Kim v. Hartford Insurance Company et al
ORDER granting 27 Motion for Summary Judgment; denying 28 Motion for Summary Judgment. Ordered by Judge Edward R. Korman on 6/14/2017. (Park, James)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
NOT FOR PUBLICATION
MEMORANDUM & ORDER
– against –
15-cv-2474 (ERK) (RER)
Under its employee welfare benefit plan (the “Plan”), the School of Visual Arts (the
“School”) offers a long-term disability insurance policy issued by Hartford Life Insurance
Company (“Hartford”). Admin. R. at 58. The policy is incorporated into the Plan, id., which
provides that an employee with a long-term disability resulting from accidental bodily injury,
sickness, or pregnancy receives benefits until retirement, id. at 7–8, 18. The Plan caps benefits at
24 months for employees who are disabled because of (1) a “Mental Illness that results from any
cause” or (2) “any condition that may result from Mental Illness.” Id. at 10–11. The Plan defines
“Mental Illness” as:
[A] mental disorder as listed in the current version of the Diagnostic
and Statistical Manual of Mental Disorders [“DSM-IV”] . . . . A
Mental Illness may be caused by biological factors or result in
physical symptoms or manifestations.
Id. at 18.
Under the Employee Retirement Income Security Act of 1974 (“ERISA”), the School is
the Plan’s sponsor and the administrator, responsible for creating, amending, and managing the
Plan. Id. at 58. In contrast, Hartford is the claims fiduciary, charged with making eligibility
determinations and interpreting the Plan’s provisions. Id. One of these eligibility determinations
is at issue here. Kim, a 54-year-old woman born in 1963, was employed by the School from 2003
until 2009, when she became disabled by bipolar disorder. Id. at 327. In May 2010, she began to
collect long-term disability benefits under the Plan. Id. at 113. Two years later, her benefits were
terminated by Hartford pursuant to the Plan’s 24-month cap for mental disabilities. Id. at 112.
Kim appealed this decision internally to Hartford, arguing, inter alia, that “Bipolar Disorder is a
biologically based illness, and therefore, it is a physical condition.” Id. at 214. Hartford denied
Kim’s appeal primarily because the Plan defines “mental illness” as those listed in the DSM-IV.
Id. at 106. Bipolar disorder is listed as a mental disorder in the DSM-IV. See AM. PSYCHIATRIC
ASS’N, DIAGNOSTIC & STATISTICAL MANUAL OF MENTAL DISORDERS 382–96 (4th ed. text rev.
2000). The parties now cross-move for summary judgment.
Because the Plan provides Hartford with the “full discretion and authority to determine
eligibility for benefits,” Admin. R. at 17, Hartford’s decision to terminate Kim’s benefits is
reviewed under an arbitrary and capricious standard. Pagan v. NYNEX Pension Plan, 52 F.3d 438,
441 (2d Cir. 1995). Kim also argues that Hartford breached its fiduciary duty by failing to consider
revisions to the Plan’s definition of “mental illness.” See Pl.’s Mot. for Summ. J. at 9–12. Whether
such a fiduciary duty exists under ERISA is a question of law and thus is reviewed de novo. See
Roganti v. Metro. Life Ins. Co., 786 F.3d 201, 210 n.7 (2d Cir. 2015).
Alleged Change in Rationale
Kim argues that Hartford changed its rationale for terminating her benefits from the initial
termination to the subsequent internal appeal. See Pl.’s Mot. for Summ. J. at 5–9. Specifically, in
its June 2010 letter approving Kim’s application, Hartford stated that her benefits would be subject
to the Plan’s 24-month cap for mental disabilities and quoted the relevant Plan provision. Admin.
R. at 132–33 (quoting id. at 10–11). Subsequently, in its February 2012 initial termination letter,
Hartford quoted this provision again. Id. at 112 (quoting id. at 10–11). Nevertheless, in its
December 2012 letter denying Kim’s appeal, Hartford quoted slightly different language from an
outdated 2003 insurance policy:
“Payment of [long-term disability] Benefits is limited to 24 months
of [long-term disability] Benefits during your lifetime for Disability
caused or contributed to by a Mental Disorder . . . .” The Policy also
provides the following definition: “Mental Disorder means a mental,
emotional, or behavioral disorder.”
Id. at 105 (quoting id. at 336).
Despite the close similarity between this quoted language and the relevant Plan provision,
compare id. at 336 and id. at 10–11, Kim argues that Hartford’s error suggests either that the
appeals reviewer used the wrong policy to terminate her benefits, or that Hartford has stopped
relying on the DSM-IV’s classifications for mental disorders. See Pl.’s Mot. for Summ. J. at 7–9.
This argument is contradicted by the rest of Hartford’s appeal denial letter. In the latter part of the
letter, Hartford explained that “Bipolar Disorder is listed in the [DSM-IV] . . . as a mental disorder
and therefore, disabilities resulting from bipolar disorder are indeed limited under the terms of the
[Plan] to 24 months of [long-term disability] benefits.” Admin. R. at 106. Moreover, Hartford
concluded the letter by stating that “[f]or the reasons documented above, we have determined that
the decision to apply the [Plan] provision limiting benefits due to a Mental Disorder effective May
3, 2012 was appropriate and that decision will be maintained.” Id. This sentence indicates that
Hartford was referring back to the correct Plan provision that it relied on in its earlier letters, and
that its misquotation of the wrong insurance policy was nothing more than an isolated error. Thus,
read as a whole, Hartford’s appeal denial letter neither deprived Kim of a full and fair review,
ERISA § 503, 29 U.S.C. § 1133, nor violated the Department of Labor’s claim procedure
regulation, 29 C.F.R. § 2560.503–1(g)(1)(ii). Moreover, Kim has failed to demonstrate that
Hartford’s conflict of interest—it both evaluates and pays claims—influenced the termination of
her benefits. Hobson v. Metro. Life Ins. Co., 574 F.3d 75, 83 (2d Cir. 2009).
Reliance on the DSM-IV
Kim also argues that Hartford’s reliance on the DSM-IV to define “mental illness” was
arbitrary and capricious because the definition is obsolete, overbroad, and excludes certain
conditions that otherwise would be subject to the 24-month cap. See Pl.’s Mot. for Summ. J. at
12–19. In a virtually indistinguishable case, however, the Second Circuit held that it is not
arbitrary and capricious for a plan’s fiduciary to terminate an employee’s benefits for bipolar
disorder based on a plan provision limiting benefits for mental disabilities and the DSM-IV’s
listing of bipolar disorder as a mental disorder. Fuller v. J.P Morgan Chase & Co., 423 F.3d 104,
107 (2d Cir. 2005). There, the employee’s long-term disability benefits were terminated after 18
months pursuant to a plan provision that limited the duration of benefits for disabilities “aris[ing]
from a mental or emotional disease or disorder.” Id. at 105–06 (internal quotation marks omitted).
The Second Circuit reasoned that the plan’s fiduciary “exercised its authority in a plainly
reasonable manner by consulting the DSM–IV, an objective authority on the subject of mental
disorders.” Id. at 107. In the present case, where the Plan explicitly defines mental illness in terms
of the mental disorders listed in the DSM-IV, the holding of Fuller applies with even greater force.
Thus, it was not arbitrary and capricious for Hartford to rely on the DSM-IV.
Alleged Fiduciary Duty
Finally, Kim argues that Hartford breached its fiduciary duty to “review the [Plan’s
definition of mental illness] to determine if it was valid and then advise [the] Plan Administrator
[i.e., the School] of its review.” Reply in Supp. of Pl.’s Mot. for Summ. J. at 1. Under ERISA, a
claims fiduciary “owes a fiduciary duty not just to the individual participant or beneficiary whose
claim is under review, but to all of the participants and beneficiaries of the plan. As a result,
ERISA requires a balance between the obligation to guard the assets of the trust from improper
claims [and] the obligation to pay legitimate claims. In striking this balance with respect to a
particular claim, a fiduciary must, among other things, assess whether the claimant has furnished
sufficient evidence that he is entitled to the benefits he seeks.” Roganti v. Metro. Life Ins. Co.,
786 F.3d 201, 211–12 (2d Cir. 2015) (internal quotation marks and citations omitted). Outside of
this specific claims processing context, however, “[e]mployers or other plan sponsors are generally
free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans.”
Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995) (citing Adams v. Avondale
Industries, Inc., 905 F.2d 943, 947 (6th Cir. 1990)). In this regard, all that is required is the
provision of “a procedure for amending [the] plan, and for identifying the persons who have
authority to amend the plan.” ERISA § 402(b)(3), 29 U.S.C. § 1102(b)(3).
In light of this distinction between claims processing and plan administration, it is
implausible that Hartford, as the claims fiduciary charged with making case-by-case eligibility
determinations, would have a fiduciary duty to consider whether the Plan’s provisions need to be
revised. The authority to amend the Plan lies entirely with the School, as the plan sponsor and
administrator. And as the Supreme Court has indicated, the School has no fiduciary duty to do so
either. See Curtiss-Wright Corp., 514 U.S. at 78 (quoting Adams, 905 F.2d at 947, for the
proposition that a plan sponsor “does not act in a fiduciary capacity when deciding to amend . . . a
welfare benefits plan”). Thus, even if Kim were to bring suit against the School, which she
voluntarily dismissed from this case, she would not have a cognizable fiduciary duty claim. Cf.
id. (holding that it is not a cognizable claim under ERISA that a plan sponsor “amended its plan to
deprive [employees] of health benefits”).
Moreover, the only case that Kim cites in support of her fiduciary duty claim is inapposite.
In Tibble v. Edison Int’l, 135 S. Ct. 1823, 1825, 1828 (2015), the Supreme Court explored the
“contours of an ERISA fiduciary’s duty” with respect to the selection and monitoring of mutual
fund investments for a 401(k) savings plan. Drawing on trust law, it held that “[a] plaintiff may
allege that a fiduciary breached the duty of prudence by failing to properly monitor investments
and remove imprudent ones.” Id. at 1829. It is difficult to see how Tibble has any relevance here.
Interpreting Kim’s position most charitably, she appears to be arguing that the monitoring of
investments under the kind of savings plan at issue in Tibble is analogous to the monitoring of
medical definitions under the Plan here. See Reply in Supp. of Pl.’s Mot. for Summ. J. at 1. But
this analogy is implausible. Unlike an investments fiduciary of the kind discussed in Tibble,
Hartford has no authority to modify the Plan’s definition of mental illness or any other Plan
provision. Kim’s similarly implausible invocation of Department of Labor regulations requiring
“fiduciaries to periodically review the performance of their service providers,” Pl.’s Mot. for
Summ. J. at 10, is rejected for the same reasons.
Kim’s motion for summary judgment is denied, and Hartford’s cross-motion is granted.
Brooklyn, New York
June 14, 2017
Edward R. Korman
Edward R. Korman
United States District Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?