Love v. Eaton Corporation Disabiltiy Plan for U.S. Employees

Filing 38

ORDER - Plaintiff's motion for summary judgment [DE35] is GRANTED, defendant's motion for summary judgment [DE33] is DENIED, and this case is REMANDED for further administrative proceedings consistent with this order. The clerk is DIRECTED to close the case. Counsel is reminded to read the order in its entirety for critical deadlines and information. Signed by District Judge Louise Wood Flanagan on 12/12/2017. (Collins, S.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:16-CV-860-FL

DIANE LOVE,
Plaintiff,
v.
EATON CORPORATION DISABILITY
PLAN FOR U.S. EMPLOYEES,
Defendant.

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ORDER

This matter is before the court on the parties’ cross-motions for summary judgment pursuant
to Federal Rule of Civil Procedure 56. (DE 33, 35). The issues raised are ripe for ruling. For the
following reasons, the court grants plaintiff’s motion for summary judgment and denies defendant’s
motion.
STATEMENT OF THE CASE
Plaintiff initiated the instant action by complaint filed October 20, 2016, alleging that she
is entitled to recover long-term disability benefits, or is entitled to a review of her application for
long-term disability benefits, under a group insurance policy (“plan”) issued by defendant, pursuant
to 29 U.S.C. § 1132(a)(1)(B) of the Employee Retirement Income Security Act of 1974 (“ERISA”).1
On May 24, 2017, defendant filed the administrative record for this case under seal. (DE 24-32).
On June 9, 2017, defendant filed the instant motion for summary judgment arguing in part that

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Plaintiff also alleged that she is entitled to recover short-term disability benefits but has since abandoned that
claim as time barred. (See DE 1, DE 36 at 1).

because plaintiff did not apply for and receive 26 weeks of short-term disability benefits (six months
or 182 days), as required under the plain language of the plan, she did not qualify to receive longterm disability benefits and her application for those benefits was correctly denied. On June 12,
2017, plaintiff filed her instant motion for summary judgment, arguing in part the plain language of
the plan does not require a claimant to apply for and receive six months of short-term disability
benefits before applying for long-term disability benefits. Plaintiff seeks a determination on the
record that she is entitled to long-term disability benefits or that she is entitled to remand of her case
for reconsideration of her application for long-term disability benefits.
STATEMENT OF THE UNDISPUTED FACTS
The undisputed facts as relevant to the instant motions may be summarized as follows. On
November 8, 1999, plaintiff began working for the Eaton Corporation. (Admin. R. at 961). On
October 25, 2014, plaintiff stopped working at the direction of her physician and was determined
by the plan to be qualified as of that day to receive short-term disability benefits through January
15, 2015. (Id. at 1014). On January 19, 2015, due to the nature of plaintiff’s disability, the plan
extended short-term disability benefits until January 31, 2015, but informed plaintiff she would need
to submit additional medical evidence to support additional short-term disability benefits. (Id. at
1017). On February 16, 2015, the plan informed plaintiff that because she failed to submit
additional medical evidence concerning her ongoing disability, she no longer qualified for short-term
disability benefits effective February 1, 2015. (Id. at 1021).
On February 28, 2015, plaintiff appealed the denial of her continued short-term disability
benefits to the plan’s first level of administrative review, submitting medical documentation at that
time. (Id. at 1112-24, 1130-33, 1152-54, 1164, 1230-31). Plaintiff submitted additional medical

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evidence after receiving an extension of time to do so. (Id. at 1125-29, 1161-63). On April 3, 2015,
the plan upheld the suspension of short-term disability benefits, finding plaintiff did not qualify for
ongoing short-term disability benefits. (Id. at 1027-28).
On April 17, 2015, plaintiff appealed the denial of continued short-term disability to the
plan’s second level review, submitting additional medical evidence after receiving an extension of
time to do so. (Id. at 1231-32, 1173-88). The plan again upheld the denial of continued short-term
disability benefits on July 15, 2015. (Id. at 1036-38).
On December 17, 2015, plaintiff submitted a long-term disability benefits claim. (Id. at
1206-1219). The plan denied plaintiff’s request on December 21, 2015, stating that because plaintiff
had not qualified for and received six months of short-term disability benefits, she could not qualify
for long-term disability benefits. (Id. 1094-95). Plaintiff appealed her denial through the plan’s
first level review. On February 12, 2016, in upholding the denial, the plan’s first level review stated
that “this is an administrative decision,” “it is not based on a determination of whether or not
[plaintiff] has met the definition of disability,” and therefore “[a]dditional medical documentation
is not relevant to the appeals decision.” (Id. at 1104).2 Plaintiff appealed her denial of long-term
disability benefits through the plan’s second level review. On June 9, 2016, in upholding the denial,
the plan’s second level review held “the Committee interprets the Plan as specifically requiring an
individual to fully exhaust the six months of disability coverage as provided under the [short-term
disability] plan,” which plaintiff did not do. (Id. at 1285).

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During this time, plaintiff submitted additional medical records. (Id. at 1274-76, 1281-82).

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DISCUSSION
A.

Standard of Review
Summary judgment is appropriate where “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(a). The party seeking 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 its burden, the non-moving party must then “come forward
with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. Ltd.
v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (internal quotation omitted). Only disputes
between the parties over facts that might affect the outcome of the case properly preclude the entry
of summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (holding
that a factual dispute is “material” only if it might affect the outcome of the suit and “genuine” only
if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party).
“[A]t the summary judgment stage the [court’s] function is not [itself] to weigh the evidence
and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Id.
at 249. In determining whether there is a genuine issue for trial, “evidence of the non-movant is to
be believed, and all justifiable inferences are to be drawn in [non-movant’s] favor.” Id. at 255; see
United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (“On summary judgment the inferences to
be drawn from the underlying facts contained in [affidavits, attached exhibits, and depositions] must
be viewed in the light most favorable to the party opposing the motion.”).

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Nevertheless, “permissible inferences must still be within the range of reasonable probability,
... and it is the duty of the court to withdraw the case from the [factfinder] when the necessary
inference is so tenuous that it rests merely upon speculation and conjecture.” Lovelace v.
Sherwin-Williams Co., 681 F.2d 230, 241 (4th Cir. 1982) (quotations omitted). Thus, judgment as
a matter of law is warranted where “the verdict in favor of the non-moving party would necessarily
be based on speculation and conjecture.” Myrick v. Prime Ins. Syndicate, Inc., 395 F.3d 485, 489
(4th Cir. 2005). By contrast, when “the evidence as a whole is susceptible of more than one
reasonable inference, a [triable] issue is created,” and judgment as a matter of law should be denied.
Id. at 489-90.
B.

Analysis
1.

Standard of Review

The first issue to decide in a claim for review of denial of benefits under an ERISA plan is
the correct standard of review to apply to defendant’s decision. The default standard of review is
de novo in ERISA cases in which a federal court is asked to review a plan administrator’s
determination. See Woods v. Prudential Ins. Co. of Am., 528 F.3d 320, 322 (4th Cir. 2008). Where
the plan at issue confers discretionary authority on its administrator, a court must instead review the
administrator’s determinations only for abuse of discretion. Metro. Life Ins. Co. v. Glenn, 128 S.
Ct. 2343, 2348 (2008); Woods, 528 F.3d at 322. This court determines de novo whether the ERISA
plan at issue confers discretionary authority on the administrator, and, if it does, whether the
administrator acted within the poof that discretion. Ellis v. Metro. Life Ins. Co., 126 F.3d 228, 233
(4th Cir. 1997).
In this case, the plan provides in relevant part:

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Benefits under the Eaton Plans will be paid only if the Plan Administrator and/or the
appointed Claims Administrator decides that the applicant is entitled to them under
the terms of the Plan. The Plan Administrator and/or the Claims Administrator has
discretionary authority to determine eligibility for benefits and to construe any and
all terms of the Plan, including but not limited to any disputed or doubtful terms. The
Plan Administrator and/or Claims Administrator also has the power and discretion
to determine all questions arising in connection with the administration,
interpretation and application of the Plan. Any and all determinations by the Plan
Administrator and/or Claims Administrator will be conclusive and binding on all
persons, except to the extent reviewable by a court with jurisdiction under ERISA
after giving effect to the time limits described in the “Claims Appeal Procedure”
section of this booklet.
(Admin. R. at 1502). In this manner, the plan confers discretionary authority upon defendant to
make benefit decisions according to the terms of the plan. “Under the abuse-of-discretion standard,
we will not disturb a plan administrator’s decision if the decision is reasonable, even if we would
have come to a contrary conclusion independently.” Williams v. Metro. Life Ins. Co., 609 F.3d 622,
630 (4th Cir. 2010).
However, “as a general proposition, ERISA plans, as contractual documents, see Wheeler
v. Dynamic Eng’g, Inc., 62 F.3d 634, 638 (4th Cir. 1995), are interpreted de novo by the courts.”
Booth v. Wal-Mart Stores, Inc. Assocs. Health & Welfare Plan, 201 F.3d 335, 340 (4th Cir. 2000).
“To the extent the administrator enjoys discretion to interpret the terms of a plan in the course of
making a benefits-eligibility determination, such interpretive discretion applies only to ambiguities
in the plan.” Blackshear v. Reliance Standard Life Ins. Co., 509 F.3d 634, 639 (4th Cir. 2007).
“[D]iscretionary authority is not implicated [where] the terms of the plan itself are clear,” Kress v.
Food Emp’rs Labor Relations, 391 F.3d 563, 567 (4th Cir. 2004), and “[a]n administrator’s
discretion never includes the authority to read out unambiguous provisions contained in an ERISA
plan,” Blackshear, 509 F.3d at 639 (internal quotation omitted). Thus, the court must enforce “the
plain language of an ERISA plan . . . in accordance with its literal and natural meaning.” United
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McGill Corp. v. Stinnett, 154 F.3d 168, 172 (1998) (internal quotation omitted).
2.

The Plan

Here, the plan contains two separate sections for short-term disability benefits and long-term
disability benefits. First, the plan provides that “[t]he Short Term Disability Plan provides you with
continuing income for up to 26 weeks if a covered disability prevents you from working. If you are
disabled longer than 26 weeks, additional benefits may be available under the Eaton long term
disability plan.” (Admin. R. at 1459). Under short-term disability benefits, the plan provides in part
that a person may be eligible for short-term disability benefits if that person is covered by the plan
and has a covered disability, defined as “an occupational or non-occupational illness or injury
prevents you from performing the essential duties of your regular position with the Company or the
duties of any suitable alternative position with the Company.” (Id. at 1464).
Second, the plan provides that “[t]he Long Term Disability Plan provides a continued source
of income if you are sick or injured and cannot work for an extended period of time. During the first
26 weeks of a covered disability, you may be covered by an Eaton Short Term Disability (STD)
Plan. If you remain disabled after that time, you may receive a benefit from the Long Term
Disability Plan.” (Id. at 1469). The plan provides in part that a person may be eligible for long-term
disability benefits if that person is covered by the plan and has a covered disability, defined as
“unable to work as the result of an occupational or non-occupational illness or injury.” (Id. at
1471). The plan additionally provides that the “work you are unable to do is defined differently over
the course of a disability,” and that a person will be considered disabled if:

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(Id.). In order to make a claim for long-term disability benefits, the plan provides for a number of
requirements or possible requirements under the heading “How to Obtain Benefits” including the
following:
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•
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You are required to complete and submit certain forms,
You must complete the forms and return them to the Claims Administrator
within 30 days of when you receive them,
The forms . . . must be completed and returned to the Claims Administrator
within one year of your last day of active work,
[T]he Claims Administrator may require additional medical or other
information,
You must apply for Social Security Benefits as soon as the Claims
Administrator determines you are eligible for them,
If your initial application for Social Security Disability is denied, the Plan
requires you reapply,
Objective findings of a disability are necessary to substantiate the period of
time your health care practitioner indicates you are disabled,
If your claim is approved by the Claims Administrator, your health care
practitioner will periodically be requested to submit updated medical
information regarding your continuing disability, and
The Claims Administrator may require you, from time to time, to undergo an
independent medical examination . . . and/or a functional capacity evaluation.

(Id. at 1476-77). The plan additionally states that “[i]f you are receiving disability benefits from the
Short Term Disability Plan, the Claims Administrator will mail the Long Term Disability Plan forms
to you at the end of your fourth month of disability.” (Id. at 1476). The plan states that “[t]he
waiting period for the start of [long-term disability] benefits begins on the day you become disabled
and continues for six months. During that time, you may be eligible for benefits under a Company
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short term disability program.” (Id. at 1474). Long-term disability benefit payments “begin on the
day immediately following a six-month period which you have been absent from work due to a
covered disability.” (Id.).
3.

Short-Term Disability Benefits Exhaustion Requirement

Defendant argues the plan requires a claimant, like plaintiff, to qualify for and receive six
months of short-term disability benefits before she may qualify for long-term disability benefits.
(DE 37 at 2-3). Here, because plaintiff only received short-term disability benefits from October
25, 2014, though February 1, 2015, defendant argues that plaintiff was correctly denied eligibility
for long-term disability benefits.
Pursuant to the plain language of the plan, however, there is no basis to interpret the terms
of the plan to require plaintiff to first exhaust short-term disability benefits before becoming eligible
for long-term benefits. Nowhere in the plan is such a requirement written, and a claimant in
plaintiff’s position would have no indication that such was required based on the terms of the plan.
Every provision offered by defendant to support its interpretation supports only the position
that a claimant must have been disabled for six months prior to receiving long-term disability
benefits, not that a claimant also must have applied for and received short-term disability benefits.
To support its position, defendant first emphasizes the following language from the plan, that “[t]he
waiting period for the start of [long-term disability] benefits begins on the day you become disabled
and continues for six months.” (DE 34 at 4). These words in no way indicate that a person seeking
long-term disability benefits must qualify for and receive six months of short-term disability benefits
in order to able to apply for long-term disability benefits. Instead, these words state that a person
must be disabled for six months and only then can that person begin to receive long-term disability

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benefits. Nothing indicates that a person must be considered disabled for six months and
additionally apply for and receive short-term disability benefits under the plan’s short-term
disability benefit system. In fact, the plan states in the same section that during the six month
waiting period that has to occur before receiving long-term disability benefits, a claimant “may be
eligible for benefits under a Company short term disability program,” indicating a claimant may not
be eligible and can still apply for long-term disability benefits. (See Admin. R. at 1474 (emphasis
added)).
Defendant also turns the court’s attention to the following language, that in order to be
considered for long-term disability benefits, in months 1-23, “including six months of short term
disability,” the person seeking benefits must be “[t]otally and continuously unable to perform the
essential duties of your regular position or any suitable alternative position.” (DE 34 at 4 (citing
Admin. R. at 1471)). In full context, the plan states the “work you are unable to do is defined
differently over the course of a disability,” and that a person will be considered disabled in order to
receive long-term disability benefits:

(Admin. R. at 1471). Here again, the requirement that the person seeking long-term disability
benefits be disabled for six months prior to application is not the same as a requirement that a person
apply for and receive six months of short-term disability benefits. The plan makes clear that an

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applicant for long-term disability benefits must be disabled for six months prior to such an
application being granted, but this is a different requirement than an applicant having to apply and
receive six months of short-term disability benefits under the plan.
Another section of the plan support this interpretation. See Johnson v. Amer. United Life
Ins. Co., 716 F. 3d 813, 821 (4th Cir. 2013) (“ERISA plans, like contracts, are to be construed as
a whole”) (internal quotation omitted). Under the directions provided to apply for long-term
disability benefits, the plan states that “[i]f you are receiving disability benefits from the Short Term
Disability Plan, the Claims Administrator will mail the Long Term Disability Plan forms to you at
the end of your fourth month of disability.” (Admin. R. at 1476 (emphasis added)). The reverse
scenario offered by this provision is that a person may not be receiving disability benefits from the
short-term disability plan when applying for long-term disability benefits.
Plaintiff is entitled to a “full and fair review[]” of her claim for long-term disability benefits.
See 29 U.S.C. § 1133; 29 C.R.F. § 2560.503-1. Therefore, the court will enter judgment remanding
the case for defendant to consider plaintiff’s application for long-term disability benefits, along with
all medical evidence submitted by plaintiff previously not considered, to determine if plaintiff
qualifies for long-term disability benefits including whether plaintiff had a qualifying disability for
six months prior to the initiation of her long-term disability benefits application.3
CONCLUSION
Based on the foregoing, plaintiff’s motion for summary judgment (DE 35) is GRANTED,
defendant’s motion for summary judgment (DE 33) is DENIED, and this case is REMANDED for
further administrative proceedings consistent with this order. The clerk is DIRECTED to close the
case.

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The court does not address the viability of plaintiff’s claim regarding the other requirements the plan contains
to qualify for long-term disability benefits.

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SO ORDERED, this the 12th day of December, 2017.

_____________________________
LOUISE W. FLANAGAN
United States District Judge

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