Zaeske v. Liberty Life Assurance Company of Boston
MEMORANDUM OPINION AND ORDER; see order for specifics. Signed by Honorable Timothy L. Brooks on June 5, 2017. (rg)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
CASE NO. 5:15-CV-5305
LIBERTY LIFE ASSURANCE COMPANY
MEMORANDUM OPINION AND ORDER
This case comes before the Court following Defendant Liberty Life Assurance
Company of Boston's ("Liberty Life") decision to terminate Plaintiff Damon Zaeske's
long-term disability benefits. The dispute arises under the Employee Retirement Income
Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq., which gives participants in an employee
welfare benefit plan a cause of action "to recover benefits due to him under the terms of
his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future
benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B).
Before the Court are the Administrative Record (Doc. 12), Plaintiff's Brief (Doc. 13),
and Defendant's Brief and Affidavit (Docs. 18, 18-1). The Court also received a letter from
Mr. Zaeske, (Doc. 19), on April 19, 2017, after the Administrative Record had been
submitted and the parties’ had submitted their briefs. Because the letter came directly from
Mr. Zaeske, rather than his attorney, and was not part of the Administrative Record on
appeal, the Court gave it no consideration. For the reasons explained herein, the Court
finds that Liberty Life’s decision to deny long-term benefits to Mr. Zaeske is REVERSED
and the claim REMANDED to Liberty Life for the correct calculation of past-due benefits.
At the time counsel briefed this ERISA appeal, Mr. Zaeske was a 52-year-old man
formerly employed by Wal-Mart Stores, Inc. (“Walmart”) in the position of Project Manager
I, Systems Strategy—Risks Manager (“Risk Manager”). His duties included observing
associate, customer, and supplier behavior first-hand; making group presentations; using
a computer to locate information; creating documents using a computer or writing
instrument; visually verifying information, often in small print; safely operating a motor
vehicle; and traveling both domestically and internationally to multiple facilities, requiring
consecutive or extended overnight stays. (Doc. 12-3, p. 397). As an employee of Walmart,
Mr. Zaeske was a member of its Associate Health and Welfare Plan (the "Plan"), which is
insured by a Group Disability Income Insurance Policy issued by Liberty Life (the "Policy").
In addition to issuing the Policy and paying benefits, Liberty Life also serves as Policy
Mr. Zaeske’s medical condition that gives rise to his claim for benefits was first
documented in 2010.
In August of that year, Mr. Zaeske visited Dr. David Garrett, a
physician practicing at Mercy Clinic in Lowell, Arkansas (“Mercy Clinic”), and complained
of depression and chronic pain, including back pain. (Doc. 12-3, p. 79). Dr. Garrett
prescribed Darvocet, a pain medication used to treat mild to moderate pain, for his
"occasional use." Id. On August 25, 2010, Mr. Zaeske had a follow-up appointment with
Dr. Garrett, and during that examination, Dr. Garrett noted tenderness in the L5-S1 area
of his lumbar spine. Id. at 80. Also during that visit, Mr. Zaeske complained that “he [could
not] sit for very long” when his back pain struck, and he “ha[d] to constantly move.” Id. Dr.
Garrett prescribed him a steroid injection for his back and refilled his pain medication
Sometime later, on October 7, 2011, Mr. Zaeske returned to Dr. Garrett,
complaining again of back pain and tenderness, anxiety, depression, restless leg
syndrome, and fatigue. Id. at 82. Dr. Garrett prescribed oxycodone for pain and Celexa
for depression. Id. at 83. Mr. Zaeske’s back exam “demonstrated tenderness on the right
paravertebral muscle group.” Id. He returned to Dr. Garrett on May 4, 2012, complaining
of chronic pain, and refilling his medications. Id. at 84. It appears that his back pain
worsened in the ensuing months, as during the next check-up on January 2, 2013, Mr.
Zaeske reported to Dr. Garrett that the oxycodone was not working well, and that the
Darvocet he had been taking for pain was now off the market.
Id. at 85. Dr. Garrett
stopped his prescription for oxycodone, but prescribed Voltaren, a non-steroidal antiinflammatory drug, and Flexeril, a muscle relaxant. Id. at 86.
On October 29, 2013, Mr. Zaeske had an appointment with Dr. Janelle Potts,
another physician at Mercy Clinic. During that visit, Mr. Zaeske complained primarily of
lower back pain. He explained to Dr. Potts that he had experienced “low back pain for
many years off and on,” but only recently had “a flair up [sic]” that caused his “[r]ight leg .
. . [to] go numb and tingly at times when laying in bed.” Id. at 87. Dr. Potts conducted a
physical examination that revealed lumbar tenderness, so she scheduled a lumbar MRI
and planned to perform two injections, one of methylprednisolone acetate and one of
dexamethasone—both corticosteroids used to treat inflammation. Id. The MRI, performed
on November 6, 2013, revealed "chronic appearing disc protrusion with severe stenosis
at L4-5." Id. at 282. Dr. Potts subsequently submitted a Certificate of Health Care Provider
for Associate's Serious Heath Condition Form (an "FMLA form") on November 15, 2013,
in which she stated that Mr. Zaeske would be incapacitated for three days per month due
to back pain and the effects of pain medication, and that these restrictions would apply for
six months. She also noted that he had been "sent for [an] MRI and referred to [a] back
surgeon." Id. at 41-42. She further explained that “when incapacitated with back pain [he]
cannot perform any task,” id. at 41, and emphasized that the medication he was currently
taking for back pain “can cause somnolence, decreased concentration, [and] inability to
drive + make decisions,” id. at 42.
After a follow-up appointment on December 2, 2013, Dr. Potts wrote in her progress
notes that "hydrocodone [was] not really controlling [Mr. Zaeske’s] pain," and that he was
"[f]inding it difficult to work due to pain." Id. at 88. During that same visit, she prescribed
him Dilaudid, an opioid pain medication, to be used in conjunction with hydrocodone in
order to control any breakthrough pain, and she instructed that he should not work for two
weeks. Id. at 89. Then, on December 9, 2013, she completed another FMLA form,
advising that Mr. Zaeske would be unable to work from December 2, 2013, through
December 25, 2013, because he was “taking strong narcotics for pain” and was “unable
to work while under the influence” of these medications. Id. at 43.
Dr. Potts’ progress notes from February 10, 2014 reveal that on January 14, 2014,
Mr. Zaeske underwent a lumbar medial bilateral branch nerve block at the Springfield Pain
Management Center, which provided “good results.” Id. at 302, 305. However, Mr.
Zaeske’s pain recurred shortly thereafter, due to effects of "spinal stenosis and bulging
discs," and he was instructed to take Tizanidine—a muscle relaxant—and hydrocodone
for pain. Id. at 302-03. Mr. Zaeske then visited Dr. Jonathan Nunley at Mercy Clinic on
February 17, 2014.
Dr. Nunley noted that Mr. Zaeske’s back pain worsened with
extension, standing, and walking. Id. at 57. Dr. Nunley then made plans to perform a
second lumbar medial branch nerve block on Mr. Zaeske’s lumbar spine. Id. at 60. On
February 26, 2014, Dr. Nunley successfully performed that procedure and then scheduled
a follow-up appointment. Id. at 60-61. Because the second medial branch nerve block
also achieved good results, Dr. Nunley performed two radiofrequency neurotomies on Mr.
Zaeske, one on March 13, 2014, and the other on April 2, 2014. Id. at 62-65. But, on April
2, 2014, Dr. Nunley concluded that the radiofrequency neurotomies had not resulted in
“much relief of back pain to this point,” and that Mr. Zaeske suffered “[c]ontinued pain
worse with extension and with standing for long periods.” Id. at 65.
Mr. Zaeske had an appointment with Dr. Potts on April 7, 2014. She noted that,
although he was "[t]aking medications as directed," his "[b]ack pain [was] not well
controlled," and he "had to miss work due to back pain and the effects of pain
medications." Id. at 94. This was true despite the fact that he “had injections with Mercy
pain management.” Id. She also observed that his job was "in jeopardy." Id. The record
reflects that the very next day, April 8, 2014, Mr. Zaeske made a claim for long-term
disability benefits under the Policy, and indicated that April 7, 2014, was the date his
disability began. In support of his claim, Dr. Potts completed two FMLA forms, one on April
18, 2014, id. at 47-48, and the other on May 29, 2014, id. at 45-46. The April 18 form
stated Dr. Potts’ medical opinion that the “strong narcotics” Mr. Zaeske was taking for back
pain, leg pain, and weakness made him “unable to work under the influence” from April 7,
2014, until May 9, 2014. Id. at 47-48. In the May 29 form, she wrote that Mr. Zaeske was
“unable to perform any function when incapacitated due to pain” caused by “intervertebral
disc protrusion, lumbar degenerative disc disease . . . [and] radiculopathy of [the] leg.” Id.
at 45-46. She estimated he would be unable to work at his regular job from May 20, 2014,
through November 20, 2014. Id. at 46.
Also on April 8, 2014, Mr. Zaeske called Liberty Life and had a conversation with
his case manager, June Arrington, as reflected in the claim notes of the Administrative
Record. Ms. Arrington documented in the file that Mr. Zaeske talked with her about his
claim and informed her that he was not a candidate for back surgery and had recently
undergone ablation therapy. He also told her that Walmart had recently warned him that
“he must find another job within Walmart[,] as he cannot do his job.” Id. at 13.
On May 23, 2014, Ms. Arrington referred Mr. Zaeske's disability claim to Dr. Patricia
Shannon for an independent medical assessment. The referral sheet pertaining to the
assessment noted that Mr. Zaeske’s job as Risk Manager for Walmart involved “[l]ight”
physical demands, and therefore was not a sedentary position. Id. at 282. Dr. Shannon
reviewed the medical documents submitted by Drs. Garrett, Potts, and Nunley, including
the lumbar MRI from November 6, 2013, and concurred with the treating doctors’ collective
diagnosis of "[c]hronic low back pain with recently increased back and leg pain." Id. She
found that Mr. Zaeske’s MRI "showed chronic appearing disc protrusion with severe
stenosis at L4-5
. . . ." Id. In addition, she identified several "co-morbid conditions
potentially impacting [his] capacity," namely, "[m]orbid obesity, anxiety, [and] sleep
disorder." Id. In determining whether Mr. Zaeske met the definition of “disability” under the
Policy, Dr. Shannon found that his current estimated work capacity was “sedentary,” rather
than the “light” level of activity needed to perform his current job. Id. She declined to
assess whether any potential accommodations existed that would facilitate a return to
work, but observed that Mr. Zaeske was currently limited in his ability to sit, stand, walk,
bend, stoop, squat, climb ladders, or lift objects weighing more than ten pounds. Id. at
283. She concluded her report by opining that the limitations on his mobility would likely
last “an additional 3 months”—for a total of six months—but that his overall prognosis was
“depedent [sic] on response to treatment.” Id.
Meanwhile, as the claim-review process progressed, Mr. Zaeske continued to
receive further treatment for his back pain from his primary physicians. Dr. Potts submitted
another FMLA form to Liberty Life on May 30, 2014. Id. at 50. That same day, Dr. Nunley
performed another steroid injection on Mr. Zaeske’s lumbar spine. Id. at 71. It was not
until June 4, 2014, that Liberty Life sent Mr. Zaeske a letter notifying him that his long-term
disability claim had been approved. See id. at 264. In the letter, Liberty Life concluded
that Mr. Zaeske met the Plan's definition of “disabled,” with respect to his ability to perform
“the Material and Subtantial Duties of his Own Occupation." Id. at 264. His date of
disability onset was found to be April 7, 2014, and he was deemed eligible to receive
benefits as of July 6, 2014. The letter from Liberty Life also informed Mr. Zaeske that it
would evaluate his claim "periodically to determine ongoing disability." Id.
Throughout the month of June 2014, Mr. Zaeske continued to see Drs. Potts and
Nunley. In an appointment with Mr. Zaeske on June 10, 2014, Dr. Potts noted that his
back pain had worsened and was "uncontrolled," that he was unable to work while taking
pain medications, and that he should continue taking oxycodone and Dilaudid for pain, and
Robaxin, a muscle relaxant. Id. at 97-99. After a visit with Mr. Zaeske on June 17, 2014,
Dr. Nunley noted that both previous lumbar steroid injections had been unsuccessful in
reducing Mr. Zaeske's pain levels, and that he continued to have “[c]onstant” low back pain
that worsened with standing or walking, such that he was now sleeping in a recliner at
night. Id. at 73. Dr. Nunley gave him yet another steroid injection on September 12, 2014,
and noted Mr. Zaeske’s continued low back pain in his notes. Id. at 76. On October 8,
2014, a different physician at Mercy Clinic, Dr. Gannon Randolph, examined Mr. Zaeske
and noted he “[c]ontinues to have low back pain. All axial, midline and band of pain.” Id.
At this point, Mr. Zaeske had been receiving long-term disability benefit checks for
only a few months. On October 12, 2014, Ms. Arrington of Liberty Life wrote a letter to Mr.
Zaeske, requesting that he obtain updated medical information on his condition from his
treating physicians, Drs. Potts, Nunley, and Randolph. See id. at 253. When Liberty Life
received no immediate response from the doctors, it sent another request on October 27,
2014. See id. at 211, 219, 227. Two days later, Dr. Randolph sent a summary of his notes
from his visit with Mr. Zaeske on October 8, 2014. The notes listed Mr. Zaeske’s current
medications for pain and inflammation, which included Gabapentin, Robaxin, oxycodone,
and Dilaudid, and observed that the reason why he was seen that day was for “[p]ain.” Id.
at 208. The notes also included an order that Mr. Zaeske submit to another lumbar MRI.
Id. On November 7, 2014, Dr. Potts faxed a “Restrictions Form” to Liberty Life, in which
she identified Mr. Zaeske’s continuing diagnosis as “lumbar degenerative disc disease,”
and noted that his “back pain, intervertebral disc protrusion . . . [and] abnormal MRI of
lumbar spine.” Id. at 203. She confirmed that he was still receiving spinal injections, and
she opined that his return-to-work date was “yet to be determined." Id.
Liberty Life apparently viewed these submissions by Drs. Randolph and Potts as
insufficient to document Mr. Zaeske’s continuing disability. On November 14, 2014, Ms.
Arrington wrote a letter to Mr. Zaeske, informing him that his benefits were suspended, and
that unless further medical records were provided by December 11, 2014, his claim would
be terminated. See Doc. 196. One day after the deadline, on December 12, 2014, Ms.
Arrington wrote another letter to Mr. Zaeske, letting him know that since Liberty Life “did
not receive all the necessary information to investigate your claim, your claim has been
denied effective December 11, 2014.” Id. at 185.
A few days later, on December 15, 2014, Liberty Life received additional medical
documentation from Drs. Potts, Nunley, and Randolph. See id. at 136-37. The documents
included reports of medial branch nerve block procedures performed in February of 2014;
a radiofrequency neurotomy performed in March of 2014; notes regarding physical exams,
epidural steroid injections, and radiofrequency ablation procedures in April of 2014; reports
of further steroid injections in September of 2014; and appointment notes and pain
prescriptions written in October of 2014. Id. at 136.
Liberty Life referred Mr. Zaeske's claim to Dr. Stuart Glassman for an independent
peer review. After he unsuccessfully attempted to reach Drs. Potts, Nunley, and Randolph
over the phone on multiple occasions, Dr. Glassman reviewed the medical records on his
own and prepared a report, dated December 23, 2014. See id. at 141-145. He determined
that the “only diagnosis that could be causing [Mr. Zaeske’s] impairment” was “lumbar
degenerative disc disease and back pain.” Id. at 143. He believed the file contained "no
evidence of any disc herniation." Id. In light of that crucial finding, he deemed Mr. Zaeske
capable of returning to his job and performing “full time activities through a work day.” Id.
His recommendation as to Mr. Zaeske’s limitations and restrictions was as follows:
It is felt that reasonably supported restrictions and limitations for a gentleman
who is 51 years old with a history of lumbar degenerative disc disease, but
no evidence of any disc herniation would be lifting 50 pounds occasionally,
25 pounds frequently, 8 hours a day, 5 days a week, with occasional
bending, kneeling, squatting and climbing, frequent standing and walking, no
restrictions for sitting, frequent reaching and driving and no restrictions for
fine motor activity.
Id. (emphasis added).
Relying on Dr. Glassman's opinion, Ms. Arrington wrote a follow-up letter to Mr.
Zaeske on December 29, 2014, informing him that his claim had now been substantively
reviewed, and Liberty Life had concluded that he would not receive further benefits
because he was now able to "perform the duties of [his] own occupation" under the Policy's
definition. See id. at 136-38. Just two weeks after this letter was sent, Mr. Zaeske
underwent an MRI of his lumbar spine that confirmed the presence of a moderately sized
herniated disc in his lumbar spine. See id. at 23, 52-53.
On February 20, 2015, Mr. Zaeske appealed Liberty Life’s termination of his
benefits. Along with his appeal form, he supplied a letter from Dr. Potts, dated February
10, 2015, id. at 111, a “Restrictions Form” completed by Dr. Potts the previous year, on
April 11, 2014, id. at 113, and an “Activities Questionnaire” that Mr. Zaeske had filled out
on April 20, 2014, id. at 114-16. The February 2015 letter from Dr. Potts advised that Mr.
Zaeske was currently unable to work “due to severe back pain and medication that causes
drowsiness and inability to concentrate.” Id. at 111. She explained that, in her opinion,
“[h]e is unable to sit in chairs, walk[,] or stand for any length of time necessary to work.”
Id. The information she filled out on the “Restrictions Form” noted that, physically, Mr.
Zaeske would be able to do only sedentary work with his condition, but that he was
“[u]nable to do work of any kind presently because necessary pain medications cause
somnolence + confusion.” Id. at 113 (emphasis added).
On March 10, 2015, Liberty Life completed its initial level of appellate review and
upheld its decision to deny benefits. The denial letter sent to Mr. Zaeske noted Liberty
Life’s reliance on Dr. Glassman’s earlier review of the file from December 2014, and his
conclusion that there was no disc herniation, no side effects from prescribed medications,
and no restrictions needed for returning to work. (Doc. 12-2, p. 5). Although Liberty Life
documented several submissions that Mr. Zaeske’s doctors had added to the record for
purposes of the appeal, Liberty Life found that there was “a lack of information to alter the
previous medical assessment or to support a level of impairment that would preclude
occupational functionality beyond December 11, 2014.” Id. at 7.
Post-appeal, Mr. Zaeske submitted further medical documentation to Liberty Life,
including the lumbar spine MRI from January 13, 2015; a letter dated March 10, 2015,
noting Mr. Zaeske’s issues with bathing, personal hygiene, and problems associated with
his weight; numerous FMLA forms from his treating physicians; and a certificate for
issuance of a special license plate for disabled persons, dated March 30, 2015, in which
Dr. Potts had checked the box confirming that Mr. Zaeske could not "walk without the use
of or assistance from a brace, cane, crutch, another person, . . . wheelchair or other
assistive device." (Doc. 12-3, p. 33).
In view of this newly submitted medical information, Liberty Life conducted a second
administrative review of the file by submitting it to another reviewing physician, Dr. Mark
Reecer. In contrast to Dr. Glassman, Dr. Reecer did find that Mr. Zaeske suffered from a
lumbar herniated disc, along with lumbar degenerative disease, chronic pain, and
long-term narcotics usage. (Doc. 12-3, p. 26). Dr. Reecer wrote a report for Liberty Life
that, among other things, specifically noted that he had reviewed Dr. Potts’ February 10,
2015 letter, in which she opined that Mr. Zaeske’s multiple pain medications negatively
affected his ability to concentrate and made him sleepy. Nevertheless, Dr. Reecer’s report
made no mention of the effects that Mr. Zaeske’s medications might have on his ability to
perform his former job as Risk Manager for Walmart. Dr. Reecer found, instead, that there
appeared to be “[n]o side effects from the current medication regimen,” and “[t]herefore
there are no restrictions based on the current medication regimen.” Id. at 27. Without
referencing any of Mr. Zaeske’s specific job requirements, Dr. Reecer opined that Mr.
Zaeske was capable of sitting for one-hour intervals, walking for one-hour intervals,
standing for 30-minute intervals, and engaging in occasional climbing, crawling, squatting,
kneeling, stooping, and crouching. Id. at 26. Overall, it was Dr. Reecer’s view that Mr.
Zaeske could, with these restrictions in place, “work 8 hour shifts, 40 hours per week,” but
“may have poor tolerance”—not due to the documented stenosis and herniated disc
issues, which he conceded were present—but due to “morbid obesity and being grossly
deconditioned.” Id. at 27.
On June 1, 2015, in reliance on Dr. Reecer's findings, Liberty Life again upheld its
decision to deny long-term disability benefits to Mr. Zaeske, finding as follows:
We . . . are unable to alter the original determination to deny benefits beyond
December 11, 2014 due to the additional medical evidence did not support
your inability to perform the material and substantial duties of your own
occupation, as defined by the Wal-Mart Stores, Inc. Associates’ LTD Policy.
(Doc. 12-2, p. 1). Following the June 1 denial letter, Mr. Zaeske’s administrative appeal
rights were exhausted, and he filed the instant case in this Court on December 23, 2015.
He now seeks review of the adverse decision to terminate his benefits, and he asks that
he be awarded benefits as of December 12, 2014, the date they were first terminated, and
for the remaining 12-month period provided under the Policy.
II. LEGAL STANDARD
Generally, once a plaintiff has exhausted his administrative remedies, the Court's
function 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); Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). A denialof-benefits claim under ERISA is reviewed for abuse of discretion when "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) (citing Firestone, 489 U.S. at 111). When a plan confers discretionary
authority, the Court must defer to the determination made by the administrator or fiduciary
unless such determination is arbitrary and capricious. Id. at 115; see Jackson v. Prudential
Ins. Co. of Am., 530 F.3d 696, 701 (8th Cir. 2008) ("[R]eview for an 'abuse of discretion'
or for being 'arbitrary and capricious' is a distinction without a difference . . . ." (citing
Schatz v. Mutual of Omaha Ins. Co., 220 F.3d 944, 946 n.4 (8th Cir. 2000)).
The Court finds that in the case at bar, abuse of discretion is the proper standard
of review because the Policy confers upon Liberty Life, as Plan Administrator, the binding
"authority, in its sole discretion, to construe the terms of this policy and to determine benefit
eligibility [there]under." (Doc. 12-1, p. 42). In general, the decision of a plan administrator
may only be overturned if it is not "reasonable, i.e., supported by substantial evidence."
Donaho v. FMC Corp., 74 F.3d 894, 899 (8th Cir. 1996). A plan 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, then it should not
be disturbed, even though a different reasonable interpretation could have been made.
Cash v. Wal-Mart Group Health Plan, 107 F.3d 637, 641 (8th Cir. 1997) (citing Donaho,
74 F.3d at 899). Nonetheless, although it is "not unreasonable for a plan administrator to
deny benefits based upon a lack of objective evidence," that denial must still be supported
by substantial evidence in order to withstand judicial scrutiny. McGee v. Reliance Standard
Life Ins. Co., 360 F.3d 921, 924-25 (8th Cir. 2004). Substantial evidence means "more
than a scintilla but less than a preponderance." Schatz, 220 F.3d at 949.
To determine whether Liberty Life's decision was reasonable, the Court will consider
multiple factors. One factor is the conflict of interest that may exist when the same party
is both claims administrator and insurer; that is, when the same party that makes the
benefits decisions also pays the claims. Firestone, 489 U.S. at 115; Atkins v. Prudential
Ins. Co., 404 F. App'x 82, 86 (8th Cir. 2010). The importance of this factor varies
depending on whether the circumstances suggest a high or low likelihood that the conflict
of interest affected the benefits decision. Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105,
117 (2008). For instance, a conflict will weigh more heavily in circumstances "where an
insurance company administrator has a history of biased claims administration" or where
evidence shows "procedural unreasonabilities." Metropolitan, 554 U.S. at 117-18. On the
other hand, it may be "less important . . . where the administrator has taken active steps
to reduce potential bias and to promote accuracy . . . . ” Metropolitan, 554 U.S. at 117.
In addition to any potential conflict of interest, the Court will consider five other
factors in determining whether Liberty Life's decision was reasonable:
(1) whether the administrator's interpretation is consistent with the goals of
the Plan; (2) whether the interpretation renders any language in the Plan
meaningless or internally inconsistent; (3) whether the administrator's
interpretation conflicts with the substantive or procedural requirements of the
ERISA statute; (4) whether the administrator has interpreted the relevant
terms consistently; and (5) whether the interpretation is contrary to the clear
language of the Plan.
Torres v. Unum Life Ins. Co. of Am., 405 F.3d 670, 680 (8th Cir. 2005) (citing Shelton v.
ContiGroup Cos., Inc., 285 F.3d 640, 643 (8th Cir. 2002)) (the “Shelton factors”).
As an initial matter, Mr. Zaeske asserts that the Court should confer significant
weight to the conflict of interest created by Liberty Life's status as both insurer and
administrator under the Policy. However, the record does not indicate that Liberty Life has
a history of biased claims administration, nor does it reveal any significant procedural
irregularities. Further, the affidavit of the manager of Liberty Life's Appeal Review Unit
alleges that Liberty Life has taken "active steps to reduce potential bias" by geographically
separating case managers from "those employees who make underwriting and premium
decisions," and implementing departmental and managerial separation between case
managers and underwriters. (Doc. 18-1, p. 3). Notably, three different reviewing doctors
made decisions impacting the denial of benefits in this case. Under these circumstances,
the Court does not find that the conflict-of-interest factor should receive significant weight.
Turning to the five Shelton factors recognized by the Eighth Circuit, the Court must
now consider whether Liberty Life's interpretation of the Policy was consistent with the
goals of the Policy; whether the interpretation renders any language in the Policy
meaningless or internally inconsistent; whether Liberty Life’s interpretation of the Policy’s
terms conflicts with the substantive or procedural requirements of the ERISA statute;
whether Liberty Life, as the administrator of the Policy, interpreted the relevant terms
consistently; and whether Liberty Life’s interpretation is contrary to the clear language of
the Policy. 285 F.3d at 643.
The Court begins its analysis by examining the Policy language. The Policy
promises to pay benefits to employees who become "Disabled due to Injury or Sickness
. . . ." (Doc. 12-1, p. 26). There are two different standards that the Policy utilizes to
determine whether an employee qualifies as “disabled.” The first standard, which is
applicable in the instant case, is used “during the Elimination Period and the next 12
months of Disability.” Id. at 13. This standard considers whether an employee, “as a result
of Injury or Sickness, is unable to perform the Material and Substantial Duties of his Own
Occupation.” Id. The second standard comes into play after the Elimination Period and
ensuing 12 months of disability coverage have expired. Under the second standard, an
employee will continue to be considered “disabled” under the Policy if he “is unable to
perform, with reasonable continuity, the Material and Substantial Duties of Any
Occupation.” Id. (emphasis added).
For purposes of interpreting the first standard, the “Elimination Period” is a period
of consecutive days in which no benefit is payable, beginning with the first day of disability.
See id. at 14. The Policy defines the “Material and Substantial Duties” of an employee’s
occupation as the “responsibilities that are normally required to perform the Covered
Person’s Own Occupation, or any other occupation, and cannot be reasonably eliminated
or modified.” Id. In Mr. Zaeske’s case, he was approved for benefits on June 4, 2014; his
first day of disability was determined to be April 7, 2014; and he became eligible to receive
benefits as of July 6, 2014. His Elimination Period, therefore, did not end until July 6,
2014. Since Mr. Zaeske’s request for benefits was initially granted, and then cut off within
the first 12 months of disability following the Elimination Period, the only question the Court
must answer is whether Liberty Life abused its discretion in determining that his medical
condition improved, such that he became able to perform the material and substantial
duties of his former job, at the time disability benefits were terminated on December 12,
In reviewing the Administrative Record in this case, it is clear that Liberty Life’s
interpretation of the Policy, which it relied on in terminating Mr. Zaeske’s benefits, was
inconsistent with the Policy’s goal of providing long-term disability benefits to qualified Plan
members, in violation of the first Shelton factor. After Liberty Life completed its initial
evaluation of Mr. Zaeske’s medical condition, it decided that he met the definition of
“disabled,” and awarded him benefits. However, each subsequent medical evaluation
conducted by Liberty Life’s reviewing physicians either ignored objective medical data in
the file, failed to appreciate that his condition had not improved over time, or declined to
consider whether he could still perform the material and substantial duties of a Risk
Manager, given his documented limitations. To illustrate this point, the Court will now
review the material inconsistencies and errors present in Liberty Life’s reviewing-physician
reports. This review clearly illustrates why Liberty Life’s decision to terminate benefits was
not supported by substantial evidence.
The Court begins with Liberty Life’s first independent reviewing physician, Dr.
Shannon, who evaluated Mr. Zaeske’s medical file in late May of 2014 and determined that
he was eligible to receive long-term disability benefits. Her opinion was reasonable and
well supported by substantial evidence. Unlike the medical assessments that were
performed later by other reviewing doctors, Dr. Shannon’s assessment stands alone as the
only one that properly considered the nature of Mr. Zaeske’s job at Walmart, and the fact
that it required light, rather than sedentary, activity. Indeed, the record reflects that at the
time Mr. Zaeske first applied for benefits, his employer had begun to recognize that he
could no longer perform his current duties and had encouraged him to find another job
within the company. See Doc. 12-3, p. 13.
As per the Policy, Dr. Shannon undertook an analysis of whether Mr. Zaeske was
medically disabled by considering the “own occupation” standard. In doing so, she
reviewed the documentation submitted by his treating doctors and concurred in their
collective diagnosis that he suffered from "[c]hronic low back pain with recently increased
back and leg pain.” Id. at 282. She also noted the objective evidence of his MRI, which
"showed chronic appearing disc protrusion with severe stenosis at L4-5 . . . ." Id. His
constellation of symptoms caused her to conclude that Mr. Zaeske was limited in his ability
to sit, stand, walk, bend, stoop, squat, climb ladders, or lift objects weighing more than ten
pounds. Id. at 283. Therefore, due to his limited mobility, he could not perform the lightduty tasks that his job required—such as touring Walmart facilities and observing
associate, customer, and supplier behavior, making presentations, driving to various
facilities, and engaging in both domestic and international travel in furtherance of his
duties. Importantly, Dr. Shannon also recognized that it would be impossible for her to
estimate the date Mr. Zaeske might return to work, as this depended on his response to
Liberty Life reviewed its decision to award benefits, as it had the right to do under
the Policy, on October 12, 2014. A request for updated medical information was put to Mr.
Zaeske’s doctors at that time, and Liberty Life determined that the documentation it
received was not thorough enough to substantiate the continuing nature of the disability—
despite the fact that the underlying diagnosis had not changed, no surgeries had been
performed in the meantime, and his doctors confirmed that he continued to receive spinal
medications—including Gabapentin, Robaxin, oxycodone, and Dilaudid. Still, Liberty Life
terminated his benefits as of December 12, 2014, but allowed him to submit additional
medical information so his claim could be reevaluated.
The second independent medical review of Mr. Zaeske’s file was performed at
Liberty Life’s request on or around December 23, 2014, by Dr. Glassman. This review was
flawed and unreliable, and thus should not have formed the basis for Liberty Life’s decision
to uphold its denial of benefits—a decision that the Court finds was arbitrary and capricious
and rendered the language in the Policy meaningless and inconsistent, in violation of the
second Shelton factor. Dr. Glassman ignored verified proof in the medical file that Mr.
Zaeske suffered from disc protrusion, herniation, and lumbar stenosis. The Administrative
Record is replete with evidence of this disc injury, and Dr. Shannon noted its existence in
her report only seven months earlier. Evidently ignoring Mr. Zaeske’s treating physicians’
medical records and Dr. Shannon’s opinion, Dr. Glassman opined that the “only diagnosis
that could be causing impairment” was “lumbar degenerative disc disease and back pain.”
Id. at 143.
This incorrect diagnosis led Dr. Glassman to assume that Mr. Zaeske was less
impaired than he actually was—and contributed to a domino-effect of faulty assumptions
and unsupported recommendations. Because Dr. Glassman had determined that Mr.
Zaeske’s mobility was greater than it actually was, he opined that Mr. Zaeske could
perform more tasks on the job than he was actually capable of performing. It therefore
comes as no surprise that Dr. Glassman found Mr. Zaeske capable of returning to his
former job and performing “full time activities through a work day.” Id. Without any reason
given for Mr. Zaeske’s sudden, and rather magical, physical improvement, Dr. Glassman
advised Liberty Life that Mr. Zaeske could now perform such herculean tasks as “lifting 50
pounds occasionally,” “frequent standing and walking,” sitting for any length of time with
“no restrictions,” and “frequent reaching and driving.” Id.
Dr. Glassman’s report also focused excessively on Mr. Zaeske's range of motion,
emphasizing that his medical records appeared to reflect "no deficits for range of motion
or strength for the upper or lower extremities or spine." (Doc. 12-3, p. 144). Though range
of motion certainly determines how far a person can reach or bend, it does not fully
address a patient’s pain level while exercising that range of motion. Reports submitted by
all three of Mr. Zaeske’s treating physicians consistently documented his increasingly
uncontrolled levels of pain over time. This type of pain was treated with multiple epidural
steroid injections, radiofrequency ablation procedures, medial branch nerve blocks, a
radiofrequency neurotomy, and various, powerful narcotic medications—all to no avail.
Nowhere in Dr. Glassman’s report did he acknowledge Mr. Zaeske’s pain as being
uncontrolled. He did not address how uncontrolled pain would affect Mr. Zaeske’s ability
to walk, sit, lift heavy things, or travel. Further, nowhere in his report did Dr. Glassman
mention the effects of the narcotics that Mr. Zaeske was taking or the fact that Dr. Potts
noted multiple times in documents submitted to Liberty Life that the medications caused
Mr. Zaeske to experience somnolence, decreased concentration, confusion, an inability
to drive, and an inability to make decisions. See, e.g., id. at 42.
The law provides that a plan administrator, such as Liberty Life, may credit a
consulting physician's findings even when they conflict with treating physicians' opinions,
provided that the consulting physician’s findings are considered reliable. See Black &
Decker Disability Plan v. Nord, 538 U.S. 822, 833 (2003); see also House v. Paul Revere
Life Ins. Co., 241 F.3d 1045, 1048 (8th Cir. 2001) (if an independent medical examination
had been performed, the administrator would have been "entitled to discount [the treating
physician's] opinion entirely in favor of a contrary opinion produced by the independent
examiner"). In Mr. Zaeske’s case, however, there is no question that Dr. Glassman’s
findings and recommendations were unreliable, which means that Liberty Life’s complete
reliance on those findings was unreasonable and constituted an abuse of its discretion as
Plan Administrator. The Court need not defer to Liberty Life’s December 2014 finding that
Mr. Zaeske was not disabled according to the Policy.
Moving on to Mr. Zaeske’s February 2015 appeal, the Court finds that Liberty Life’s
decision to again defer to and rely on Dr. Glassman’s original report was an abuse of
discretion. The record reflects that for the appeal, Dr. Potts provided an updated letter on
Mr. Zaeske’s condition, as well as a “Restrictions Form,” which noted that someone in Mr.
Zaeske’s current physical condition would ordinarily be capable of performing sedentary
work (as opposed to the “light” level of work required for being a Risk Manager), but that
sedentary work was impossible in Mr. Zaeske’s particular case because of the effects of
his pain medications on his ability to think and concentrate. See id. at 113. It is evident
that Liberty Life did not meaningfully consider either of these updated records or Mr.
Zaeske’s robust medical file in upholding its decision to deny benefits on March 10, 2015.
The denial letter simply cited back to Dr. Glassman’s December 23, 2014 report and relied
on it exclusively in denying Mr. Zaeske’s appeal. See Doc. 12-2, pp. 5-6. Accordingly, the
Court declines to defer to Liberty Life’s March 2015 finding that Mr. Zaeske was not
disabled according to the Policy.
Finally, the Court arrives at Mr. Zaeske’s second appeal, which was reviewed by Dr.
Reecer. Unlike Dr. Glassman, Dr. Reecer acknowledged that Mr. Zaeske did, in fact,
suffer from something more than mere back pain. Dr. Reecer affirmed that the medical file
supported diagnoses of lumbar degenerative disc disease, lumbar herniated disc, chronic
pain, and long-term narcotic usage. (Doc. 12-3, p. 26). Nevertheless, Dr. Reecer’s medical
opinion was unreasonable and unsupported by the medical evidence, as he omitted from
his report any consideration of whether Mr. Zaeske’s chronic pain would impact his ability
to function in the workplace. Dr. Reecer claimed to have reviewed Mr. Zaeske’s doctors’
reports and the long list of pain medications Mr. Zaeske had been prescribed, but Dr.
Reecer nonetheless failed to consider how those medications affected Mr. Zaeske’s ability
to perform: (1) any tasks that would involve alertness, coordination, and mobility, and (2)
any tasks specifically listed in his job description as Risk Manager that could not
reasonably be eliminated or modified, as per the Policy’s definition of “Material and
Substantial Duties.” Instead, Dr. Reecer inexplicably opined that Mr. Zaeske suffered from
“[n]o side effects from the current medication regimen,” and “[t]herefore there are no
restrictions based on the current medication regimen.” Id. at 27.
Dr. Reecer’s ultimate recommendation that Mr. Zaeske was capable of sitting for
one-hour intervals, walking for one-hour intervals, standing for 30-minute intervals, and
engaging in occasional climbing, crawling, squatting, kneeling, stooping, and crouching,
see id. at 26, was also unsupported by the record, and stood in direct contradiction to Dr.
Shannon’s earlier report and recommendation, which assumed the identical medical
diagnoses of chronic low back pain, disc herniation, and severe lumbar stenosis. If
anything, the numerous medical records submitted after Dr. Shannon filed her report
indicate that Mr. Zaeske’s condition either remained the same or worsened over time, and
that his pain remained uncontrolled. Nowhere in the record is there any evidence that Mr.
Zaeske’s condition improved after the original decision to grant benefits. Accordingly, Dr.
Reecer’s recommendation that Mr. Zaeske could perform far more tasks than Dr. Shannon
determined he could perform—given the same medical diagnosis—rendered the Policy’s
definition of “disability” as meaningless or internally inconsistent, in violation of the second
Liberty Life’s conduct also violated the third Shelton factor, which asks whether the
administrator's interpretation of the insurance policy conflicts with the substantive or
procedural requirements of the ERISA statute. “ERISA requires all plan fiduciaries—a term
that includes plan administrators—to discharge their duties in accordance with the plan
documents.” Torres, 405 F.3d at 681 (citing 29 U.S.C. § 1104(a)(1)(D)). Here, Liberty Life
failed to discharge its duty to assess Mr. Zaeske's eligibility for long-term disability benefits
when it ignored evidence from his treating physicians that was directly related to the
Policy's definition of “disabled.” Moreover, Liberty Life’s reliance on conflicting
recommendations—for the same medical diagnosis—made by three independent
reviewing physicians shows that the Policy’s terms were interpreted inconsistently, in
violation of the fourth Shelton factor.
Lastly, the Court finds that Liberty Life’s deference to Dr. Reecer’s opinion and its
finding that Mr. Zaeske did not meet the definition of “disabled” under the Policy was
contrary to the clear language of the Policy, in violation of the fifth Shelton factor. The
Policy specifically defines a claimant as “disabled” in terms of his ability to perform a
particular job, and Dr. Reecer failed to consider whether Mr. Zaeske could perform the
material and substantial duties required of a Risk Manager, in light of the many restrictions
and limitations that even Dr. Reecer deemed necessary. For all of these reasons, the
Court need not defer to Liberty Life’s June 2015 finding that Mr. Zaeske was not disabled
according to the Policy.
As Mr. Zaeske has prevailed in all respects in this matter, Liberty Life’s decision to
terminate his long-term disability benefits will be reversed. Mr. Zaeske will be entitled to
receive benefits from the time they were initially terminated in December of 2014, through
the remainder of the 12-month period of time that followed . The Court will also order
Liberty Life to pay Mr. Zaeske a check representing the lump-sum total amount of benefits
owed within 30 days of the entry of this Order.
IT IS THEREFORE ORDERED that Defendant Liberty Life Assurance Company of
Boston's decision to terminate Plaintiff Damon Zaeske's long-term disability benefits is
REVERSED , and the claim is REMANDED to Defendant to calculate the correct amount
of past-due benefits owed .
IT IS FURTHER ORDERED that Defendant pay all past-due benefits owed to
Plaintiff in the form of a lump-sum check within 30 days of the date of this Order.
IT IS FURTHER ORDERED that Mr. Zaeske's attorney submit his petition for
reimbursement of his reasonable fees and costs expended in prosecuting this appeal , in
accordance with ERISA, within 30 days of the date of this Order.
IT IS SO ORDERED on
this~ay of Jun , 2 17.
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