Patrick v. Hewlett-Packard Co, et al

Filing 116

ORDER granting plaintiff's 78 Motion for Summary Judgment; denying defendants' 90 Motion for Summary Judgment; overruling plaintiff's evidentiary objections 98 ; sustaining defendants' evidentiary objections 102 ; the Court orders the Clerk of Court to enter judgment in favor of plaintiff, close the case file and terminate this case; Signed by Magistrate Judge Jan M. Adler on 7/13/09. (kaj)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 ) ) ) Plaintiff, ) ) v. ) ) HEWLETT-PACKARD COMPANY ) EMPLOYEE BENEFITS ORGANIZATION ) INCOME PROTECTION PLAN, etc.; et ) al., ) ) ) Defendants. ) LYN PATRICK, I. INTRODUCTION This ERISA case involves the issue of whether claims administrator Voluntary Case No. 06-CV-1506-JMA (McC) ORDER: GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT [Doc. 78] AND DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [Doc. 90] UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

20 Plan Administrators, Inc. ("VPA"), acting on behalf of Defendants, abused its discretion in 21 denying Plaintiff's claim for long-term disability ("LTD") benefits under the Hewlett22 Packard Company Disability Plan ("the Plan"). On January 23, 2009, Plaintiff Lyn Patrick 23 ("Patrick" or "Plaintiff") and Defendants Hewlett-Packard Company Employee Disability 24 Plan and Hewlett-Packard Company ("HP" or "Defendants") filed cross-motions for 25 summary judgment ("MSJ") [Docs. 78, 90]. On March 2, 2009, each party filed an 26 opposition to the other side's motion for summary judgment [Doc. Nos. 97-104]. On 27 March 2, 2009, Plaintiff filed an Objection to evidence submitted by Defendants [Doc. 28 98], to which Defendants responded on April 6, 2009 [Docs. 107-108]. Defendants filed

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1 Objections to evidence submitted by Plaintiff on March 3, 2009 [Doc. 102]. On April 6, 2 2009, the parties filed replies in support of their motions for summary judgment [Docs. 3 108, 111]. 4 On June 24, 2009, the Court heard oral argument on the parties' cross-motions

5 for summary judgment. Upon due consideration of the written and oral arguments of the 6 parties and the record herein, the Court GRANTS Plaintiff's Motion for Summary 7 Judgment [Doc. 78] and DENIES Defendants' Motion for Summary Judgment [Doc. 90]. 8 The Court OVERRULES Plaintiff's Objections to evidence submitted by Defendants, 9 [Doc. 98] and SUSTAINS Defendants' Objections to evidence submitted by Plaintiff. 10 [Doc. 102]. 11 II. 12 13 BACKGROUND A. Factual Background

Plaintiff Lyn Patrick worked for Hewlett-Packard for nearly 20 years as a senior

14 technical and management employee. Declaration of Lyn Patrick filed in support of 15 Plaintiff's MSJ [Doc. 82] ("Patrick Decl." ¶2). On or about August 26, 2002, Plaintiff 16 applied for, and began receiving, workers' compensation benefits and short-term 17 disability benefits under the Plan due to right shoulder tendonitis, right forearm lateral 18 epicondylitis ("tennis elbow") and right hand carpal tunnel syndrome. Administrative 19 Record ("AR") 286.1 The last day Patrick worked at HP due to her disabilities was 20 August 23, 2002. Id. Pursuant to the terms of the Plan, Plaintiff was paid short-term 21 disability benefits for one year, until August 24, 2003. See Ex. A, §(o)(I) at 10 (providing 22 that short-term disability be paid for a maximum of 52 weeks). 23 Before Plaintiff went on short-term disability, she was seen at least three times by

24 Dr. Joan Collins in 2002 for pain in her shoulder, forearm, elbow and/or fingers. AR 37625 26 27 28 Defendants provided the Administrative Record ("AR") as Ex. C to their motion for summary judgment. Defendants numbered their exhibits sequentially in the bottom right corner. The Court will use these page numbers in providing citations to the AR. 2
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1 78.2 From Patrick's first day of disability on August 26, 2002 and over the next year, 2 Plaintiff was seen and examined by Dr. Rodney Henderson, her primary treating 3 physician, every month. Dr. Henderson indicated on October 7, 2002 that Patrick would 4 be "started on therapy" (AR 218), and on November 13, 2002, noted that she "needs 5 more therapy for her shoulder and elbow" and a repeat nerve study for her carpal tunnel. 6 AR 217. Each of the reports discussed Plaintiff's shoulder pain.3 On December 11, 7 2002, Dr. Henderson noted that although Patrick's "elbow is quite a bit better," she was 8 "now having intermittent pain in the shoulder." AR 216. On January 8, 2003, Dr. 9 Henderson concluded that Patrick was "currently temporarily disabled secondary to 10 her calcific tendinitis, epicondylitis, and right carpal tunnel syndrome and will be so for 11 probably the next three months." AR 189-191.4 Dr. Henderson performed right carpal 12 tunnel release surgery on Plaintiff on February 12, 2003. AR 180-181. On February 26, 13 2003, Dr. Henderson found she was "[t]emporar[ily] totally disabled until further notice." 14 AR 176-77. 15 On May 4, 2003, Patrick filed her claim for long-term disability benefits ("LTD

16 benefits") with VPA.5 AR 286-94. Patrick listed her right shoulder, elbow and hand as 17 18 19 20 21 22 23 24 25 26 27 28 While Defendants cite Dr. Collins' 8/8/02 report for its finding that Plaintiff had "normal strength and sensation" in her right hand and "full range of motion at the elbow," (8/11/03 Denial Letter, AR 262; Def. MSJ at 5; Def. reply at 9) the report also indicates that: "Lynn has been having increasing discomfort in her right forearm and elbow. . . [and] is intermittently having numbness in her three fingers as well." AR 376. Furthermore, Dr. Collins' 3/26/02 report notes that Patrick "had problems years ago with right rotator cuff tenderness [tendinitis]. . . [and] her symptoms have flared again. She is having pain in her right shoulder and it is keeping her awake at night." AR 378. "She is having constant pain in the shoulder;" "she is complaining of constant numbness of the three fingers," and "[s]he is tender over the rotator cuff insertion posteriorly and the elbow is tender." (11/13/02 rpt; AR 217). "She is still complaining of pain over the anterolateral shoulder;" after injection, "patient really had no improvement in her pain and her cuff strength remained diminished." (9/16/02 rpt, AR 219). "The elbow is exquisitely tender." (8/26/02 report; AR 220).
4 5 3 2

Emphasis here, as elsewhere, has been added unless otherwise indicated.

The Court previously granted VPA's motion for summary judgment on October 31, 2007, finding that it was not a proper defendant in this action. [Doc. 49] The Plan designates the Hewlett-Packard Company Employee Benefits Organization as the Plan Administrator, and ERISA specifies that any action to recover benefits shall be brought against the Plan and/or 3
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1 the basis for her claim for LTD benefits, specifically: (1) right shoulder disorder of the 2 "bursa tendon," (2) right forearm lateral epicondylitis (i.e. tennis elbow), and (3) right 3 hand carpal tunnel syndrome. AR 286. Patrick indicated that she had seen Dr. Joan 4 Collins and Dr. Rodney Henderson for treatment. Id.6 5 On May 14 and May 21, 2003, Dr. Henderson found that Patrick still had pain in

6 her elbow and shoulder and swelling and stiffness in her fingers, and that she could not 7 return to her previous job, but that she would be eligible for vocational rehabilitation, 8 working up to 4 hours per day, as long as she did no keyboard or mouse work, no 9 overhead work and no forceful or repetitive gripping. AR 278-280, 150-51. On June 25, 10 2003, Dr. Henderson concluded that Patrick had "reached a point of maximal medical 11 improvement and she will be considered permanent[ly disabled] and stationary." AR 12 145-47. 13 14 15 64. 1. VPA denies Plaintiff's claim

On August 11, 2003, VPA denied Plaintiff's initial claim for LTD benefits. AR 261The letter outlined Plaintiff's medical history on one page (AR 262) and concluded

16 that Plaintiff could perform other jobs for which she might have been qualified. AR 263. 17 The letter indicated that Plaintiff's file had been referred to a vocational specialist for 18 review, who determined that she could perform the following jobs: (1) Credit Analyst, (2) 19 Management Analyst, (3) Sales Agent and (4) Order Department Supervisor. Id. The 20 21 22 23 24 25 26 27 28 the Plan Administrator, not the Claims Administrator. Ford v. MCI Comms. Health & Welfare Plan, 399 F.3d 1076, 1081-83 (9th Cir. 2005). Effective December 16, 2001, the Plan name was changed from "Hewlett-Packard Company Employee Benefits Organization Income Protection Plan" to the "Hewlett-Packard Company Disability Plan." Declaration of Lauren A. Deeb in support of Def. MSJ [Doc. 91], Ex. A at H585 [Doc. 91-3]. Plaintiff also contends in her MSJ that her right vocal chord was paralyzed during a cervical disc fusion surgery in April 2001, that she required neck surgery in October 19, 2001 to repair it, and that her speaking capacity has been limited to a maximum of three hours per day since that time. Pl. MSJ at 1-2. However, there is no mention of this vocal chord injury in Plaintiff's LTD claim form or appeal, or anywhere in the Administrative Record, other than one line in a medical record review performed by Dr. Christopher Behr which indicates that in January 2001, Plaintiff was referred to Dr. Mahood Mahdavi for surgery to repair her right vocal chord. Dr. Behr's 12/16/02 report, AR 192-203 at 195. As there is no documentation in the Administrative Record that Plaintiff's vocal chord injury existed after Plaintiff's LTD claim was filed, the Court has not considered the alleged vocal chord injury in its analysis. 4
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1 letter acknowledged that Dr. Henderson diagnosed Plaintiff with carpal tunnel syndrome, 2 lateral epicondylitis and calcific tendonitis, and recommended that any work should be 3 restricted by "no forceful or repetitive gripping, no keyboarding or mouse work and no 4 overhead work." AR 262. However, there was no analysis or indication of whether these 5 four positions required computer, keyboarding or mouse work. 6 On August 27, 2003, Dr. Henderson continued to diagnose Patrick with disorders

7 of right shoulder bursa/tendon, elbow pain and lateral epicondylitis, and stated that these 8 restrictions continued to make Patrick disabled. AR 254-55. On November 19, 2003, Dr. 9 Henderson noted that Patrick's symptoms were getting worse and were now in both 10 Plaintiff's right and left hands. AR 253. On January 19, 2004, Dr. Henderson 11 recommended that Patrick be taken out of her vocational rehabilitation training because 12 it "is aggravating her symptoms." He found that she was "demonstrating symptoms of 13 carpal tunnel reoccurrence on the right hand and a development on the left hand as 14 well." He concluded that "[s]he is now TTD [temporarily totally disabled]." AR 14215 43. 16 On February 3, 2004, Dr. Shack performed an EMG test which "reveal[ed] no

17 electrical evidence of entrapment neuropathy," and "no evidence of carpal tunnel (post18 op on the right) or cubital tunnel slowing on either side." AR 137-41. However, Dr. 19 Shack specifically qualified his findings by stating that "this is a difficult diagnosis to 20 make on EMG/NCV, and false negative tests are often seen." AR 138. 21 22 2. Patrick appeals the denial of her claim

On February 5, 2004, Patrick (who was not represented by counsel at this time)

23 timely sent a letter to VPA appealing the denial of her claim for LTD benefits. AR 25124 255. She stated that since her LTD claim was denied on August 11, 2003, she 25 continued to have pain and swelling in her right wrist, arm and shoulder, and that due to 26 favoring her right arm, she was now experiencing pain and swelling in her left hand and 27 arm. AR 251 She indicated that she was "again on `TTD' (Temporary Total 28 Disability"), as per Dr. Henderson's orders. Id. She stated that she had been in 5

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1 vocational rehabilitation training as a Medical Assistant, but was "unable to complete my 2 externship because of my injuries. At this time my injuries do not make me a suitable 3 candidate for employment." Id. In regard to the jobs listed in the denial letter, Patrick 4 stated that: "they all involve working on a computer and as Dr. Henderson stated . . .back 5 on May 14, 2003 I'm no longer a suitable candidate for any type of computer or 6 repetitive motion employment." Id. Patrick also indicated that while during the first 7 part of 2003, her right hand and arm improved because she was participating in physical 8 therapy three times a week, and was otherwise using them minimally, the pain and 9 problems returned with normal use during her vocational rehabilitation. Id. She enclosed 10 copies of additional reports from Dr. Henderson, including Primary Treating Physician 11 ("PTP") progress reports, a Physician's Supplemental Certificate and a Supplemental 12 Report. Id. 13 On February 12, 2004, VPA wrote to Patrick, stating that it had received her

14 appeal and her supplemental reports from Dr. Henderson dated August 27, 2003, 15 November 19, 2003 and January 19, 2004. AR 246. It stated that Patrick had "not 16 submitted any evidence or documentation to substantiate [her] disability beyond August 17 24, 2003" (Id.), notwithstanding the fact that Dr. Henderson's January 19, 2004 report 18 concluded that Patrick was temporarily totally disabled. VPA indicated that it would 19 give Patrick another 30 days to submit additional documentation in support of her claim. 20 Id. On March 3, 2004, VPA wrote Patrick informing her that it had requested medical 21 records from her worker's compensation carrier, and that the initial 45-day review period 22 would be suspended pending receipt of this information. AR 245. 23 On April 7, 2004, VPA sent Patrick's file to Dr. Richard Kaplan, a physiatrist,7 and

24 requested that he perform a Complete Medical Record Review. VPA 4/7/04 lttr to Dr. 25 26 27 28 A physiatrist is a physician who specializes in physical medicine and rehabilitation with a focus on restoring function to the patient. American Adademy of Physical Medicine and Rehabilitation, What is a Physiatrist?, at http://www.aapmr.org/condtreat/what.htm. Specifically, the types of disorders physiatrists are trained to diagnose and treat include: tendonitis, carpal tunnel syndrome, neck and back pain, chronic pain, and work-related injuries. Id. While Plaintiff argues that Dr. Kaplan was unqualified to render an opinion, she has submitted no evidence in support of her contention. 6
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1 Kaplan, AR 130-131. VPA specified that the purpose of the review was to provide it 2 "with a second opinion regarding the claimant's medical condition, restrictions and 3 limitations," but that it was "not asking whether the claimant can return to work. We will 4 make a vocational determination." AR 130.8 Dr. Kaplan prepared a 3-page report on 5 April 9, 2004, concluding that in his opinion, "there is no objective evidence of any 6 remaining restrictions at this time for this patient." AR 127-29. 7 Dr. Kaplan referred to Dr. Henderson's reports from 11/13/02, 2/26/03, 6/25/03

8 and 2/9/04, as well as the 2/3/04 EMG test. In regard to the more recent reports, he 9 acknowledged that Dr. Henderson's 6/25/03 report documented "a permanent and 10 stationary" disability, "minimal pilar pain and mild provocative test for epicondylitis," and 11 that Patrick should be restricted from using a computer keyboard or mouse and should 12 not perform forcible gripping, grasping or fine finger manipulation. AR 128. He also 13 acknowledged Dr. Henderson's 2/9/04 report noting that Patrick had bilateral hand 14 swelling, numbness and tingling and that vocational rehabilitation had been discontinued, 15 and stated that the report found decreased sharp pain in her arms, no obvious edema as 16 well as good flexion and extension of the digits, and negative tests for Tinel's and elbow 17 flexion. Id. Dr. Kaplan concluded: "There is no documentation of any objective 18 abnormalities on physical examinations which would result in limitations in reference to 19 the patient's lateral tendonitis in her shoulder or calcific tendonitis. The patient is noted 20 to have full range of motion with essentially subjective symptoms of pain though no 21 objective evidence of synovitis or inflammation in any of those areas." Id. 22 In his last report prior to the denial of Plaintiff's appeal, dated June 7, 2004, Dr.

23 Henderson noted that Patrick reported a "significant flare-up" of symptoms in her 24 right upper extremity. AR 437-38. "She is now having worsening symptoms of her elbow 25 26 27 28 Plaintiff contends that Dr. Kaplan did not spend adequate time performing his review, and states that he "rendered his `report' on the same day he was hired to do so." Pltff Opp at 16. Defendants dispute this, stating that the file was sent to Dr. Kaplan on April 7, and he provided his report 2 days later on April 9. Def. MSJ Reply at 6-7. In any event, it appears from Dr. Kaplan's report that he did prepare his review in one day, as the opening sentence reads: "Today I had the opportunity at your request to perform a Complete Medical Record Review on [Lyn Patrick]." AR 127. 7
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1 wrist and even the shoulder. She is back in her elbow band and tunnel brace and using 2 ice with improvement." Id. He stated that Patrick was "exquisitely tender over the 3 lateral epicondylar area and ERCB with pain with resisted wrist extension;" the "carpal 4 tunnel is minimally tender with negative provocative tests for carpal tunnel," and that she 5 had "decreased grip strength." Id. He indicated that her work status remained 6 unchanged from his January 19, 2004 report -- temporarily totally disabled. Id. 7 8 3. VPA denies Plaintiff's appeal

On July 9, 2004, VPA denied Plaintiff's appeal. AR 444-48. VPA described

9 certain medical reports, including several of Dr. Henderson's reports, Dr. Kaplan's report 10 and the EMG test. AR 446. The letter discussed Patrick's complaints of pain, 11 tenderness, swelling, numbness and tingling, but relied heavily on the EMG test which 12 "was essentially a normal examination." No mention was made of Dr. Henderson's 13 findings of "temporary total disability." The VPA acknowledged Dr. Henderson's opinion 14 that Patrick should not use a computer keyboard or mouse, and should not perform 15 repetitive forceful gripping, grasping or other fine finger manipulation. Id. 16 VPA cited the vocational consultant report and stated that considering Patrick's

17 education, training, expertise, and in light of her physical restrictions, she could perform 18 the following jobs: (1) Credit Analyst, (2) Management Analyst, (3) Sales Agent and (4) 19 Order Department Supervisor. Id. However, there was no analysis or indication of 20 whether these four positions required computer, keyboarding or mouse work. The letter 21 concluded that while Plaintiff "may be unable to return to [her] former position at Hewlett22 Packard, the medical and vocational information substantiates [she is] capable of 23 performing other qualifications for which [she is] or could become qualified." Id. at 447. 24 Therefore, VPA reaffirmed its denial of Patrick's claim for LTD benefits. Id. 25 26 27 4. Plaintiff submits additional evidence to VPA after the denial of her appeal

On November 24, 2004, nearly five months after VPA denied Plaintiff's appeal for

28 LTD benefits, Patrick, through her counsel, sent VPA and HP a letter requesting that 8

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1 VPA reopen Plaintiff's claim file so that Plaintiff could file a "supplemental appeal." Ex. E 2 to Def. MSJ [Doc. 91-8] at 455. VPA did not respond to Plaintiff's counsel's request or 3 agree to reopen Plaintiff's file. Compl. ¶ 52. 4 Nonetheless, on February 9, 2006 -- over 1-1/2 years after Plaintiff's appeal was

5 denied on July 9, 2004 -- Plaintiff's counsel sent a second letter to VPA and HP, 6 purporting to "perfect" her appeal that VPA had denied back in July 2004. Ex. F to Def. 7 MSJ [Doc. 91-9]. Plaintiff demanded that HP and/or VPA grant Plaintiff "full LTD 8 benefits," and submitted several medical records regarding examinations conducted of 9 Plaintiff "[s]ince the time of HP's denial of her LTD benefits." Id. at 473, 499 and Exs. G10 O. Each of the medical records submitted by Plaintiff's counsel with his February 6, 11 2006 letter was dated between January and December 2005.9 As the medical records 12 were not in existence at the time VPA denied Plaintiff's appeal in July 2004, Defendants 13 had no obligation to consider the reports, and the Court may not consider these reports, 14 as addressed in Section IV below. 15 16 17 B. Pertinent Plan Terms 1. "Total disability" under the terms of the plan

To be eligible for benefits under the Plan, the claimant must establish that she is

18 "Totally Disabled" as defined by the Plan. A member applying for short-term disability 19 benefits must show that "following the onset of the injury or sickness, the Member is 20 continuously unable to perform each and every duty of his or her "Usual Occupation." 21 See Plan, Ex. A to Def. MSJ, § 2(o)(I) at 10. A member's "Usual Occupation" is defined 22 as the normal work assigned to the member by HP. Id., § 2(t) at 13. If a member 23 qualifies, she is entitled to receive up to a maximum of 52 weeks of short-term disability 24 benefits. Id., § 2(o)(I) at 10. 25 26 27 28 Exhibits G-O to the February 9, 2006 letter sent by Plaintiff's counsel consisted of medical reports all prepared after VPA's July 9, 2004 denial of benefits -- Dr. Henderson's 4/22/05 report (Ex. G); Dr. Mahdavi's 1/31/05 report (Ex. H); Dr. Ron King's 5/9/05 report (Ex. I); Dr. John Dorsey's CV and 10/20/05 report (Exs. J, K); Dr. Nudleman's CV and 9/26/05 report (Exs. L, M), and Dr. Goldfarb's CV and 12/12/05 report (Exs. N-O). 9
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A member who applies for long-term disability benefits must show that "the

1 Member is continuously unable to perform any occupation for which he or she is or may 2 become qualified by reason of his or her education, training or experience." Id., § 2(o)(ii) 3 at 10. The Plan provides that "the determination of Total Disability shall be made by the 4 Claims Administrator on the basis of objective medical evidence. `Objective medical 5 evidence' shall mean that evidence establishing facts or conditions as perceived without 6 distortion by personal feelings, prejudices or interpretations." Id., § 2(o) at 11. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2. The Plan's delegation of authority to VPA

The Plan provides that: The Company is the named fiduciary which has the discretionary authority to act with respect to any appeal from a denial of benefits. The Company's discretionary authority includes the authority to determine eligibility for benefits and to construe the terms of the Plan. The Claims Administrator shall administer the review of denied claims on the Company's behalf and make the decision on review. Ex. A, § 8(a) at 51. The Plan vests discretionary authority in VPA, as Claims Administrator, to determine "Total Disability" and to "process[] claims." Id. at § 2(o) and § 4(f) at 11 and 18. The Plan also states that the "Claims Administrator shall have the discretionary power to construe the language of the Plan and make the decision on review on behalf of the Company." Id., § 8(e). III. LEGAL STANDARDS A. Summary Judgment Standard In ERISA Cases

Normally, summary judgment is appropriate if the evidence presented "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Leisek v. Brightwood Corp., 278 F.3d 895, 898 (9th Cir. 2002). However, in the Ninth Circuit, "where the abuse of discretion standard applies in an ERISA benefits denial case, a motion for summary judgment is merely the conduit to bring the legal question before the district court and the usual tests of summary judgment, such as whether a genuine dispute of material fact exists, do not apply." Nolan v. Heald College, 551 F.3d 1148, 1154 (9th Cir. 2009) 10
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1 (noting that traditional rules of summary judgment may apply if, unlike here, there is a 2 structural conflict of interest). Thus, the issue before the Court is whether VPA abused 3 its discretion in denying Plaintiff's claim for long-term disability benefits on behalf of 4 Defendants. 5 6 B. "Abuse of Discretion" Standard of Review Applies

This Court previously ruled on September 7, 2007 that "the proper standard of

7 review of VPA's denial of LTD benefits in this action is abuse of discretion." [Doc. 48 at 8 15]. The Court confirmed for a second time, on December 1, 2008, that "VPA's decision 9 to deny Plaintiff's LTD benefits claim will be reviewed under the `arbitrary and capricious' 10 (or, synonymously, `abuse of discretion') standard." [Doc. 76 at 14]. Despite these 11 unambiguous rulings, Plaintiff yet again argues at length that the de novo standard of 12 review should apply because: (1) the Plan does not vest sufficient discretion in VPA to 13 trigger the "arbitrary and capricious" standard of review and/or HP improperly delegated 14 its fiduciary responsibility to VPA, and (2) procedural irregularities and/or structural 15 conflicts of interest require de novo review or must be considered as factors in abuse of 16 discretion review. Pl. MSJ at 9-13, Pl. Opp to Def. MSJ at 21-25. For the reasons set 17 forth below, and in the Court's previous Orders [Docs. 48, 76], the Court confirms that 18 the "abuse of discretion" standard of review applies. 19 20 1. The Plan vests authority to administer claims with VPA

Plaintiff extensively challenges the Plan's delegation of claims administration

21 authority to VPA, arguing (again) that the Court should give "no deference" to VPA in 22 reviewing its denial and conduct a de novo review. Pl. MSJ at 9-13, Pl. Opp to Def. MSJ 23 at 21-25. In granting Defendants' Motion for Summary Adjudication re the Proper 24 Standard for Review, this Court previously held that the Plan confers sufficient discretion 25 in VPA such that the "abuse of discretion" standard of review applies: 26 27 28 The language of the Plan and ASA sufficiently confers discretionary authority to VPA as a matter of contractual agreement to shift the standard of review to abuse of discretion. Under the Plan and ASA, VPA is authorized to process claims, determine eligibility for and the amount of any benefits, and render decisions on appeals of denied claims. 11
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Furthermore, VPA is unambiguously granted the discretion to construe Plan language and make decisions on review on behalf of HP.

3 See Doc. No. 48 at 7-8(9/7/07 Order granting MSJ) (internal citations omitted) 4 When Plaintiff attempted to reargue the issue in moving to compel additional

5 discovery from Defendants, the Court rejected Plaintiff's argument a second time: 6 7 This Court's ruling on the standard of review constitutes the law of the case, and it is wholly inappropriate for Plaintiff to re-argue this matter at this stage of the proceedings.

8 [Doc. No. 76 at 15]. 9 In line with its previous rulings, the Court rejects Plaintiff's contention that "zero

10 deference applies to VPA." Pl. MSJ at 12. Likewise, the Court rejects Plaintiff's 11 contention that HP improperly delegated its "fiduciary responsibility" to VPA. As 12 Plaintiff's own cited authorities recognize, it is settled that "[u]nder ERISA, a named 13 fiduciary may delegate its fiduciary responsibilities" to other named fiduciaries, or even to 14 non-fiduciaries. Madden v. ITT Long Term Disability Plan for Salaried Employees, 914 15 F.2d 1279, 1283 (9th Cir. 1990), citing 29 U.S.C. § 1105 (c)(1). Accordingly, when an 16 ERISA plan "expressly gives the administrator or fiduciary discretionary authority to 17 determine eligibility for benefits . . . [and the] named fiduciary properly designates 18 another fiduciary, delegating its discretionary authority, the `arbitrary and capricious' 19 standard of review applies. . ." Id. at 1283-84. Here, the Plan directly vests VPA with 20 discretion to make benefits determinations and interpret Plan terms. Thus, Plaintiff's 21 "`failure to properly delegate' argument is irrelevant. . . given the Plan's direct assignment 22 of duties to [VPA]." Riffey v. Hewlett-Packard Co. Disability Plan, 2007 U.S. Dist. LEXIS 23 21847, *27 (E.D. Cal. Mar. 27, 2007) (arbitrary and capricious standard applied to HP's 24 Plan, as administered by VPA); see also Lamantia v. Voluntary Plan Adm'rs, Inc., 401 25 F.3d 1114, 1123 (9th Cir. 2005) (same). 26 27 2. There is no structural conflict of interest Plaintiff cites numerous cases for the proposition that a "structural conflict must be

28 weighed as a factor in evaluating whether the plan abused its discretion." See, e.g., Pl. 12

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1 MSJ at 13-14. However, the Court previously ruled that "[b]ecause the Plan at issue 2 herein was entirely funded by Defendant HP . . . while VPA had discretionary authority to 3 determine eligibility for and the amount of benefits . . . no structural conflict of interest 4 exists in this case." [Doc. 76 at 9]. 5 6 C. Abuse Of Discretion Analysis

An "abuse of discretion analysis allows a court to tailor its review to all the

7 circumstances before it." Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 968 (9th 8 Cir. 2006). In Abatie, 458 F.3d at 970, the Ninth Circuit addressed the question of what 9 evidence the court may consider when reviewing a denial of LTD benefits, and 10 concluded that "in general, a district court may review only the administrative record 11 when considering whether the plan administrator abused its discretion, but may admit 12 additional evidence on de novo review." The Ninth Circuit has confirmed that "ERISA 13 plan administrators do not have unbounded discretion." Booton v. Lockheed, 110 F.3d 14 1461, 1463 (9th Cir. 1997). 15 The Supreme Court has recently reaffirmed the principle that ERISA "sets forth a

16 special standard of care upon a plan administrator" to exercise its discretion "solely in the 17 interests of the participants and beneficiaries of the plan," providing a "full and fair 18 review" to claimants. Metropolitan Life Ins. Co. v. Glenn, 128 S.Ct. 2343, 2350 (2008). 19 As another court in this Circuit recently held, under the "abuse of discretion" standard, 20 "[t]he court cannot simply `rubber stamp' Defendant's decision if it failed to provide a 21 full and fair review of the facts of this case." Beckstrand v. Elec. Arts Group Long Term 22 Disability Ins. Plan, 2008 U.S. Dist. LEXIS 83195, *27 (E.D. Cal., Sept. 16, 2008). See 23 also Ordway v. Metropolitan Life Ins. Co., 2007 U.S. Dist. LEXIS 61341 (S.D. Cal. 2007) 24 (denying defendant's motion for summary judgment when "the evidence, when taken as 25 a whole, [wa]s not substantial" even though defendant's finding of non-disability was 26 "supported by some evidence.") 27 In Glenn, 128 S.Ct. 2343, the Supreme Court held that "when judges review the

28 lawfulness of benefit denials, they will often take account of several different 13

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1 considerations of which a conflict of interest [where applicable] is one." Id. at 2351. The 2 Court explained: 3 4 5 6 7 This kind of review is no stranger to the judicial system. Not only trust law, but also administrative law, can ask judges to determine lawfulness by taking account of several different, often case-specific, factors, reaching a result by weighing all together. In such instances, any one factor will act as a tiebreaker when the other factors are closely balanced, the degree of closeness necessarily depending upon the tiebreaking factor's inherent or case-specific importance.

8 Id. See also Toven v. Metro. Life Ins. Co., 2008 U.S. Dist. LEXIS 100445, *24-25 (C.D. 9 Cal., Dec. 2, 2008) ("In theory, any number of factors might be relevant to such a 10 determination" of whether the administrator abused its discretion in denying LTD 11 benefits).10 12 The Supreme Court in Glenn affirmed the Sixth Circuit's grant of LTD benefits

13 based on consideration of a combination of factors, including: (1) that "MetLife had 14 emphasized a certain medical report that favored a denial of benefits, and had 15 deemphasized certain other reports that suggested a contrary conclusion," (2) that 16 MetLife failed to take into account evidence indicating that stress aggravated Plaintiff's 17 condition, and (3) MetLife's conflict of interest, which was "but one factor among many 18 that a reviewing judge must take into account." Id. at 2347-52. The Supreme Court 19 concluded that "[a]ll these serious concerns, taken together with some degree of 20 conflicting interests on MetLife's part, led the court to set aside MetLife's discretionary 21 decision. We can find nothing improper in the way in which the court conducted its 22 review." Id. at 2352. 23 Likewise, in Taft v. Equitable Life Assurance Society, 9 F.3d 1469, 1473 (9th Cir.

24 1993), the district court held that the defendant abused its discretion in terminating 25 26 27 28 Although there is no structural conflict in this case, a structural conflict is not a prerequisite to finding an abuse of discretion. When there is no conflict of interest, the Court applies a "straightforward abuse of discretion analysis." Abatie 458 F.3d at 968. Courts may take into account a number of "different, often case-specific factors" (Glenn,128 S.Ct. at 2351), and "conflict of interest is but one factor." Beckstrand, 2008 U.S. Dist. LEXIS 83195 at *20 (emphasis in original). Accordingly, the Court will conduct its review of VPA's denial of LTD benefits taking into account all relevant factors exclusive of any purported conflict of interest. 06cv1506 14
10

1 plaintiff's LTD benefits, and plaintiff appealed. Defendant argued to the Ninth Circuit that 2 because it gave an explanation for terminating benefits, the court's "analysis should go 3 no further." Id. The Ninth Circuit disagreed, finding that "abuse of discretion review is 4 not that limited." Id. The court held that "an administrator also abuses its discretion if it 5 relies on clearly erroneous findings of fact in making benefit determinations." Id. The 6 court went on to analyze the substance of the reports to ascertain whether they were 7 clearly erroneous, concluding that they were not. Id. See also Bendixen v. Standard Ins. 8 Co., 185 F.3d 939, 944 (9th Cir. 1999) (holding that an "administrator also abuses its 9 discretion if it relies on clearly erroneous findings of fact in making benefit 10 determinations"). 11 In determining the amount of deference to which the insurer is entitled, the factors

12 the district court may consider include: (1) whether the defendant ignored plaintiff's 13 complaints of pain, which are inherently subjective and not easily determined by 14 objective measurement; (2) whether defendant had a "meaningful dialogue with its 15 beneficiary in deciding whether to grant or deny benefits," and (3) whether defendant 16 "took various of [plaintiff's] doctors' statements out of context, or otherwise distorted 17 them," or "omit[ted an] important qualifier." Saffon v. Wells Fargo & Co. Long Term 18 Disability Plan, 522 F.3d 863, 872-73 (9th Cir. 2008). If so, such factors suggest that 19 "less deference should be given to the decision of the claims administrator." Id. at 873 20 21 22 23 24 25 26 27 28 IV. MEDICAL RECORDS SUBMITTED BY PLAINTIFF AFTER VPA DENIED HER APPEAL As indicated above, VPA denied Plaintiff's appeal on July 9, 2004. AR 444-48. Five months later, on November 24, 2004, Patrick's counsel sent VPA and HP a letter requesting that VPA reopen Plaintiff's claim file so that Plaintiff could file a "supplemental appeal." Ex. E to Def. MSJ [Doc. 91-8] at 455. VPA did not respond. Compl. ¶ 52. On February 9, 2006 -- over 1-1/2 years after Plaintiff's appeal was denied on July 9, 2004 -Plaintiff's counsel sent a second letter to VPA and HP demanding HP

15

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1 grant her claim for LTD benefits, attaching several medical records, all from 2005 -- at 2 least 6 months after VPA's denial of her appeal. Ex. F to Def. MSJ [Doc. 91-9]. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A. VPA Did Not Abuse Its Discretion By Failing To Consider Evidence Submitted After Plaintiff's Appeal Was Denied

Plaintiff argues at length that VPA abused its discretion in failing to consider the medical records and letters submitted after her appeal was denied. See, e.g. Pl. MSJ at 16-18; Pl. reply at 7-10. However, it is settled law that a claims administrator cannot abuse its discretion "by failing to consider evidence not before it" at the time of its determination. Taft, 9 F.3d at 1472; Alford v. DCH Foundation Group Long-Term Disability Plan, 311 F.3d 955, 959-60 (9th Cir. 2002) (administrator did not abuse its discretion in failing to consider medical evidence that Plaintiff submitted several weeks after the deadline set forth in the denial letter, and such documents were not part of the administrative record); see also Bendixen, 185 F.3d at 944 ("it was not error to refuse to consider Dr. High's report because the report was given to Standard after its second review had been completed and a final determination had been made"). Furthermore, the Plan does not obligate VPA to consider evidence submitted after an appeal is denied. The Plan sets forth the procedures VPA must follow in reviewing appeals of denied claims, Plan, Ex. A, § 8(a)-(f) at 51-54. Under that procedure, the claimant has the right to a single appeal of an adverse decision by VPA. Id., § 8(b). VPA must then give the claimant written notice of its decision within 45 days of receiving the appeal, unless special circumstances warrant additional time for review, in which case it must render a decision within 90 days. Id., § 8(c). If VPA denies the appeal, the claimant has exhausted her administrative remedies under the Plan and may then file a lawsuit "to recover benefits under the Plan." Id., § 8(g) at 54-55. Plaintiff filed an evidentiary objection on March 2, 2009 [Doc. 98], essentially arguing that the administrative record submitted by Defendants was incomplete because it did not include documents (such as Plaintiff's counsel's two letters with exhibits) that were submitted to VPA after it had already denied Plaintiff's claim and appeal. For the 16
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1 reasons set forth herein, Plaintiff's evidentiary objection is OVERRULED. Defendants 2 filed an evidentiary objection on March 3, 2009 [Doc. 102] objecting to the declarations 3 (including exhibits) of Lyn Patrick, Howard Hellen, Dr. John Dorsey, Dr. Rodney 4 Henderson, Dr. Byron King, Dr. M. Mahdavi, Dr. Kenneth Nudleman and Dr. Howard 5 Goldfarb. Defendants' primary objection is that such declarations and exhibits are 6 irrelevant in that Plaintiff seeks to admit evidence that was not contained in the 7 administrative record for Plaintiff's LTD claim that existed at the time VPA denied 8 Plaintiff's appeal on July 9, 2004.11 For the reasons set forth herein, Defendants' 9 evidentiary objections are SUSTAINED. 10 11 12 B. This Court May Not Consider Reports Outside The Administrative Record As Plaintiff Has Not Demonstrated Procedural Irregularities

The Ninth Circuit recently confirmed that "[i]t is the general rule, of course, that

13 when applying an abuse of discretion standard to an ERISA plan, the district court's 14 review is limited to the administrative record." Burke v. Pitney Bowes Inc. Long-Term 15 Disability Plan, 544 F.3d 1016, 1027 (9th Cir. 2008), citing Abatie, 458 F.3d at 970. 16 However, "the district court may consider evidence outside the administrative record if it 17 determines that procedural irregularities prevented the full development of the 18 administrative record." Burke, 544 F.3d at 1028, citing Abatie, 458 F.3d at 973; see also 19 Saffon, 522 F.3d at 872, n. 2 ("Abatie held that district courts may take additional 20 evidence whenever procedural irregularities have prevented full development of the 21 administrative record, and to the extent that our earlier cases conflict with Abatie . . . 22 those cases are no longer good law.") 23 Here, the Court finds that Plaintiff has failed to demonstrate that procedural

24 irregularities prevented the full development of the administrative record. Indeed, the 25 reports could not have been excluded due to a procedural error, because they did not 26 27 28 Defendants also object to the Patrick Declaration on additional grounds such as conclusion, opinion, assumes facts not in evidence, lack of foundation, argument, vague and ambiguous, immaterial and hearsay. As the Court has relied on the Administrative Record for the pertinent facts, rather than the Patrick Declaration, it is not necessary to reach these additional grounds for objection. 06cv1506 17
11

1 even exist at the time VPA denied Plaintiff's claim. The Ninth Circuit recently rejected 2 the same argument made by Plaintiff here that the district court should consider medical 3 reports that did not exist at the time benefits were denied: 4 5 6 7 8 9 10 11 [Plaintiff] argues that the district court erred in failing to consider doctors' reports outside the administrative record. The reports were written after. . . VPA issued its decision denying [plaintiff's] claim. These reports do not fall into any of the narrow exceptions pursuant to which the reports could be considered. The reports were not excluded due to any procedural error, Abatie, 458 F.3d at 973, because they did not exist at the time of the administrative determination. Nor do the reports provide any evidence of conflict necessary to determine how much weight to give a conflict of interest under the abuse of discretion standard. Id. at 970. We do not engage in a de novo review that would permit admission of the reports.

12 Lamantia v. Hewlett-Packard Co. Employee Benefits Org. Income Prot. Plan, 2008 U.S. 13 App. LEXIS 12172, *5 (9th Cir. June 2, 2008); see also Alford, 311 F.3d at 959 14 ("Permitting a district court to examine evidence outside the administrative record would 15 open the door to the anomalous conclusion that a plan administrator abused its 16 discretion by failing to consider evidence not before it.") 17 Similarly, in Toven, 2008 U.S. Dist. LEXIS 100445 at *32, the plaintiff attempted to

18 submit additional medical evidence that was not provided to defendant MetLife during 19 the original processing of the claim. In holding that it was "not the type of evidence this 20 Court can consider," the court reasoned that it could not have been excluded from the 21 claim file due to procedural irregularities because it did not exist at the time of denial: 22 23 24 25 26 27 28 Here, however, the evidence submitted by Plaintiff postdates MetLife's final decision. If evidence had existed at the time of MetLife's denial that should have been in the claim file, but was not there because of MetLife's misconduct, it could have been presented to the Court now. But there is no way the evidence at issue could have been in the claim file at any time, since it did not yet exist. Accordingly, this Court has not considered Plaintiff's additional proffered evidence. Therefore, because the additional medical reports and materials submitted by Plaintiff did not exist at the time of VPA's denial of her appeal, these documents could 18
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1 not have been excluded from the claim file due to procedural irregularities. Accordingly, 2 this Court has not considered them, and VPA did not abuse its discretion in failing to 3 consider them. 4 5 6 V. VPA ABUSED ITS DISCRETION IN DENYING PLAINTIFF'S CLAIM FOR LONG-TERM DISABILITY BENEFITS For the reasons set forth below, the Court finds that the following factors, when

7 considered in their totality, demonstrate that VPA abused its discretion in denying 8 Plaintiff's claim for LTD benefits. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Although there was a conflict of interest in that case, the court found that it "was not `egregious,' and [did] not weigh particularly heavily either for or against [MetLife]." Id. at *30. 06cv1506 19
12

A.

VPA Failed To Consider Whether Returning To Work Would Cause Plaintiff's Condition to Worsen

In Toven, 2008 U.S. Dist. LEXIS 100445 at *43, defendant MetLife denied plaintiff's claim for LTD benefits, and the court, reviewing the denial under an abuse of discretion standard, held that Plaintiff was entitled to recover LTD benefits.12 One of the primary factors the court considered in regard to whether defendant MetLife properly investigated or evaluated Plaintiff's claim was that it completely "fail[ed] to ask the question of whether Plaintiff, whose condition had improved after leaving work, would be able to return to work without a concomitant worsening of his condition." Id. at *37-38. "In other words . . . the question of whether he could go back to work without danger was never posed, let alone answered." Id. Likewise, the medical records here show that when Plaintiff was not working and was undergoing physical therapy, her symptoms improved. However, when she began working again, through her vocational rehabilitation and externship, her symptoms (pain, swelling, numbness and tingling in all fingers, and paresthesis in the median nerve distribution) returned. AR 142-43. As a result, Dr. Henderson recommended that she "be taken out of her vocational rehabilitation training," because it was "aggravating her symptoms," including "carpal tunnel reoccurrence on the right hand and a development on the left hand as well," and concluded that "[s]he is now TTD [temporarily totally

1 disabled]." Id. In light of this, VPA's failure to consider whether Plaintiff's condition would 2 worsen upon returning to work is a factor that weighs in favor of a finding that it failed to 3 adequately investigate or evaluate her claim. 4 5 B. VPA Failed to Have a "Meaningful Dialogue" with Plaintiff

The Ninth Circuit held over ten years ago in Booton, 110 F.3d at 1463, that ERISA

6 regulations call for a "`meaningful dialogue' between claims administrator and 7 beneficiary." Saffon, 522 F.3d at 870, citing Booton, 110 F.3d at 1463. The Ninth Circuit 8 explained: 9 10 11 12 13 14 In simple English, what this regulation calls for is a meaningful dialogue between ERISA plan administrators and their beneficiaries. If benefits are denied in whole or in part, the reason for the denial must be stated in reasonably clear language. . . ; if the plan administrators believe that more information is needed to make a reasoned decision, they must ask for it. There is nothing extraordinary about this; it's how civilized people communicate with each other regarding important matters.

15 Booton, 110 F.3d at 1463. 16 The Supreme Court recently confirmed in Glenn that there is a fiduciary-like

17 relationship between administrator and beneficiary to act in the best interests of the plan 18 beneficiaries: 19 20 21 22 23 ERISA imposes higher-than-marketplace quality standards on insurers. It sets forth a special standard of care upon a plan administrator, namely, that the administrator discharge its duties in respect to discretionary claims processing solely in the interests of the participants and beneficiaries of the plan, § 1104(a)(1); it simultaneously underscores the particular importance of accurate claims processing by insisting that administrators provide a full and fair review of claim denials.

24 Glenn, 128 S. Ct. at 2350. 25 In analyzing whether a "meaningful dialogue" had taken place, the court in Saffon

26 noted that, as here, the administrator had referred plaintiff's appeal to a doctor who 27 neither examined nor interviewed her. 522 F.3d at 869. Also as here, the reviewing 28 doctor concluded that plaintiff had failed to provide sufficient "objective medical evidence" of her alleged disability. Id. at 869-70. Similarly, the denial letter informed 20

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1 plaintiff that she could appeal by providing evidence of her disability, but "does not 2 explain why the information [plaintiff] has already provided is insufficient for that 3 purpose." Id. at 870. Morever, as here, the court found that defendant "did not meet its 4 duty . . . to have a meaningful dialogue with its beneficiary . . . [by taking] various of her 5 doctors' statements out of context or otherwise distort[ing] them in an apparent effort to 6 support a denial of benefits." Id. at 873. The court in Saffon also found that defendant 7 "failed to have a meaningful dialogue" with plaintiff by failing to consider her complaints 8 of pain, or the fact that "individual reactions to pain are subjective and not easily 9 determined by reference to objective measurements." Id. at 872. 10 The facts here likewise demonstrate that VPA failed to have a meaningful

11 dialogue with Patrick. Rather than having a full and open communication with her 12 regarding the problems she was having with her carpal tunnel syndrome, elbow and/or 13 shoulder, including the pain she was experiencing that might be difficult to substantiate 14 with objective evidence, VPA merely told Plaintiff to submit evidence to substantiate her 15 disability. 2/12/04 VPA letter, AR 246. VPA claimed Plaintiff had "not submitted any 16 evidence or documentation to substantiate [her] disability beyond August 24, 2003" (AR 17 246), notwithstanding the fact that Plaintiff submitted a January 19, 2004 report from Dr. 18 Henderson (which VPA acknowledged it received) in which he stated that she had 19 worsening symptoms, should quit vocational training and was temporarily totally 20 disabled. See Dr. Henderson's 1/19/04 report, AR 142-43. Likewise, VPA's final denial 21 letter claimed that there was no objective evidence of Plaintiff's limitations or disability 22 without explaining why the information Plaintiff had previously provided was insufficient 23 and without specifying the additional evidence required. AR 444-48. VPA's failure to tell 24 Plaintiff what "objective evidence" was required was insufficient. See Volynskaya v. 25 Epicentric, Inc. Health & Welfare Plan, 2007 U.S. Dist. LEXIS 81208, *18 (N.D. Cal., Oct. 26 16, 2007) ("It is insufficient to simply inform a claimant that there is no `objective' 27 evidence to support a disability claim without specifying what type of `objective' evidence 28 would substantiate a claim.") 21

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1

In addition to not telling Patrick what type of evidence she could submit to

2 substantiate her claim, VPA did not examine or interview her, or let her know specifically 3 why the reports from Dr. Henderson in which he found that she was disabled were not 4 sufficient to establish her disability. VPA also did not investigate Plaintiff's claims in her 5 appeal that she was unable to work at other jobs because she had developed carpal 6 tunnel in both hands and had a flare-up of symptoms in her elbow and shoulder, and that 7 her symptoms were aggravated by attempting to return to work (in an externship). 8 Therefore, this factor weighs in favor of a finding that VPA did not conduct a "full and fair" 9 investigation of Patrick's disability claim or have a meaningful dialogue with her. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 C. VPA Abused Its Discretion In Relying On a Vocational Consultant Report Which Contained Clearly Erroneous Findings Of Fact And Was Not Revised To Reflect Plaintiff's Worsening Condition

An ERISA administrator abuses its discretion if it relies on clearly erroneous findings of fact. Boyd v. Bell, 410 F.3d 1173, 1178 (9th Cir. 2005); Taft, 9 F.3d at 1473. The Supreme Court has found that a "finding is clearly erroneous when although there is evidence to support it, the reviewing body on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Concrete Pipe and Prods. v. Construction Laborers Pension Trust, 508 U.S. 602, 622 (1993). Here, the administrator relied heavily on the report of a vocational consultant in determining that Plaintiff could perform other jobs. See 8/11/03 denial lttr (AR 261-64) and 7/9/04 denial lttr (AR 444-48). However, the vocational report was clearly erroneous, because it concluded that Patrick could perform four other jobs, when in fact, Plaintiff could not perform typing, or keyboard or mouse work, which each of these jobs required. Plaintiff's treating doctor, Dr. Henderson, consistently concluded that Plaintiff could not and should not perform any typing, writing keyboard or mouse work.13 VPA See (1) Dr. Henderson's 3/19/03 report -- if plaintiff returns to work, she should not use her right upper extremity at all. (AR 167-68); (2) Dr. Henderson's 5/14/03 report -- plaintiff should perform no forceful or repetitive gripping, no keyboard or mouse work, and no overhead work. (AR 278-280); (3) Dr. Henderson's 5/21/03 report ­ Plaintiff should perform "no [mouse] or keyboard work, and no repetitive forceful gripping, grasping or fine manipulation of the right hand." (AR 151); (4) Dr. Henderson's 6/25/03 report -- Patrick "should be precluded from the use of computer keyboard and mouse work. She also should not perform repetitive forceful 06cv1506 22
13

1 cited this recommendation in its initial denial letter and did not dispute it (AR 262), but 2 relied upon the vocational consultant report to conclude that there were other jobs that 3 Plaintiff could perform. AR 261-64. 4 The Vocational Rehabilitation Consultant, Renee Lange, did not interview Patrick

5 or request a physical examination of her. Instead, according to Lange's three-page 6 report, she spent approximately 4 hours reviewing Patrick's qualifications, and running a 7 search on the OASYS software program which identified occupations that could be 8 consistent with Patrick's qualifications and abilities. See 6/25/03 report, AR 269-72. The 9 occupations Ms. Lange concluded Patrick could perform were: (1) Credit Analyst, (2) 10 Management Analyst, (3) Sales Agent and (4) Order Department Supervisor. Id. at 270. 11 The vocational report cites and acknowledges the restrictions set forth in Dr.

12 Henderson's 5/14/03 report -- that Patrick must "avoid forceful or repetitive gripping and 13 grasping [and]. . . avoid overhead work and keyboard or mouse work with the right 14 upper extremity." Id. at 270. However, Ms. Lange performed no analysis regarding 15 whether these four potential occupations required any keyboard or computer work. In 16 fact, Ms. Lange implied that these jobs did require computer and keyboard work, as she 17 stated that "some accommodations might need to be made for these positions with 18 regards to keyboarding, such as work station modifications and extra break times." Id. 19 However, there is no evidence that accommodations could have been made, and the 20 facts suggest that accommodations could not have been made, because when Plaintiff 21 tried to return to work in an externship in the summer of 2003 (where such 22 accommodations were requested), her injuries worsened. See Dr. Henderson's reports 23 dated 1/19/04 (AR 142-43) (her vocational training "is aggravating her symptoms") and 24 2/9/04 (AR 135-36) ("It appears that the patient's work restrictions have not been 25 adhered to"). 26 27 28 gripping, grasping or fine finger manipulation to the right hand." (AR 145); (5) Dr. Henderson's 1/19/04 report -- Patrick is temporarily totally disabled. (AR 142-43); (6) Dr. Henderson's 6/7/04 report -- Patrick is still disabled from working (AR 437-38). 06cv1506 23 VPA relied upon this vocational consultant report in its initial and final denial of

1 Plaintiff's claim for LTD benefits, finding that the vocational consultant determined 2 Patrick could perform the four jobs listed, considering her "education, training, and 3 experience, and in light of the physical restrictions." See 8/11/03 denial lttr (AR 261-64) 4 and 7/9/04 denial lttr (AR 444-48). As discussed below, the report was clearly erroneous 5 in reaching this conclusion. 6 7 1. Job descriptions for the positions listed in the report

The vocational report contains a very brief (three-line) description of each of the

8 four jobs, compiled from the DOT (Dictionary of Occupational Titles), along with each 9 job's DOT identification number. Id. A similar directory, also compiled by the U.S. 10 Department of Labor, is the Occupational Outlook Handbook (O*NET). 11 12 a. Credit Analyst A Credit Analyst reviews files and customer records to analyze the paying habits

13 of customers who are delinquent in paying bills and recommends action. DOT #241.26714 022. The analyst then prepares reports with this credit information for use in decision 15 making. O*NET 13-2041.00. As this job involves reviewing files (presumably either on 16 paper or electronically) and preparing a written report, it will necessarily involve computer 17 keyboard/typing and/or fine manipulation. 18 19 b. Management Analyst A Management Analyst analyzes business or operating procedures to devise the

20 most efficient methods of accomplishing work. DOT #161.167-018. The analyst analyzes 21 data to determine the nature and extent of the problem he or she is being asked to solve, 22 develops solutions to the problem, and then reports the findings and recommendations 23 to the client "usually . . . in writing." O*NET 13-111.00. The fact that the job involves 24 reviewing data and compiling written reports means, necessarily, that it will require 25 typing/keyboard and mouse work, as well as gripping/fine manipulation. Indeed, the 26 photograph depicting a "management analyst" in the O*NET directory shows a person 27 sitting at a desk, typing on a computer keyboard. Id. 28 24

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1 2

c. Sales Agent A Sales Agent sells financial products and services to clients for investment

3 purposes, which involves soliciting clients, conducting research regarding products and 4 providing clients with information, completing sales order tickets and performing 5 calculations to monitor client accounts and verify transactions. DOT #250.257-018. 6 Agents also analyze information, prepare reports and handle administrative duties, such 7 as filing and scheduling appointments. O*NET 41-4011.00. Thus, it is apparent that a 8 sales agent position would involve computer work and typing. 9 10 d. Order Department Supervisor An Order Department Supervisor coordinates activities of personnel in an order

11 writing department. The Supervisor plans and initiates order-writing procedures, 12 supervises workers writing master orders and directs the establishment and 13 maintenance of customer order records. DOT # 169.167-038. The O*NET does not 14 contain a description of Order Department Supervisors, but indicates in regard to Order 15 Clerks that they "sit for long periods of time in front of computer terminals," and that 16 "[p]roficiency with computer software is increasingly important because most orders are 17 being filled and filed electronically." O*NET 43-4151.00. Accordingly, this position would 18 necessarily involve computer keyboard work reviewing the orders and order procedures. 19 20 21 22 23 24 25 26 27 28 2. VPA did not request an updated vocational report after receiving Plaintiff's appeal

Plaintiff told VPA in her appeal that she could not perform any of these jobs, as they all involved keyboard work. AR 251. Plaintiff informed VPA that this was especially so, as now symptoms had flared up in her left hand, elbow and arm, in addition to her right hand, elbow and shoulder. Id. However, despite this information and Plaintiff's recent medical reports, VPA did not ask the vocational consultant to re-run the search, update its report or do any further analysis. Instead, in its July 9, 2004 denial of Plaintiff's appeal, VPA relied on the same (erroneous) Vocational Report from June 25, 2003 - over a year earlier. See 7/9/04 denial letter (AR 444-48), referencing 6/25/03 vocational report (AR 269-272). In Archuleta v. Reliance Standard Life Ins., 504 F.Supp.2d 876, 885 (C.D. 25
06cv1506

1 Cal. 2007), the court found that a vocational report which had not been updated and "was 2 more than a year old, render[ed] it of dubious value at the time of the decision." The court 3 also found the report was flawed in that it failed to consider the impact of the side effects 4 of plaintiff's medication on her ability to work and in that "it failed to ask its vocational 5 consultant to update her report based on the new medical information from plaintiff's 6 doctor." Id. at 885-86. Likewise, the report here is flawed and of dubious evidentiary 7 value in that it was over a year old, had not been updated to reflect Plaintiff's new medical 8 reports from Dr. Henderson, and failed to take into account the impact that working had 9 on aggravating her symptoms. 10 In summary, the report's conclusion that Plaintiff could perform these four jobs

11 was erroneous. VPA's reliance on this report to deny Plaintiff's claim for LTD benefits, 12 and its continued reliance on the report without any further analysis -- even after Plaintiff 13 stated in her appeal that she could not do these jobs because they all involved computer 14 work and notwithstanding Dr. Henderson's consistent findings that she was unable to do 15 such work -- supports a finding that VPA abused its discretion, especially when 16 considered in conjunction with the other factors discussed herein. 17 18 D. VPA's Failure To Conduct A Physical Examination

An administrator's reliance on a paper review "does not, standing alone, require

19 the conclusion that the plan administrator acted improperly." Beckstrand, 2008 U.S. Dist. 20 LEXIS 83195 at *26, citing Calvert v. Firstar Fin. Inc., 409 F.3d 286, 294 (6th Cir. 2005). 21 However, "the failure to conduct a physical examination -- especially where the right to do 22 so is specifically reserved in the plan -- may, in some cases, raise questions about the 23 thoroughness and accuracy of the benefits determination." Calvert, 409 F.3d at 295. 24 Additionally, when issues of the claimant's credibility are involved," "reliance on such a 25 [paper] review may be inadequate." Id. at 297, n.6. See also Beckstrand, 2008 U.S. Dist. 26 LEXIS 83195 at *26-27 (granting plaintiff's motion for summary judgment for 27 reinstatement of LTD benefits and holding that failure to conduct further examinations, 28 especially given conflicting opinions, "raises questions about the thoroughness and accuracy of the Plan's benefits determination.") 26

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1

The VPA claims manual specifically conferred the right to conduct a physical

2 examination -- "on internal appeal, an IME may be requested for physical examination to 3 substantiate a disability." See Def. MSJ Opp at 15, n. 6. Nonetheless, VPA did not -4 either upon the initial review or after Plaintiff's appeal -- interview Plaintiff or conduct a 5 physical examination of her. Such an examination would have been particularly helpful in 6 this case, as Plaintiff's credibility was at issue - Patrick complained of extensive pain, yet 7 VPA felt it was not sufficiently substantiated by objective evidence. This is especially true 8 in light of the fact that the primary objective evidence relied on by VPA in denying benefits 9 -- the EMG test -- is known to elicit false negative results. AR 138. Thus, the Court finds 10 that VPA's failure to interview and/or conduct a physical examination of Patrick raises 11 questions about the thoroughness and accuracy of its investigation and benefits 12 determination, and weighs in favor of a finding of abuse of discretion. 13 14 E. VPA Disregarded Plaintiff's Subjective Evidence of Pain

After Plaintiff entered vocational therapy and began working at an externship, her

15 pain and symptoms in her shoulder, elbow and hand began to worsen. As she indicated 16 in her February 5, 2004 appeal letter, she had pain and swelling in her right wrist, arm 17 and shoulder, and due to favoring her right arm, she was now experiencing pain and 18 swelling in her left hand and arm. AR 251-255. She stated that she had "[n]umbness in 19 the fingers, and my hand is constantly swollen. I'm unable to close my hand at all in the 20 morning." Id. She complained that her "[w]rist and arm have pain and swelling with use," 21 and that she had "[s]houlder pain and stiffness." Id. She estimated that her "[p]ain 22 intensity is 3-8 and is on a daily basis." Id. Dr. Henderson noted her symptoms of pain, 23 swelling, numbness and tingling in the fingers in both hands in his January 19, 2004 24 report, and recommended that she be "taken out of her vocational rehabilitation training." 25 AR 142-43. On June 7, 2004, Dr. Henderson noted a "significant flare-up" of symptoms, 26 stating that "[s]he is now having worsening symptoms of her elbow wrist and even the 27 shoulder," and was "exquisitely tender over the lateral epicondylar area and ERCB with 28 pain with resisted wrist extension." AR 437-38 While VPA cited some of Plaintiff's complaints of pain and symptoms in its denial 27

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1 letters, it ultimately disregarded her complaints of pain, swelling, stiffness and tenderness, 2 and concluded that she had failed to produce sufficient objective evidence that she could 3 not perform other jobs for which she was qualified. AR 444-48. VPA's approach of 4 "disregarding subjective evidence of pain is disapproved in Ninth Circuit precedent." 5 Caplan v. CNA Fin. Corp., 544 F.Supp.2d 984, 992-993 (N.D. Cal. 2008), citing Saffon, 6 511 F.3d at 1216 (noting that "individual reactions to pain are subjective and not easily 7