Hipple v. Matrix Absence Management, Inc. et al
Filing
17
OPINION and ORDER Denying Plaintiff's 10 MOTION For Judgment on the Administrative Record, Denying Defendants' 11 MOTION for Judgment, Vacating the Determination of the Plan Administrator and Remanding the Case for Further Proceedings. Signed by District Judge Matthew F. Leitman. (Monda, H)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
PAUL HIPPLE,
Plaintiff,
Case No. 13-cv-11059
Hon. Matthew F. Leitman
v.
MATRIX ABSENCE
MANAGEMENT, INC. et al.,
Defendants.
____________________________/
OPINION AND ORDER DENYING PLAINTIFF’S MOTION FOR
JUDGMENT ON THE ADMINISTRATIVE RECORD (ECF #10);
DENYING DEFENDANTS’ MOTION FOR JUDGMENT (ECF #11);
VACATING THE DETERMINATION OF THE PLAN ADMINISTRATOR;
AND REMANDING THE CASE FOR FURTHER PROCEEDINGS
This dispute arises out of the termination of Paul Hipple (“Hipple”) as an
employee of Denso International America, Inc. (“Denso”), and Hipple’s
subsequent submission of a claim for short-term disability benefits pursuant to the
Denso Health & Welfare Plan (the “Plan”). The administrator of the Plan, Matrix
Absence Management, Inc. (“Matrix”), denied Hipple’s claim for benefits and his
administrative appeals on the ground that Hipple was not a participant in the Plan
on the date of his disability. Hipple has now filed this action against Denso,
Matrix, and the Plan (collectively, the “Defendants”) pursuant to section
502(a)(1)(B) of the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1132(a)(1)(B), for the recovery of short-term disability
benefits. The parties have filed cross-motions for judgment on the administrative
record. For the reasons discussed below, the Court finds that Matrix’s denial of
benefits was arbitrary and capricious.
The Court DENIES both motions for
judgment, VACATES Matrix’s determination on Hipple’s claim, and REMANDS
the matter to Matrix for further proceedings.
BACKGROUND AND PROCEDURAL HISTORY
A.
Hipple’s Employment History at Denso
Hipple began working for Denso as a technician in 2004. (Compl. at ¶11.)
His tenure as a Denso employee was fraught with misconduct. No fewer than
seven times during his employment, Hipple was reprimanded, warned, or
otherwise punished for, among other things, “rude and uncooperative behavior
toward subordinates, peer[s][,] vendors and customers.” (AR 256. See also id. at
251-255.)
In addition, Hipple suffered from several medical conditions during his
employment with Denso.
Based on the voluminous submissions in the
administrative record, it appears that Hipple experienced serious back, neck,
shoulder, and foot injuries, among other aiments, between 2009 and 2012. (See id.
at 474-675.) At least three times, Hipple had to take extended medical leaves of
absence from his employment at Denso. (See id. at 701, 716, 749.)
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B.
Hipple’s Termination and Claim of Disability
June 6, 2012, was an eventful day for Hipple.
Separation
Review
Committee
(the
“Committee”)
That day, the Denso
met
to
consider
a
recommendation by the Management Team and Human Resources that Hipple’s
employment be terminated for “[g]ross insubordination on several occasions.” (Id.
at 250.)
The report presented to the Committee detailed instances of
insubordination by Hipple, which appear to have increased in frequency in the
months preceding the meeting. (Id. at 251-255.) At or about 2:00 p.m., Hipple
was informed that his employment with Denso had been terminated. (Id. at 109.)
Also on June 6, 2012 – it is unclear at precisely what time – Hipple visited
his doctor’s office and complained of “back” and “l[ower] l[eft] e[xtremity] pain.”
(Id. at 260.) Based on Hipple’s condition, the doctor determined that Hipple was
“[u]nable to return to employment at this time.” (Id.) That same day – again, it is
unclear at precisely what time – Hipple called the Matrix “Intake Center” and filed
a claim for short-term disability benefits. (Id. at 334.) Defendants contend that
Hipple visited the doctor and filed his claim for short-term disability benefits after
being notified of his termination from Denso. (See ECF #11 at 8.) Hipple does not
dispute this chronology.
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C.
Matrix Denies Hipple’s Claim for Disability Benefits
On June 8, 2012, Matrix denied Hipple’s claim for benefits. (AR 333-337.)
By letter, a claims examiner informed Hipple that she received an email from
Denso’s human resources department on June 7, 2012, “stating that [Hipple’s] last
day worked was June 6, 2012 and that on that same date [Hipple] was terminated
from [his] employment with Denso.” (Id. at 334.) The Matrix claims examiner
concluded that Hipple was not eligible for short-term disability benefits because he
was “not an active employee on [his] date of disability.” (Id.)
The Matrix claims examiner cited to certain provisions of the Plan’s ShortTerm Disability Program (the “Program”) to support the denial of Hipple’s claim.
Specifically, the examiner quoted from section II.C.1 of the Program, which
provides that “[a] Participant will automatically cease to participate [in the
Program] on the … date on which the Participant ceases to be an Associate of the
Company.” (Id. at 333; see also id. at 9.) The examiner also cited section III.C.7
of the Program, which states that “[n]o Participant will be entitled to a benefit
under [the short-term disability program] if … the period of Disability begins when
the Associate is not a Participant in the Program.” (Id. at 334; see also id. at 11.)1
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The Program defines “Disability” as “any physical or mental condition arising
from an illness, pregnancy or injury which renders a Participant incapable of
performing the material duties of his or her regular occupation or any reasonably
related occupation on a full time basis.” (Id. at 6.)
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D. Hipple Twice Appeals the Denial of Benefits; Matrix Rejects Both
Appeals
Under the Program, a participant whose claim is initially denied may appeal
to Matrix for “a review of the decision made on his or her claim.” (Id. at 17.) On
June 20, 2012, Hipple appealed the denial of benefits. (Id. at 340.) In his appeal,
Hipple asserted that his managers at Denso had been “aware of [his] medical
situation and disability for months.” (Id.) Hipple claimed that he “was an active
employee on the date of disability and [his] insurance was in effect at the time of
[his] disability.” (Id.)
Matrix denied Hipple’s appeal on July 8, 2012. (Id. at 367-370.) By letter,
Matrix informed Hipple that
[t]he information from your employer indicates you worked on
June 6, 2012…. This would make your … first day of disability
June 7, 2012. You were terminated from employment on June
6, 2012. Based on this termination you were no longer an
Associate under this Program when the period of Disability
began. The Program states No [sic] Participant will be entitled
to a benefit under this Program if the period of Disability begins
when the Associate is not a Participant in the Program.
(Id. at 368.) Accordingly, Matrix upheld its denial of Hipple’s claim.
The Program provides participants the opportunity for a second appeal of a
denied claim (see id. at 18), and Hipple, through his attorneys, filed a second
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appeal with Matrix on January 14, 2013 (id. at 413-438).2 In this appeal, Hipple
claimed that he “stopped working on June 6, 2012 due to severe spinal and hip
pathologies.” (Id. at 414.) Hipple included a lengthy discussion of his medical
history – including various injuries, surgeries, and medical absences from Denso –
dating back to 2008. (Id. at 415-434.) He also attached supporting medical
records. (See id. at 474-675) Hipple asserted that it is an “undeniable fact that [he]
was not only disabled as of June 6, 2012, but [he] was disabled long before he filed
his disability claim.” (Id. at 415.)
On March 1, 2013, Matrix once again denied Hipple’s appeal. (Id. at 689690.) Matrix noted in this denial letter that Dr. Avner R. Griver (“Dr. Griver”) had
reviewed Hipple’s claim “for both objective evidence to support disability … and
eligibility for disability benefits.”
(Id. at 689.)
The denial letter quoted Dr.
Griver’s conclusion that although “the records provided do support a functionally
impairing hip condition, given that Mr. Hipple’s employment was terminated on
[June 6, 2012] … he would not be entitled to benefits under the Program since the
period of disability began when he was no longer a Participant….” (Id.) Matrix
concluded that it would “uphold[] [its] previous decision to deny benefits …
beginning June 7, 2012.” (Id.)
2
The appeal letter is dated “January 14, 2012.” However, it is clear from the
context of the letter that it should have been dated in 2013.
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E.
Hipple Files this Action and the Parties File Cross-Motions for
Judgment
Having exhausted his rights to recourse under the Program, Hipple filed this
action on March 8, 2013. (See Compl., ECF #1.) In his Complaint, Hipple
requests that this Court “enter judgment in [his] favor against Denso, the Plan,
and/or Matrix … [and] order the immediate payment of disability income and other
employee benefits.” (Id. at 19.)
The parties have filed cross-motions for judgment on the administrative
record. (See ECF #10, 11.) The Court held a hearing on the motions on June 6,
2014, and now issues this Order denying both motions, vacating the plan
administrator’s determination, and remanding this action for further proceedings.
GOVERNING LEGAL STANDARD
Section 502(a)(1)(B) of ERISA authorizes an individual to bring a civil
action “to recover benefits due to him under the terms of [his] plan, to enforce [his]
rights under the terms of the plan, or to clarify [his] rights to future benefits under
the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B).
The standard of review in this case turns on whether the Plan grants Matrix
“discretionary authority to determine eligibility for benefits or to construe the
terms of the plan.” See Shelby County Health Care Corp. v. S. Council of Indus.
Workers Health & Welfare Trust Fund, 203 F.3d 926, 933 (6th Cir. 2000) (quoting
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). If the plan
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administrator does not have discretionary authority to determine eligibility, then
the Court conducts a de novo review; however, if the plan administrator does have
such authority, then the Court reviews the administrator’s action under the
“arbitrary and capricious” standard of review. See id. In this case, Denso has
discretion to “determine eligibility for benefits under the Program” (AR at 22), and
Denso has delegated to Matrix “discretionary authority to determine the validity of
claims under the Plan” (id. at 89). The parties do not dispute that this language
gave Matrix discretion to determine eligibility for short-term disability benefits.
Accordingly, the arbitrary and capricious standard applies.
“The arbitrary or capricious standard [of review] is the least demanding form
of judicial review of administrative action. When it is possible to offer a reasoned
explanation, based on the evidence, for a particular outcome, that outcome is not
arbitrary or capricious.” Davis v. Kentucky Fin. Cos. Ret. Plan, 887 F.2d 689, 693
(6th Cir. 1989) (internal quotation marks and citations omitted). Further, Hipple
has the burden of demonstrating that Matrix acted arbitrarily or with caprice. See
Senzarin v. Abbott Severance Pay Plan for Employees of KOS Pharmaceuticals,
361 F. App'x 636 (6th Cir. 2010) (citing Rochow v. Life Ins. Co. of N. Am., 482
F.3d 860, 865 (6th Cir. 2007)).
Yet, arbitrary and capricious review “is not ... without some teeth.” Evans v.
UnumProvident Corp., 434 F.3d 866, 876 (6th Cir. 2006) (internal quotation marks
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and citation omitted). Indeed, a district court reviewing a plan administrator's
determination under the arbitrary-and-capricious standard does not sit merely to
“rubber stamp the administrator's decision.” Jones v. Metro. Life Ins. Co., 385
F.3d 654, 661 (6th Cir. 2004); see also Hackett v. Xerox Corp. Long–Term
Disability Income Plan, 315 F.3d 771, 774–75 (7th Cir. 2003). “The obligation
under ERISA to review the administrative record in order to determine whether the
plan administrator acted arbitrarily and capriciously ‘inherently includes some
review of the quality and quantity of the medical evidence and the opinions on
both sides of the issues.’” Evans, 434 F.3d at 876 (quoting McDonald v. WesternSouthern Life Ins. Co., 347 F.3d at 172).
ANALYSIS
Matrix based the denial of Hipple’s claim solely on one ground: because he
worked until June 6, 2012 – the date on which he was terminated – he was not
“disabled” under the terms of the Program while he was a Participant and,
therefore, he was not entitled to benefits. In denying Hipple’s claim, Matrix did
not evaluate the medical evidence to determine whether, as Hipple claimed, Hipple
was in fact disabled before his termination – i.e., while was still a Participant in the
Program. Rather, Matrix simply assumed that because Hipple continued to show
up to work until his termination on June 6, 2012, he was not disabled before that
date. That assumption is contrary to Sixth Circuit precedent.
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In Rochow, supra, the Sixth Circuit held that an employee can be present at
work and receiving a paycheck for his labor and, at the same time, be “disabled”
under the terms of the employer’s benefit plan. The claimant in Rochow suffered
from a degenerative neurological disease but, as is the case here, he did not submit
a disability claim until after the employer terminated his employment. The plan
administrator denied the claim on the ground that the claimant “continued to work
[until termination and therefore could not] be considered disabled” while still
covered by the plan. Rochow, 482 F.3d at 864. The Sixth Circuit held that the
denial – resting, as it did, on an unverified assumption that the claimant could not
have been disabled because he was present at work – was arbitrary and capricious.
The court stressed that “there is no ‘logical incompatibility between working full
time and being disabled from working full time.’” Id. at 865, quoting Hawkins v.
First Union Corp. Long-Term Disability Plan, 326 F.3d 914, 918 (7th Cir. 2003).
Rochow precludes a benefits plan administrator from denying an employee’s claim
for disability benefits solely because the employee was present at work on or after
the alleged disability onset date.
In this case, Hipple alleges that his disability dates back to November 22,
2011; March 2, 2012; May 15, 2012; or June 6, 2012 – all prior to his termination.
(See Compl. at ¶14.) If Hipple was, in fact, disabled as of these times, then he
would be entitled to benefits. (See AR at 11 (employee not eligible for benefits if
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he became disabled after ceasing to be a Participant in the Program).)
And
Rochow precludes Defendants from assuming that Hipple was not disabled before
his termination simply because he showed up for work; it requires Defendants to
examine the medical evidence to determine whether Hipple was, in fact, disabled
before his termination – while he was still a participant in the Program. If Hipple’s
disability arose while he was still a participant, then under the terms of the
Program, he would be entitled to benefits – even if he submitted his application
after his termination.
Defendants’ attempts to distinguish Rochow are unsuccessful. Defendants
argue that Rochow differs from the present case because in Rochow, the claimant’s
employer was aware of his diminished work capacity while the claimant was
employed, and the claimant’s diminished capacity led directly to his termination.
(See ECF #13 at 2-3.) Under Rochow, however, the cause of an employee’s
termination is irrelevant – the operative inquiry is whether the claimant became
disabled while he was a participant in the plan. Further, it might be the case that
Hipple’s superiors were aware that he had diminished work capacity in the weeks
or months leading up to his termination – however, the administrative record lacks
relevant evidence because Defendants conducted no inquiry whatsoever into the
merits of Hipple’s claim.
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Matrix’s failure to review the medical evidence to determine whether Hipple
was, in fact, disabled prior to his termination renders its denial of his claim
arbitrary and capricious. Accordingly, this Court will remand this matter to Martix
with the direction that Matrix reconsider Hipple’s claim and that, in doing so,
Matrix review the medical evidence to determine whether Hipple’s disability
began prior to his termination – and while he was still a Participant in the Program
– such that he would be eligible for benefits.
Hipple urges the Court not to remand the case but to issue an award of
benefits. Hipple cites to Dr. Griver’s statement in the letter denying Hipple’s
second appeal that “the records provided do support a functionally impairing hip
condition” to argue that Defendants have already admitted Hipple’s disability.
(See ECF #10 at 29; see also id. at 690.) However, the Court does not believe that
Dr. Griver’s statement was intended as a conclusion that Hipple was, in fact,
disabled under the terms of the Program. Further, Dr. Griver’s statements make no
findings with respect to the onset date of Hipple’s impairments. Accordingly,
remand is appropriate to permit Matrix to consider the evidence of record. See
Elliott v. Metropolitan Life Ins. Co., 473 F.3d 613, 622 (6th Cir. 2006). (“[W]here
the problem is with the integrity of the plan's decision-making process, rather than
that a claimant was denied benefits to which he was clearly entitled, the
appropriate remedy generally is remand to the plan administrator.”)
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The Court will, however, order Matrix to complete its review of the claim on
an expedited basis. Hipple has waited far too long for an appropriate review of his
claim.
CONCLUSION
For the reasons set forth above, IT IS HEREBY ORDERED THAT
Hipple’s motion for judgment on the administrative record (ECF #10) and
Defendants’ motion for judgment (ECF #11) are DENIED.
IT IS FURTHER ORDERED THAT Matrix’s final determination denying
benefits to Hipple (ECF #8 at 689-690) is VACATED.
The matter is
REMANDED to Matrix for an additional review of Hipple’s claim consistent with
the terms of this Order. Matrix shall complete its review of Hipple’s claim and
issue a final determination no later than JULY 28, 2014.
s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE
Dated: June 13, 2014
I hereby certify that a copy of the foregoing document was served upon the parties
and/or counsel of record on June 13, 2014, by electronic means and/or ordinary
mail.
s/Holly A. Monda
Case Manager
(313) 234-5113
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