KELLY v. RELIANCE STANDARD LIFE INSURANCE COMPANY et al
Filing
106
OPINION. Signed by Judge Katharine S. Hayden on 12/21/2011. (nr, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
THOMAS P. KELLY,
Plaintiff,
v.
Civ. Action No. 09-2478 (KSH)
RELIANCE STANDARD LIFE INSURANCE
COMPANY, and THE PENN MUTUAL LIFE
INSURANCE COMPANY,
OPINION
Defendants.
Katharine S. Hayden, U.S.D.J.
This case comes before the court on cross-motions for summary judgment filed by
plaintiff, Thomas P. Kelly and defendant Reliance Standard Life Insurance Company
(―Reliance‖). Earlier, in addressing dispositive motions brought by the parties, the Court
remanded to the Reliance Plan Administrator for a ―full and fair review‖ of Kelly‘s claim for
long-term disability (―LTD‖) benefits. The matter has been re-opened because Reliance again
denied Kelly‘s claim for benefits, and Kelly has appealed the decision to this Court.
The Court must now determine whether Reliance‘s denial of LTD benefits on remand
was an abuse of discretion under the terms of the plan.
I. Factual Background
1
In November of 2005, Kelly was employed as a ―Managing Director/Advanced
Planning/Compliance Officer‖ at the Edison, New Jersey office of Penn Mutual Life Insurance
Co. (―Penn Mutual‖). (Pl‘s Br., Ex. B, Supplemental Cert., ¶ 3.) In this ―multiple function
position,‖ Kelly had a number of responsibilities, including coordinating and supervising
recruiting, running annual compliance meetings and the quarterly supervisor program,
coordinating and monitoring joint work among associates, conducting continuing education
classes, overseeing trading operations for compliance purposes, and monitoring new business for
suitability. (Id. at Ex. B, sub-Ex. A.) Kelly was also responsible for conducting yearly Private
Office Visits (―POVs‖) for every agent under the Edison agency‘s supervisory jurisdiction. (Id.
at Ex. B, Supplemental Cert., ¶18–20.) In addition, Kelly supervised the ―HTK department‖ and
interacted with the ―HTK compliance department on all issues concerning the agency.‖ (Id. at
Ex. B, sub-Ex. A.) As explained by Kelly in his certification, HTK was made up of the ―nonhoused registered representatives of broker-dealer Horner Townsend and Kent‖ located
throughout New Jersey, whom Kelly helped to manage, train and supervise. (Pl‘s Br., Ex. B,
Supplemental Cert., ¶ 15.) One of Kelly‘s tasks was to complete a yearly visit to ―every HTK
Producer of the Edison agency who did not conduct business from an NASD registered branch
office.‖ (Id. at ¶ 23.) To facilitate Kelly‘s required travel, Penn Mutual provided him with full
lease reimbursement for his car. (Id. at ¶10.) Though the parties dispute the degree to which
Kelly was required to travel for his job, both agree that there was a requirement that he travel at
least 10% of the time. (Id.)
On Monday November 7, 2005, Kelly was injured in an automobile accident which
―exacerbated existing spinal cord injuries‖ and prevented him from ―being able to perform the
duties of [his] current occupation on even a part time basis.‖ (Id. at ¶ 46.) Previously, Kelly‘s
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back had been injured in a 1993 snowmobile accident in which he suffered a compression
fracture of his spine at T12, degeneration of discs T12-L1 and T11-12, and a posterior spur at the
T11-12 interspace with a gibbous deformity. (AR166; Pl‘s Br., Ex. B, sub-Ex. H.) This resulted
in a hospital stay, and Kelly later returned to work at his prior place of employment on partial
disability. (AR166.) Kelly told his agency manager at Penn Mutual about his residual disability
from the 1993 accident at the time he was employed by Penn Mutual. (Pl‘s Br., Ex. B,
Supplemental Cert., ¶ 45.)
Kelly‘s doctor, Dr. Dearolf, concluded that the November 7, 2005 car accident
aggravated the prior injuries and resulted in an additional ―left side disc herniation at L5-S1.‖
(Pl‘s Br., Ex. B, sub-Ex. H.) Kelly suffered ―radicular symptoms along with limited motion in
his lumbar and thoracic spine, lumbar sprain and strain, lumbar radiculopathy and degenerative
joint disease in his back.‖ (Id.) Dr. Dearolf instructed Kelly ―not to perform any work of any
kind,‖ and prescribed steroid injections and physical therapy. (Amended Compl. ¶ 24.)
At the time of the accident, Kelly was a participant in Penn Mutual‘s long-term employee
disability plan. (Pl‘s Br. at 4.) Defendant Reliance, the plan administrator, had the discretionary
authority to determine eligibility for plan benefits and was also responsible for making benefit
payments to eligible participants.
(Id.) The Reliance plan entitled a ―Totally Disabled‖
participant to receive a monthly benefit of 66-2/3% of his Covered Monthly Earnings after 180
days of total disability (the ―Elimination Period‖) until the age of 66. (Amended Compl. ¶ 51.)
In February of 2006, Penn Mutual‘s Vice President wrote to Kelly about whether Kelly intended
to submit a claim for LTD benefits. (Id. at ¶ 49.) Kelly timely notified Penn Mutual of his intent
to file a claim and completed the necessary forms by May of 2006. (Id. at ¶¶ 52–53, 56.) The
forms were first sent to the Penn Mutual claims department. (Id. at ¶ 55.) It was Penn Mutual‘s
3
obligation to forward Kelly‘s claim for benefits along with accurate supporting documentation,
such as a job description, to Reliance. (Id. at ¶ 61–62.) However, as this Court concluded in the
prior summary judgment proceedings, Penn Mutual failed to provide Reliance with Kelly‘s
correct job title or an accurate list of his job duties. (Id. at ¶¶ 77–79; Tr. 9:20–10:16 Dec. 14,
2010.)
In an October 23, 2006 letter Reliance denied Kelly‘s claim for LTD benefits. (Amended
Compl. ¶ 95.) The letter included a list of criteria Reliance had used to determine that Kelly was
purportedly capable of performing the duties of his ―regular occupation.‖ In pertinent part the
letter stated:
Please be aware that your own regular occupation is not your job with a
specific employer, it is not your job in a particular work environment, nor is it
your specialty in a particular occupation field. In evaluating your eligibility for
benefits, we must evaluate your inability to perform your own regular occupation
as it is performed in a typical work setting for any employer in the general
economy.
...
While you may believe that your job required a greater level of physical
exertion, your occupation is classified as sedentary by the United States
Department of Labor‘s, Dictionary of Occupational Titles (―DOT‖). Your claim
for benefits has been evaluated based on your ability to perform a sedentary
occupation.
(AR121–22.) Kelly timely appealed the denial of benefits. (Amended Compl. ¶ 119.)
On March 12, 2007, Reliance informed Kelly that it upheld its denial on appeal. (Id. at ¶ 136.)
As a result, Kelly filed suit in this Court against both Reliance and Penn Mutual claiming
that Reliance‘s denial of benefits was arbitrary and capricious and that Penn Mutual had
breached its fiduciary duties as a co-fiduciary of the plan. Kelly‘s complaint included RICO
claims against both defendants, which were later dismissed on defendants‘ motions to dismiss. In
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addition, the complaint contained a claim alleging a violation of the Family and Medical Leave
Act on the part of Penn Mutual, which was dismissed by a stipulation. The remaining claims
alleged that the actions of Reliance and Penn Mutual violated ERISA.
Kelly and Reliance filed cross-motions for summary judgment which were argued on
December 14, 2010. The Court concluded that the administrative record was deficient, that
Reliance had relied on an incorrect definition of Kelly‘s occupation (a definition which the Third
Circuit had already concluded was improper), that Penn Mutual provided an incorrect job
description, and that Kelly had not been helpful in providing information during the claim
processing. (Tr. 4:1–5:15; 7:15–8:25; 9:20–10:1 Dec. 14, 2010.) As a result, the Court ordered a
remand to the Plan Administrator and directed that Reliance should ―make a decision on the
merits.‖ (Id. at 13:3–4.) Kelly was permitted to submit additional evidence to more fully develop
the record. (Id. at 13:18–25.)
Kelly submitted a supplemental certification which included a detailed description of his
job responsibilities, a copy of the correct Penn Mutual job description for his position, and forms
indicating other duties delegated to him. (Pl‘s Br., Ex. B.) Kelly included a follow-up letter from
his doctor and MRI scans of his back. (Id.) He also claimed for the first time that his inability to
perform the required duties ―of any occupation have been further exacerbated by the onset and
increase of chronic cardiac symptoms.‖ (Id. at Ex. B, Supplemental Cert., ¶51.)
On February 18, 2011, Reliance rendered its remand decision, again denying Kelly LTD
benefits. (Id. Ex. C.) The remand decision was based on the reports of two independent
consultants who completed paper reviews of Kelly‘s claim file—Dr. Robert Green, an orthopedic
surgeon and Dr. Gregory Helmer, a cardiology specialist—as well as a report by Jody Barach,
the in-house Vocational Specialist, and a letter from Kelly‘s former supervisor, Frank DePaola,
5
who provided a critique of Kelly‘s description of his job duties. (Id.) The denial letter reiterated
the policy language, noting that disability benefits will be paid only where a claimant
demonstrates total disability for the Elimination Period. (Pl‘s Br. Ex. C.) ―Elimination period‖ is
defined as ―180 consecutive days of Total Disability.‖ (Id.) And ―Total Disability‖ is defined as
an inability to ―perform the substantial and material duties of your regular occupation.‖ (Id.) The
Elimination Period for Kelly‘s claim was determined to run from November 26, 2005 to May 25,
2006. 1 (Id.) The letter noted that both Dr. Green and Dr. Helmer ―opined that no restrictions and
limitations [on Kelly‘s ability to work] are supported through the records for either condition
from the date of disability through the end of the 180-day Elimination period.‖ (Id.) Specifically,
Dr. Green concluded that ―there was not sufficient objective information to determine why he
was having this discomfort,‖ and thus there was ―insufficient evidence to support that there
would be any restrictions or limitations during the mentioned timeframe.‖ (Id.)
The denial letter further concluded that while Kelly‘s certification ―suggests a job that
requires a much greater level of exertion and more extensive travel than would be expected for a
generally sedentary-type office job,‖ the letter from Kelly‘s supervisor indicated that Kelly
―grossly exaggerate[d] the level of physical activity involved in [his] job at PML as well as the
travel duties.‖ (Id.) The denial letter relied on Penn Mutual HR Personnel‘s May 31, 2006 form,
which indicated that Kelly‘s position ―required frequent sitting and only occasional standing and
walking with no lift or carry.‖ (Id.) As a result, Reliance denied the claim for benefits because
1
As noted above, in his supplemental certification Kelly also claimed to have cardiovascular issues. This resulted in
a review of the records from his cardiologist on remand. Because the first cardiac treatment record in the
administrative file is dated August of 2006, after the conclusion of the Elimination Period, the Court has not
considered Kelly‘s cardiac condition in its analysis. Therefore, the Court will not discuss the portion of the claim
denial related to Kelly‘s cardiac condition, or the report of the independent cardiologist consultant.
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neither of the specialists‘ opinions supported ―restrictions or limitations at or following the date
of disability,‖ and neither concluded that Kelly‘s ability to travel was limited. (Id.)
Kelly appealed the remand decision to this Court and is seeking summary judgment on
the grounds that the denial of benefits was arbitrary and capricious. Reliance has cross-moved
for summary judgment in its favor.
II. Standard of Review
A. Motion for Summary Judgment
Summary judgment may be granted when there is no genuine issue as to any material fact
and [ ] the moving party is entitled to a judgment as a matter of law.‖ Fed. R. Civ. P. 56(c). The
role of the court is not to ―weigh the evidence and determine the truth of the matter but to
determine whether there is a genuine issue for trial.‖ Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 249 (1986).
A factual dispute is genuine if a reasonable jury could find in favor of the
nonmoving party and it is material only if it bears on an essential element of the plaintiff‗s claim.
Fakete v. Aetna, Inc., 308 F.3d 335, 337 (3d Cir. 2002). When deciding a summary judgment
motion, a court must view the record and draw all inferences in a light most favorable to the
opposing party. Knopick v. Connelly, 639 F.3d 600, 606 (3d Cir. 2011). ―This standard does not
change when the issue is presented in the context of cross-motions for summary judgment.‖
Appelmans v. City of Phila., 826 F.2d 214, 216 (3d Cir. 1987).
B. Standard of Review for Administrator’s Determination Under ERISA
When a benefit plan vests the claim administrator with discretion to make the claim
determination, ―its interpretations of plan language and benefit determinations are generally
subject to an ‗abuse of discretion‘ or ‗arbitrary and capricious‘ standard of review.‖
Schwarzwaelder v. Merrill Lynch & Co., Inc., 606 F. Supp. 2d. 546, 557 (W.D. Pa. 2009) (citing
7
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). ―In the ERISA context, the
arbitrary and capricious and abuse of discretion standards of review are essentially identical.‖
Miller v. Am. Airlines, Inc., 632 F.3d 837, 845 n.2 (3d Cir. 2011). Both of these phrases are
understood to require the Court to uphold the Administrator‘s decision ―unless an underlying
interpretation or benefit determination was unreasonable, irrational, or contrary to the language
of the plan.‖ Schwarzwaelder, 606 F. Supp. 2d. at 557.
The court‘s assessment involves
evaluating ―the quality and quantity of the medical evidence and the opinions on both sides of
the issues. Otherwise, courts would be rendered to nothing more than rubber stamps.‖ Glenn v.
MetLife, 461 F.3d 660, 674 (6th Cir. 2006), aff’d by Metropolitan Life Ins. Co. v. Glenn, 554
U.S. 105 (2008). The burden is on Kelly to demonstrate that Reliance‘s denial of benefits was
arbitrary and capricious. Schwarzwaelder, 606 F. Supp. 2d. at 558 (citing Moskalski v. Bayer
Corp., 2008 WL 2096892 at *4 (W.D. Pa. May 16, 2008)).
Because ―benefits determinations arise in many different contexts and circumstances, . . .
the factors to be considered [in reviewing a plan administrator's exercise of discretion] will be
varied and case-specific.‖ Estate of Schwing v. Lilly Health Plan, 562 F.3d 522, 526 (3d Cir.
2009) (internal quotations omitted). When, as here, the ERISA plan administrator is responsible
for both determining eligibility for benefits and paying the benefits awarded, an inherent conflict
of interest arises. Glenn, 554 U.S. at 114. The Supreme Court has directed that this conflict of
interest be viewed as one of the several factors considered in evaluating whether the
administrator has abused its discretion. Id. at 117.
The focus of review is the ―plan administrator's final, post-appeal decision.‖ Funk v.
CIGNA Group Ins., 648 F.3d 182, 191 n.11 (3d Cir. 2011)(citing 29 C.F.R. §§ 2560.503–1(h),
2560.503–1(h)(2)(i)–(ii), 2560.503–1(h)(2)(iv) & (3)(ii)). The court may in the course of its
8
review consider prior decisions ―as evidence of the decision-making process that yielded the
final decision, and it may be that questionable aspects of or inconsistencies among those prefinal decisions will prove significant in determining whether a plan administrator abused its
discretion.‖ Id. (citing Miller, 632 F.3d at 855–56).
III. Analysis
In evaluating the reasonableness of Reliance‘s final, post-appeal determination denying
Kelly‘s claim, the Court considers Reliance‘s inherent conflict of interest, the questionable
aspects of its pre-final decision making process, and, most importantly, three troubling aspects of
Reliance‘s final review: (1) an inappropriately selective evaluation of the evidence, (2) the
rejection of self-reported and subjective evidence while relying on a claimed lack of objective
evidence, and (3) an absence of any substantive evaluation of material job duties and the
claimant‘s ability to perform them.
A. Inappropriately Selective Evaluation of the Evidence
It is abundantly clear that in making its claim determination Reliance relied heavily on
the paper-review reports of its hired independent consultants, Dr. Green and Dr. Helmer, while
giving less weight to the treatment records of Kelly‘s treating physician and physical therapist. It
is true, as noted by Reliance in its brief, that ERISA plan administrators need not give special
deference to the opinions of treating physicians, and are under no ―discrete burden of explanation
when they credit reliable evidence that conflicts with a treating physician‘s evaluation.‖ Black &
Decker Disability Plan v. Nord, 538 U.S. 822, 834 (2003). However, an administrator may not
―arbitrarily refuse to credit a claimant‘s reliable evidence, including the opinions of treating
physicians.‖ Id. See also Michaels v. Equitable Life Assur. Soc., 305 Fed. App‘x 896, 906–07
(3d Cir. 2009) (questioning administrators choice to give determining weight to the conclusions
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of experts paper review reports over the conclusions of claimant‘s treating physicians);
Moskalski, 2008 WL 2096892 at *9 (―[T]he selective, self-serving use of medical information is
evidence of arbitrary and capricious conduct.‖)
Reported decisions reflect that courts are troubled where a plan administrator denies a
claim by relying on the paper-review reports of consultants that oppose the conclusions of
treating physicians. Schwarzwaelder, 606 F. Supp. 2d. at 559. See e.g., Elms v. Prudential Ins.
Co. of Am., 2008 WL 4444269 at *15 (E.D. Pa. Oct. 2, 2008) (It is ―important to note that no
doctor who has actually treated [plaintiff] or examined her in person, as opposed to performing a
‗file review‘ has found her to be capable . . . of performing work-related tasks.‖); Winkler v.
Met. Life Ins. Co., 170 Fed. App‘x 167 (2d Cir. 2006) (vacating denial as arbitrary where it was
based ―entirely on the opinions of three independent consultants who never personally examined
[plaintiff], while discounting the opinions‖ of the treating physicians.); Glenn, 461 F.3d at 671
(finding it ―perplexing‖ that the plan administrator disregarded the opinion of the ―only
physician to have personally treated or observed‖ the claimant); Kinser v. Plans Admin. Comm.
of Citigroup, Inc., 488 F. Supp. 2d 1369, 1382–83 (M.D. Ga. 2007) (concluding it was
unreasonable for the plan administrator to ignore the treating physician‘s ―clearly stated and
supported opinion‖ and rely instead on ―a cold record file-review by a non-examining‖
consultant.).
A strong emphasis on paper review reports is of even greater concern where, as in this
case, the plan administrator had the discretion to supplement the record by requiring an
independent medical evaluation (―IME‖) but chose not to. See Schwarzwaelder, 606 F. Supp.
2d. at 558–9. The ―decision to forgo an IME and conduct only a paper review, while not
rendering a denial of benefits arbitrary per se, is another factor to consider in the Court‘s overall
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assessment of the reasonableness of the administrator‘s decision-making process.‖ Id. at 559
(citing Glenn, 461 F.3d at 671). See also Post v. Hartford Ins. Co., 501 F.3d 154, 166 (3d Cir.
2007), abrogated on other grounds by Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008) (noting
that while a plan administrator is not required to give treating physicians‘ opinions special
weight, ―courts must still consider the circumstances that surround an administrator ordering a
paper review.‖); Elliot v. Metro. Life Ins. Co., 473 F.3d 613, 621 (6th Cir. 2006) (―[A] plan's
decision to conduct a file-only review—especially where the right to conduct a physical
examination is specifically reserved in the plan—may, in some cases, raise questions about the
thoroughness and accuracy of the benefits determination.‖ (internal quotations omitted)).
Here, Dr. Green‘s report, prepared from a paper file review, discounts Dr. Dearolf‘s
conclusions about Kelly‘s condition with little or no explanation and appears to selectively
ignore the treatment information in the reports of Kelly‘s physical therapist which detail his pain
and progress. Dr. Green noted that Dr. Dearolf found ―Kelly is unable to sit for any prolonged
period of time or stand for any prolonged period of time which he felt would make him incapable
of performing sedentary work. He felt the symptoms would be on a permanent basis unlikely to
improve over time.‖ (Pl‘s Br., Ex. D.) As to this, Dr. Green offered what is, at best, speculation
about Dr. Dearolf‘s medical assessment and a conclusion that is otherwise unsupported:
I think if Dr. Dearolf had felt that this was a significant back problem, to prevent
this Mr. Kelly from returning to work in even a sedentary position, there would
have been further studies to more definitively elucidate the problem. So based on
the records that I have reviewed and from an orthopedic standpoint only, it is my
opinion that there is no objective evidence for restrictions or limitations.
(Id.)
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Moreover, despite the fact that Dr. Green did not examine Kelly and admittedly did not
review an MRI report2 and thus did not know ―the extent of the supposed herniation of L5-S1,‖
he opined that the proper diagnosis of Kelly‘s symptoms was less severe than what Dr. Dearolf
had posited. (Id.) ―This information reviewed sounds to me like a lumbar sprain of mild
degenerative, previously somewhat compromised spine.‖ (Id. (emphasis added).) Dr. Green‘s
report provides no medical basis for coming to this conclusion.
Further, Dr. Green discounts the records of Kelly‘s visits to Dr. Dearolf by noting ―most
of the complaints and findings reported were subjective in nature.‖ In response to Penn Mutual‘s
request that he evaluate whether Kelly‘s condition would have resulted in restrictions or
limitations during the Elimination Period, Dr. Green simply noted that although there are records
of Kelly complaining of pain, ―there was not sufficient objective information to determine why
he was having this discomfort‖ and thus ―there is insufficient evidence to support that there
would be any restrictions or limitations during the above mentioned timeframe.‖ (Id.)
Similarly, Dr. Green only mentioned the ―significant notes from the [physical] therapist‖
briefly, observing that ―at the conclusion of each visit, the therapist stated the claimant tolerated
the procedure well and was gradually showing improvement.‖ (Id.) Dr. Green did note that in
the last physical therapy evaluation in the record, dated June 15, 2006, ―the therapist mentioned
that claimant still had a significant pain level.‖ But Dr. Green‘s report does not reference the
portion of that report in which the therapist noted Kelly still had
2
In their briefs, the parties argue at length about the MRI. Kelly claims that Reliance withheld the 16 pages of MRI
images from its consultants. (Pl‘s Br. p. 7.) Reliance, counters by noting that it gave the images to its consultants but
Kelly never provided an MRI report analyzing the MRI images. (Def‘s Opp. Br. p. 12.) In a letter written after the
claim determination, Dr. Green confirmed that he had seen the 16 images but they were poor copies and thus he did
not base his conclusions on them. (Id. at Ex. F.) This debate appears irrelevant to the ultimate inquiry because
regardless of who had what, Dr. Green confirmed he did not rely on the MRI scans in completing his report.
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functional difficulties with bathing, bending, reaching, standing, work activities,
riding in a car, climbing stairs, sitting and standing for prolonged periods of more
than 15 minutes. He can sit for 30-40 minutes and walk for about 5-10 minutes.
Functionally, he notes overall fatigue and diminished attention secondary to
fatigue and pain. He also has difficulty driving. . . . He remains quite frustrated
with the overall impact on function that pain is causing and difficultly returning to
work.
(AR139–40.) This report was written almost a month after the conclusion of the Elimination
Period, demonstrating that Kelly suffered from severe pain and had functional difficulties
through the end of the relevant period, which provides evidence of restrictions or limitations
during the Elimination Period.
In denying Kelly‘s claim, Reliance relied on Dr. Green‘s report and failed to give any
independent weight to Dr. Dearolf‘s conclusions or the physical therapy records. (Id. at Ex. C.)
In fact, aside from quoting Dr. Green‘s report discounting Dr. Dearolf‘s medical opinion, Dr.
Dearolf‘s findings and conclusions about Kelly‘s medical condition as Kelly‘s treating physician
are not mentioned in the denial letter at all. (Id.) The problematical reliance on Dr. Green‘s
opinions is clearly evident where the denial letter concludes its evaluation of Kelly‘s medical
condition by stating:
Both specialists therefore opined that no restrictions or limitations are supported
through the records for either condition from the date of disability through the
end of the 180-day Elimination Period. What‘s more, as mentioned above, Dr.
Green felt that a lack of follow-up testing ordered by Dr. Dearolf appears
inconsistent with your self-reports of the severity of your pain.
(Id.) Reliance appears to have disregarded the medical opinion of the only doctor that actually
treated Kelly and ignored the reports of his physical therapist which further elaborated on his
condition, and instead relied solely on Dr. Green‘s conclusion that there was a ―lack of objective
evidence for restrictions or limitations.‖ As indicated, Reliance also chose to forgo an IME.
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This is significant because, while it is acceptable for the administrator to credit the
contrary evidence of a non-treating physician, where a non-treating physician‘s opinion simply
cites to an absence of information it does not serve to refute the treating physician‘s conclusions,
and in and of itself is not a reasonable explanation for denying benefits. See Mishler v. Met. Life
Ins. Co., 2007 WL 518875 at *9 (E.D. Mich. Feb. 15, 2007). Courts have noted ―the particular
appropriateness and helpfulness of an IME in cases in which the claim involves subjective
complaints.‖ Schwarzwaelder, 606 F. Supp. 2d. at 560. (citing Klinger v. Verizon Comm., Inc.,
2007 WL 853833 at *3 (E.D. Pa. Mar. 14, 2007) (noting that a claim administrator who requests
an IME ―avoid[s] the uncomfortable argument . . . that the administrator reasonably gave greater
weight to the opinions of physicians who have not physically examined the plaintiff than to those
physicians who did.‖); Adams v. Metro. Life Ins. Co., 549 F. Supp. 2d 775, 790 (M.D. La. 2007)
(where a ―case involves subjective accounts . . . the fact that only a file review was conducted is
relevant.‖).
Because Reliance (1) substantially relied on Dr. Green‘s paper review, which
discounted and selectively ignored much of the evidence of Kelly‘s ailments, (2) failed to
request an IME, and (3) gave no independent weight to the opinion of the only physician that
actually treated Kelly, the Court concludes its exercise of discretion in deciding this claim was
arbitrary and capricious.
B. Unreasonable Rejection of Self-Reported and Subjective Evidence
Courts have also found denials arbitrary where the decision is based largely on the
rejection of the claimant‘s self-reported symptoms and the treating physician‘s conclusions about
those symptoms, when no reasonable basis for rejecting such observations is identified. See,
e.g., Schwarzwaelder, 606 F. Supp. 2d. at 561–62. A claimant‘s subjective accounts cannot be
wholly dismissed, particularly where, as here, ―the plan itself does not restrict the type of
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evidence that may be used to demonstrate total disability.‖3 Glenn, 461 F.3d at 672. Courts have
also concluded that a claimant‘s account of pain cannot be ignored simply because it can be
characterized as ―subjective.‖ See Audino v. Raytheon Co. Short Term Disability Plan, 129 Fed.
App‘x 882, 885 (5th Cir.2005). In a factually similar case involving a claimant with back
problems, one court concluded
The defendants are not free to ignore the plaintiff's chronic and severe pain under
the apparent theory that MRIs or EMGs must demonstrate some structural
deformity for a person to be disabled because of back pain. Unfortunately for all
parties involved, back pain, even severe pain, is not so simple.
Gellerman v. Jefferson Pilot Financial Ins. Co., 376 F. Supp. 2d 724, 734, 376 n.9 (S.D. Tex.
2005).
Here, Dr. Green‘s report generally ignored Kelly‘s complaints of pain noted in the
physical therapy records, and found that ―most of the complaints and findings reported‖ in Dr.
Dearolf‘s treatment notes ―were subjective in nature.‖ (Pl‘s Br. at Ex. D.) Dr. Green‘s report
further concludes that because ―there was no documentation of any other studies recommended
such as an electromyography, functional capacity evaluation, repeat MRI with possible
discogram, or any other studies that would help elucidate the problem,‖ there was ―no objective
evidence for restrictions or limitations.‖ (Id.) He also stated that he felt Dr. Dearolf would have
requested or completed ―further studies to more definitely elucidate the problem‖ if it was
actually as serious as Kelly suggested. (Id.)
Reliance accepted Dr. Green‘s conclusion that there was ―no objective evidence of
limitations or restrictions‖ in denying Kelly‘s claim. The determination that objective evidence
3
The Reliance policy merely states that ―written proof of Total Disability must be sent to us within ninety (90) days
after Total Disability occurs.‖ (AR013.) The policy does not delineate what is and is not acceptable ―written proof.‖
15
was lacking appears to have been influenced by the fact that Dr. Dearolf did not complete more
tests to evaluate Kelly‘s condition. Indeed, Reliance reiterated in the denial letter that this was
one of the reasons for denying the claim. But the plan does not explicitly limit the evidence of
disability to ―objective evidence.‖
Reliance‘s decision to accept the conclusions of one
physician‘s paper review, and to discount Kelly‘s account of his pain which is supported by the
observations of the treating physician and physical therapist, further demonstrates that its
exercise of discretion in deciding Kelly‘s claim was arbitrary and capricious.
C. Absence of any Substantive Evaluation of Material Job Duties
Under the Reliance benefit plan, ―Total Disability‖ is defined as an inability to ―perform
the substantial and material duties of your regular occupation.‖ (Pl‘s Br. Ex. C.) In denying the
parties first cross-motions for summary judgment and ordering a remand, the Court noted that
Reliance had denied Kelly‘s claim by (1) relying on an incorrect job description from Penn
Mutual, and (2) improperly defining ―regular occupation‖ generally as opposed to taking into
account the actual job duties performed, a practice the Third Circuit expressly rejected in Lasser
v. Reliance Standard life Ins. Co., 344 F.3d 381, 387 (3d Cir. 2003). (Tr. 9:20–24, Dec. 14,
2010.) By permitting Kelly to supplement the administrative record on remand with correct
information related to his job responsibilities. The Court pointed out that ―now we have the
golden opportunity with the blessing of the district court to do it right.‖ (Id. at 14:14–15.)
Kelly submitted a 67 paragraph supplemental certification detailing his job
responsibilities and injuries and attached nine Exhibits, including the correct Penn Mutual Job
Description from his personnel file, as well as numerous delegation forms from his supervisor
detailing other responsibilities that had been delegated to him. (Pl‘s Br. Ex B.)
Reliance
provided this information to Kelly‘s supervisor at Penn Mutual, Frank DePaola, who responded
16
with a three page letter critique. The letter essentially noted that the job description and
delegation forms were accurate but that Kelly, as a supervisor himself, could choose to delegate
many of the tasks he discussed and that Kelly traveled approximately 10% of the time, but never
as much as 45% of the time. (Pl‘s Br. Ex. E.) This information, along with the reports of Dr.
Green and Dr. Helmer, were provided to Reliance‘s Vocational Specialist for review.
The Vocational Specialist submitted a two page review. The first page is almost
completely filled with a copied bulleted list of the job responsibilities for Kelly‘s Managing
Director/Advanced Planning/Compliance Officer position, and half of the second page consists
of copied portions of Dr. Green‘s and Dr. Helmer‘s paper review reports. (Def‘s Br. Ex. D.)
Beyond the copied portions, the report offers only conclusory remarks and refers to Kelly‘s
position by the wrong title. (Id.) It concludes, without any elaboration, that Kelly was required
to travel only 10% of the time, had the ability to delegate job duties, ―and in light of the medical
information referenced, Mr. Kelly would be capable of performing the material duties of a
Managing Agent at Penn Mutual Life Insurance Company.‖ (Id.)
When evaluating whether Kelly‘s medical condition precluded him from performing the
material duties of his job, Reliance relied heavily on the submission of the Vocational Specialist.
(Pl‘s Br. Ex. C.) Neither the Vocational Specialist nor Reliance determined which duties were
material duties of Kelly‘s job, which duties could be delegated, what degree of physical exertion
was required to complete the material duties and whether Kelly could, during the Elimination
Period, complete those tasks. In the denial letter, Reliance also uses the DePaola letter to
discredit Kelly‘s description of the physical requirements of his job responsibilities, observing
that based on DePaola‘s information, ―many of the statements [Kelly] made in [his] affidavit
17
concerning [his] job requirements grossly exaggerate the level of physical activity involved in
[his] job at PML as well as travel duties.‖ (Id.)
What actually is ―grossly exaggerated‖ is Reliance‘s characterization of Kelly‘s
certification. DePaola‘s letter states that many of the duties Kelly was required to perform were
duties he had the option to delegate, and that Kelly from time to time attended out of office
meetings he was not required to attend. (Pl‘s Br. Ex. E.) Reliance inflates DePaola‘s comments
to a broadside attack on Kelly‘s supplemental certification. But the fact that Kelly had the option
to delegate certain job responsibilities he was actively performing prior to the car accident does
not mean that by explaining those duties Kelly was exaggerating the requirements of his job in
his certification. Moreover, in Lasser, the Third Circuit expressly held that the assessment of a
claimant‘s inability to ―perform the material duties of his/her regular occupation‖ requires
consideration of the ―usual work that the [claimant] is actually performing immediately before
the onset of the disability.‖ 344 F.3d at 387 (emphasis added).
The apparent wholesale rejection of Kelly‘s description of his job duties was
unreasonable and led to the additional unreasonable failure to countenance the existence of any
restrictions or limitations during the Elimination Period. In light of Dr. Dearolf‘s conclusion that
Kelly was unable to perform non-sedentary and sedentary work, and the physical therapist‘s
detailed notes about Kelly‘s impaired functional ability, it is surprising that neither Dr. Green‘s
report nor Reliance‘s ultimate denial of benefits suggest that Kelly‘s condition warranted any
work place restrictions or limitations. Dr. Green‘s report concluded there was no objective
evidence to support any restrictions or limitations without considering the actual requirements of
Kelly‘s job. The Vocational Specialist relied on Dr. Green‘s conclusion that no restrictions or
limitations were warranted in summarily concluding that Kelly was capable of performing his
18
job duties. Reliance relied on both of these reports to thereafter deny Kelly‘s claim for benefits
without giving any weight to his treating physician‘s diagnosis or his own description of his job
activities. Reliance‘s failure to consider the duties Kelly was actually performing prior to the
accident and whether Kelly was physically capable of performing those duties after the accident
was unreasonable and demonstrates Reliance‘s exercise of discretion in denying Kelly‘s claim
was arbitrary and capricious.
IV. Conclusion
On remand, Reliance conducted an inappropriately selective review of the evidence,
placed unreasonable emphasis on the reports of consultants who never examined Kelly, chose
not to use an IME, and failed to engage in any meaningful analysis of Kelly‘s material job duties.
These deficiencies in the context of Reliance‘s inherent conflict of interest and questionable prefinal decision activities amount to an arbitrary and capricious exercise of discretion in violation
of ERISA.
Accordingly, Kelly‘s motion for summary judgment with respect to Count I of his
Amended Complaint is granted4, and Reliance‘s motion for summary judgment is denied. Kelly
is entitled to receive the LTD benefits owed to him under the Plan.5 The Court will entertain
Kelly‘s request to recover costs and attorneys‘ fees. An appropriate order will be entered.
December, 21st 2011
/s/ Katharine S. Hayden
Katharine S. Hayden, U.S.D.J.
4
It should be noted that Kelly moved for Summary Judgment against both Reliance, Count I of his Amended
Complaint, and Penn Mutual, Count II of his Amended Complaint. Penn Mutual filed an opposition brief that
opposed only an award of compensatory damages in the event the Court concluded that the denial was arbitrary and
capricious. Because neither Kelly nor Penn Mutual presented any arguments relating to Kelly‘s ―specific
allegations‖ against Penn Mutual, the Court has not granted summary judgment as to Count II.
5
Kelly has also requested an award of ―money damages‖ from Reliance, distinct from the LTD benefit payments
owing. Kelly has not argued in his brief why such money damages are warranted, nor presented any facts or law to
support the request. Therefore, the court denies Kelly‘s request for additional money damages.
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