Hudson v. Beazer Homes, Inc. et al

Filing 16

ORDER granting Defendants' 12 Motion for Summary Judgment. Signed by Judge Richard W. Story on 06/16/11. (sk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
GAINESVILLE DIVISION
BOBBIE ANN HUDSON,
Plaintiff,
v.
BEAZER HOMES, INC., and THE
PRUDENTIAL INSURANCE
COMPANY,
Defendants.

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CIVIL ACTION NO.
2:09-CV-00167-RWS

ORDER
This case is before the Court for consideration of Defendants’ Motion for
Summary Judgment [12]. After reviewing the record, the Court enters the
following Order.
Background
A hip replacement surgery injured Plaintiff Bobbie Ann Hudson
(“Plaintiff” or “Hudson”) while she was employed by Defendant Beazer
Homes, Inc. (“Defendant” or “Beazer”). (Dkt. No. [1-1] at ¶ 4). Defendant
Prudential Insurance Company (“Defendant” or “Prudential”) paid her
disability benefits under Beazer’s insurance policy because she was unable to
work at any job due to her injury. (Id. at ¶¶ 5, 7). In January 2009, Prudential

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stopped these payments and would not reinstate them, despite Plaintiff’s
assertion that her physician thought she was unfit to work. (Id. at ¶¶ 8–10; Dkt.
No. [12-2] at ¶ 8). Although certain work restrictions were necessary,
Prudential believes “the evidence revealed that Plaintiff was capable of working
in a sedentary occupation and that she had the skills necessary to perform
alternative sedentary occupations.” (Dkt. No. [12-2] at ¶ 10). This provided a
basis for termination of the benefits because “in order to receive additional
benefits [after 24 months of payments,] she must be disabled from any alternate
occupation for which she is qualified.” (Id. at ¶ 9). Evidence that led Prudential
to reach this conclusion includes the opinions of physicians who evaluated
Plaintiff and video of Plaintiff driving, carrying groceries, and unloading
groceries from her truck. (Id. at ¶¶ 60–73).
On June 9, 2009, Plaintiff filed a complaint in the Superior Court of
Forsyth County seeking damages and reinstatement of her disability benefits.
(Id., prayer for relief (a)–(f), at 1, 6). Defendants removed the case to this Court
pursuant to 28 U.S.C. §§ 1441 and 1446. (Dkt. No. [1] at 1). On November 10,
2010, Defendants filed a Motion for Summary Judgment [12] on all claims.

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(Dkt. No. [12] at 1). Plaintiff, represented by counsel, did not file a response to
Defendants’ Motion for Summary Judgment [12].
Discussion
I.

Summary Judgment Standard
Summary judgment is proper “if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.” FED. R. CIV. P. 56(c). The party moving for summary
judgment “bears the initial responsibility of informing the district court of the
basis for its motion, and identifying those portions of [the record] which it
believes demonstrate the absence of a genuine issue of material fact.” Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Once the moving party has met his burden, the nonmoving party must go
“beyond the pleadings and by her own affidavits, or by the depositions, answers
to interrogatories, and admissions on file, designate specific facts showing that
there is a genuine issue for trial.” Id. at 324 (internal quotation marks omitted).
If the non-moving party fails to do so, the moving party is entitled to summary
judgment. United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1438
(11th Cir. 1991). However, an unopposed motion does not mean that the
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moving party automatically prevails; rather, the Court is still required to
consider the merits of the motion. See Dunlap v. Transamerica Occidental Life
Ins. Co., 858 F.2d 629, 632 (11th Cir. 1988) (denying an argument on appeal
because the lower court “indicate[d] that the merits of the motion were
addressed”); Simpson v. Countrywide Home Loans, No. 1:10-CV-0224-CAMECS, 2010 WL 3190693, at *3 (N.D. Ga. Apr. 26, 2010) (holding that
“unopposed” under Northern District of Georgia Local Rule 7.1(B) does not
mean the non-responsive party “abandoned” its claims in the motion to dismiss
context).
II.

Standard of Review for ERISA
A.

ERISA Applicability and Preemption

ERISA applies “to any employee benefit plan if it is established or
maintained … by any employer engaged in commerce … .” 29 U.S.C. §
1003(a)(1). ERISA defines “employee benefit plan” as either an “employee
pension benefit plan” or an “employee welfare benefit plan.” 29 U.S.C. §
1002(3). ERISA further defines “employee welfare benefit plan” as “any plan,
fund, or program … established or maintained by an employer … for the
purpose of providing its participants or their beneficiaries, through the purchase
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of insurance or otherwise, … benefits in the event of … disability … .” 29
U.S.C. § 1002(1). A “plan, fund or program” exists for purpose of ERISA
liability “if from the surrounding circumstances a reasonable person can
ascertain the intended benefits, a class of beneficiaries, the source of financing,
and procedures for receiving benefits.” Donovan v. Dillingham, 688 F.2d 1367,
1373 (11th Cir. 1982).
Furthermore, ERISA provides a uniform regulatory regime over
employee benefit plans and includes expansive preemption provisions which
are intended to ensure that employee benefit plan regulation remains
“exclusively a federal concern.” Aetna Health Inc. v. Davila, 542 U.S. 200, 208
(2004). This goal is facilitated through 29 U.S.C. § 1144(a), which provides that
ERISA preempts all state laws that “relate to any employee benefit plan
described in [§ 1003].” The Supreme Court noted this preemption provision is
“conspicuous for its breadth” and has interpreted the term “relate to” broadly:
A law relates to an employee benefit plan, in the normal sense of the
phrase, if it has a connection with or reference to such a plan. Under this
broad common-sense meaning, a state law may relate to a benefit plan,
and thereby be pre-empted, even if the law is not specifically designed to
affect such plans, or the effect is only indirect. Pre-emption is also not
precluded simply because a state law is consistent with ERISA’s
substantive scheme.
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Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138–39 (1990) (citations
omitted) (quotation marks omitted). Thus, state law claims—whether based on
state common or statutory law—that “relate to” an ERISA plan are preempted
under § 1144 and fail as a matter of law. See e.g., Pilot Life Ins. Co. v.
Dedeaux, 481 U.S. 41, 47–48 (1987); Jones v. LMR Int’l, Inc., 457 F.3d 1174,
1179 (11th Cir. 2006).
B.

Standard for Denial of Benefits

“ERISA does not set out standards under which district courts must
review an administrator’s decision to deny benefits.” Doyle v. Liberty Life
Assurance Co. of Boston, 542 F.3d 1352, 1355 (11th Cir. 2008) (citing
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 (1989)). The “typical
summary judgment analysis does not apply to ERISA cases.” Ruple v. Hartford
Life and Accident Ins. Co., 340 F. App’x 604, 611 (11th Cir. 2009). Rather, the
Eleventh Circuit in Williams v. BellSouth Telecomms., Inc. established a
six-step framework “for use in judicially reviewing virtually all ERISA-plan
benefit denials”:
(1) Apply the de novo standard to determine whether the claim
administrator's benefits-denial decision is “wrong” (i.e., the court
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disagrees with the administrator's decision); if it is not, then end the
inquiry and affirm the decision
(2) If the administrator's decision in fact is “de novo wrong,” then
determine whether he was vested with discretion in reviewing claims; if
not, end judicial inquiry and reverse the decision.
(3) If the administrator's decision is “de novo wrong” and he was vested
with discretion in reviewing claims, then determine whether “reasonable”
grounds supported it (hence, review his decision under the more
deferential arbitrary and capricious standard).
(4) If no reasonable grounds exist, then end the inquiry and reverse the
administrator's decision; if reasonable grounds do exist, then determine if
he operated under a conflict of interest.
(5) If there is no conflict, then end the inquiry and affirm the decision.
(6) If there is a conflict of interest, then apply heightened arbitrary and
capricious review to the decision to affirm or deny it.
373 F.3d 1132, 1137–38 (11th Cir. 2004) (emphasis in original) (footnotes and
citations omitted).1
III.

Merits of Defendants’ Motion
Defendants argue that the case should be dismissed because: (A)

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The Supreme Court's decision in Metro. Life Ins. Co. v. Glenn, however, cast
doubt on the sixth step of this procedure. See 554 U.S. 105, 115–17 (2008)
(concluding that conflict of interest should be weighed as one factor in determining
whether an administrator abused discretion). Following Glenn, the Eleventh Circuit
“recognized that Glenn implicitly overrules Brown and other cases requiring courts to
apply the heightened standard to a conflicted administrator’s benefits decision.”
Capone v. Aetna Life Ins. Co., 592 F.3d 1189, 1195 (11th Cir. 2010) (citation
omitted). Accordingly, under the sixth step, “the existence of a conflict of interest
should merely be a factor for the district court to take into account when determining
whether an administrator's decision was arbitrary and capricious,” and the burden is
on the plaintiff to show a decision was arbitrary. Id. at 1196.
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Plaintiff’s claims “‘relate to’ an ERISA plan and are thus preempted” and (B)
the denial of benefits is permissible under the modified Williams six-part test.
(Dkt. No. [12-1] at 13, 17–25).
A.

ERISA Preemption

Plaintiff asserts the following state law claims: (1) reinstatement of her
disability benefits; (2) compensatory damages; and (3) bad faith damages. (Dkt.
No. [1-1] at 6). However, all of these claims “relate to” an ERISA plan and are
thus preempted. The intended benefits are long-term disability payments for the
plan’s participants who are unable to work due to injury or sickness. (Dkt. No.
[12-9] at 27, 32). The plan is funded by Beazer’s payment of premiums to
Prudential, which funds benefit payments. (Id. at 35). Finally, the Plan clearly
describes the procedures for receipt of benefits. (Id. at 50, 56–58). Accordingly,
the Plan qualifies as an “employee welfare benefit plan” and is governed by
ERISA. Also, there can be no dispute that Plaintiff’s state law claims “relate to”
the Plan; indeed, the entire Complaint [1-1] is premised on Prudential’s denial
of disability benefits. (Dkt. No. [1-1] at ¶¶ 8–14.) Those state law claims are
therefore preempted and dismissed with prejudice.

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B.

Modified Williams Six-Part Test

With the dismissal of her state law claims, Plaintiff may only proceed
with a claim for benefits under 29 U.S.C. § 1132(a)(1)(B). Under Capone, the
Court begins by determining if Prudential’s decision was correct from a de
novo perspective. When performing this review, the Court is limited to the
evidence that was before Prudential at the time the decision was made to deny
benefits. Glazer v. Reliance Standard Life Ins. Co., 524 F.3d 1241, 1246 (11th
Cir. 2008) (noting that a court performing a de novo review is “limited to the
record that was before [the administrator] when it made its decision”). The
Court will limit its consideration at this step to the administrative record, and no
outside evidence will be considered. Id.
There is no dispute Plaintiff underwent hip surgery and a subsequent
revision procedure, resulting in certain restrictions/limitations. However, the
evidence reveals there were no complications following the revision, and
Plaintiff’s recovery appears to have gone as planned so that Plaintiff is able to
work in a sedentary capacity. (Dkt. No. [1-1] at ¶¶ 14, 18 60–73). Because the
evidence reveals that Plaintiff’s recovery from hip revision surgery was
uneventful, and because her treating physicians have identified no
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restrictions/limitations that would prevent sedentary work, Prudential correctly
determined Plaintiff was no longer disabled and retained sedentary work
capacity. See Peters v. Hartford Life & Accident Ins. Co., Nos. 08-16070, 0912867, 2010 WL 638451, at *2 (11th Cir. Feb. 24, 2010) (finding evidence
submitted by the plaintiff did not support “a finding of total disability because it
did not contain limitations or restrictions on [plaintiff’s] ability to perform her
job”); Bell v. Shenandoah Life Ins. Co., 589 F. Supp. 2d 1368, 1376 (M.D. Ga.
2008) (holding the defendant’s decision to deny benefits reasonable in part
because the treating physician did not place any functional limitations on the
plaintiff). When considered in this light, Prudential correctly determined
Plaintiff retained sedentary work capacity.
Even assuming Prudential’s decision was not de novo correct,
Prudential’s motion should be granted because the plan documents confer
discretion, and the facts show that Prudential’s decision was reasonable. Under
the second step in the analysis, the Court must determine whether the plan
grants discretion to Prudential. Where a plan gives the administrator discretion
to determine eligibility for benefits, the arbitrary and capricious standard of
review applies. E.g., Glazer, 524 F.3d at 1246; Tippitt v. Reliance Standard Life
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Ins. Co., 457 F.3d 1227, 1232 (11th Cir. 2006); Paramore v. Delta Air Lines,
Inc., 129 F.3d 1446, 1449 (11th Cir. 1997).
In order to determine whether the Plan grants such discretion, the Court is
“required to examine all of the plan documents.” Shaw v. Conn. Gen. Life
Ins. Co., 353 F.3d 1276, 1282 (11th Cir. 2003). The documents need not,
however, contain any particular “magic language” in order to confer the
requisite discretion. Gutta v. Standard Select Trust Ins. Plans, 530 F.3d 614,
619 (7th Cir. 2008).
Discretion-granting language is contained in both the Summary Plan
Description (“SPD”) and the formal plan document. According to the SPD:
“The Prudential Insurance Company of America as Claims Administrator has
the sole discretion to interpret the terms of the Group Contract, to make factual
findings, and to determine eligibility for benefits.” (Dkt. No. [12-9] at 56). This
language clearly grants Prudential the requisite discretion for the arbitrary and
capricious standard to apply. See, e.g., Keith v. Prudential Ins. Co. of Am., No.
09-10695, 317 F. App’x 548, at *1 (11th Cir. 2009) (reasoning that “[n]o
question exists” that language identical to that in the SPD in this case conferred
discretionary authority to determine eligibility or to construe the terms of the
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plan). The formal plan document also grants discretion to Prudential. The plan
states that a participant is disabled when “Prudential determines” that the
disability standard has been satisfied. (Dkt. No. [12-9] at 38). This language
confers the requisite discretion. See Miller v. Prudential Ins. Co. of Am., 625 F.
Supp. 2d 1256, 1264 n.4 (S.D. Fla. 2008) (noting that the insurer had discretion
to decide disability claims based on the same “when Prudential determines”
language in the plan here). Because both the SPD and the formal plan grant
Prudential discretionary authority to decide claims, the arbitrary and capricious
standard of review applies.
Under the arbitrary and capricious standard, the administrator’s decision
is affirmed if, “based upon the facts as known to the administrator at the time
the decision was made,” there was a “reasonable basis for the decision.” Glazer,
524 F.3d at 1246; see also Griffis v. Delta Family-Care Disability, 723 F.2d
822, 825 (11th Cir. 1984) (stating the administrator’s decision “need not be the
best possible decision, only one with a rational justification”). In applying this
standard, the Court’s role is to determine whether the decision was “made
rationally and in good faith—not whether it was right.” Griffis, 723 F.2d at 825.

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Thus, the third step in the analysis is to determine if reasonable grounds exist
for Prudential’s decision.
Prudential determined Plaintiff is no longer eligible for long-term
disability benefits because she can work in a sedentary capacity after reviewing
and considering all of the evidence in the administrative record. This decision is
entitled to deference, and there are no facts that would show Prudential’s
decision was arbitrary, capricious, or tainted by self interest. Paramore, 129
F.3d at 1451 (“[W]here the plan affords the administrator discretion, the
administrator’s fact-based determinations will not be disturbed if reasonable
based on the information known to the administrator at the time the decision
was rendered.”). Thus, for all of the reasons Prudential’s decision was right,
that decision also was reasonable.
Finally, when determining whether Prudential’s decision was arbitrary or
capricious, the Court should weigh any conflict of interest as “a factor.” Doyle,
542 F.3d at 1360. However, even where a conflict exists, “the burden remains
on the plaintiff to show the decision was arbitrary; it is not the defendant’s
burden to prove its decision was not tainted by self-interest.” Id. Here, there are
no facts that showing Prudential’s decision was based on anything other than an
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unbiased consideration of the facts and Plan language at issue. As the Eleventh
Circuit has now made clear, it is not incumbent upon Prudential to prove its
decision was not tainted by self interest, but rather it is Plaintiff’s burden to
show that it was. Id. Accordingly, even if an analysis of steps five and six were
required, there are no facts that show an abuse of discretion.
Conclusion
For the aforementioned reasons, Defendants’ Motion for Summary
Judgment [12] is GRANTED. The clerk shall close the case.

SO ORDERED, this 16th day of June, 2011.

________________________________
RICHARD W. STORY
United States District Judge

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