Lin v. Metropolitan Life Insurance Company et al

Filing 95

FINDINGS OF FACT AND CONCLUSIONS OF LAW. Signed by Judge Saundra Brown Armstrong on 8/16/16. Stipulation or Alternatively, Joint Letter Brief due by 8/26/2016.(dtmS, COURT STAFF) (Filed on 8/16/2016)

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UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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OAKLAND DIVISION

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8 STEVE LIN,

Plaintiff,

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Case No: C 15-2126 SBA
FINDINGS OF FACT AND
CONCLUSIONS OF LAW

vs.

11 METROPOLITAN LIFE INSURANCE

COMPANY and TRINET EMPLOYEE
12 BENEFIT INSURANCE PLAN,

Defendants.

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Plaintiff Steven Lin (“Plaintiff”) brings the instant action under the Employee

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Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132, to challenge the termination

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of his long-term disability (“LTD”) benefits under the Tri-Net Employee Benefit Insurance

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Plan (“Plan”), an ERISA-covered employee welfare benefit plan. As Defendants, Plaintiff

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has named the Plan and its administrator, Metropolitan Life Insurance Company

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(“MetLife”).

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The parties are presently before the Court on: (1) Plaintiff’s Motion for Summary

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Judgment; and (2) Defendants’ Motion for Judgment Under Fed. R. Civ. Pro. 52. Dkt. 37,

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85.1 Having read and considered the papers filed in connection with this matter and being

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fully informed, the Court hereby GRANTS Plaintiff’s motion and DENIES Defendants’

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motion. The Court resolves the instant motions without oral argument. Fed. R. Civ. P.

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78(b); Civ. L.R. 7-1(b).

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As will be set forth below, Plaintiff’s motion is construed as a motion for judgment
under Federal Rule of Civil Procedure 52, not as a motion for summary judgment.

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FINDINGS OF FACT2

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EMPLOYMENT HISTORY

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1.

Plaintiff is an adult male, born on August 24, 1962. Administrative Record

(“AR”) 1230. He holds a Ph.D. in Chemistry. AR 1053.
2.

On May 2, 2002, Tri-Net Group, Inc. (“TriNet”) hired Plaintiff to work on

new product development. AR 424; 431-433.
3.

In 2007, TriNet promoted Plaintiff to Director of Polymer Technologies.

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AR 1053. The requirements of that position include providing leadership and direction for

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subordinates, generating ideas, developing and executing action plans, and the ability to

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focus and concentrate. AR 445.

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TRINET’S LTD PLAN
4.

During the course of his employment at TriNet, Plaintiff became a participant

in the Plan. AR 445.
5.

Benefits under the Plan are funded by a group policy of disability insurance

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issued by MetLife, which, at all relevant times, served as the claim administrator for

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benefits under the Plan. AR 1240.

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6.

Class 1: All Full-Time Salaried, Professional, Officer and
Management employees of Policyholder, but not temporary,
seasonal, or employees working in Canada.
Class 2: All Salaried and Hourly employees of the
Policyholder, but not temporary, seasonal or employees
working in Canada.

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The Plan identifies two eligible classes for benefits, as follows:

AR 1265.
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Plaintiff is a Class 1 employee. AR 423.

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To the extent any statement in the findings of fact makes reference to the law, it
shall be deemed as both a finding of fact and conclusion of law. Likewise, to the extent
that any conclusion of law includes any matter of fact, it shall be deemed to have been
28 found by the Court to be both a finding of fact and conclusion of law.
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8.

The Plan’s definition of “Disability” depends on whether the employee is

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Class 1 or Class 2. For Class 1 employees, such as Plaintiff, the following definition is

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applicable:
Disabled or Disability means that, due to Sickness or as a
direct result of accidental injury:
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You are receiving Appropriate Care and Treatment and
complying with the requirements of such treatment; and
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You are unable to earn:
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more than 80% of your Predisability Earnings at
Your Own Occupation from any employer in
Your Local Economy.

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AR 1259. “Own Occupation” means “the essential functions You [i.e., the employee]

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regularly perform that provide Your primary source of earned income.” AR 1262. “Local

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Economy” refers to the area in which the employee resides “which offers suitable

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employment opportunities within a reasonable distance.” AR 1261.

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MEDICAL AND CLAIMS HISTORY
9.

On or about April 20, 2010, Plaintiff ceased working at TriNet due to chronic

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renal (kidney) failure. He thereafter submitted a claim for LTD benefits under the Plan.

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AR 1196. In the claim form, Plaintiff indicated the following reasons for his inability to

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perform the duties of his job: “Renal Failure, Headache, Chest Pain, Fatigue, Loss of

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Memory & Sleeping.” Id.

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10.

On October 15, 2010, MetLife approved Plaintiff’s application for benefits,

effective July 30, 2010. AR 1179.
11.

On March 13, 2011, Plaintiff, then 48 years old, underwent a kidney

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transplant due to end stage renal failure. AR 887. The source of the donor kidney was a

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cadaver. AR 1196. At the time of his surgery, Plaintiff was positive for Hepatitis B.

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AR 881.

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12.

On June 27, 2011, Plaintiff saw Dr. Shahrzad Zarghamee, a nephrologist

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(kidney specialist), for a follow up visit. AR 886. Dr. Zarghamee documented that

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Plaintiff was taking various immunosuppressant medications to prevent the rejection of the

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transplanted kidney, Baraclude for his Hepatitis B infection, and Atenolol for dizziness,
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among a host of other medications. AR 886-87. Her notes also indicate that the donor was

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positive for CMV (Cytomegalovirus), and that Plaintiff had tested positive for CMV, as

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well. AR 886. Plaintiff reported that he was “doing well,” but felt dizzy, despite being on

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Atenolol. AR 887. “Headaches (7/4/2010)” along with “Other Malaise and Other Fatigue

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(1/11/2012)” are listed among Plaintiff’s various “Problems.” AR 885.

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13.

Subsequent to his initial follow up visit, Plaintiff continued to see Dr.

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Zarghamee regularly, often on a monthly basis. Dr. Zarghamee’s notes indicate that

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Plaintiff consistently suffered from debilitating headaches and chronic fatigue. His

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headaches occurred more than once per day, typically lasting twenty to thirty minutes at a

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time. In addition, he experienced dizziness after looking at a computer screen and then

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standing up, and was frequently extremely tired and fatigued. As to the specific cause of

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Plaintiff’s headaches and fatigue, Dr. Zarghamee was unsure. However, she suspected that

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it may be caused by an interaction between Baraclude and Plaintiff’s immunosuppressant

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medications. AR 881-884 (6/7/11); AR 885-892 (6/21/11); AR 893-900 (7/12/11); AR

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901-907 (8/3/11); AR 908-916 (9/7/11); AR 926-933 (10/8/11); AR 917-925 (10/12/11);

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AR 934-941 (12/7/11); AR 942-949 (1/10/12); AR 950-957 (2/8/12); AR 958-965 (3/7/12);

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AR 727-729 (7/10/13); AR 525-534 (8/7/13); AR 581-591 (9/5/13); AR 615-628 (10/3/13);

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AR 644-655 (11/4/13); AR 662-673 (12/5/13); AR 446 (12/23/14).

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14.

Dr. Zarghamee opined that Plaintiff was unable to perform sedentary work

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due to fatigue and an inability to focus. AR 875. As a result of these conditions, Plaintiff

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could no longer focus or concentrate, problem solve, provide leadership and supervision,

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generate ideas and plans or execute them. AR 445. His condition was so severe that he

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would experience “extreme exhaustion” from concentrating on the mundane matters,

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which, in the past, would have been “second nature” to him. Id. Dr. Zarghamee concluded

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that in light of these limitations, Plaintiff was likely to be absent from work four times per

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week and otherwise simply “cannot work.” AR 444.3

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Dr. Zarghamee checked the box indicating that Plaintiff would be absent “[m]ore
than four days per month,” but handwrote “4 days/wk will miss work!” AR 444.
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CLAIM REVIEW
15.

As part of its claim review process, MetLife retained nephrologist Michael

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Gross, M.D., of MLS Peer Review Services for an “Independent Peer Review” of

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Plaintiff’s medical records. AR 517-523. In his report, dated January 29, 2014, Dr. Gross

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noted that Plaintiff’s renal function was “normal” and confirmed his subjective complaints

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of chronic fatigue and headaches. AR 520-521. Dr. Gross, however, did not expressly

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answer the question presented to him: “Does the medical information support functional

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limitations []physical or psychiatric, beyond 1-22-2014 onward?” AR 521. Instead, he

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opined that while there was subjective support for Plaintiff’s complaints, “the objective

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information in the file or the physical examination [performed by one of Plaintiff’s

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physicians] . . . does not document any objective findings to suggest the reasons for his

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fatigue.” AR 522. Dr. Gross acknowledged that Plaintiff’s “medications may be causing

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his fatigue, [but] none of these medications will ever be changed because he is a transplant

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patient and requires these medications on an ongoing basis.” Id. Dr. Gross suggested that

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to confirm the validity of his complaints, Plaintiff should undergo an independent medical

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evaluation (“IME”) or a consult with a specialist in chronic fatigue. Id.

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Apparently in response to questions subsequently posed by MetLife, Dr.

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Gross prepared a supplemental report, dated May 5, 2014. AR 467-473. In this report, Dr.

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Gross indicated that MetLife construed his prior recommendation for an IME or specialist

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as a “potential treatment option [and] not as a current recommendation for clarification of

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functionality.” AR 472. MetLife asked Dr. Gross to clarify or confirm what he meant. Id.

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Dr. Gross restated that he is recommending that Plaintiff undergo an IME or consult with a

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chronic fatigue specialist. Id.

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Defendants also claim that MetLife consulted with its “Medical Director”4

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and “Dr. Wolf,” a neurologist, who reviewed Plaintiff’s medical records and found “no

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clear etiology of plaintiff’s fatigue, and no aggressive attempt to identify a specific

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Defendants do not identity the Medical Director, though the cryptic notes in the
print-out seem to suggest that his name is David S. Peters, M.D. AR 220.
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cause . . . .” Defs.’ Mot. for J., Dkt. 85 at 13 (citing AR 217, 220-23). No report from Dr.

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Wolf or the Medical Director is cited. Rather, the only support for this assertion is what

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appears to be a print-out of a computerized claims activity log prepared by MetLife. AR

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217-18.

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TERMINATION OF BENEFITS
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By letter dated July 24, 2014, MetLife notified Plaintiff that it had completed

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its evaluation of his claim for ongoing LTD benefits. AR 458. Incorrectly applying the

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definition of disability applicable to Class 2 employees, MetLife concluded that the

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“medical documentation provided to date fails to substantiate an ongoing Disability after 24

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months of benefits payments as defined in your Employer’s Plan,” and therefore, notified

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Plaintiff that it was terminating benefits effective July 22, 2014. AR 458, 461. Citing

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reports from Dr. Gross, MetLife stated that there was “no clinical evidence to substantiate

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functional deficits due to subjective complaints of headaches.” AR 460-61. MetLife also

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referred to a report by its Medical Director, who, on June 24, 2014, reviewed Plaintiff’s

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records and found “no evidence or clear etiology to explain subjective complaints of

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fatigue.” AR 461. The letter acknowledged that the Social Security Administration

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(“SSA”) awarded Plaintiff Social Security Disability Insurance (“SSDI”) benefits for his

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disabling conditions, but that such an award does not “guarantee the approval or

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continuation of long-term disability benefits . . . .” AR 461.

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19.

On January 16, 2015, Plaintiff, through counsel, submitted a letter to MetLife

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to appeal the termination of his LTD benefits. AR 438. The appeal included a Residual

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Functional Capacity Questionnaire and a letter prepared by Dr. Zarghamee, both dated

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December 23, 2014. AR 438-445. In addition, Plaintiff noted that he is a Class 1, as

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opposed to Class 2 employee, and therefore, his claim should have been evaluated under

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the “own occupation” definition of disability under the Plan. Id. Additionally, Plaintiff

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requested additional time to submit additional information. Id. Plaintiff submitted the

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supplemental information on January 28, 2015. LIN 2010-2013.

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20.

On February 2, 2015—three days after Plaintiff submitted the aforementioned

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supplemental information—MetLife issued a second denial letter. AR 423-28. This letter

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correctly applied the definition of disability applicable to Class 1 employees. AR 423.

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Other than this change, however, the February 2 letter is essentially identical to MetLife’s

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prior letter from July 24, 2014.

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21.

Plaintiff did not submit an appeal from MetLife’s February 2, 2015 letter, but

instead filed this lawsuit.

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PROCEDURAL HISTORY

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22.

Plaintiff commenced the instant action in this Court on May 11, 2015.

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23.

The Complaint alleges two ERISA claims: (1) claim for benefits, 29 U.S.C.

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§ 1132(a)(1)(B); and (2) duty to provide documents, 29 U.S.C. § 1332(a)(1)(A) and (c)(1).
24.

The first claim is based on the termination of Plaintiff’s benefits on or about

July 22, 2014.
25.

The second claim is predicated on a request for “relevant documents”

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submitted by Plaintiff to Defendants under 29 U.S.C. § 1332(a)(1)(A) and (c)(1) on

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September 8, 2014, and a request from February 10, 2015, for the qualifications of the

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medical reviewers and the internal guidelines and protocols used in processing his claim.

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Compl. ¶ 22.

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26.

As relief, the pleadings seek a declaration that Plaintiff is entitled to past due

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disability benefits along with the reinstatement of his benefits, statutory penalties in the

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amount of $110 per day for failing to provide the requested plan documents, and an award

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of costs.

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27.

On July 20, 2015, Defendants filed their Answer, which includes an

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affirmative defense that Plaintiff’s claims are barred as a result of his failure to exhaust

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administrative remedies. Answer ¶¶ 19, 28, Dkt. 9. Apparently in response to the assertion

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of that defense, Plaintiff submitted a “voluntary” appeal to MetLife on July 31, 2015.

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28.

On February 18, 2016, Defendants filed a motion for judgment on the

pleadings, arguing that Plaintiff’s claim for benefits should be dismissed for failure to
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exhaust administrative remedies. Defendants further asserted that Plaintiff’s second claim,

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which sought statutory penalties for failure to produce documents, was legally infirm. In

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response, Plaintiff voluntarily abandoned his second claim for statutory penalties, but

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argued that his claim for benefits should not be dismissed for failure to exhaust.

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Separately, Plaintiff filed a motion for leave to amend to allege facts regarding the appeal

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he submitted to MetLife on July 31, 2015, ostensibly to cure any failure to exhaust.

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29.

On April 22, 2016, the Court issued a written order granting Defendants’

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motion to dismiss as to Plaintiff’s claim for statutory penalties, but denying the motion with

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respect to Plaintiff’s claim for benefits. Dkt. 36. In particular, the Court rejected

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Defendants’ contention that Plaintiff was required to exhaust his administrative remedies

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prior to filing suit on the ground that Defendants had failed to identify any provision in the

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Plan imposing an exhaustion requirement. Id. at 4. In view of that finding, the Court

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denied Plaintiff’s motion for leave to amend as moot. Id. at 6.

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CONCLUSIONS OF LAW

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STANDARD OF REVIEW

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30.

ERISA provides that a qualifying ERISA plan participant may bring a civil

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action in federal court “to recover benefits due to him under the terms of his plan, to

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

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the terms of the plan[.]” 29 U.S.C. § 1132(a)(1)(B); Metro. Life Ins. Co. v. Glenn, 554 U.S.

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105, 108 (2008). As a participant in the Plan, Plaintiff has standing to seek judicial review

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of MetLife’s termination of his benefits. See Chuck v. Hewlett Packard Co., 455 F.3d

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1026, 1040 n.8 (9th Cir. 2006).

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31.

A claim of denial of benefits in an ERISA case is to be reviewed “under a de

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novo standard unless the benefit plan gives the administrator or fiduciary discretionary

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authority to determine eligibility for benefits or to construe the terms of the plan.”

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Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Montour v. Hartford Life

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& Acc. Ins. Co., 588 F.3d 623, 629 (9th Cir. 2009). De novo review means that the court

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“considers the matter anew, as if no decision had been rendered.” Dawson v. Marshall, 561

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F.3d 930, 932-33 (9th Cir. 2009).

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32.

Defendants contend that the Plan expressly grants MetLife discretionary

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authority to make eligibility determinations and to construe its terms, and therefore,

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MetLife’s decision to terminate Plaintiff’s LTD benefits should be reviewed for abuse of

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discretion. AR 1296. However, such grants of discretion are “void and unenforceable”

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under California Insurance Code section 10110.6. Section 10110.6 provides, in relevant

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part, as follows:
(a) If a policy, contract, certificate, or agreement offered,
issued, delivered, or renewed, whether or not in California, that
provides or funds life insurance or disability insurance coverage
for any California resident contains a provision that reserves
discretionary authority to the insurer, or an agent of the insurer,
to determine eligibility for benefits or coverage, to interpret the
terms of the policy, contract, certificate, or agreement, or to
provide standards of interpretation or review that are
inconsistent with the laws of this state, that provision is void
and unenforceable.
....
(g) This section is self-executing. If a life insurance or
disability insurance policy, contract, certificate, or agreement
contains a provision rendered void and unenforceable by this
section, the parties to the policy, contract, certificate, or
agreement and the courts shall treat that provision as void and
unenforceable.

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Cal. Ins. Code § 10110.6 (emphasis added). Section 10110.6 became effective January 1,

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2012, id., prior to the denial of Plaintiff’s claim for LTD benefits on July 22, 2014, see

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Grosz-Salomon v. Paul Revere Life Ins., 237 F.3d 1154, 1159 (9th Cir. 2001) (finding that

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an ERISA claim accrues at the time the benefits are denied).

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33.

Defendants argue—without citation to any decisional authority—that section

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10110.6 is inapplicable where the grant of discretion is an “integral part of the ERISA

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welfare benefit plan’s plan document, not part of an insurance policy or certificate.” Dkt.

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85 at 16. Although the Ninth Circuit has not yet reached this issue, federal district courts,

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including numerous judges from this District, consistently have rejected Defendants’

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construction of section 10110.6. See Nagy v. Grp. Long Term Disability Plan for
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Employees of Oracle Am., Inc., No. 14-CV-00038-HSG, 2016 WL 1611040, at *10 (N.D.

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Cal. Apr. 22, 2016) (Grewal, M.J.) (citing cases). The rationale underlying those decisions

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is that limiting section 10110.6 only to cases where a grant of discretion is contained in the

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insurance policy or certificate would render the statute “practically meaningless.” Gonda v.

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The Permanente Med. Grp., Inc., 10 F. Supp. 3d 1091, 1095 (N.D. Cal. 2014) (Conti, J.).

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The Court finds the rationale underlying those decisions to be persuasive and likewise

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concludes that section 10110.6 renders the Plan’s grant of discretion to be unenforceable.5

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34.

In cases where de novo review applies, the Court adjudicates the matter as a

bench trial based on the administrative record, pursuant to Federal Rule of Civil Procedure

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52. Kearney v. Standard Ins. Co., 175 F.3d 1084, 1094-95 (9th Cir. 1999) (en banc).6

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“When conducting a de novo review of the record, the court does not give deference to the

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claim administrator’s decision, rather determines in the first instance if the claimant has

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adequately established that he or she is disabled under the terms of the plan.” Muniz v.

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Amec Const. Mgmt., Inc., 623 F.3d 1290, 1295-96 (9th Cir. 2010). “[W]hen the court

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reviews a plan administrator’s decision under the de novo standard of review, the burden of

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proof is placed on the claimant.” Id. at 1294. The Court is to “evaluate the persuasiveness

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of conflicting testimony,” and make findings of fact. Kearney, 175 F.3d at 1095. This is

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considered a “bench trial on the record,” which may “consist[] of no more than the trial

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judge rereading [the administrative record].” Id. The Court’s review is limited to the

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administrative record unless “circumstances clearly establish that additional evidence is

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Under the abuse of discretion standard, a court must uphold a plan administrator’s
interpretation of the plan unless it is unreasonable; that is, such decision is arbitrary and
25 capricious. Moyle v. Liberty Mut. Ret. Ben. Plan, 823 F.3d 948, 958 (9th Cir. 2016). In
this case, even if the Court were to review MetLife’s decision under the more deferential
26 abuse of discretion standard, the Court’s ruling on the instant motions would remain the
same.
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Because a de novo standard of review applies, the Court construes both parties’
motions under Federal Rule of Civil Procedure 52(a)(1). See Kearney, 175 F.3d at 1095.
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necessary to conduct an adequate de novo review.” Id. at 1090 (quoting Mongeluzo v.

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Baxter Travenol Long Term Disability Benefit Plan, 46 F.3d 938, 944 (9th Cir. 1995)). 7

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PLAINTIFF’S DISABILITY
35.

The salient issue presented is whether Plaintiff’s conditions render him

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disabled such that he is entitled to the reinstatement of LTD benefits under the Plan. As

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noted, Plaintiff is considered disabled, as that term is defined by the Plan, if, as a result of

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injury or sickness, he is: (1) receiving appropriate care and treatment and is complying with

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the requirements of such treatment; and (2) unable to earn 80% of his pre-disability

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earnings from his own occupation. AR 423-28. The record supports Plaintiff’s claim that

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he is disabled under that standard.
36.

The Director position held by Plaintiff requires him to provide leadership and

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direction for his team, along with the ability to focus and concentrate, generate ideas, and

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develop and execute action plans. AR 445. Plaintiff’s treating physicians documented that

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he suffers from headaches and extreme fatigue, and that such conditions render it

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effectively impossible for Plaintiff to reliably perform the essential functions of his

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position. They opined that these conditions could be the result of Plaintiff’s antirejection

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medications, coupled with his use of Baraclude, a medication to treat his hepatitis. In

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summarizing her years of treating Plaintiff, Dr. Zarghamee opined that “no good treatment

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is available.” AR 446. If Plaintiff discontinued his antirejection medications, he could lose

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his kidney, thereby requiring lifelong dependence on dialysis. Discontinuation of

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Baraclude will lead to “activation” of Hepatitis B, which, in turn, would lead to kidney and

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liver failure. Id. The overall record is more than sufficient to establish that Plaintiff is

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disabled within the meaning of the Plan. See Salomaa v. Honda Long Term Disability

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Plaintiff’s motion appends 225 pages of documents outside of the administrative
record. LIN 2000-2225. Defendants object to these documents. Dkt. 85 at 21. While the
Court has the discretion to consider materials outside of the administrative record, see
26 Kearney, 175 F.3d at 1095, it is unnecessary to consider the additional records adduced by
Plaintiff to assess whether he is entitled to reinstatement of his LTD benefits. Although this
27 Order contains some citations to the extra-record documents for context, the cited facts do
not form the basis for the Court’s ruling. Accordingly, Defendants’ objection is overruled
28 as moot.
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Plan, 642 F.3d 666, 676-79 (9th Cir. 2011) (evidence showing that the doctors who

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personally examined the claimant concluded that he was disabled, even though insurance

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company’s non-examining physicians found otherwise, supported finding that the claimant

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was disabled under terms of the plan); see also Sabatino v. Liberty Life Assurance Co. of

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Boston, 286 F. Supp. 2d 1222, 1231 (N.D. Cal. 2003) (“Plaintiff was employed as an

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engineer, which may be a sedentary occupation, but one that requires careful thought and

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concentration. Simply being able to perform sedentary work does not necessarily enable

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one to work as an engineer.”).

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37.

Defendants acknowledge that Plaintiff’s medical providers consistently

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documented his ongoing headaches and extreme fatigue, but nonetheless attempt to justify

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MetLife’s termination decision on the ground that the etiology of those conditions is not

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supported by any objective medical findings. The lack of a definitive diagnosis, however,

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is not a proper ground upon which to terminate LTD benefits. Salomaa, 642 F.3d at 677

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(rejecting insurer’s requirement that the plan participant present objective evidence or

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clinical proof to substantiate a disability based on chronic fatigue); see also Saffon v. Wells

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Fargo & Co. Long Term Disability Plan, 522 F.3d 863, 873 (9th Cir. 2008) (noting that an

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insurer’s failure to pay LTD benefits may be suspect where it is “based on [plaintiff]’s

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failure to produce evidence [of pain] that simply is not available”).

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38.

Defendants also contend that Plaintiff’s medical records demonstrate that his

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symptoms are not disabling within the meaning of the Plan, and he is otherwise not

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complying with the treatment plan prescribed by his medical providers. Dkt. 85 at 18-19.

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The records cited by Defendants consist of office notes prepared by Dr. Zarghamee from

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Plaintiff’s various office visits. Upon reviewing those documents, the Court finds that they

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do not support Defendants’ contentions.

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a.

Defendants cite notes from an office visit on November 8, 2011, at

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which Plaintiff allegedly “declined a ‘long workup’ which was recommended by his doctor

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as a means to determine if CMV and/or EBV [Epstein-Barr Virus] caused his claimed

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fatigue symptoms.” Dkt. 85 at 18 (citing AR 929). In fact, the notes do not state that he
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“declined” to undergo testing. Rather, they merely state: “Will monitor CMV and EBV.

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Wants to wait before we embark on a long workup. He believes he just needs to be

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patient.” AR 929. Plaintiff’s apparent desire to wait to see if his conditions improved does

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not suggest, let alone, demonstrate that he was not compliant with the directions of his

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medical providers. In addition, there is no indication that Dr. Zarghamee expressed any

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concern regarding Plaintiff’s desire to defer the work up.

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b.

Defendants assert that Plaintiff ignored medical advice to start taking

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Ditropan, a medication for overactive bladder. Dkt. 85 at 18 (citing AR 951). According to

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Defendants, Plaintiff suffers from an overactive bladder that disrupts his sleep, which, in

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turn, causes his fatigue. Id. In her office notes from January 10, 2012, Dr. Zarghamee

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expressed concern that Plaintiff may be suffering from Chronic Fatigue Syndrome, as

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opposed to Nocturia (a condition in which the individual wakes up at night feeling the need

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to urinate). AR 945. Nonetheless, she referred Plaintiff to a urologist for a “further

14

evaluation.” Id. Dr. Zarghamee’s notes from Plaintiff’s next visit on February 8, 2012,

15

indicate: “Saw urologist active Bladder, normal. Given [D]itropan not started.” AR 951.

16

Defendants seize upon the “not started” notation as proof that Plaintiff had disregarded his

17

physician’s orders. Yet, there is no explanation in Dr. Zarghamee’s office notes as to why

18

the medication was not started. The Court does note that the records from Plaintiff’s

19

September 5, 2013, appointment indicate that Plaintiff was taking Ditropan, but stopped for

20

reasons he could not recall. AR 581.8 As such, she recommended that he resume taking

21

Ditropan. AR 583, 619. At a subsequent office visit on November 4, 2013, Dr. Zarghamee

22

indicated that Plaintiff had been taking Ditropan as prescribed but that it proved ineffective

23

and did not prevent Plaintiff from waking up three to four times per night to urinate. AR

24

644. In sum, although there is some evidence in the record that Plaintiff may have

25

temporarily stopped taking Ditropan, that fact does not support the conclusion that Plaintiff

26

was not in compliance with his treatment plan.

27
8

28

Defendants improvidently cite AR 524, Dkt. 85 at 18, which appears to be a
facsimile cover sheet that does not in any way discuss Plaintiff’s prescription for Ditropan.
- 13 -

1

c.

Defendants point to an office note from August 11, 2013, wherein

2

Plaintiff reported taking a two week trip to China to visit his father. Dkt. 85 at 18 (citing

3

AR 724). Though not entirely clear, Defendants appear to suggest that Plaintiff’s ability to

4

travel supports MedLife’s conclusion that he is not disabled. But Defendants’ summary of

5

Dr. Zarghamee’s office note is incomplete. In discussing Plaintiff’s trip, Dr. Zarghamee

6

indicated that Plaintiff reported being “very tired but his legs are heavy and fatigue.”

7

AR 724. Elsewhere in the record, Plaintiff confirmed that the trip was “low key” and that

8

he “did not do much.” AR 161. Thus, the mere fact that Plaintiff travelled to China does

9

not undermine his claim that his conditions are debilitating.

10

d.

Defendants claim that in August 2013, Dr. Zarghamee instructed

11

plaintiff to return to his neurologist for treatment of his headaches, but that he failed to

12

follow through with her instructions. Dkt. 85 at 18 (citing AR 160-64, 724). However,

13

Defendants omit Plaintiff’s explanation that he had not seen his neurologist in “awhile

14

because last time he saw the Neurologist they [sic] said really not much they could do for

15

me so essentially treats primarily with Dr. Shahrzad Zarghamee monthly.” AR 161. Thus,

16

the cited office notes do not support the notion that Plaintiff failed to follow the instructions

17

of Dr. Zarghamee.

18

e.

Defendants claim that Plaintiff was “unwilling to change his hepatitis

19

medication from Baraclude to Viread, which was recommended by his doctor as a way to

20

determine whether Baraclude had caused him to experience the reported fatigue.” Dkt. 85

21

at 18 (citing AR 630). This again mischaracterizes the record. Dr. Zarghamee’s notes

22

recite that she and Plaintiff “discussed continuing the Baraclude versus switching to Viread

23

to see if it helps the fatigue.” AR 630. Dr. Zarghamee indicated that although “the

24

likelihood is low” that switching to Viread would improve Plaintiff’s fatigue, she was

25

willing to change his medication. Id. The record does not support the conclusion that

26

Plaintiff was unwilling to change his medication, or that Dr. Zarmaghee had instructed him

27

to do so.

28
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1

f.

Finally, Defendants attribute Plaintiff’s fatigue to his consumption of

2

caffeinated beverages in the latter part of the day, notwithstanding warnings from his doctor

3

that caffeine could disrupt his sleep. Dkt. 85. at 18 (citing AR 615). The notes referred to

4

by Defendants are from Plaintiff’s visit with Dr. Zarghamee on October 3, 2013. Dr.

5

Zarghamee remarks that: “When I go through products he eats or drinks he still is drinking

6

tea in the afternoon and early evening which might be influencing his sleep patterns.” AR

7

615. Among her recommendations at the conclusion of that office visit is an instruction

8

to“[s]top drinking any kind of caffeinated product after 12 noon.” AR 619. There is no

9

mention in Dr. Zarghamee’s notes from subsequent office visits that Plaintiff was not in

10

compliance with that instruction. E.g., 644, 662. Nor is there any indication in the record

11

that, prior to Plaintiff’s office visit on October 3, 2013, Dr. Zarghamee expressly instructed

12

Plaintiff to stop drinking tea in the afternoon.9

13

g.

In sum, the isolated and out-of-context medical notes cited by

14

Defendants are insufficient to establish that MetLife had a reasonable basis for concluding

15

that Plaintiff was not disabled or not in compliance with his treatment plan.10

16
17

PAPER REVIEW
39.

Aside from the medical records discussed above, other aspects of the

18

administrative record also persuade the Court that MetLife erroneously terminated

19

Plaintiff’s benefits. In particular, the Court finds it significant that MetLife terminated

20

Plaintiff’s benefits without actually examining him.

21

40.

The Ninth Circuit has recognized that an insurer’s decision to conduct “a

22

‘pure paper’ review . . , that is, to hire doctors to review [the claimaint]’s files rather than to

23

conduct an in-person medical evaluation of him” may raise “questions about the

24
9

Records from an August 7, 2013, office visit with Dr. Zarghamee does note
Plaintiff’s increased intake of caffeine, AR 724, but there is no discussion of whether such
intake is related to his fatigue. Nor is there any recommendation by Dr. Zarghamee
26 regarding his consumption of caffeinated drinks. AR 725-26.
25

10

It bears noting that MetLife’s termination letters did not mention Plaintiff’s
alleged failure to comply with the treatment plan prescribed by his providers as a basis for
28 denying continued benefits.
27

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1

thoroughness and accuracy of the benefits determination.” Montour v. Hartford Life &

2

Acc. Ins. Co., 588 F.3d 623, 634 (9th Cir. 2009) (citations and internal quotations omitted);

3

Salomaa, 642 F.3d at 676 (noting that the only doctors who concluded the plaintiff was not

4

disabled “were . . . the physicians the insurance company paid to review his file”).

5

41.

Here, MetLife’s termination decision was predicated principally on the

6

reports of its outside consultant, Dr. Gross, and its Medical Director. AR 460-61. Both of

7

these individuals evaluated Plaintiff’s claim for benefits without physically examining him.

8

Dr. Gross repeatedly recommended to MetLife that an in-person examination of Plaintiff

9

should be performed, either in the form of an IME or a consultation with a chronic fatigue

10

specialist. Yet, no such examination took place. AR 472, 522. While MetLife was not

11

necessarily required to conduct a personal examination of Plaintiff as a prerequisite to

12

terminating his benefits, the fact that MetLife failed to do so—in contravention to the

13

recommendation of its own consultant—further underscores the result-driven nature of

14

MetLife’s decision to terminate Plaintiff’s benefits. See Valente v. Aetna Life Ins. Co., No.

15

SACV1400350JVSRNBX, 2015 WL 5091590, at *4 (C.D. Cal. July 1, 2015) (finding that,

16

in the context of de novo review, the insurer’s decision to conduct a purely paper review of

17

the claim was a relevant factor to consider in evaluating the administrator’s decision).

18
19

SSA AWARD
42.

MetLife also failed to adequately address the fact that the SSA awarded SSDI

20

benefits to Plaintiff. Although such an award is not dispositive of whether a claimant is

21

entitled to LTD benefits, see Montour, 588 F.3d at 635, the Ninth Circuit has held that a

22

plan administrator cannot simply ignore the SSA’s decision to award disability benefits,

23

and that the failure to adequately address such decision may constitute an abuse of

24

discretion, see Salomaa, 642 F.3d at 679 (“Evidence of a Social Security award of disability

25

benefits is of sufficient significance that failure to address it offers support that the plan

26

administrator’s denial was arbitrary, an abuse of discretion”); Montour, 588 F.3d at 635

27

(“complete disregard for a contrary conclusion without so much as an explanation raises

28
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1

questions about whether an adverse benefits determination was ‘the product of a principled

2

and deliberative reasoning process.’”) (citations omitted).11

3

43.

In Montour, the court explained that “[o]rdinarily, a proper acknowledgment

4

of a contrary SSA disability determination would entail comparing and contrasting not just

5

the definitions employed but also the medical evidence upon which the decisionmakers

6

relied.” 588 F.3d at 636 (emphasis added); see also Salz v. Standard Ins. Co., 380 Fed.

7

App’x 723, 724 (9th Cir. June 1, 2010) (“A proper administrative process will meaningfully

8

discuss a claimant’s award of social security benefits . . . [and] analyz[e] the distinctions

9

between the basis for the two awards”). MetLife failed to conduct this type of comparative

10

analysis. In both of its termination letters, MetLife simply dismissed the SSA’s award by

11

noting, in an entirely general manner, that: “Our decision may differ from that of the SSA

12

because they may not have the same information that was utilized in making our decision.”

13

AR 461. That type of generic analysis is not the type of “comparing and contrasting” of

14

medical definitions and evidence mandated in Montour.

15

44.

Defendants argue that the SSA award was based on Plaintiff’s pre-transplant

16

disability as of April 29, 2010, and is unrelated to his post-transplant fatigue and headaches.

17

Dkt. 85 at 23-24 (citing AR 870-74). Perhaps so, but Defendants waived this argument as a

18

result of MetLife’s failure to mention this rationale in its termination letters. Under ERISA,

19

a notification of adverse action must recite the “specific reason or reasons for the adverse

20

determination” and “reference to the specific plan provisions on which the determination is

21

based.” 29 C.F.R. § 2560.503-1(g)(1). An insurer will be deemed to have waived the right

22

to rely on any reason not cited in the denial letter. See, e.g., Harlick v. Blue Shield of Cal.,

23

686 F.3d 699, 719 (9th Cir. 2012) (“A plan administrator may not fail to give a reason for a

24

benefits denial during the administrative process and then raise that reason for the first time

25
11

Although MetLife’s termination decision is reviewed de novo, and not for abuse
of discretion, the failure to meaningfully address an SSA award of benefits remains
germane. See Rodas v. Standard Ins. Co., No. EDCV 13-2203-JGB (SPx), 2015 WL
27 5156455, *7-8 (C.D. Cal. Sept. 1, 2015) (“While the de novo standard of review applies in
this case, the Court must take into account the ‘weighty evidence’ that the SSA found that
28 Plaintiff was disabled.”).
26

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1

when the denial is challenged in federal court, unless the plan beneficiary has waived any

2

objection to the reason being advanced for the first time during the judicial proceeding”).

3

While MetLife could have sought to distinguish the SSA award on the ground that it now

4

asserts, i.e., that the SSA award pertained to a different disability, the fact remains that it

5

failed to do so when it terminated Plaintiff’s benefits. As such, MetLife cannot attempt to

6

downplay the significance of the SSA award on a ground that was not specified in its

7

termination letter.

8
9

LIMITATION ON CHRONIC FATIGUE SYNDROME BENEFITS
45.

Finally, Defendants contend that even if Plaintiff were disabled within the

10

meaning of the Plan, he would not be entitled to any additional payment of benefits. Dkt.

11

85 at 20; Dkt. 90 at 10-11. In particular, they draw the Court’s attention to a provision in

12

the Plan that limits the payment of benefits in cases where the disability is attributable to

13

Chronic Fatigue Syndrome. That provision states:
If You are Disabled due to:
...
2.
Chronic fatigue syndrome and related conditions.
We will limit Your Disability benefits to a lifetime maximum
equal to the lesser of:
•
24 months; or
•
The Maximum Benefit Period.

14
15
16
17
18
19

AR 1281.

20

46.

According to Defendants, Dr. Zarghamee’s notes indicate that Plaintiff had

21

been complaining of chronic fatigue since September 2011. Dkt. 85 at 20 (citing AR 441).

22

In view of that reference, coupled with the Plan’s 24-month limitation on benefits for

23

Chronic Fatigue Syndrome, Defendants assert that Plaintiff’s right to such benefits would

24

have lapsed as of September 2013—prior to the July 2014 effective date MetLife

25

terminated his benefits.

26
27

47.

Defendants’ argument fails on multiple levels. First, Dr. Zarghamee did not

actually diagnose Plaintiff with Chronic Fatigue Syndrome. Rather, she indicated that the

28
- 18 -

1

type of fatigue Plaintiff was experiencing was not “typical” in transplant patients, but was

2

“typical with Chronic Fatigue Syndrome.” AR 441.

3

48.

Second, Defendants’ contention that Plaintiff’s benefits lapsed as of

4

September 2013 (i.e., 24 months after Dr. Zarghamee mentioned the term Chronic Fatigue

5

Syndrome) is contradicted by the fact that they continued to pay benefits through July

6

2014. Indeed, there is no indication that MetLife deemed Plaintiff disabled due to Chronic

7

Fatigue Syndrome in the first instance.

8
9

49.

Third, and perhaps most fundamentally, Defendants waived application of

this limitation by failing to rely on it when terminating Plaintiff’s benefits. In neither of its

10

two termination letters did MetLife find that Plaintiff’s disability claim was subject to the

11

24-month limitation for disability claims based on Chronic Fatigue Syndrome. Nor did

12

MetLife assert that Plaintiff’s right to receive benefits lapsed as of September 2013. To the

13

contrary, MetLife clearly stated that it was terminating benefits on the grounds that there

14

was “no clinical evidence to substantiate functional deficits due to subjective complaints of

15

headaches,” AR 460-61, and “no evidence or clear etiology to explain subjective

16

complaints of fatigue,” AR 461. Having failed to raise the 24-month limitation for Chronic

17

Fatigue Syndrome claims in its terminations letters, MetLife cannot belatedly do so now.

18

See Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc., 770 F.3d

19

1282, 1296 (9th Cir. 2014) (“an administrator may not hold in reserve a known or

20

reasonably knowable reason for denying a claim, and give that reason for the first time

21

when the claimant challenges a benefits denial in court.”).

22
23

50.

the Plan limitation for benefits paid due to Chronic Fatigue Syndrome.

24
25

The Court finds that Plaintiff’s right to benefits in this case is not subject to

REMEDY
51.

As relief, Plaintiff seeks the reinstatement of his LTD benefits, retroactive to

26

July 23, 2014, which is the day after his benefits were terminated. Where plan benefits are

27

unjustifiably terminated, the Court may order the reinstatement of those benefits.

28

Pannebecker v. Liberty Life Assur. Co. of Boston, 542 F.3d 1213, 1221 (9th Cir. 2008)
- 19 -

1

(holding the district court erred in failing to retroactively reinstate long-term disability

2

benefits wrongfully terminated by the defendant); Grosz-Salomon, 237 F.3d at 1164

3

(affirming district court’s award of benefits and denial of request to remand where

4

disability insurer abused its discretion by terminating benefits). In the present case, the

5

Court has determined that MetLife terminated Plaintiff’s LTD benefits based on an

6

erroneous determination that he was no longer disabled. Retroactive reinstatement of

7

benefits is therefore the appropriate remedy.

8
9

52.

In addition to reinstating Plaintiff’s benefits, the Court may, in its discretion,

award prejudgment interest on an award of ERISA benefits. Blankenship v. Liberty Life

10

Assur. Co. of Boston, 486 F.3d 620, 627 (9th Cir. 2007). “Generally, ‘the interest rate

11

prescribed for post-judgment interest under 28 U.S.C. § 1961 is appropriate for fixing the

12

rate of pre-judgment interest unless the trial judge finds, on substantial evidence, that the

13

equities of that particular case require a different rate.’” Id. (quoting Grosz-Salomon, 237

14

F.3d at 1164). Under 28 U.S.C.§ 1961(a), “interest shall be calculated from the date of the

15

entry of the judgment, at a rate equal to the weekly average 1-year constant maturity

16

Treasury yield [i.e., T-bill], as published by the Board of Governors of the Federal Reserve

17

System, for the calendar week preceding the date of the judgment.” Here, Plaintiff

18

summarily requests that the Court award interest at a rate of 10 percent instead of the T-bill

19

rate. Dkt. 37 at 30. Before the Court considers this request, Plaintiff shall meet and confer

20

with Defendants’ counsel to determine whether they can reach an agreement on this issue.

21

53.

Plaintiff also seeks an award of attorneys’ fees, pursuant to 29 U.S.C.

22

§ 1132(g). Section 502(g)(1) of ERISA provides that the court has discretion to award “a

23

reasonable attorney’s fee . . . to either party.” 29 U.S.C. § 1132(g)(1). To recover fees, a

24

party must establish “some degree of success on the merits.” Hardt v. Reliance Standard

25

Life Ins. Co., 560 U.S. 242, 254 (2010). The prevailing party in an ERISA action “should

26

ordinarily recover an attorney’s fee unless special circumstances would render such an

27

award unjust.” Smith v. CMTA-IAM Pension Trust, 746 F.2d 587, 589 (9th Cir. 1984).

28

Plaintiff indicates, prior to bringing a motion for fees, he will meet and confer with
- 20 -

1

Defendants’ counsel to ascertain whether they can reach an agreement on attorney’s fees in

2

this action.

3

CONCLUSION

4
5

The Court finds that Plaintiff is disabled within the meaning of the Plan, and that
Defendants improperly terminated his LTD benefits. Accordingly,

6

IT IS HEREBY ORDERED THAT:

7

1.

Plaintiff’s motion for judgment is GRANTED and Defendants’ motion for

8

judgment is DENIED. Defendants shall reinstate Plaintiff’s LTD benefits, retroactive to

9

July 23, 2014.

10

2.

The parties shall meet and confer regarding the proper form of judgment and

11

the amount of benefits, prejudgment interest, attorneys’ fees and costs to be awarded. In

12

the event the parties are able to reach an agreement on the foregoing, they shall submit a

13

stipulation and proposed order for the Court’s review. If no agreement is reached, Plaintiff

14

shall file a joint letter brief setting forth the parties’ respective positions. The Court may

15

refer any remaining disputes to a magistrate judge for a report and recommendation. The

16

proposed stipulation, or alternatively, letter brief, shall be filed by no later than August 26,

17

2016.

18
19

IT IS SO ORDERED.
Dated: August 16, 2016

______________________________
SAUNDRA BROWN ARMSTRONG
Senior United States District Judge

20
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24
25
26
27
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