Bertha Campos v. Reliance Standard Life Insurance Company et al

Filing 53

FINDINGS OF FACT AND CONCLUSIONS OF LAW signed by Judge Otis D. Wright, II: 1. Plaintiff worked a minimum of 30 hours during [her] regular work week as defined by the LTD Plan; 2. Reliance waived any argument that Plaintiff was not entitled to benef its because she did not meet the definition of Totally Disabled during the Regular Occupation period; 3. Remand to the Plan administrator is appropriate for a determination whether Plaintiff was totally disabled under the Any Occupation period, wheth er the 24-month pay limitation for musculoskeletal and connective tissue disorders applies to Plaintiffs injury, and to make other determinations as necessary that are not inconsistent with this decision; 4. WHM should be dismissed from this lawsuit without prejudice. The Court ORDERS the parties to submit a proposed judgment to the Court within 7 days of the date of this Order. (lc)

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United States District Court
Central District of California

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Case № 2:15-cv-08304-ODW (GJSx)

BERTHA CAMPOS,
v.

Plaintiff,

RELIANCE STANDARD LIFE
INSURANCE COMPANY; WHM, LLC;
and DOES 1 through 10, inclusive,

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FINDINGS OF FACT AND
CONCLUSIONS OF LAW

Defendants.

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This is an action under the Employee Retirement Income Security Act to

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recover long-term disability benefits. On October 17, 2016, the parties lodged the

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record of the underlying administrative proceeding with the Court. On April 10, 2017,

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the Court conducted a bench trial, after which the Court took the matter under

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submission. Based on the Administrative Record, the briefs submitted by the parties,

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and the argument of counsel at the trial of this matter, the Court issues the following

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findings of fact and conclusions of law.
I.

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1.

FINDINGS OF FACT

On or about May 5, 2008, Defendant WHM, LLC (“WHM”) hired

Plaintiff Bertha Campos as a full-time employee.

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2.

Defendant Reliance Standard Life Insurance Company (“Reliance”)

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issued a group long-term disability policy, policy number VPL 300459 (the “LTD

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Plan”), to WHM.

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3.

At all relevant times during Plaintiff’s employment with WHM, Plaintiff

was enrolled in the LTD Plan.
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The LTD Plan terms provide that “[a] person is eligible for insurance

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under this Policy if he/she: (1) is a member of an Eligible Class . . .; and (2) has

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completed the Waiting Period . . .”

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5.

The LTD Plan terms define “Eligible Class[]” as follows: “Each active,

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Full-time Employee earning an annual salary of at least $15,000 except any person

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employed on a temporary or seasonal basis.”

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6.

The LTD Plan terms define “actively at work” and “active at work” as

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follows: “‘Actively at Work’ and ‘Active Work’ mean actually performing on a Full-

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time basis the material duties pertaining to his/her job in the place where[,] and the

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manner in which[,] the job is normally performed. This includes approved time off

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such as vacation, jury duty and funeral leave, but does not include time off as a result

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of an Injury or Sickness.”

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7.

The LTD Plan terms define “full-time” as follows: “‘Full-time’ means

working for you for a minimum of 30 hours during a person’s regular work week.”

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8.

The LTD Plan terms do not expressly define “regular work week.”

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9.

On April 11, 2013, Plaintiff was working as a banquet server for WHM

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when she fell and injured herself.
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On November 21, 2013, Plaintiff submitted to Reliance a claim for

benefits under the LTD Plan.
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On April 7, 2014, Reliance sent a letter to Plaintiff that appeared to deny

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Plaintiff’s claim. The letter did not explicitly state that Reliance denied her claim, but

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it cited language from the LTD Plan terms regarding the full-time requirement for

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coverage. The letter then stated: “We regret our decision could not be more favorable.

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Our determination has been based on the information contained in your file and the

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policy provisions applicable to your claim.”
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On April 9, 2014, Plaintiff called Reliance to inquire about the status of

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her claim, at which time a Reliance representative informed Plaintiff that Reliance had

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denied her claim. According to Reliance’s written notes from the call, Reliance

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advised Plaintiff that her “claim [was] not denied due to medical not supporting [sic],

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just due to not meeting [full time] hours policy definition.”

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13.

On September 17, 2014, Plaintiff appealed the denial of her claim.

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14.

On January 13, 2015, Reliance sent a letter to Plaintiff denying her

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appeal. Reliance stated in the letter that it had reviewed Plaintiff’s payroll information

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for the eight pay periods (16 weeks) preceding Plaintiff’s accident. Reliance included

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the following table regarding the amount of time Plaintiff worked during those pay

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periods:

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Period Ending

Hours Worked

Total Hours

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12/26/2012

30.5 Regular time; 8 Vacation hours

38.50

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1/9/2013

23 Regular time; 8 Vacation hours

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1/23/2013

61 Regular time; 16 Vacation hours1

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2/6/2013

49 Regular time

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2/20/2013

68.75 Regular time

68.75

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3/6/2013

49.75 Regular time

49.75

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3/20/2013

72.50 Regular time

72.50

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4/3/2013

33 Regular time; 24 Vacation hours

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15.

Reliance stated in its January 13 letter that during those eight pay-

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Although Reliance stated that eight of these hours were “sick” hours, this appears to be a typo.
The record discloses that the 8 “sick” hours were actually “vacation” hours, and Reliance included it
in the total eligible hours in the third column.

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periods, Plaintiff “infrequently worked over 30 hours per week,” and that she “only

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worked ‘full-time’ as defined by your Policy, during three (3) pay periods.”

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Reliance’s January 13 letter further stated: “[W]hile we understand that

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you were considered a full-time employee for purposes of certain benefits only

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available to full-time employees, the Policy has a specific definition of ‘Full-time’

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which must be satisfied in order for your LTD claim to have been approved. We

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further understand that you paid premiums for this benefit, and this decision does not

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imply that you are never eligible for LTD benefits. However, for this particular claim,

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you did not work sufficient hours during the many weeks leading up to the date you

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became injured, on April 11, 2013, in order for your claim to be approved.”
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Plaintiff worked an average of 31 hours per week during the six pay

periods preceding her accident.
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In a letter to Reliance dated June 23, 2015, Plaintiff stated in part: “Prior

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to and during my employment your company continued to deduct monies for monthly

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policy coverage fully aware my employer was not providing me with the minimal 30

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hours per week, but was giving these hours to other non-full time employees.”

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Reliance argues that the LTD Plan has a 180-day Elimination Period

during which no benefit is payable.
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Reliance argues that the LTD Plan terms contain a “Regular Occupation”

and an “Any Occupation” definition of “Total Disability.”
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Reliance argues that during the “Regular Occupation” period, the LTD

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Plan terms provide, in part: “‘Totally Disabled’ and ‘Total Disability’ mean, that as a

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result of an Injury or Sickness: (1) during the Elimination Period and for the first 24

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months for which a Monthly Benefit is payable, an Insured cannot perform the

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substantial and material duties of his/her Regular Occupation.”

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22.

Reliance argues that the LTD Plan terms define “Regular Occupation” as

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“the occupation the Insured is routinely performing when Total Disability begins. We

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will look at the Insured’s occupation as it is normally performed in the national

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economy, and not the unique duties performed for a specific employer or in a specific

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locale.”

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Reliance argues that with regard to the “Any Occupation” period, the

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LTD Plan terms provides: “‘Totally Disabled’ and ‘Total Disability’ mean, that as a

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result of an Injury or Sickness: . . . (2) after a Monthly Benefit has been paid for 24

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months, an Insured cannot perform the material duties of Any Occupation. We

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consider the Insured Totally Disabled if due to an Injury or Sickness he or she is

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capable of only performing the material duties on a part-time basis or part of the

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material duties on a Full-time basis.”

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Reliance argues that the LTD Plan terms define “Any Occupation” as “an

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occupation normally performed in the national economy for which an Insured is

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reasonably suited based upon his/her education, training or experience.”

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Reliance argues that the LTD Plan terms include a 24-month pay

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limitation for certain Total Disabilities “caused by or contributed to [by]

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musculoskeletal and connective tissue disorders of the neck and back.”

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The only basis on which Reliance denied Plaintiff’s claim is that Plaintiff

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did not work a minimum of 30 hours in a “regular work week” as required by the LTD

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Plan terms.

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WHM provided payroll information to Reliance so that Reliance could

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determine whether Plaintiff was a full time employee under the LTD Plan. However,

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WHM was not otherwise involved in determining Plaintiff’s eligibility for benefits

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under the LTD Plan.

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II.
1.

CONCLUSIONS OF LAW

Under the Employee Retirement Income Security Act (“ERISA”), a

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participant in an ERISA-governed welfare benefit plan may bring a civil action “to

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recover benefits due to him under the terms of his plan, to enforce his rights under the

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terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”

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29 U.S.C. § 1132(a)(1)(B).

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2.

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“A denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed

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under a de novo standard unless the benefit plan gives the administrator or fiduciary

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discretionary authority to determine eligibility for benefits or to construe the terms of

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the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). The

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parties to this action have stipulated, and the Court has ordered, that Reliance’s denial

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of Plaintiff’s claim shall be reviewed de novo. (ECF Nos. 26–27.)
3.

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Under a de novo standard of review, the Court interprets the terms of an

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ERISA-governed benefit plan “in an ordinary and popular sense as would a person of

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average intelligence and experience.” Evans v. Safeco Life Ins. Co., 916 F.2d 1437,

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1441 (9th Cir. 1990) (internal brackets and quotation marks omitted). However,

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“[a]mbiguities in the Plan are to be resolved in [the participant’s] favor.” Patterson v.

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Hughes Aircraft Co., 11 F.3d 948, 950 (9th Cir. 1993) (citing Kunin v. Benefit Trust

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Life Ins. Co., 910 F.2d 534, 537 (9th Cir. 1990)).
4.

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Despite Reliance’s argument to the contrary, there is ambiguity in how to

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determine a “regular work week” under the LTD Plan. The LTD Plan terms do not

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expressly define what constitutes a “regular work week.” Moreover, the dictionary

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definition of the word “regular” is of no help in determining a method for calculating

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a

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https://www.merriam-webster.com/dictionary/regular (last visited April 10, 2017)

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(defining “regular” in part as “recurring, attending, or functioning at fixed, uniform, or

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normal intervals”). Reliance’s decision to look at the preceding eight pay periods to

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determine Plaintiff’s “regular work week” is, at best, only one of several permissible

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ways to determine a “regular work week.”

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regular

5.

work

week.

See

Regular,

Merriam-Webster’s

Dictionary,

Because the term “regular work week” is ambiguous, and because

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ambiguities must be construed where possible in favor of coverage, the Court will

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consider Plaintiff to have met the full-time requirement if she can provide a

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reasonable calculation method that establishes that she worked in excess of 30 hours

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in a “regular work week” prior to her injury.

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Plaintiff points out that she worked an average of 31 hours per week over

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the six pay periods before her accident. The Court concludes that averaging the

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number of hours worked over a particular period reasonably reflects the number of

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hours that an employee “regularly” works. Indeed, because Plaintiff had a widely-

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varying work schedule work (due to the fact that her work was event-based), the

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average is likely a more accurate reflection of Plaintiff’s “regular” work week than

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doing a week-to-week comparison of hours worked. The Court also concludes that six

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pay periods (as opposed to eight) is a large enough sample size to reasonably reflect

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what her “regular work week” was prior to the injury. Finally, this calculation method

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does not contradict any explicit terms of the LTD Plan. Thus, based on Plaintiff’s

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calculation, the Court concludes that Plaintiff worked “a minimum of 30 hours during

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[her] regular work week” as defined by the LTD Plan.

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7.

Reliance repeatedly points to Plaintiff’s complaint following the denial of

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her appeal that “[her] employer was not providing [her] with the minimal 30 hours per

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week.” This statement does not compel a different result. First, Plaintiff’s statement,

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when read in context, is not a concession that Reliance correctly concluded that she is

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not a full-time employee under the LTD Plan. Rather, Plaintiff is simply pointing out

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that she was unable to work more hours than she had because WHM did not schedule

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her for more work. Second, her statement does not change the number of hours she

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actually worked before her accident; indeed, the dispositive question—which is solely

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a legal question—is whether the hours she worked renders her a full-time employee

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under the LTD Plan. And as Reliance does not make any estoppel or waiver argument

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based on Plaintiff’s statement, it does not affect the Court’s analysis regarding

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whether or not the hours that she worked qualify her as a full-time employee under the

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LTD Plan.

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8.

Reliance also argues that Plaintiff is not entitled to benefits for several

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additional reasons. First, Reliance argues that Plaintiff was not entitled to any benefits

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during the Elimination Period and 24-month “Regular Occupation” period because she

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could still perform her “regular occupation” following her accident. However, despite

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the fact that this defense was available to Reliance at the time of both Plaintiff’s initial

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claim and at the time of Plaintiff’s appeal, Reliance did not base its denial of her claim

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on this issue. It is well established in the Ninth Circuit that the failure to assert a

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defense to coverage during the administrative proceeding is a bar to raising that

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defense during the subsequent civil action. See, e.g., Mitchell v. CB Richard Ellis

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Long Term Disability Plan, 611 F.3d 1192, 1199 n.2 (9th Cir. 2010); Harlick v. Blue

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Shield of Cal., 686 F.3d 699, 720 (9th Cir. 2012). The Court therefore rejects this

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argument.

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Second, Reliance argues that Plaintiff is not entitled to benefits during the

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“Any Occupation” period. Because Plaintiff’s claim was denied before the “Any

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Occupation” period commenced, Reliance could not have made any determination as

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to this issue during the administrative process.

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Reliance did not waive this argument by not asserting it. The Court therefore remands

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the matter to the plan administrator to make an initial determination on this issue.

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Thus, the Court concludes that

Reliance also argues that the Court should remand the matter to the plan

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administrator to determine whether the 24-month pay limitation for musculoskeletal

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and connective tissue disorders applies to Plaintiff’s injury. Again, because Plaintiff’s

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claims were denied before the 24-month pay limitation would have kicked in, this

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issue was not ripe for determination during the administrative process. Thus, the

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Court concludes that Reliance did not waive this argument by not asserting it. The

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Court therefore remands the matter to the plan administrator to make an initial

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determination on this issue.

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11.

A party is generally not a proper defendant to an action under 29 U.S.C.

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§ 1132(a)(1)(B) where “it had nothing to do with denying [the claimant’s] claim for

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increased benefits” and is not responsible for paying benefits. See Cyr v. Reliance

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Standard Life Ins. Co., 642 F.3d 1202, 1207 (9th Cir. 2011).

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12.

Here, Plaintiff pursues two alternative theories as to why the Reliance’s

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decision was wrong. First, Plaintiff argues she is a “full time” employee under the

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LTD Plan because she worked an average of 31 hours per week in the six weeks

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preceding her accident. Second, she argues that because Plaintiff paid premiums for

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the LTD Plan while she was employed by WHM, Defendants either waived or are

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estopped from asserting the argument that Plaintiff is ineligible for benefits. With

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respect to the first theory of liability, WHM is not a proper defendant because WHM

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had no involvement in determining whether the hours Plaintiff worked qualified her

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for benefits under the LTD Plan terms (and because WHM is not responsible for

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paying benefits). While it is a closer question whether WHM is a proper defendant

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under the second theory, that theory is moot in light of the Court’s ruling. The Court

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therefore concludes that dismissal of Plaintiff’s claims against WHM is appropriate.

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III.

CONCLUSION

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For the reasons discussed above, the Court concludes as follows:

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1.

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Plaintiff worked “a minimum of 30 hours during [her] regular work

week” as defined by the LTD Plan;
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Reliance waived any argument that Plaintiff was not entitled to benefits

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because she did not meet the definition of “Totally Disabled” during the “Regular

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Occupation” period;
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Remand to the Plan administrator is appropriate for a determination

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whether Plaintiff was totally disabled under the “Any Occupation” period, whether the

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24-month pay limitation for musculoskeletal and connective tissue disorders applies to

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Plaintiff’s injury, and to make other determinations as necessary that are not

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inconsistent with this decision;
4.

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WHM should be dismissed from this lawsuit without prejudice.

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The Court ORDERS the parties to submit a proposed judgment to the Court
within seven days of the date of this Order.

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IT IS SO ORDERED.

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April 12, 2017

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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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