Reddick v. Metropolitan Life Insurance Company et al

Filing 53

ORDER granting in part and denying in part 40 Motion to Augment the Administrative Record; granting 47 Motion to Augment the Administrative Record. Bench Trial set for 6/6/2017 09:00 AM before Judge M. James Lorenz. Signed by Judge M. James Lorenz on 3/23/2017. (sjt)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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THOMAS REDDICK,

Case No.: 3:15-cv-02326-L-WVG
Plaintiff,

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v.

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ORDER (1) GRANTING IN PART
AND DENYING IN PART
PLAINTIFF'S MOTIONS [Docs. 40,
47] TO AUGMENT THE
ADMINISTRATIVE RECORD AND
(2) SETTING TRIAL DATES

METROPOLITAN LIFE INSURANCE
COMPANY, et al.,

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Defendant.

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Pending before the Court is Plaintiff Thomas Reddick’s (“Reddick”) motions to

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augment the administrative record. The Court decides the matter on the papers submitted

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and without oral argument. See Civ. L. R. 7.1 (d)(1). For the reasons stated below, the

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Court GRANTS IN PART and DENIES IN PART Reddick’s motions.

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I.

BACKGROUND

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This case concerns the termination of Plaintiff Reddick’s long term disability

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benefits. Reddick previously worked as a financial advisor for Morgan Stanley, a mostly

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sedentary job that requires long hours of sitting and mental concentration. In March

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2008, Reddick injured himself when he slipped and fell while performing yard work at

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his home. As a result, Reddick underwent procedures including spinal surgery, epidural

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steroid injections, and was placed on various medications that may affect his cognitive

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abilities. Prior to sustaining this injury, Reddick enrolled in a long-term disability

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insurance plan provided by his employer Morgan Stanley. Defendant Metropolitan Life

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Insurance Company (“MetLife”) is both the insurer and administrator of this plan (“the

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Plan”). Under the Plan, an insured is considered “disabled” (and therefore entitled to

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benefits) if “due to Sickness or as a direct result of accidental injury: [the insured is]

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receiving Appropriate Care and Treatment and complying with the requirements of such

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treatment; [the insured is]: unable to earn more than 80% of [his] Predisability Earnings

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at [his] Own Occupation from any employer in [his] Local Economy; and unable to

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perform each of the material duties of [his] Own Occupation.” (AR 1947.)

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Because of his injury, Reddick started drawing benefits on his MetLife policy in

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2010. He continued to draw benefits through November 21, 2014, when MetLife

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terminated his benefits. Prior to benefit termination, MetLife faxed a form (“the Form”

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[Doc. 40-8 Ex. 1 p. 5]) to Dr. Mark A. Harris (“Dr. Harris”), one of Reddick’s treating

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physicians. The Form asked Dr. Harris “[d]o you agree that [Reddick] has the functional

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ability to return to work with or without accommodations [yes or no].” Before faxing it

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back, Dr. Harris circled “yes” and “with” and wrote in “I believe RTW [return to work] is

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an essential part of spine rehab although in this case likely with accommodations.”

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MetLife notified Reddick of his benefit termination via letter. (Termination Letter

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[AR 336–338].) In the Termination Letter, MetLife informed Reddick of his right to

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appeal within 180 days and explained that he should submit evidence to support his

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appeal. The Termination Letter did not notify Reddick of the Form filled out by Dr.
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Harris, nor did MetLife otherwise inform Reddick of the Form’s existence prior to his

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administrative appeal.

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MetLife denied Reddick’s administrative appeal. (Appeal Denial [AR 11–17].) In

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doing so, MetLife relied on a variety of medical and administrative opinions. (Id.) Of

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special relevance to the present motions, MetLife relied on an administrative law judge’s

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(“ALJ”) determination that Reddick was not sufficiently disabled to qualify for social

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security disability benefits. (See [Doc. 42] 5:2–5.) This decision was vacated on an

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appeal heard by Judge Moskowitz.

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MetLife also relied on the opinion of an independent physician consultant (“IPC”).

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In his report, the IPC concluded Reddick could lift up to 20lbs; sit for 8 hours in an 8-

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hour work day provided he could change positions every 30 minutes; walk and stand;

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bend, stoop, and twist occasionally; and reach overhead, waist level, and below the waist

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without any restrictions. (AR 218.) Before stating this conclusion, the IPC’s report

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referenced the ALJ’s vacated decision, stating “on December 27, 2013, an administrative

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law judge denied disability and noted [Reddick] could lift and carry 10 pounds

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frequently. The administrative law judge noted he could lift 20 pounds occasionally,

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stand and walk for four out of eight hours a day, and sit for six out of eight hours a day.”

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(AR 216–17.) The IPC further stated that his conclusions were “based on [Reddick’s]

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history of chronic pain syndrome and previous surgery … [as well as] the note from Dr.

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Harris of June 5, 2014 [the Form], noting that return to work is an essential part of spine

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rehabilitation.” (AR 219.)

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Reddick subsequently appealed the denial of his disability benefits to this Court.

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(See Compl. [Doc. 1].) Reddick now seeks to augment the administrative record with

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three items. The first item is a letter from Dr. Harris. (The Letter [Doc. 40–8 Ex. 1 pp.

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2–4].) In the Letter, Dr. Harris provides an in depth explanation of Mr. Reddick’s

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physical condition, an opinion on Reddick’s disability status, and an explanation of what

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he meant to communicate when he filled out the Form. (Id.) The second item is an

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exhibit containing W2’s and earnings statements which Reddick claims are relevant to
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determining his disability pay. (Earnings Records [Doc. 40–6 Ex. 4].) The third is a

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summary judgment order in which Judge Moskowitz vacated the ALJ’s opinion and

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remanded the case. (MSJ Order [Doc. 47–5 Ex. 1].) MetLife opposes the admission of

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all of these exhibits. (See Opp’ns [Docs. 42, 48].)

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II.

LEGAL STANDARD
Consistent with governing law1, the parties have stipulated that the proper standard

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of review for this ERISA governed improper denial of benefits claim is de novo. (See

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Joint Stipulation [Doc. 31]; May 24, 2016 Order [Doc. 41].) Under this standard, the

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Court’s duty is to determine whether a denial of ERISA governed benefits was proper.

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Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 963 (9th Cir. 2006). In making this

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determination, a Court should generally consider only materials that were a part of the

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administrative record considered by the plan administrator. Mongeluzo v. Baxter

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Travenol Long Term Disability Ben. Plan, 46 F.3d 938, 943–44 (9th Cir. 1995).

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However, a district court, in its discretion, may consider evidence extrinsic to the

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administrative record when necessary to conduct an adequate de novo review. Id. A

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non-exhaustive list of circumstances in which extrinsic evidence can thus be “necessary”

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include those involving (1) potential conflicts of interest presented where the

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administrator is the payor and (2) relevant evidence that a claimant could not have

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presented during the administrative review process. Opeta v. Northwest Airlines Pension

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Plan for Contract Emps, 484 F.3d 1211, 1217 (9th Cir. 2007) (quoting Quesinberry v.

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Life Ins. Co. of N. Am., 987 F.2d 1017, 1025 (4th Cir. 1993).

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See Opeta v. Northwest Airlines Pension Plan for Contract Emps, 484 F.3d 1211, 1216 (9th Cir. 2007).
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III.

DR. HARRIS’ LETTER
Reddick seeks to admit a letter from Dr. Harris in which Dr. Harris explains what

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he meant when he filled out the Form stating that Reddick could return to work with

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accommodation and that a return to work was essential to spine rehab. (The Letter.)

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Because the Letter was not part of the administrative record, admission is proper only if

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necessary to conduct an adequate de novo review. Mongeluzo, 46 F.3d at 943–44.

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Broadly speaking, Reddick argues the Letter is necessary because (1) MetLife based their

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denial of benefits decision, at least in part, on the Form; (2) the Form is ambiguous; and

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(3) The Letter shows that Metlife resolved the ambiguity in a manner that is inconsistent

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with the actual opinion Dr. Harris intended to communicate when he filled out the Form.

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In support of this argument, Reddick cites to Williams v. Sun Life Assurance Co. of

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Canada, 2009 WL 604942 (C.D. Cal. 2009). In Williams, ERISA claimant Williams

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appealed the denial of her benefits. In denying Williams’ administrative appeal,

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Defendant Sun Live, the insurer and claims administrator, relied on the opinion of a

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doctor who reviewed Williams’ medical records and prepared a report essentially stating

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that she was not medically disabled from returning to her work. In reaching this

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conclusion, the reviewing doctor relied on a form that Sun Live created and sent to

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Williams’ attending physician. The form listed three categories of activity: stand / walk,

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sit, and drive. Next to each activity were boxes for the attending physician to check off,

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indicating how much, if any, of the activity she believed Williams could undertake in a

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given day. Williams’ attending physician checked “1-4 hours” for stand/walk, “1-3

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hours” for sit, and “1-3 hours” for drive. In so doing, the attending physician meant to

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communicate her opinion that Williams could intermittently sit for a total of 1-3 hours in

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a day, whether driving or doing something else while seated. However, the reviewing

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doctor hired by Sun Live added the maximum number under sit with the maximum

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number under drive and concluded that Williams could sit for six hours in a given day

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and therefore was not disabled from performing her work.

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In appealing the denial of her claim to the district court, Williams sought to

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augment the administrative record with a declaration from her attending physician

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explaining that Sun Live interpreted the form her attending physician filled out in a

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manner inconsistent with the information her attending physician intended to

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communicate. The court granted Williams’ motion to augment, emphasizing that (1) the

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form was ambiguous; (2) Sun Live created the ambiguity in drafting the form; (3) Sun

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Live, as both insurer and claims administrator, resolved the ambiguity in a manner that

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financially benefitted it but harmed Williams. Plaintiff urges that, because this case is on

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all fours with Williams, the Court should reach the same conclusion here.

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The Court agrees. Like in Williams, the Form at issue here is ambiguous. In very

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broad fashion, it asks: “Do you agree that Mr. Reddick has the functional ability to return

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to work with or without accommodation? [yes or no?].” (the Form.) The Form provides

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absolutely no information as to what type of work Reddick can do or how many hours in

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a week he could do it. Further, by indicating Dr. Harris’ belief that a return to work

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would be helpful to an ongoing spine rehabilitation process and would likely require

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accommodations, the Form does not seem to imply a belief that Reddick was physically

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able to make a near complete return to work. Metlife could have easily cleared up this

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ambiguity by following up with Dr. Harris.2 But, Metlife did not.

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Also like in Williams, there is a risk of conflict of interest presented by the fact that

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MetLife operates as both insurer and administrator. This concern is magnified by the fact

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that MetLife, instead of following up with Dr. Harris, seemingly resolved the ambiguity

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in a financially self-serving manner detrimental to the interests of the insured. Further,

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Metlife did not notify Reddick of the Form when they invited him to present information

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relevant to his administrative appeal of the initial denial of his benefits, thus denying him

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The Court notes that MetLife complains of difficulty experienced in communicating with Dr. Harris.
However, the facts show that MetLife learned that sending a fax was the most efficient method of
communicating with Dr. Harris and they successfully contacted Dr. Harris with the first fax they sent
him. There is no reason to believe a second fax would have gone unreturned.
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the opportunity to come forward with this clarifying evidence earlier. Such

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circumstances clearly favor augmentation of the administrative record. See Opeta, 484

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F.3d at 1217 (internal quotations omitted).

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MetLife presents several arguments in opposition. First, Metlife argues that the

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Letter is not necessary because, apart from the Form, the voluminous Administrative

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Record contains more than enough other information upon which to sustain MetLife’s

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decision to terminate benefits. The problem with this argument is that, regardless of how

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many other records or evidence may tend to support MetLife’s determination, the fact

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remains that MetLife appears to have placed special emphasis on the Form Dr. Harris

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filled out.

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Specifically, in its letter to Reddick notifying him of the denial of his appeal,

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MetLife repeatedly references a report prepared by an Independent Physician Consultant

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(“IPC”). (AR 13–17.) In his report, the IPC concluded Reddick could lift up to 20lbs;

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sit for 8 hours in an 8 hour work day provided he could change positions every 30

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minutes; walk and stand; bend, stoop, and twist occasionally; and reach overhead, reach

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waist level, and reach below the waist without any restrictions. (AR 218.) The IPC

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further stated that this conclusion was “based on [Reddick’s] history of chronic pain

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syndrome and previous surgery … [as well as] the note from Dr. Harris of June 5, 2014

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[the Form], noting that return to work is an essential part of spine rehabilitation.” (AR

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219.)

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Thus, the IPC’s conclusions, which seem to have heavily informed MetLife’s

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denial decision, appear to stem in large part from the Form prepared by Dr. Harris.

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Because that form was ambiguous, the IPC’s reliance upon it, as well as MetLife’s denial

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citing the IPC report, seem potentially problematic. Furthermore, (1) admission of the

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letter would provide no further information than would have likely been gleaned from

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MetLife properly following up with Dr. Harris to resolve the ambiguity of the Form, and,

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(2) because Dr. Harris is an attending physician, his opinions would seem highly relevant

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to a determination of whether Reddick was disabled per the policy definition. Therefore,
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to properly scrutinize MetLife’s decision de novo, the Court finds it necessary to exercise

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its discretion to admit the Letter clarifying the ambiguity of the Form. Accordingly, the

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Court GRANTS Reddick’s motion as to Dr. Harris’ Letter.

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IV.

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REDDICK’S EARNINGS RECORDS
Reddick also seeks to augment the administrative record with various earnings

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records [Doc. 40–6, Ex. 4] that he claims demonstrate MetLife improperly calculated the

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amount of benefits owed to him under the policy. Though not briefed as such, the Court

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sees two issues presented by this request: (1) the admissibility of earnings statements to

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show the inadequacy of any pre-termination benefits payments and (2) admissibility for

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purposes of calculating damages stemming from post-termination non-payment of

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benefits, assuming liability is found. As to the first issue, the Court DENIES Reddick’s

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motion. Reddick never raised the issue of improper benefits calculation in the

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administrative context with MetLife and therefore has not yet exhausted his

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administrative remedies regarding pre-termination benefits payments. See Saffle v. Sierra

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Pacific Power Co. Bargaining Unit for Long Term Disability Income Plan., 85 F.3d 455,

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460 (9th Cir. 1996).
As to the second issue, the Court GRANTS Plaintiff’s motion. If the Court finds

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that MetLife’s denial of benefits was improper and the issue of damages need not be

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remanded, Reddick’s earnings records would be necessary.

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V.

SUMMARY JUDGMENT ORDER

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Reddick also seeks to admit a summary judgment order issued by Judge

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Moskowitz. In February 2011, Reddick applied for social security disability benefits.

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The ALJ who heard his claim concluded Reddick was not disabled per social security

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standards. The ALJ’s decision is a part of the administrative record and MetLife placed

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some reliance upon it in concluding that Reddick was not disabled per the Plan’s

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standards. (See [Doc. 42] 5:2–5 (MetLife stating it relied in part on the ALJ’s findings);
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AR 215–6 (IPC indicating he reviewed the ALJ’s findings in preparing his report).)

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Reddick appealed the ALJ’s decision to the district court. In a summary judgment order

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issued after the ERISA administrative record closed, Judge Moskowitz vacated the ALJ’s

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decision and remanded the case for proper consideration. Specifically, Judge Moskowitz

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found two faults with the ALJ’s decision. First, the ALJ violated the treating physician

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rule by rejecting the opinion of a treating physician in favor of a non-treating physician’s

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contradicting opinion without providing specific and legitimate reasons, supported by

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substantial evidence in the record, for doing so. Second, the ALJ erred by not including

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in the hypothetical posed to the vocational expert the ALJ’s finding that Reddick suffered

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from mild mental impairment as a result of the medications he takes.

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The main argument that MetLife presents in opposition to the admission of this

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order is that it is not relevant (or necessary) because it relies entirely on a principle that

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has no application to ERISA appeals: the treating physician rule. The main problem with

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this argument is that it ignores a substantial portion of the MSJ Order. As explained

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above, Judge Moskowitz found that the ALJ erred both by (1) violating the treating

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physician rule and (2) by not properly taking account of Reddick’s mild mental

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restrictions. The ALJ’s failure to consider Reddick’s mild mental restrictions certainly

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would tend to suggest that the ALJ might have erred in concluding Reddick was not

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disabled per social security standards. In turn, this would tend to suggest that MetLife, in

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determining that Reddick was not disabled per Plan standards, erred in placing reliance

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on the ALJ’s potentially flawed conclusion.

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Furthermore, as it stands, the administrative record contains the ALJ’s finding that

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Reddick is not disabled per social security standards. MetLife has already cited to the

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ALJ’s finding to support its conclusion that Reddick was not disabled per Plan standards.

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(See [Doc. 42] 5:2–5.) If the Court does not admit the MSJ Order, MetLife, at trial, could

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again cite to the ALJ’s opinion to support its benefits denial decision and Reddick would

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be unable to counter with the fact that Judge Moskowitz found the ALJ’s opinion to be

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flawed. To avoid such unfairness, the Court finds it necessary to have the MSJ on file.

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Accordingly, the Court GRANTS Reddick’s motion as to it.

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VI.

CONCLUSION AND ORDER
For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART

Reddick’s motions as follows.
 The Administrative Record is augmented with the following:

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o Dr. Harris’ Letter [Doc. 40-8 Ex. 1 pp. 2–4].

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o Reddick’s W2’s and earnings statements [Doc. 40–6 Ex. 4] for the sole

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purpose of determining damages, if any, stemming from post-termination

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non-payment of benefits.

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o Judge Moskowitz’s order granting summary judgment, vacating the ALJ’s

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decision, and remanding the case [Doc. 47–5 Ex. 1], as well as the

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associated Judgment [Doc. 47–5 Ex. 2].

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It is further ordered that:
o On or before April 24, 2017, the parties shall file their respective opening
trial briefs.
o On or before May 12, 2017, the parties shall file their respective responding
trial briefs.

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o Trial is scheduled before the undersigned on June 6, 2017, at 9:00 a.m.

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o On or before June 13, 2017, the parties shall file proposed findings of fact

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and conclusions of law.

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o The parties shall not file a brief in excess of 25 pages.

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o A post trial settlement conference before a magistrate judge may be held

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within 30 days of verdict in the case.

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IT IS SO ORDERED.

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Dated: March 23, 2017

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