed the items in the administrative

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record that the Administrator considered in making its decision. (Doc. 40-9 at 4). It

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discussed Dr. Yumiko Hoeger’s, Plaintiff’s treating physician, opinion that Plaintiff was

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disabled and the basis for that opinion. (Id. at 4–5). The letter then discussed Dr. McCrary’s

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examination and his recommended work restrictions. (Id. at 5). The letter then noted that

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Dr. Hoeger disagreed with Dr. McCrary’s medical conclusions but agreed with the

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recommended work restrictions. (Id.). In this case, there is no deficiency under § 2560.503-

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1(g)(1)(iii) “because [Plaintiff’s] claim did not fail because [s]he failed to submit needed

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evidence. It failed because [the Administrator], having considered all the evidence,

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concluded that it needed no more and that [the claimant] was not disabled.” See Kearney

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v. Standard Ins. Co., 175 F.3d 1084, 1091 (9th Cir. 1999) (en banc); see also Koblentz v.

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UPS Flexible Employee Ben. Plan, No. 12-CV-0107-LAB, 2013 WL 4525432, at *4 (S.D.

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Cal. Aug. 23, 2013) (“Compliance with [§ 2560.503-1(g)(1)(iii)] was not required here

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because there was no indication that any particular additional information was needed to

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make a reasoned decision.”).

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Plaintiff does not identify any particular information the Administrator should have

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informed Plaintiff it needed. Instead, the crux of Plaintiff’s argument seems to be that the

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Administrator failed to tell her that she could “perfect” her claim by procuring more

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persuasive medical evidence demonstrating that she is disabled in conflict with Dr.

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McCrary’s conclusion. Such an open-ended “find more favorable evidence” interpretation

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of § 2560.503-1(g)(1)(iii) would insert a procedural irregularity into every case in which

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an administrator determines that the evidence in the administrative record weighs against

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an award of benefits. Accordingly, the Court does not find that the initial denial letter failed

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to meet the § 2560.503-1(g)(1)(iii) requirement.

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2. Providing Misleading Information

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Second, Plaintiff argues that a representative of the Administrator improperly

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informed her that no additional information was necessary for the Administrator to reach a

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decision, leading her to submit the appeal before acquiring additional medical records.

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(Doc. 40 at 8).

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After receiving her initial denial letter dated August 8, 2018, Plaintiff sent a letter

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appealing the denial on August 28, 2018. (Doc. 40-9 at 8). The appeal letter stated that

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Plaintiff had two upcoming appointments with Dr. Davis Simms and Dr. Amin Mona. (Id.

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at 9). On September 26, 2018, a representative of the Administrator called Plaintiff to

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discuss her appeal. (Id.; Doc. 40-11 at 3). In Plaintiff’s appeal denial letter, the

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Administrator describes the conversation as follows:

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On September 26, 2018 we spoke regarding your claim and
appeal and discussed whether you wanted us to place your
appeal in pending status to allow you to submit the medical
information from the noted upcoming appointments outlined in
September, 2018 and October, 2018. You requested that we
proceed with our review without the additional appointment
information.
(Doc. 40-9 at 9).

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Plaintiff, however, claims that she was misled into submitting her appeal when she

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did. (Doc. 40 at 8). In support of this claim, Plaintiff offers an affidavit stating that when

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asked whether she wanted to submit her appeal before the appointments, the

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Administrator’s representative told her that she “had submitted enough information and

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they could make their decision now, rather than prolonging it for the several months that it

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would take for” Plaintiff to see her doctors. (Doc. 40-10 at 3). Defendant offers no

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conflicting evidence, and in fact, does not dispute (or acknowledge) Plaintiff’s evidence.

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Accordingly, for purposes of the Plaintiff’s motion, the Court accepts Plaintiff’s affidavit

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regarding what Defendant’s representative told her as true. See generally Kearney, 175

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F.3d at 1096 (B. Fletcher, J., concurring in part and dissenting in part).

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Plaintiff asserts that this statement “clearly led her to believe that if she appealed

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then, the claim would be approved.” (Doc. 40 at 8). Regardless of whether the

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representative’s statement implied a forthcoming approval, it certainly implied that the

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Administrator’s decision was a foregone conclusion. Assuming the Administrator intended

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to complete a “full and fair” review of Plaintiff’s claim based on all available medical

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information, see 29 U.S.C. § 1133(2), it should have informed Plaintiff that this additional

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information could impact the outcome of her appeal.

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The Court finds that had Plaintiff been told that the Administrator would consider

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more medical information and such information could impact the outcome of her appeal,

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she would have included more information in the record. Accordingly, under Abatie, 458

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F.3d at 972, the record should be supplemented to include the reports of Drs. Simms and

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Mona as well as the additional medical information she acquired during the 180 days she

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had to submit an appeal set forth in Doc. 40-5 (Plaintiff’s Exhibit E).

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3. Failure to Disclose Doctor’s Report

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Finally, Plaintiff argues that the Administrator erred by failing to disclose Dr.
Ashlock’s report before the appeal decision.4

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A plan administrator’s “claims procedures . . . will not be deemed to provide a

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claimant with a reasonable opportunity for a full and fair review of a claim and adverse

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benefit determination unless the claims procedures” ensure that “a claimant shall be

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provided, upon request and free of charge, reasonable access to, and copies of, all

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documents, records, and other information relevant to the claimant’s claim for benefits.”

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29 C.F.R. § 2560.503-1(h)(2)(iii).

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Plaintiff correctly argues that Salomaa, 642 F.3d at 680, held that “[a] physician’s

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evaluation provided to the plan administrator falls squarely within [§ 2560.503-

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1(h)(2)(iii)’s] disclosure requirement.” See also Yancy v. United of Omaha Life Ins. Co.,

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No. CV149803PSGPJWX, 2015 WL 5132086, at *4 (C.D. Cal. Aug. 25, 2015) (“Under

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binding Ninth Circuit authority, the failure to provide a claimant with a physician’s report

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relied on during the administrative appeal of a denied benefits claim violates ERISA’s

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guarantee for ‘full and fair review’ of a denied claim.”).

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However, “[c]ase law and the relevant regulations state that a plan must provide a

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claimant with copies of his or her record ‘upon request.’” Masuda-Cleveland v. Life Ins.

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Co. of N. Am., No. CV 16-00057 LEK-RLP, 2017 WL 427497, at *6 (D. Haw. Jan. 31,

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2017); see also Lewis v. Unum Life Ins. Co. of Am., 450 F. Supp. 3d 1019, 1022, 1024 (D.

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Ariz. 2020) (remanding for supplementation of the record after administrator failed to

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respond to a request for consulting experts’ reports). Here, Plaintiff does not cite anything

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demonstrating that she requested Dr. Ashlock’s report prior to her appeal denial. She

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Plaintiff also argues that the Administrator erred by denying her claim without sending
Dr. McCrary’s report to Dr. Neil Dende, another of her treating physicians, and Kelsey
Lafond, her physical therapist, for a response. (Doc. 40 at 9). Even assuming this
demonstrates a failure to fully consider the claim as Plaintiff asserts, both Dr. Dende and
Lafond had the opportunity to respond to Dr. McCrary’s opinion as part of Plaintiff’s
appeal. And the letter denying Plaintiff’s appeal indicates that the Administrator considered
a letter from Dr. Dende and notes from Lafond. (Doc. 40-9 at 8–10). Accordingly, Plaintiff
fails to demonstrate that any potential error prevented the development of the
administrative record. See Abatie, 458 F.3d at 972.
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instead argues that the Administrator should have disclosed Dr. Ashlock’s report because

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it knew that Plaintiff and her medical providers disagreed with Dr. Ashlock’s opinions.

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(Doc. 40 at 9). But Salomaa imposes no such requirement, and Plaintiff cites no other

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authority supporting this argument.

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4.

Scope of Supplementation and Remand

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As discussed above, the Court grants the request to supplement the record with

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information that would have been included before the appeal deadline. Plaintiff also

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requests to supplement the record with the SSA’s decision finding Plaintiff disabled, along

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with the entire SSA claim file. (Doc. 40 at 2).

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Defendant argues that the SSA information would not impact this Court’s review

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because the SSA findings are not binding on disability plan administrators and because the

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SSA decision post-dated the Administrator’s decision. (Doc. 44 at 6–7).

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The Court agrees with Defendant that as a general matter, “a district court should

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not take additional evidence merely because someone at a later time comes up with new

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evidence that was not presented to the plan administrator.” Mongeluzo, 46 F.3d at 944. The

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Ninth Circuit, however, has emphasized that “[w]hile ERISA plan administrators are not

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bound by the SSA’s determination, complete disregard for a contrary conclusion without

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so much as an explanation raises questions about whether an adverse benefits

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determination was ‘the product of a principled and deliberative reasoning process.’”

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Montour, 588 F.3d at 635 (quoting Glenn v. MetLife, 461 F.3d 660, 674 (6th Cir. 2006),

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aff’d sub nom. Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008)). Accordingly, “a proper

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acknowledgment of a contrary SSA disability determination would entail comparing and

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contrasting . . . the medical evidence upon which the decisionmakers relied.” Id. at 636.

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Here, because the Court finds that a procedural irregularity prevented the full

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development of the record, the Court determines a remand is appropriate to consider the

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complete record in the first instance. “Although clearly, [the Administrator] did not abuse

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its discretion by failing to consider a SSA decision that had not yet been rendered, [it]

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should not now, when reconsidering the record due to a previous omission and procedural

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irregularities, ignore a conflicting SSA determination.” Woolsey v. Aetna Life Ins. Co., No.

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CV-18-00578-PHX-SMB, 2020 WL 1083932, at *13 (D. Ariz. Mar. 6, 2020).

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Accordingly, the Court grants Plaintiff’s request to supplement the administrative record

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with her SSA claim file.

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B.

Motion for Additional Discovery

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Plaintiff also seeks discovery “narrowly tailored to the conflicts of interest she

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alleges led to the claim termination.” (Doc. 40 at 11). This includes financial

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documentation relating to the amount Defendant or the Administrator paid the vendors who

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referred Drs. McCrary and Ashlock, performance evaluations of the Administrator’s

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employee who rendered the final denial and issued the letters which refused to re-open the

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claim, any guidelines and manuals the Administrator used, and several depositions. (Id. at

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12). Because the Court finds that supplementing the administrative record and remanding

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to the Administrator is appropriate in this case, the Court denies the request for discovery

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as moot.

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Throughout her motion, Plaintiff makes much of the fact that Defendant and the

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Administrator were operating under a structural conflict of interest and alleges that Drs.

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McCrary and Ashlock were biased in favor of the companies who retain them for their

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services. (See Doc. 40). On remand, however, Plaintiff will receive a complete review of

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the supplemented record and a new decision. That decision must be based on a full and fair

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review of the record, see 29 U.S.C. § 1133(2), and must discuss any potential disagreement

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with the decision of the SSA, see Montour, 588 F.3d at 636. To the extent that review leads

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to a decision in Plaintiff’s favor, no need for discovery into any potential biases or conflicts

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of interest will exist. If this review leads the Administrator deny the claim and Plaintiff

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believes the denial is based on a conflict of interest or improper bias, she can request

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discovery in a subsequent court proceeding under de novo review. See Opeta, 484 F.3d at

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1217.

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III.

CONCLUSION

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For the foregoing reasons,

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IT IS ORDERED that Plaintiff’s Motion to Supplement the Administrative Record

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with Extrinsic Evidence (Doc. 40) is GRANTED as specified above.
IT IS FURTHER ORDERED that Plaintiff’s Motion Regarding the Need for
Discovery and its Scope (Doc. 40) is DENIED AS MOOT.

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IT IS FURTHER ORDERED that Plaintiff’s Motion to Remand Case (Doc. 40)

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is GRANTED. This case is remanded to the Plan Administrator for further proceedings

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consistent with this Order.

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IT IS FURTHER ORDERED that the Clerk of Court shall terminate this action
and enter judgment accordingly.
Dated this 13th day of October, 2020.

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