Nicholson v. Standard Insurance Company et al

Filing 28

OPINION AND ORDER; Standard's decision to deny benefits is AFFIRMED, Nicholson's claim is DENIED, and this case is DISMISSED WITH PREJUDICE. Signed by Honorable P. K. Holmes, III on March 19, 2018. (hnc)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FORT SMITH DIVISION
DAVID C. NICHOLSON

PLAINTIFF

v.

No. 2:17-CV-02098

STANDARD INSURANCE COMPANY, et al.

DEFENDANTS

OPINION AND ORDER
Plaintiff David C. Nicholson brings this action pursuant to the provisions of the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., alleging Defendants
Standard Insurance Company, et al. (“Standard”) wrongly denied his claim for disability benefits.
Before the Court are the administrative record (Doc. 19), Nicholson’s brief (Doc. 20) and reply
(Doc. 27), and Standard’s brief (Doc. 24). For the reasons stated herein, the Court finds that
Standard’s decision to deny benefits is AFFIRMED, Nicholson’s claim is DENIED, and this case
is DISMISSED WITH PREJUDICE.
I.

Background
Nicholson was a participant in a long-term disability plan (“Plan”) issued and administered

by Standard. The Plan provides that “[i]f you become Disabled while insured under the Group
Policy, we will pay [long term disability] Benefits according to the terms of the Group Policy after
we receive Proof Of Loss satisfactory to us.” The Plan granted discretion to Standard to interpret
the Plan and to resolve all questions arising in the administration, interpretation and application of
the Plan including determining who is entitled to benefits.
Nicholson stopped working on September 28, 2014 and submitted a claim for benefits,
asserting that he was unable to work due to back pain.

Nicholson’s employer, Cudd Energy Services, sent his job description to Standard and
identified his occupation as “CPS Field Salesman” and “CPS District Salesman.” Standard had a
vocational expert, Paul Kangas, review the employer’s job description and Nicholson’s own
description of his job. Kangas determined that Nicholson had an occupation in “the Light strength
range.”
Dr. Gary Nudell, a board certified internist, reviewed Nicholson’s medical records. Dr.
Nudell noted that Nicholson’s treating physician, Dr. Suh Niba, stated that Nicholson was unable
to work. However, Dr. Nudell noted that there were limited clinical findings related to Nicholson’s
self-reported complaints of pain and that he was not referred for specialty care. Based on his
review of the medical records, Dr. Nudell concluded that Nicholson “could perform light level
activity on a full time basis with reasonable continuity.”
In reliance upon this information, Standard denied Nicholson’s claim. After the denial,
Nicholson’s employer sent a letter that modified his job description and Dr. Niba sent
correspondence providing further support for his claim.
Standard asked the vocational expert to reexamine Nicholson’s occupation in light of his
employer’s letter. After reviewing the letter, Kangas revised his opinion and determined that
Nicholson’s occupation “would have involved physical demands within the Medium demand
classification.”
Standard asked Dr. Nudell to reconsider his prior opinion in light of the additional
correspondence from Dr. Niba. Dr. Nudell wrote an addendum to his original report and stated
that Dr. Niba’s correspondence did not cause him to change his opinion. Dr. Nudell noted that the
medical records did not support a conclusion that Nicholson could not perform all of the activities
associated with a medium level occupation. However, he suggested that if there were questions

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regarding Nicholson’s ability to lift, sit, and stand as a result of disc disease, Standard should have
an orthopedist review the records.
Dr. Kenneth J. Kopacz, a board certified orthopedic surgeon, reviewed Nicholson’s records
and determined that “[b]ased upon the medical documentation, there is no clinical support for
functional impairment.” Dr. Kopacz further concluded that Nicholson should be able to perform
all of the activities associated with a medium level occupation.
Standard advised Nicholson that it had considered his supplemental materials and had
consulted two physicians, including a qualified orthopedist, but still had concluded that Nicholson
had not presented evidence substantiating his disability. Standard advised Nicholson that he could
file an administrative appeal.
Nicholson filed an appeal. As part of Nicholson’s appeal, his lawyer provided medical
records. Standard alleges that it had already obtained most of these records.
Dr. Mark Shih, who is certified in physical medicine and rehabilitation, reviewed
Nicholson’s records on appeal. Dr. Shih noted “[v]isit notes with Dr. Niba document only
[Nicholson’s] subjective complaints of increased difficulty without abnormality on exam, nor
imaging changes, without support for limitations and restrictions.” Shih further noted that he
“would typically expect there would be a change in [Nicholson’s] pain medication regimen,
referral to a specialty provider, and further evaluation of [Nicholson’s] condition,” none of which
occurred.
Standard advised Nicholson that it was upholding its denial of his claim and he
subsequently filed this lawsuit.
II.

Legal Standard
Generally, once a plaintiff has exhausted his administrative remedies, the court’s function

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is to conduct a review of the record that was before the administrator of the plan when the claim
was denied. Farfalla v. Mutual of Omaha Ins. Co., 324 F.3d 971, 974-75 (8th Cir. 2003). A
denial-of-benefits claim under ERISA is reviewed for an abuse of discretion when, as is the case
here1, “a plan gives the administrator discretionary power to construe uncertain terms or to make
eligibility determinations.” King v. Hartford Life & Accident Ins. Co., 414 F.3d 994, 998-99 (8th
Cir. 1997) (en banc). When a plan confers discretionary authority, then the Court must defer to
the determination made by the administrator unless such determination is arbitrary and capricious.
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). “[R]eview for an ‘abuse of
discretion’ or for being ‘arbitrary and capricious’ is a distinction without a difference” because the
terms are generally interchangeable. Jackson v. Prudential Ins. Co. of Am., 530 F.3d 696, 701 n.6
(8th Cir. 2008).
The law is clear that the decision of a plan administrator may only be overturned if it is not
“reasonable; i.e. supported by substantial evidence.” Cash v. Wal-Mart Group Health Plan, 107
F.3d 637, 641 (8th Cir. 1997). An administrator’s decision will be deemed reasonable if “a
reasonable person could have reached a similar decision, given the evidence before him, not that
a reasonable person would have reached that decision.” Id. If a decision is supported by a
reasonable explanation, it should not be disturbed, even though a different reasonable
interpretation could have been made. Id.
The Court’s task now is to analyze whether Standard’s decision to deny benefits to

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Nicholson disputes that abuse of discretion is the proper standard of review, and instead
advocates for de novo review based on Ark. Admin. Code 054.00.101-4 (“Rule 101”). Rule 101
applies to “all disability income policies . . . which are issued or renewed on and after March 1,
2013.” Ark. Admin. Code 054.00.101-7. The Policy in this case was issued on January 1, 2007
and last amended on January 1, 2013. While Nicholson argues that “[b]ased on the Plan’s own
language the policy must have renewed” after March 1, 2013, he offers no support for this
contention. Accordingly, the Court finds that Rule 101 does not apply to the Policy.
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Nicholson was an abuse of discretion. In considering this question, the Court must examine the
basis behind the denial and determine if the decision was supported by substantial evidence. See
id. There are five factors the Court will consider to determine whether Standard’s decision was
reasonable:
(1)
(2)
(3)
(4)
(5)

whether the administrator’s interpretation is consistent with
the goals of the Plan;
whether the interpretation renders any language in the plan
meaningless or internally inconsistent;
whether the administrator’s interpretation conflicts with the
substantive or procedural requirements of the ERISA statute;
whether the administrator has interpreted the relevant terms
consistently; and
whether the interpretation is contrary to the clear language
of the Plan.

Shelton v. ContiGroup Cos., Inc., 285 F.3d 640, 643 (8th Cir. 2002).
III.

Analysis
As an initial matter, the Court finds that Standard’s review of Nicholson’s medical records

was reasonable. The record reflects that Nicholson’s treating physician, Dr. Niba, reported
Nicholson’s complaints of back pain. However, Dr. Niba offered no objective evidence that
Nicholson’s pain would render him unable to perform his job. Three additional physicians
subsequently reviewed Nicholson’s medical records. These physicians noted that there was no
objective evidence of disability such as imaging or evaluation by a specialist. The Eighth Circuit
has held that when a doctor’s opinion provides no reliable objective evidence to support a finding,
“[i]t is not unreasonable for a plan administrator to deny benefits based upon a lack of objective
evidence.” McGee v. Reliance Standard Life Ins. Co., 360 F.3d 921, 924-25 (8th Cir. 2004).
Accordingly, Standard’s decision to ignore the opinion of Dr. Niba in favor of crediting the
opinions of other physicians was reasonable and not an abuse of discretion. See Delta FamilyCare Disability & Survivorship Plan v. Marshall, 258 F.3d 834, 843 (8th Cir. 2001) (“Where the
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record reflects conflicting medical opinions, the plan administrator does not abuse its discretion in
finding the employee not to be disabled.”).
The first and second Shelton factors weigh in favor of Standard. The Plan’s goal, as stated
in the “Insuring Clause,” is to provide benefits to individuals who become disabled while insured
under the Plan. The Plan notes that Standard will pay benefits after receiving proof of loss which
it deems to be satisfactory. The Plan defines a disabled individual as one who is “unable to perform
with reasonable continuity the Material Duties of [his] Own Occupation.” Since Nicholson’s
medical records do not provide objective evidence that his complaint of back pain prevented him
from performing the material duties of his occupation, Standard’s decision to deny Nicholson
benefits was a proper interpretation of the Plan, was not contrary to the goals of the Plan, and was
not inconsistent with the Plan’s definition of disability or any other language in the plan.
The remaining three Shelton factors also weigh in favor of Standard. In considering these
factors, the Court finds that Standard acted carefully, reasonably, and appropriately in evaluating
Nicholson’s claim in light of the Plan’s terms. Nicholson was afforded a full and fair review of
both the denial of his claim and the appeal of that denial. Standard relied on the opinions of
multiple physicians in denying the claim. Standard ultimately found Nicholson not to be disabled
due to a lack of correlation between his back pain and his ability to perform the material duties of
his job. Accordingly, Standard’s decision to deny benefits was made after careful review, while
comporting with ERISA and the clear language of the Plan.
Accordingly, the Court finds that Standard did not abuse its discretion in denying
Nicholson’s claim.
IV.

Conclusion
IT IS THEREFORE ORDERED that Standard’s decision to deny benefits is AFFIRMED,

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Nicholson’s claim is DENIED, and this case is DISMISSED WITH PREJUDICE.
IT IS SO ORDERED this 19th day of March, 2018.

/s/P. K. Holmes, III
P.K. HOLMES, III
CHIEF U.S. DISTRICT JUDGE

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