Mark v. Aetna Life Insurance Company et al

Filing 48

ORDER VACATING DENIAL OF BENEFITS AND REMANDING FOR FURTHER PROCEEDINGS. ORDERED: 1. The Joint Motion for Determination 38 is GRANTED; 2. Judge Watanabe's Recommendation 44 is ADOPTED as modified herein; 3. Defendant's decision t o terminate Plaintiff's short-term disability benefits effective May 27, 2016 is VACATED and this matter is REMANDED to Defendant for supplementation of the record (should Plaintiff choose to submit additional materials), further review of the record as developed on remand, and a new decision; and 4. The Clerk shall enter judgment in favor of Plaintiff and against Defendant, and shall terminate this case. Plaintiff shall have her costs upon compliance with D.C.COLO.LC ivR 54.1. Should Plaintiff intend to seek attorneys' fees, she must do so within the time required, and according to the procedures established by, Federal Rule of Civil Procedure 54(d)(2) and D.C.COLO.LCivR 54.3, by Judge William J. Martinez on 8/24/2018. (dhans, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 17-cv-0441-WJM-NRN
JULIA MARK,
Plaintiff,
v.
AETNA LIFE INSURANCE COMPANY and
FEDEX OFFICE AND PRINT SERVICES, INC.,
Defendants.

ORDER VACATING DENIAL OF BENEFITS AND
REMANDING FOR FURTHER PROCEEDINGS

In this case brought pursuant to 29 U.S.C. § 1132(a) of the Employee Retirement
Income Security Act of 1974 (“ERISA”), Plaintiff Julia Mark (“Mark”) challenges the
decision of Defendant Aetna Life Insurance Company (“Aetna”) to terminate Mark’s
short-term disability benefits. After completion of briefing, the parties filed a Joint
Motion for Determination. (ECF No. 38.) The Court referred the matter to United States
Magistrate Judge Michael J. Watanabe (since retired) for a report and recommendation.
(ECF No. 43.)
Judge Watanabe issued his report and recommendation on April 25, 2018
(“Recommendation”), recommending that Aetna’s decision be vacated and remanded
for further consideration. (ECF No. 44.) Aetna timely objected (ECF No. 45) and Mark
responded to that objection (ECF No. 46). The Court has now reviewed the
Recommendation, Aetna’s objection, Mark’s response, as well as the parties’ pre-

Recommendation briefing (ECF Nos. 29, 33, 37) and many portions of the
Administrative Record (ECF No. 25, cited below as “R.”).
For the reasons explained below, the Court adopts the Judge Watanabe’s
recommended disposition, although for reasons somewhat different than those
expressed by Judge Watanabe. Aetna’s termination of benefits is therefore vacated
and remanded for further consideration.
I. RULE 72(b) STANDARD OF REVIEW
When a magistrate judge issues a recommendation on a dispositive matter,
Federal Rule of Civil Procedure 72(b)(3) requires that the district court judge “determine
de novo any part of the magistrate judge’s [recommendation] that has been properly
objected to.” Fed. R. Civ. P. 72(b)(3). In conducting its review, “[t]he district court judge
may accept, reject, or modify the recommendation; receive further evidence; or return
the matter to the magistrate judge with instructions.” Id. An objection is proper if it is
filed within fourteen days of the magistrate judge’s recommendations and is specific
enough to enable the “district judge to focus attention on those issues—factual and
legal—that are at the heart of the parties’ dispute.” United States v. 2121 East 30th
Street, 73 F.3d 1057, 1059 (10th Cir. 1996) (internal quotation marks omitted).
Aetna timely objected to the Recommendation with sufficient specificity. (See
ECF No. 45.) Accordingly, the Court reviews this matter de novo.
II. BACKGROUND
No party has objected to Judge Watanabe’s factual summary (ECF No. 44 at 2–
7), and so the Court adopts it as if set forth herein. The Court repeats the following to
provide context for its resolution.
Mark fell on a sidewalk and injured her left knee, as well as one of her ankles,
2

her neck, and back. (ECF No. 44 at 2; see also ECF No. 29 at 2; ECF No. 33 at 4.)
The parties point to nothing in the record showing the precise date of the injury, but it
happened on or before March 10, 2016, which was Mark’s last day of work with her
employer, FedEx Office. (ECF No. 44 at 2.) Mark’s job required her to stand for her
entire shift, move and lift 55 pounds, and consistently bend and twist at the waist and
the knees. (Id. at 2–3.) Her injury prevented her from performing these tasks and so
she was placed on leave. (Id.)
On May 24, 2016, Mark applied for short-term disability benefits through the
FedEx Office and Print Services, Inc. Short Term Disability Plan (“Plan”). (R. at 782.)
The Plan applies where an injury prevents an employee “from performing the material
and substantial duties of his or her regular occupation.” (R. at 5.) But the Plan requires,
among other things, that the alleged disability be “substantiated by significant objective
findings which are defined as signs which are noted on a test or medical exam and
which are considered significant anatomical, physiological or psychological
abnormalities which can be observed apart from the individual’s symptoms.” (R. at 6.)
Aetna, which administers the Plan for FedEx Office (R. at 4), decided on May 31,
2016 that Mark qualified for short-term disability payments from March 11 through May
26 of that year. (R. at 230–31.) The letter announcing the benefits award further
stated, “If you need to stay out beyond May 26, 2016, send current medical information
from your doctor to us for review.” (R. at 230.) The parties do not describe what Mark
did in reaction to this letter. However, Aetna soon sent another letter, dated June 8,
2016, announcing that it was “no longer approving” short-term disability benefits
“starting on May 27, 2016.” (R. at 245.) The letter stated that, on May 31, 2016 (the
date Aetna initially approved benefits), Aetna had requested “[a]dditional medical
3

information supporting your claim . . . from Dr. Chang [who was regularly treating Mark
for her injuries],” but the information received from Dr. Chang “provides a diagnosis only
and fails to provide physical examination findings, diagnostic test results, or any
evidence of your inability to perform the essential functions of your own occupation.”
(Id.) Thus, said Aetna, “It has been determined that there are insufficient clinical exam
findings to support your [disability claim].” (Id.)
This letter provided instructions on how to appeal. (R. at 245–46.) Mark initiated
a timely appeal on August 30, 2016. (R. at 312.) Aetna received numerous additional
medical records from Mark and her treating providers, and affirmed its termination of
benefits by letter dated November 16, 2016 (“Appeal Decision”). (R. at 391.) The
Appeal Decision summarized the medical records, including the following:
•

“PT [i.e., physical therapy] reevaluation on 06/21/16 . . . [included] a
functional report of antalgic gait and an impaired ability to ambulate long
distances. On exam, you had significant left knee swelling; an increased,
rigid arch in your right foot and multilevel thoracic mechanical dysfunction.
Range of motion was 95 percent bilaterally in the knees. Strength was
within functional limits with pain inhibition in the left quadriceps. Reflexes
and sensation were intact.”

•

“PT reevaluation dated 07/20/16 advised of a functional report of antalgic
gait and an impaired ability to ambulate long distances. On exam, you
had significant left knee swelling; an increased rigid arch in your right foot
and multilevel thoracic mechanical dysfunction. Range of motion was
95% bilaterally in the knees. Overall strength was improving. You had a
tight hamstring, calf, right posterior tibialis and thoracolumbar
4

paravertebrals.”
•

“On 07/26/16, you reported having neck pain. On exam, you had limited
cervical range of motion, however measured findings were not provided.
You also had a stiff thoracic spine and upper trapezius tightness.”

•

“PT note dated 09/13/16 noted on exam, gait was slightly antalgic with
forward head posture. Cervical and knee range of motion was limited with
swelling above the left knee, however measured findings were not
provided. Strength was improving overall. You had hypomobility [i.e., less
mobility than a healthy person would exhibit] at [spinal levels] T8-10 and
T11-12; restriction at the thoracolumbar junction and stiffness at the
bilateral hips, midfoot and cervicothoracic and L4-5 areas. You also had a
tight hamstring, calf, right posterior tibialis and thoracolumbar
paravertebrals.”

•

“On 10/03/16, you were assessed to be weaker on the left side however,
the specific body part or measured findings were not provided.”

(R. at 391–92.)
In explaining the choice not to continue benefits, the Appeal Decision asserted, t
[N]o significant correlating exam findings were provided.
There was no documentation of any diagnostic test results or
significant measured deficits in range of motion or strength,
knee instability, use of assistive devices or neurological
deficits. . . .
[Aetna has] determined there are no significant objective
findings to substantiate that a functional impairment exists
that would render you unable to perform your heavy job
duties . . . effective 05/27/16.
(R. at 392.)

5

The Appeal Decision was the final step of Aetna’s internal administrative
process. (Id.) Mark, having exhausted her administrative remedies, filed this lawsuit on
February 17, 2017. (ECF No. 1.) The Court referred the matter to Judge Watanabe for
a recommended disposition. (ECF No. 42.) Very briefly, Judge Watanabe recommends
that Aetna’s decision be vacated and remanded for further development of the record
because Aetna had a duty under the circumstances to seek out additional information
regarding Mark’s medical condition. (Id. at 13–14 (citing, among other things, Gaither v.
Aetna Life Ins. Co., 394 F.3d 792, 807–08 (10th Cir. 2004), and Gilbertson v. Allied
Signal, Inc., 328 F.3d 625, 635 (10th Cir. 2003)).)
III. ERISA STANDARD OF REVIEW ON THE MERITS
“When an individual covered by [an ERISA-governed employee benefit] plan
makes a claim for benefits, the [plan] administrator gathers evidence, including the
evidentiary submissions of the claimant, and determines under the plan’s terms whether
or not to grant benefits. If the administrator denies the claim, the claimant may bring
suit to recover the benefits due to him under the terms of his plan.” Jewell v. Life Ins.
Co. of N. Am., 508 F.3d 1303, 1308 (10th Cir. 2007) (internal quotation marks omitted;
certain alterations incorporated). Federal courts have exclusive jurisdiction over such
suits, as ERISA preempts most relevant state laws. 29 U.S.C. § 1144(a).
Normally when the ERISA-governed plan at issue “gives the administrator or
fiduciary discretionary authority to determine eligibility for benefits or to construe the
terms of the plan,” the plan administrator’s denial of benefits is reviewed under an
arbitrary and capricious standard. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101,
115 (1989). Here, the Plan delegates such discretionary authority to Aetna. (R. at 31–
32.) The Court will therefore analyze Aetna’s decision under the arbitrary and
6

capricious standard.
“When reviewing a plan administrator’s decision to deny benefits, [the Court]
consider[s] only the rationale asserted by the plan administrator in the administrative
record and determine[s] whether the decision, based on the asserted rationale, was
arbitrary and capricious.” Scruggs v. ExxonMobil Pension Plan, 585 F.3d 1356, 1362
(10th Cir. 2009) (internal quotation marks omitted). The Court is further limited to
reviewing the administrator’s decision in light of the information before the administrator
when it made its decision. Hall v. UNUM Life Ins. Co. of Am., 300 F.3d 1197, 1201
(10th Cir. 2002) (“in reviewing a plan administrator's decision for abuse of discretion, the
federal courts are limited to the ‘administrative record’—the materials compiled by the
administrator in the course of making his decision”).
IV. ANALYSIS
The Court expresses no opinion on Judge Watanabe’s reasoning that Aetna had
a duty, under the circumstances of this case, to further develop the medical record
before deciding whether to discontinue Mark’s short-term disability benefits. Upon de
novo review and having reviewed all of the briefing both predating and postdating the
Recommendation (see ECF Nos. 29, 33, 37, 45, 46), the Court is convinced by a
separate argument, namely, that Aetna’s decision to discontinue benefits was arbitrary
and capricious under its stated rationale (see ECF No. 29 at 5–6, 22).
Aetna discontinued benefits because it believed there were “no significant
objective findings to substantiate that a functional impairment exist[ed] that would
render [Mark] unable to perform [her] heavy job duties.” (R. at 392.) This refers to Plan
language requiring “significant objective findings which are defined as signs which are
noted on a test or medical exam and which are considered significant anatomical,
7

physiological or psychological abnormalities which can be observed apart from the
individual’s symptoms.” (R. at 6.)
The Appeal Decision’s rationale—lack of significant objective findings—is a non
sequitur compared to the medical evidence it summarizes. As described in Part II,
above, Aetna had before it evidence of (among other things): left knee swelling; reduced
range of motion in the knees (95%); antalgic gait (i.e., limping); increased, rigid arch in
the right foot; “multilevel thoracic mechanical dysfunction”; “tight hamstring, calf, right
posterior tibialis and thoracolumbar paravertebrals”; limited range of motion in the neck;
and hypomobility at certain areas of the spine. (R. at 391–92.) All of these appear to
be “anatomical[] [or] physiological . . . abnormalities which can be observed apart from
the individual’s symptoms.” The Appeal Decision nowhere claims otherwise.
Aetna’s response brief dismisses all of these medical observations as
“‘symptoms’ that were expressly insufficient alone to meet the definition of disabled
under the [P]lan.” (ECF No. 33 at 13 (footnote omitted).) But the Appeal Decision does
not characterize any of these observations as “symptoms.” See Scruggs, 585 F.3d at
1362 (“When reviewing a plan administrator’s decision to deny benefits, [the Court]
consider[s] only the rationale asserted by the plan administrator in the administrative
record . . . .” (internal quotation marks omitted)). Moreover, Aetna nowhere explains, in
the Appeal Decision or otherwise, why these observations do not reveal “anatomical[]
[or] physiological . . . abnormalities which can be observed apart from the individual’s
symptoms.” (R. at 6.)
To the extent Aetna means to say that a claimant could fake these conditions,
the argument still fails. Absent outlandish scenarios (e.g., purposeful re-injury before an
exam), conditions such as swelling and muscle tightness cannot be faked. Moreover,
8

the Plan does not define “significant objective findings” with respect to whether a
claimant can fake a condition. The Plan says only that there must be evidence of
abnormalities which can be observed apart from the claimant’s symptoms. So even a
condition that might be faked, such as a limp, may not be disregarded solely on that
basis.
On three occasions the Appeal Decision refers to observations about limited
range of motion but discounts these observations for lack of “measured findings.” (R. at
392.) This appears to imply that Aetna cannot determine, without numerical
measurements, whether an objective finding is a “significant objective finding[]”
(emphasis added). But this only emphasizes a more systemic problem in the Appeal
Decision. To properly discount the observations contained in the medical record, Aetna
needs to conclude as to each observation that it is (1) not “objective,” or (2) objective
but not “significant.” Again, Aetna nowhere declares any of the above-recited
observations to be non-objective. The Court is forced to presume, then, that Aetna
concluded the observations were not “significant”—but Aetna never says as much, with
one exception. That exception is a supposed lack of “significant measured deficits and
range of motion,” apparently referring to the 95% range-of-motion measurement on two
occasions. (See R. at 391–92.) Assuming for present purposes that 95% range of
motion is not a “significant anatomical[] [or] physiological . . . abnormalit[y]” (R. at 6), the
rest of the Appeal Decision comprises only an announcement, not an explanation.
Aetna invokes the “significant objective findings” requirement and then says that none
exist despite having just summarized a substantial record of objective observations,
none of which are obviously insignificant.
Aetna also overlooks, or fails to see the probative value of, objective
9

observations found in three “functional movement screens” administered on Mark by a
physical therapist. (See R. at 273–74, 278, 376.) These evaluations tested abilities
such as “deep squat,” “hurdle step,” “inline lunge,” “shoulder mobility,” and similar gross
motor functions. Each evaluation resulted in a numerical score. The Appeal Decision
acknowledges that two of these functional movement screens took place (one on July
20, 2016, and another on September 26, 2016) resulting in scores of 14 and 11,
respectively. (R. at 392 (referring to R. at 278 & 376).)1 But that is the extent of the
Appeal Decision’s recognition of the functional movement screens. Notably, the Appeal
Decision says nothing about the physical therapist’s narrative description of Mark’s
performance during the September 26, 2016 evaluation. That narrative twice describes
“loss of balance,” and also states that Mark was “unable to touch [her] knee to [the]
ground” in a lunging exercise. (R. at 376.) The Appeal Decision also says nothing
about a third functional movement screen that took place on August 8, 2016. (R. at
273–74.) In that evaluation, the physical therapist’s narrative notes “lack of balance,”
“extreme lack of balance,” “lack of stability,” and difficulty touching the knee to the
ground during the lunge test. (R. at 274.)
In short, Aetna’s final decision in Mark’s case displays two instances of arbitrary
and capricious analysis. First, Aetna summarized a substantial record of what appear
to be objective findings and then announced that no “significant objective findings”
existed, without explanation as to why the findings just summarized were neither
objective nor significant. Cf. Zuke v. Am. Airlines, Inc., 644 F. App’x 649, 654 (6th Cir.
2016) (“when a plan [decision] categorically states that there is no objective evidence

1

The significance of these scores is not explained.

10

when in fact there is such evidence—favorable or not—the plan acts arbitrarily and
capriciously”). Second, Aetna overlooked potentially important additional objective
findings available in the record, namely, the functional movement screen narratives.
Lamont v. Connecticut Gen. Life Ins. Co., 215 F. Supp. 3d 1070, 1080 (D. Colo. 2016)
(“in the substantial evidence analysis, the denominator (all available evidence) is as
important as the numerator (the evidence relied upon to reach a decision)”). 2
For the first time in her reply brief, Mark argues that Aetna also behaved
arbitrarily and capriciously because it approved Mark’s benefits and then discontinued
them, with no explanation of what had changed or why the medical records were
sufficient for approval through May 26, 2016 but not afterward. (ECF No. 37 at 13–14.)
Arguments raised for the first time in a reply brief are normally forfeited. See, e.g.,
United States v. Harrell, 642 F.3d 907, 918 (10th Cir. 2011). However, because the
Court would vacate and remand for the above-stated reasons regardless, the Court
notes that “[t]otal failure to discuss prior benefits certainly raises the suspicion of an
inadequately reasoned decision.” Lamont, 215 F. Supp. 3d at 1079. In the present
circumstance, Aetna’s failure further emphasizes that its choice to discontinue Mark’s
benefits was arbitrary and capricious on the record before it and in light of the
explanation it provided. Cf. id. (noting, in the context of long-term disability, that
termination of previously awarded benefits naturally raises questions such as, “What
changed? Has the claimant’s functional capacity improved? Or has the claimant’s
2

On appeal, Aetna at times emphasizes the observations in the medical record, noted in
the Appeal Decision, that Mark’s condition had been improving. (See, e.g., ECF No. 33 at 8, 13,
18.) But the Appeal Decision does not say that the medical evidence shows Mark’s condition
improved to the point where she could resume her job. The Appeal Decision rests entirely on
the notion that Mark failed to submit significant objective findings. That is the rationale this
Court must review. See Scruggs, 585 F.3d at 1362.

11

functional capacity always been better than previously believed, but the insurer failed to
discover information suggesting as much until now?”).
Judge Watanabe recommended vacatur and remand to Aetna for further
consideration of the record and a new decision (ECF No. 44 at 14), in contrast to Mark’s
request for reversal and remand with directions to reinstate benefits (ECF No. 29 at 25).
Mark filed no objection to this (or any) portion of the Recommendation, so the Court
may review it “under any standard it deems appropriate.” Summers v. Utah, 927 F.2d
1165, 1167 (10th Cir. 1991) (citing Thomas v. Arn, 474 U.S. 140, 150 (1985)); see also
Fed. R. Civ. P. 72(b) advisory committee’s note (“When no timely objection is filed, the
court need only satisfy itself that there is no clear error on the face of the record in order
to accept the recommendation.”). The Court reviews for clear error and finds none.
Indeed, Judge Watanabe recommended the proper disposition under the
circumstances: “if the plan administrator failed to make adequate findings or to explain
adequately the grounds of its decision, the proper remedy is to remand the case to the
administrator for further findings or explanation.” DeGrado v. Jefferson Pilot Fin. Ins.
Co., 451 F.3d 1161, 1175 (10th Cir. 2006) (internal quotation marks omitted).
On remand, “[Aetna] is directed to ‘tak[e] new evidence should [Mark] wish to
submit the same.’” Id. at 1176 (quoting Buffonge v. Prudential Ins. Co. of Am., 426 F.3d
20, 32 (1st Cir. 2005)). The parties may also address whether Mark now qualifies for
long-term disability benefits—a matter passingly mentioned in the parties’ briefs (see
ECF No. 29 at 11 n.8; ECF No. 33 at 2 n.1), and about which the Court expresses no
opinion.

12

V. CONCLUSION
For the reasons set forth above the Court ORDERS as follows:
1.

The Joint Motion for Determination (ECF No. 38) is GRANTED;

2.

Judge Watanabe’s Recommendation (ECF No. 44) is ADOPTED as modified
herein;

3.

Defendant’s decision to terminate Plaintiff’s short-term disability benefits effective
May 27, 2016 is VACATED and this matter is REMANDED to Defendant for
supplementation of the record (should Plaintiff choose to submit additional
materials), further review of the record as developed on remand, and a new
decision; and

4.

The Clerk shall enter judgment in favor of Plaintiff and against Defendant, and
shall terminate this case. Plaintiff shall have her costs upon compliance with
D.C.COLO.LCivR 54.1. Should Plaintiff intend to seek attorneys’ fees, she must
do so within the time required, and according to the procedures established by,
Federal Rule of Civil Procedure 54(d)(2) and D.C.COLO.LCivR 54.3.
Dated this 24th day of August, 2018.
BY THE COURT:

______________________
William J. Martinez
United States District Judge

13