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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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 THOMAS REDDICK, Case No.: 3:15-cv-02326-L-WVG Plaintiff, 12 13 v. 14 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., 15 Defendant. 16 17 Pending before the Court is Plaintiff Thomas Reddick’s (“Reddick”) motions to 18 19 augment the administrative record. The Court decides the matter on the papers submitted 20 and without oral argument. See Civ. L. R. 7.1 (d)(1). For the reasons stated below, the 21 Court GRANTS IN PART and DENIES IN PART Reddick’s motions. 22 // 23 // 24 // 25 // 26 // 27 // 28 // 1 3:15-cv-02326-L-WVG 1 I. BACKGROUND 2 This case concerns the termination of Plaintiff Reddick’s long term disability 3 benefits. Reddick previously worked as a financial advisor for Morgan Stanley, a mostly 4 sedentary job that requires long hours of sitting and mental concentration. In March 5 2008, Reddick injured himself when he slipped and fell while performing yard work at 6 his home. As a result, Reddick underwent procedures including spinal surgery, epidural 7 steroid injections, and was placed on various medications that may affect his cognitive 8 abilities. Prior to sustaining this injury, Reddick enrolled in a long-term disability 9 insurance plan provided by his employer Morgan Stanley. Defendant Metropolitan Life 10 Insurance Company (“MetLife”) is both the insurer and administrator of this plan (“the 11 Plan”). Under the Plan, an insured is considered “disabled” (and therefore entitled to 12 benefits) if “due to Sickness or as a direct result of accidental injury: [the insured is] 13 receiving Appropriate Care and Treatment and complying with the requirements of such 14 treatment; [the insured is]: unable to earn more than 80% of [his] Predisability Earnings 15 at [his] Own Occupation from any employer in [his] Local Economy; and unable to 16 perform each of the material duties of [his] Own Occupation.” (AR 1947.) 17 Because of his injury, Reddick started drawing benefits on his MetLife policy in 18 2010. He continued to draw benefits through November 21, 2014, when MetLife 19 terminated his benefits. Prior to benefit termination, MetLife faxed a form (“the Form” 20 [Doc. 40-8 Ex. 1 p. 5]) to Dr. Mark A. Harris (“Dr. Harris”), one of Reddick’s treating 21 physicians. The Form asked Dr. Harris “[d]o you agree that [Reddick] has the functional 22 ability to return to work with or without accommodations [yes or no].” Before faxing it 23 back, Dr. Harris circled “yes” and “with” and wrote in “I believe RTW [return to work] is 24 an essential part of spine rehab although in this case likely with accommodations.” 25 MetLife notified Reddick of his benefit termination via letter. (Termination Letter 26 [AR 336–338].) In the Termination Letter, MetLife informed Reddick of his right to 27 appeal within 180 days and explained that he should submit evidence to support his 28 appeal. The Termination Letter did not notify Reddick of the Form filled out by Dr. 2 3:15-cv-02326-L-WVG 1 Harris, nor did MetLife otherwise inform Reddick of the Form’s existence prior to his 2 administrative appeal. 3 MetLife denied Reddick’s administrative appeal. (Appeal Denial [AR 11–17].) In 4 doing so, MetLife relied on a variety of medical and administrative opinions. (Id.) Of 5 special relevance to the present motions, MetLife relied on an administrative law judge’s 6 (“ALJ”) determination that Reddick was not sufficiently disabled to qualify for social 7 security disability benefits. (See [Doc. 42] 5:2–5.) This decision was vacated on an 8 appeal heard by Judge Moskowitz. 9 MetLife also relied on the opinion of an independent physician consultant (“IPC”). 10 In his report, the IPC concluded Reddick could lift up to 20lbs; sit for 8 hours in an 8- 11 hour work day provided he could change positions every 30 minutes; walk and stand; 12 bend, stoop, and twist occasionally; and reach overhead, waist level, and below the waist 13 without any restrictions. (AR 218.) Before stating this conclusion, the IPC’s report 14 referenced the ALJ’s vacated decision, stating “on December 27, 2013, an administrative 15 law judge denied disability and noted [Reddick] could lift and carry 10 pounds 16 frequently. The administrative law judge noted he could lift 20 pounds occasionally, 17 stand and walk for four out of eight hours a day, and sit for six out of eight hours a day.” 18 (AR 216–17.) The IPC further stated that his conclusions were “based on [Reddick’s] 19 history of chronic pain syndrome and previous surgery … [as well as] the note from Dr. 20 Harris of June 5, 2014 [the Form], noting that return to work is an essential part of spine 21 rehabilitation.” (AR 219.) 22 Reddick subsequently appealed the denial of his disability benefits to this Court. 23 (See Compl. [Doc. 1].) Reddick now seeks to augment the administrative record with 24 three items. The first item is a letter from Dr. Harris. (The Letter [Doc. 40–8 Ex. 1 pp. 25 2–4].) In the Letter, Dr. Harris provides an in depth explanation of Mr. Reddick’s 26 physical condition, an opinion on Reddick’s disability status, and an explanation of what 27 he meant to communicate when he filled out the Form. (Id.) The second item is an 28 exhibit containing W2’s and earnings statements which Reddick claims are relevant to 3 3:15-cv-02326-L-WVG 1 determining his disability pay. (Earnings Records [Doc. 40–6 Ex. 4].) The third is a 2 summary judgment order in which Judge Moskowitz vacated the ALJ’s opinion and 3 remanded the case. (MSJ Order [Doc. 47–5 Ex. 1].) MetLife opposes the admission of 4 all of these exhibits. (See Opp’ns [Docs. 42, 48].) 5 6 II. LEGAL STANDARD Consistent with governing law1, the parties have stipulated that the proper standard 7 8 of review for this ERISA governed improper denial of benefits claim is de novo. (See 9 Joint Stipulation [Doc. 31]; May 24, 2016 Order [Doc. 41].) Under this standard, the 10 Court’s duty is to determine whether a denial of ERISA governed benefits was proper. 11 Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 963 (9th Cir. 2006). In making this 12 determination, a Court should generally consider only materials that were a part of the 13 administrative record considered by the plan administrator. Mongeluzo v. Baxter 14 Travenol Long Term Disability Ben. Plan, 46 F.3d 938, 943–44 (9th Cir. 1995). 15 However, a district court, in its discretion, may consider evidence extrinsic to the 16 administrative record when necessary to conduct an adequate de novo review. Id. A 17 non-exhaustive list of circumstances in which extrinsic evidence can thus be “necessary” 18 include those involving (1) potential conflicts of interest presented where the 19 administrator is the payor and (2) relevant evidence that a claimant could not have 20 presented during the administrative review process. Opeta v. Northwest Airlines Pension 21 Plan for Contract Emps, 484 F.3d 1211, 1217 (9th Cir. 2007) (quoting Quesinberry v. 22 Life Ins. Co. of N. Am., 987 F.2d 1017, 1025 (4th Cir. 1993). 23 // 24 // 25 // 26 27 28 1 See Opeta v. Northwest Airlines Pension Plan for Contract Emps, 484 F.3d 1211, 1216 (9th Cir. 2007). 4 3:15-cv-02326-L-WVG 1 2 III. DR. HARRIS’ LETTER Reddick seeks to admit a letter from Dr. Harris in which Dr. Harris explains what 3 he meant when he filled out the Form stating that Reddick could return to work with 4 accommodation and that a return to work was essential to spine rehab. (The Letter.) 5 Because the Letter was not part of the administrative record, admission is proper only if 6 necessary to conduct an adequate de novo review. Mongeluzo, 46 F.3d at 943–44. 7 Broadly speaking, Reddick argues the Letter is necessary because (1) MetLife based their 8 denial of benefits decision, at least in part, on the Form; (2) the Form is ambiguous; and 9 (3) The Letter shows that Metlife resolved the ambiguity in a manner that is inconsistent 10 with the actual opinion Dr. Harris intended to communicate when he filled out the Form. 11 In support of this argument, Reddick cites to Williams v. Sun Life Assurance Co. of 12 Canada, 2009 WL 604942 (C.D. Cal. 2009). In Williams, ERISA claimant Williams 13 appealed the denial of her benefits. In denying Williams’ administrative appeal, 14 Defendant Sun Live, the insurer and claims administrator, relied on the opinion of a 15 doctor who reviewed Williams’ medical records and prepared a report essentially stating 16 that she was not medically disabled from returning to her work. In reaching this 17 conclusion, the reviewing doctor relied on a form that Sun Live created and sent to 18 Williams’ attending physician. The form listed three categories of activity: stand / walk, 19 sit, and drive. Next to each activity were boxes for the attending physician to check off, 20 indicating how much, if any, of the activity she believed Williams could undertake in a 21 given day. Williams’ attending physician checked “1-4 hours” for stand/walk, “1-3 22 hours” for sit, and “1-3 hours” for drive. In so doing, the attending physician meant to 23 communicate her opinion that Williams could intermittently sit for a total of 1-3 hours in 24 a day, whether driving or doing something else while seated. However, the reviewing 25 doctor hired by Sun Live added the maximum number under sit with the maximum 26 number under drive and concluded that Williams could sit for six hours in a given day 27 and therefore was not disabled from performing her work. 28 5 3:15-cv-02326-L-WVG 1 In appealing the denial of her claim to the district court, Williams sought to 2 augment the administrative record with a declaration from her attending physician 3 explaining that Sun Live interpreted the form her attending physician filled out in a 4 manner inconsistent with the information her attending physician intended to 5 communicate. The court granted Williams’ motion to augment, emphasizing that (1) the 6 form was ambiguous; (2) Sun Live created the ambiguity in drafting the form; (3) Sun 7 Live, as both insurer and claims administrator, resolved the ambiguity in a manner that 8 financially benefitted it but harmed Williams. Plaintiff urges that, because this case is on 9 all fours with Williams, the Court should reach the same conclusion here. 10 The Court agrees. Like in Williams, the Form at issue here is ambiguous. In very 11 broad fashion, it asks: “Do you agree that Mr. Reddick has the functional ability to return 12 to work with or without accommodation? [yes or no?].” (the Form.) The Form provides 13 absolutely no information as to what type of work Reddick can do or how many hours in 14 a week he could do it. Further, by indicating Dr. Harris’ belief that a return to work 15 would be helpful to an ongoing spine rehabilitation process and would likely require 16 accommodations, the Form does not seem to imply a belief that Reddick was physically 17 able to make a near complete return to work. Metlife could have easily cleared up this 18 ambiguity by following up with Dr. Harris.2 But, Metlife did not. 19 Also like in Williams, there is a risk of conflict of interest presented by the fact that 20 MetLife operates as both insurer and administrator. This concern is magnified by the fact 21 that MetLife, instead of following up with Dr. Harris, seemingly resolved the ambiguity 22 in a financially self-serving manner detrimental to the interests of the insured. Further, 23 Metlife did not notify Reddick of the Form when they invited him to present information 24 relevant to his administrative appeal of the initial denial of his benefits, thus denying him 25 26 2 27 28 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. 6 3:15-cv-02326-L-WVG 1 the opportunity to come forward with this clarifying evidence earlier. Such 2 circumstances clearly favor augmentation of the administrative record. See Opeta, 484 3 F.3d at 1217 (internal quotations omitted). 4 MetLife presents several arguments in opposition. First, Metlife argues that the 5 Letter is not necessary because, apart from the Form, the voluminous Administrative 6 Record contains more than enough other information upon which to sustain MetLife’s 7 decision to terminate benefits. The problem with this argument is that, regardless of how 8 many other records or evidence may tend to support MetLife’s determination, the fact 9 remains that MetLife appears to have placed special emphasis on the Form Dr. Harris 10 filled out. 11 Specifically, in its letter to Reddick notifying him of the denial of his appeal, 12 MetLife repeatedly references a report prepared by an Independent Physician Consultant 13 (“IPC”). (AR 13–17.) In his report, the IPC concluded Reddick could lift up to 20lbs; 14 sit for 8 hours in an 8 hour work day provided he could change positions every 30 15 minutes; walk and stand; bend, stoop, and twist occasionally; and reach overhead, reach 16 waist level, and reach below the waist without any restrictions. (AR 218.) The IPC 17 further stated that this conclusion was “based on [Reddick’s] history of chronic pain 18 syndrome and previous surgery … [as well as] the note from Dr. Harris of June 5, 2014 19 [the Form], noting that return to work is an essential part of spine rehabilitation.” (AR 20 219.) 21 Thus, the IPC’s conclusions, which seem to have heavily informed MetLife’s 22 denial decision, appear to stem in large part from the Form prepared by Dr. Harris. 23 Because that form was ambiguous, the IPC’s reliance upon it, as well as MetLife’s denial 24 citing the IPC report, seem potentially problematic. Furthermore, (1) admission of the 25 letter would provide no further information than would have likely been gleaned from 26 MetLife properly following up with Dr. Harris to resolve the ambiguity of the Form, and, 27 (2) because Dr. Harris is an attending physician, his opinions would seem highly relevant 28 to a determination of whether Reddick was disabled per the policy definition. Therefore, 7 3:15-cv-02326-L-WVG 1 to properly scrutinize MetLife’s decision de novo, the Court finds it necessary to exercise 2 its discretion to admit the Letter clarifying the ambiguity of the Form. Accordingly, the 3 Court GRANTS Reddick’s motion as to Dr. Harris’ Letter. 4 5 IV. 6 REDDICK’S EARNINGS RECORDS Reddick also seeks to augment the administrative record with various earnings 7 records [Doc. 40–6, Ex. 4] that he claims demonstrate MetLife improperly calculated the 8 amount of benefits owed to him under the policy. Though not briefed as such, the Court 9 sees two issues presented by this request: (1) the admissibility of earnings statements to 10 show the inadequacy of any pre-termination benefits payments and (2) admissibility for 11 purposes of calculating damages stemming from post-termination non-payment of 12 benefits, assuming liability is found. As to the first issue, the Court DENIES Reddick’s 13 motion. Reddick never raised the issue of improper benefits calculation in the 14 administrative context with MetLife and therefore has not yet exhausted his 15 administrative remedies regarding pre-termination benefits payments. See Saffle v. Sierra 16 Pacific Power Co. Bargaining Unit for Long Term Disability Income Plan., 85 F.3d 455, 17 460 (9th Cir. 1996). As to the second issue, the Court GRANTS Plaintiff’s motion. If the Court finds 18 19 that MetLife’s denial of benefits was improper and the issue of damages need not be 20 remanded, Reddick’s earnings records would be necessary. 21 22 V. SUMMARY JUDGMENT ORDER 23 Reddick also seeks to admit a summary judgment order issued by Judge 24 Moskowitz. In February 2011, Reddick applied for social security disability benefits. 25 The ALJ who heard his claim concluded Reddick was not disabled per social security 26 standards. The ALJ’s decision is a part of the administrative record and MetLife placed 27 some reliance upon it in concluding that Reddick was not disabled per the Plan’s 28 standards. (See [Doc. 42] 5:2–5 (MetLife stating it relied in part on the ALJ’s findings); 8 3:15-cv-02326-L-WVG 1 AR 215–6 (IPC indicating he reviewed the ALJ’s findings in preparing his report).) 2 Reddick appealed the ALJ’s decision to the district court. In a summary judgment order 3 issued after the ERISA administrative record closed, Judge Moskowitz vacated the ALJ’s 4 decision and remanded the case for proper consideration. Specifically, Judge Moskowitz 5 found two faults with the ALJ’s decision. First, the ALJ violated the treating physician 6 rule by rejecting the opinion of a treating physician in favor of a non-treating physician’s 7 contradicting opinion without providing specific and legitimate reasons, supported by 8 substantial evidence in the record, for doing so. Second, the ALJ erred by not including 9 in the hypothetical posed to the vocational expert the ALJ’s finding that Reddick suffered 10 from mild mental impairment as a result of the medications he takes. 11 The main argument that MetLife presents in opposition to the admission of this 12 order is that it is not relevant (or necessary) because it relies entirely on a principle that 13 has no application to ERISA appeals: the treating physician rule. The main problem with 14 this argument is that it ignores a substantial portion of the MSJ Order. As explained 15 above, Judge Moskowitz found that the ALJ erred both by (1) violating the treating 16 physician rule and (2) by not properly taking account of Reddick’s mild mental 17 restrictions. The ALJ’s failure to consider Reddick’s mild mental restrictions certainly 18 would tend to suggest that the ALJ might have erred in concluding Reddick was not 19 disabled per social security standards. In turn, this would tend to suggest that MetLife, in 20 determining that Reddick was not disabled per Plan standards, erred in placing reliance 21 on the ALJ’s potentially flawed conclusion. 22 Furthermore, as it stands, the administrative record contains the ALJ’s finding that 23 Reddick is not disabled per social security standards. MetLife has already cited to the 24 ALJ’s finding to support its conclusion that Reddick was not disabled per Plan standards. 25 (See [Doc. 42] 5:2–5.) If the Court does not admit the MSJ Order, MetLife, at trial, could 26 again cite to the ALJ’s opinion to support its benefits denial decision and Reddick would 27 be unable to counter with the fact that Judge Moskowitz found the ALJ’s opinion to be 28 9 3:15-cv-02326-L-WVG 1 flawed. To avoid such unfairness, the Court finds it necessary to have the MSJ on file. 2 Accordingly, the Court GRANTS Reddick’s motion as to it. 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 // 10 3:15-cv-02326-L-WVG 1 2 3 4 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: 5 o Dr. Harris’ Letter [Doc. 40-8 Ex. 1 pp. 2–4]. 6 o Reddick’s W2’s and earnings statements [Doc. 40–6 Ex. 4] for the sole 7 purpose of determining damages, if any, stemming from post-termination 8 non-payment of benefits. 9 o Judge Moskowitz’s order granting summary judgment, vacating the ALJ’s 10 decision, and remanding the case [Doc. 47–5 Ex. 1], as well as the 11 associated Judgment [Doc. 47–5 Ex. 2]. 12 13 14 15 16 17 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. 18 o Trial is scheduled before the undersigned on June 6, 2017, at 9:00 a.m. 19 o On or before June 13, 2017, the parties shall file proposed findings of fact 20 and conclusions of law. 21 o The parties shall not file a brief in excess of 25 pages. 22 o A post trial settlement conference before a magistrate judge may be held 23 within 30 days of verdict in the case. 24 IT IS SO ORDERED. 25 Dated: March 23, 2017 26 27 28 11 3:15-cv-02326-L-WVG

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