Gilson v. Macy's Inc Long Term Disability Plan et al

Filing 46

ORDER DENYING MOTION FOR SUMMARY JUDGMENT by Hon. William Alsup denying 32 Motion for Summary Judgment.(whalc3, COURT STAFF) (Filed on 5/22/2014)

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1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE NORTHERN DISTRICT OF CALIFORNIA 9 11 For the Northern District of California United States District Court 10 KYMBERLEE GILSON, 12 13 14 No. C 13-04520 WHA Plaintiff, v. 15 MACY’S, INC. LONG TERM DISABILITY PLAN and PRUDENTIAL INSURANCE OF AMERICA, 16 Defendants. 17 ORDER DENYING MOTION FOR SUMMARY JUDGMENT / 18 INTRODUCTION 19 In this ERISA action involving a claim for benefits, defendants move for summary 20 judgment. There is a genuine issue of material fact, however, about what documents constitute 21 the Plan document, and therefore what standard of review controls this action. For the reasons 22 stated below, the motion is DENIED. Both sides will be allowed to engage in limited discovery 23 regarding the Plan document and the alleged structural conflict of interest. 24 25 STATEMENT Plaintiff Kymberlee Gilson was employed as a sales clerk with Macy’s Inc., in 2011, 26 where she was occasionally required to reach above shoulder height to access displays and 27 merchandise, as well as lifting, carrying, pushing, and pulling items that weighed up to 20 28 1 pounds (PRU126, 330, 694, 716).* As an employee, she was a beneficiary of defendant Macy’s 2 Inc. Long Term Disability Plan (the “LTD Plan”), which provided long-term disability benefits 3 for eligible employees. Defendant Prudential Insurance Company of America was the claims 4 administrator for the LTD Plan (PRU071). Relevant to this action, an eligible employee was 5 considered disabled when the employee was unable to perform material and substantive duties of 6 her regular occupation due to sickness, the employee was under the regular care of a doctor, and 7 the employee had a 20% of more loss in her monthly earnings due to that sickness of injury 8 (PRU011, 076). In addition, the eligible employee must have been “continuously disabled” 9 through the 180-day elimination period, which was a period of continuous disability that needed to be satisfied before benefits are granted (PRU013, 078). INJURY AND TREATMENT. 11 For the Northern District of California United States District Court 10 A. 12 On April 30, 2011, plaintiff claims she tripped over her dog and fell down half a flight of 13 stairs, hitting her shoulder and knocking out her two front teeth (PRU404–05). She stopped 14 working that day (PRU747). On May 18, 2011, a MRI of plaintiff’s right shoulder at Kaiser 15 Foundation Hospital indicated that plaintiff suffered from “partial tears [of the rotator cuff]. . . 16 [but no] full-thickness rotator cuff tear,” fracture, or disclocation (PRU159–160). Plaintiff 17 returned to Kaiser for pain treatment on June 30 and July 1 (PRU435; PRU437). On August 11, 18 she was diagnosed with adhesive capsulitis of the shoulder “due to [the] fall,” which is a 19 condition characterized by stiffness and pain in the shoulder joint (PRU439). A few months later 20 on October 6, plaintiff reported that her shoulder was “getting much better” and she felt ready to 21 return to work (PRU441). Once she was released back to work and returned to Macy’s, 22 however, she was unable to work due to pain in her shoulder. Plaintiff returned to see her doctor 23 at Kaiser on November 15, who treated the pain (PRU144–45). Plaintiff continued to see a 24 doctor for treatment of her shoulder on December 20, and was eventually referred for surgery for 25 subacromial decompression on February 7, 2012 (PRU147–151). 26 27 28 * The full Bates numbering for the documents contained in the administrative record is PRU 77212000330-000XXX. The citations in this order refer to the last three digits of the Bates labels. 2 1 Plaintiff lost her health benefits through Macy’s due to her inability to work on May 7, 2 2012, and accordingly did not receive her scheduled surgery through Kaiser (PRU300). After 3 three months of non-treatment, she began to receive health benefits through the County on May 4 29 (PRU200–26). At the May 29 check-up, plaintiff requested a disability form from 5 physician’s assistant Lulu Garcia. While Garcia noted that she needed to review the records 6 from Kaiser, she provided plaintiff with the disability note certifying an inability to work 7 (PRU752). After two months of physical therapy at Queen of the Valley medical center, plaintiff 8 was referred to an orthopedic surgeon on July 23 (PRU278–81). 9 On August 15, plaintiff underwent a second MRI. In addition to the rotator cuff tear, the MRI indicated that plaintiff suffered from mild atrophy of the rotator cuff muscles, some 11 For the Northern District of California United States District Court 10 degenerative changes to the acromioclavicular joint, and a small cyst near the humerus 12 (PRU334). Plaintiff was evaluated on August 30, 2012, by Doctor John Burton. Burton 13 recommended a right shoulder arthroscopy, which is a minor surgery (PRU189). After a pre- 14 operation visit on October 30, Burton completed the procedure on November 2 (PRU286–87). 15 In a follow-up meeting, Burton instructed plaintiff to avoid lifting, stretching, and gripping for 16 two months (PRU289). Plaintiff engaged in post-surgery physical therapy from November 12, to 17 March 2013, when she would continue with a home program (PRU228–234). 18 19 20 21 22 Plaintiff returned to part-time work on February 1, 2013, with plans to return to full-time work on July 2013 (PRU818). The administrative record ends in May 2013. 2. CLAIM FOR BENEFITS REVIEW. A. Initial Review. Plaintiff filed a claim for benefits on August 8, 2012 (PRU698–702). On September 5, 23 Nurse Judy Gillis began to review plaintiff’s claim and supporting information. During this 24 initial review, Gillis attempted to contact plaintiff’s family practitioner, Dr. Jennifer Wilson, for 25 additional information, but Wilson did not respond (PRU713). Plaintiff was informed of the 26 inability to contact Wilson (PRU799). On September 19, Gillis wrote to Garcia, the County 27 physician’s assistant treating plaintiff at the time, and requested information (PRU194). In 28 particular, while Gillis wrote that “[t]he purpose of this letter is . . . not to influence your clinical 3 1 care,” she noted that Garcia had provided plaintiff with a disability note. Afterwards, Gillis 2 incorrectly informed Garcia that plaintiff had not received treatment for seven months prior to 3 being treated by Garcia (PRU194–95). In fact, plaintiff had not received treatment for only three 4 months after she lost her health benefits through Macy’s (PRU300). Gillis opined that plaintiff 5 only had self-reported symptoms, and therefore no objective basis, to support Garcia’s diagnosis 6 of disability (PRU753). Her opinion is based on the records sent by Garcia, plaintiff’s May 2011 7 MRI that showed only a partial rotator cuff tear, evidence of improvement, and the fact that she 8 was temporarily released back to work in October 2011 (PRU753–54). Her conclusion was that 9 plaintiff only had reasonable restrictions, including no lifting of items that were greater than 20 pounds, from April 29, 2011 through the week of October 6, 2011. After October 6, Gillis 11 For the Northern District of California United States District Court 10 concluded that plaintiff had no restrictions or limitations (PRU754). Gillis reviewed additional 12 medical records submitted by plaintiff on September 10 and 21, but did not change her ultimate 13 conclusions (PRU736, 741–42, 746). 14 On October 9, 2012, vocational rehabilitation specialist Meredith Tardif evaluated 15 plaintiff’s occupation as a sales clerk and determined that the occupation required occasional 16 above-shoulder movement of 11-20 pounds occasionally and 10 pounds frequently (PRU730). 17 On October 15, physical therapist Kathleen Pattis reviewed plaintiff’s medical files to conclude 18 that plaintiff successfully treated her shoulder condition by October 6, 2011, and was able to 19 work by then (PRU726). Pattis was unsure whether plaintiff’s condition deteriorated between 20 October 6, 2011, and July 2012, so she recommended an external file review (PRU727). 21 Prudential referred the claim to external reviewer Dr. David Bauer, who is an orthopedic surgeon 22 (PRU321–26). After reviewing plaintiff’s medical records, Bauer concluded that plaintiff did 23 not suffer from decreased capacity after October 6, 2011 (PRU325). 24 After considering the reports by Gillis, Pattis, Tardif, and Bauer (the only external 25 reviewer), Prudential denied plaintiff’s claim for long-term disability benefits (PRU807–10). In 26 particular, Prudential concluded that plaintiff could return to work on October 7, 2011, with no 27 restrictions or limitations (PRU808). Thus, plaintiff was not continuously impaired through her 28 180-day “elimination period,” which ran until October 27, 2011, as required by the LTD Plan, 4 1 and was therefore not eligible for benefits. Moreover, Prudential held that plaintiff’s failure to 2 return to work on October 7 was not justified because her self-reported pain was “out of 3 proportion to the clinical findings” and that “no objective evidence [supported] requiring 4 restrictions that would prevent [her] from performing [her] job functions” as a sales clerk at 5 Macy’s (PRU808). 6 B. 7 FIRST APPEAL. On January 28, 2013, plaintiff appealed Prudential’s denial of long-term disability 8 benefits, arguing that (1) she was approved for state-disability benefits, (2) her family 9 practitioners, including Dr. Currie-Johnson from Kaiser, Dr. Jennifer Wilson, and Dr. Colleen Townsend, certified that she was disabled, and (3) her functional capacity was significantly 11 For the Northern District of California United States District Court 10 reduced after she attempted to return to work in November 2011 (PRU296–97). In addition, 12 plaintiff submitted additional medical records to support her claim. 13 As part of the appeal review, an additional external orthopedic surgeon, Doctor Spyros 14 Panos, reviewed plaintiff’s medical records on March 12, 2013 (PRU126–36). Panos found that 15 plaintiff qualified for several restrictions from work, including lifting and carrying 10 pounds 16 frequently and 25 pounds occasionally, from April 30, 2011, to November 1, 2012 (PRU129). 17 Moreover, Panos found that plaintiff had no work capacity from November 2, 2012, through 18 November 30 due to her shoulder surgery (PRU129). After November 30, however, Panos held 19 that plaintiff could have returned to work with some restrictions and could have worked without 20 any limitations by December 16 (PRU136). Panos recognized that plaintiff’s treating providers, 21 Doctor Johnson, Doctor Disston, and physician assistant Garcia, extended plaintiff’s out-of-work 22 time from October 20, 2011, through surgery on November 2, and that Doctor Wilson had signed 23 an attending physician statement certifying plaintiff’s disability (PRU131). Panos argued, 24 however, that their conclusion that plaintiff was disabled was not supported by her medical 25 record. 26 27 After Prudential received Panos’ report, it referred plaintiff’s file to an additional internal vocational rehabilitation counselor Francis Grunden (PRU714). Grunden concluded that 28 5 1 plaintiff’s occupation as a sales clerk could accommodate the limitations identified by Panos 2 (PRU706, 713, 818). 3 Based on the reports by Panos and Grunden, Prudential upheld its decision to deny 4 plaintiff’s claim for long-term disability benefits April 24, 2013 (PRU816–20). Among other 5 reasons, Prudential found that plaintiff’s restrictions, such as lifting and carrying 10 pounds 6 frequently and 25 pounds occasionally, did not preclude her from working as a sales clerk, 7 except for the brief period after her November 2012 surgery (PRU818). Accordingly, Prudential 8 ruled that plaintiff did not have the type of restrictions or limitations that prevented her from 9 performing “material and substantive duties” of her regular occupation through the 180-day elimination period. 11 For the Northern District of California United States District Court 10 C. SECOND APPEAL. 12 On May 1, 2013, plaintiff appealed Prudential’s denial of long-term benefits a second 13 time (PRU120–22). While plaintiff did not provide any additional information as part of the 14 second appeal, she argued in particular that Prudential erred in failing to examining her in person 15 and relying on their own reviewing physicians’ opinions than those of her treating physicians 16 (PRU120). On May 20, 2012, Prudential upheld its decision to deny plaintiff’s claim for long- 17 term disability benefits (PRU821–24). 18 On September 30, 2013, plaintiff filed the instant action, seeking “benefits due under the 19 Plan according to proof” under ERISA (Compl. at 3). This order follows full briefing and oral 20 argument. 21 22 ANALYSIS Summary judgment is proper when the “pleadings, depositions, answers to 23 interrogatories, and admissions on file, together with the affidavits, if any, show that there is no 24 genuine issue as to any material fact and that the moving party is entitled to judgment as a matter 25 of law.” Rule 56(c). A dispute is “genuine” only if there is sufficient evidence for a reasonable 26 fact finder to find for the non-moving party, and “material” only if the fact may affect the 27 outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). “In 28 considering a motion for summary judgment, the court may not weigh the evidence or make 6 1 credibility determinations, and is required to draw all inferences in a light most favorable to the 2 nonmoving party.” Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). ERISA STANDARD OF REVIEW. 3 1. 4 As a threshold matter, the applicable standard of review must be determined. “[A] denial 5 of benefits [claim pursuant to Section 502(a)(1)(B)] ‘is to be reviewed under a de novo standard 6 unless the benefit plan gives the administrator or fiduciary discretionary authority to determine 7 eligibility for benefits or to construe the terms of the plan.’” Burke v. Pitney Bowes Inc. 8 Long-Term Disability Plan, 544 F.3d 1016, 1023 (9th Cir. 2008) (citations omitted). The 9 presumption of de novo review can be overcome only when the plan administrator satisfies its burden that the plan unambiguously gives it discretionary authority. McDaniel v. Chevron 11 For the Northern District of California United States District Court 10 Corp., 203 F.3d 1099, 1107 (9th Cir. 2000). If the administrator satisfies that burden, the Court's 12 review is for abuse of discretion. In that instance, the standard of review is “arbitrary and 13 capricious,” meaning “the administrator's decision cannot be disturbed if it is reasonable.” 14 Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 675 (9th Cir. 2011). 15 16 A. Plan Document. The parties disagree about what standard of review applies. This disagreement is 17 resolved by determining what documents constitute the LTD Plan document. According to 18 defendants, the LTD Plan document is comprised of the Group Insurance Contract, Certificate of 19 Coverage, Claims and Appeals Section, and Summary Plan Document (SPD) (Reply Br. at 3). 20 In reply, plaintiff argues that only the Group Insurance Contract and Certificate of Coverage 21 constitute the LTD Plan document and those two documents do not unambiguously give 22 Prudential discretionary authority. 23 ERISA does not require a single plan document and the plan document may incorporate 24 other formal or informal documents. Scott v. Gulf Oil Corp., 754 F.2d 1499, 1503 (9th Cir. 25 1985); accord Gonzales v. Unum Life Ins. Co. of Am., 861 F. Supp. 2d 1099, 1107–08 (S.D. Cal. 26 2012) (Judge Anthony Battaglia) (collecting cases). Rather, an ERISA plan exists even without 27 a formal plan if “from the surrounding circumstances a reasonable person can ascertain the 28 intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving 7 1 benefits.” Carver v. Westinghouse Hanford Co., 951 F.2d 1083, 1086 (9th Cir. 1991), cert. 2 denied, 505 U.S. 1222 (1992). 3 Both sides agree that the Group Insurance Contract and Certificate of Coverage are a part 4 of the LTD Plan document (Opp. at 12; Reply Br. at 3). Plaintiff argues, however, that the SPD 5 is not a part of the LTD Plan. This order agrees. The Supreme Court has stated that “summary 6 documents, important as they are, provide communication with beneficiaries about the plan, but 7 that their statements do not themselves constitute the terms of the plan for purposes of [Section] 8 502(a)(1)(B).” CIGNA Corp. v. Amara, 131 S. Ct. 1866, 1878 (2011) (emphasis added); accord 9 Skinner v. Northrop Grumman Ret. Plan B, 673 F.3d 1162, 1165 (9th Cir. 2012). In addition, plaintiff argues that the Claims and Appeals section is not a part of the LTD 11 For the Northern District of California United States District Court 10 Plan because the section specifically states that it is not a part of the Group Insurance Certificate 12 and was not properly adopted as an amendment to the policy (PRU039; Opp. at 14–15). See 13 Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154 (9th Cir. 2001). Indeed, a cursory 14 review of the Claims and Appeals section does not reveal whether the document was intended to 15 be a part of the LTD Plan. Accordingly, there is a genuine issue of material fact about whether 16 the Claims and Appeals section is a part of the LTD Plan, and accordingly, what proper standard 17 of review applies. Accordingly, defendants’ motion for summary judgment is DENIED. 18 2. 19 Both sides may engage in limited discovery on the following two issues: (1) whether the 20 Claims and Appeals section is part of the LTD Plan, (2) plaintiff’s claim that a structural conflict 21 of interest affected Prudential’s decision to deny plaintiff’s claim for long-term disability 22 benefits because Prudential is both the claims administrator and the payor (Opp. at 17). Stephan 23 v. Unum Life Ins. Co. of Am., 697 F.3d 917, 930 (9th Cir. 2012); accord Caldwell v. Facet 24 Retiree Med. Plan, 2014 U.S. Dist. LEXIS 46998, at *13–14 (N.D. Cal. Apr. 3, 2014) (Judge 25 William Alsup). The Court invites a jointly-proposed protective order to govern discovery in 26 this action. DISCOVERY. 27 28 8 1 2 CONCLUSION For the reasons stated above, defendants’ motion for summary judgment is DENIED. 3 4 IT IS SO ORDERED. 5 6 Dated: May 22, 2014. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 7 8 9 11 For the Northern District of California United States District Court 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9

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