CLOUD v. THE PNC FINANCIAL SERVICES GROUP,INC. et al

Filing 27

MEMORANDUM AND ORDER THAT DEFENDANT'S MOTION FOR SUMMARY JUDGMENT IS GRANTED IN ITS ENTIRETY. PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT IS DENIED IN ITS ENTIRETY. THE CLERK OF COURT IS DIRECTED TO MARK THIS CASE CLOSED FOR ALL PURPOSES. JUDGMENT IS ENTERED IN FAVOR OF THE DEFENDANTS AND AGAINST PLAINTIFF. SIGNED BY HONORABLE LAWRENCE F. STENGEL ON 1/30/2009. 2/2/2009 ENTERED AND COPIES MAILED AND E-MAILED.(mbh, )

I N THE UNITED STATES DISTRICT COURT F O R THE EASTERN DISTRICT OF PENNSYLVANIA R O N A L D CLOUD, P laintiff : : : : : : : : : C IV IL ACTION

v. T H E PNC FINANCIAL SERVICES G R O U P , INC., et al., D efe n d a n ts

N O . 06-CV-1066

MEMORANDUM S T E N G E L , J. January 30, 2009

In this ERISA case, Ronald Cloud is trying to recover long-term disability benefits u n d e r PNC's employee plan.1 The parties filed cross-motions for summary judgment. F o r the reasons that follow, I will grant the defendants' motion for summary judgment a n d deny the plaintiff's motion for summary judgment. I . BACKGROUND R o n a ld Cloud was employed as a Senior Investment Accountant for PNC from S e p te m b e r 2, 1997 until July 2, 2004. Mr. Cloud believed that he was unable to continue w ith his job due to severe anxiety and depression. He participated in PNC's long-term d is a b ility plan.2 Under the Plan, during an initial ninety-day "elimination period" and the

Mr. Cloud asserts his claim under Section 502(a)(1)(B) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). The plan is governed by ERISA and provides full-time employees who are out of work for periods exceeding ninety days with up to 70% of their base salary. The Plan's benefits are paid out of a pre-established trust and therefore, it is self-funding.
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n ex t twenty-four months of "total disability," an employee must prove he "cannot perform e a c h of the material duties of his or her regular occupation." See Compl. Exh. B at 5 (" th e Plan"). After twenty-four months, the standard for total disability is heightened and th e employee is required to demonstrate that he could not perform each of the material d u tie s of "any gainful occupation" for which he was reasonably suited by training, e d u c atio n , or experience. Id. The plan designates PNC as the Plan Administrator, and p ro v id e s that no decision by the Administrator shall be overturned unless the decision is " a rb itra ry and capricious." 3 Id. at 16. Additionally, the Plan allows PNC "to appoint or e m p lo y individuals or firms to assist in the administration of the [p]lan." PNC authorized S e d g w ick Claims Management Services, Inc. to evaluate and decide claims pursuant to th e Plan. Benefits under the Plan are paid out of a trust established for that purpose. (Statement of Undisputed Material Facts, PNC's Memorandum of Law in support of its M o tio n for Summary Judgment). Neither PNC nor Sedgwick had any direct financial interest or obtained any direct financial benefit from a decision regarding Mr. Cloud's c la im for long-term disability benefits. Id. On September 17, 2004, approximately two months after he stopped working at P N C , Mr. Cloud submitted an application for long-term disability benefits. (AR 108-

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As the Administrator, the plan grants PNC authority and discretion as follows: 3(a) The Administrator shall be responsible for the Plan's compliance with all the requirements of applicable provisions of [ERISA] . . . The Administrator shall be vested with all the power, authority and discretion necessary to supervise and control the operation of the Plan in accordance with the terms thereof. 2

1 1 0 ).4 Claiming "severe depression, severe anxiety," Mr. Cloud alleged that he could not p erf o rm his job duties.5 After receiving the claim, Sedgwick contacted the plaintiff's p h ys ic ia n , Dr. Ian Magill, to obtain the plaintiff's medical records. (AR 8384). In the tre a tin g physician's statement, Dr. Magill described the plaintiff's prognosis as "good," f a ile d to list any restrictions the anxiety placed on the plaintiff and concluded that the a n x ie ty and depression were "temporary." 6 (AR 95-98). Based on its investigation, S ed g w ick notified Mr. Cloud on November 19, 2004 that his claim for long-term d is a b ility benefits was denied. (AR 32-35). In a letter dated November 29, 2004, PNC explained that the plaintiff must either a p p e al Sedgwick's decision or return to work. (AR 31). On December 15, 2004, S e d g w ick received a letter from the plaintiff appealing the denial. (AR 30). With S e d g w ic k 's consent, the plaintiff submitted supplemental medical information, including a consultative medical examination which the Pennsylvania Bureau of Disability D e ter m in a tio n obtained while deciding the plaintiff's claim for disability benefits

The administrative record contains the underwriting and claims files concerning the plaintiff. The plaintiff testified that "[t]he anxiety of the job has almost given me a nervous breakdown . . . My hands shake, my chest gets tight, and sometimes [I have] shortness of breath . . . Traveling 110 miles round trip per day has added to the problem." (AR 108).
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On November 1, 2004, Sedgwick contacted the plaintiff's other medical provider, Dr. James Gaul, to request further information; in response, Dr. Gaul provided Sedgwick with a consultation report of his October 14, 2004 examination of the plaintiff. (AR 36-37, 61-62). In this report, Dr. Gaul described the plaintiff as alert and "cognitively intact" with only mild and temporary anxiety. (AR 39). 3

p u rs u a n t to the Social Security Act. (AR 19-27). Dr. Donald Jennings, who conducted the examination, stated that plaintiff "had a major psychological reaction." Id. Dr. J e n n in g s did not state, however, that the plaintiff was disabled. After receiving the p la in tif f 's appeal, Sedgwick retained two independent physicians to review all of the p la in tif f 's medical information.7 (AR 2). After reviewing these records, the two p h ys ic ia n s concluded that Mr. Cloud was not totally disabled. (AR 2-12). Based on all of th e evidence presented, in a letter dated February 9, 2005, Sedgwick upheld the prior d e n ial of the plaintiff's claim. (AR 1-3). Sedgwick's letter informed Mr. Cloud that "all a p p e lla te administrative remedies have been exhausted." Id. II. LEGAL STANDARD The Supreme Court decided that if an ERISA plan authorizes a plan administrator to evaluate and decide claims for benefits, the courts should apply a deferential standard of ju d ic ia l review. Firestone Tire & Rubber Co. V. Bruch, 489 U.S. 101, 115 (1989). Additionally, the Supreme Court determined that the "arbitrary and capricious" standard of ju d ic ia l review was appropriate when re-examining an administrator's decisions. Id. at 1 0 3 . See Skretvedt v. E.I. Dupont deNemours & Co., 268 F.3d 167, 170 (3d Cir. 2001); see also Courson v. Bert Bell NFL Player Retirement Plan, 214 F.3d 136, 142 (3d Cir. 2 0 0 0 ); Abnathya v. Hoffman-La Roche, Inc., 2 F.3d 40, 45 (3d Cir. 1993). "[The arbitrary a n d capricious standard's] scope of review is narrow, and `the court is not free to
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The two independent physicians were Dr. Joseph J. Jares, III, a board-certified neurologist, and Dr. Irwin Greenberg, a board-certified psychiatrist. (AR 2). 4

s u b s titu te its own judgment for that of the [administrator] in determining eligibility for p la n benefits.'" Mitchell v. Eastman Kodak Co., 113 F.3d 433, 439 (3d Cir. 1997) (q u o tin g Lucash v. Strick Corp., 602 F. Supp. 430, 434 (E.D. Pa. 1984)). Further, the a rb itra ry and capricious standard limits the court's review to the record before the ad m inistrat o r at the time of the decision. Mitchell, 113 F.3d at 440 ("Under the arbitrary a n d capricious standard of review, the `whole' record consists of that evidence that was b e f o re the administrator when he made the decision being reviewed."); see also Freiss v. R e lia n c e Standard Life Ins. Co., 122 F. Supp. 2d 566, 573 (E.D. Pa. 2000); Luby v. T ea m sters Health, Welfare and Pension Trust Funds, 944 F.2d 1176, 1184 n.8 (3d Cir. 1 9 9 1 ); Woolsey v. Marion Laboratories, Inc., 934 F.2d 1452, 1460 (10th Cir. 1991); V o liv a v. Seafarers Pension Plan, 858 F.2d 195, 196 (4th Cir. 1988). The Third Circuit h a s determined that an administrator's decision may be found arbitrary and capricious if th e decision is "without reason, unsupported by substantial evidence or erroneous as a m a tte r of law." Abnathya, 2 F.3d at 45. Under the arbitrary and capricious standard, as lon g as the administrator's decision was reasonable and supported by evidence, the court m u s t uphold the administrator's decision. Firestone, 489 U.S. at 111; Abnathya, 2 F.3d at 45. Although courts generally apply the highly deferential arbitrary and capricious s ta n d a rd , the Third Circuit has recognized that a heightened standard of review applies w h e n there is a conflict of interest. Pinto v. Reliance Standard Life Ins. Co., 214 F.3d 377,

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3 7 8 (3d Cir. 2000). A conflict of interest may exist when the employer's plan is unfunded, a n d claims must be paid out of the employer's general revenues. Pinto, 214 F.3d at 378; s e e also Smathers v. Multi-Tool, Inc., et al., 298 F.3d 191 (3d Cir. 2002); Skretvedt, 268 F .3 d 167 (3d Cir. 2001). However, a conflict of interest does not exist where the employer f u n d s an ERISA plan through a fixed trust; in which case the arbitrary and capricious sta n d a rd should be applied.8 Smathers, 298 F.3d at 198-99. In this case, PNC funds its E R IS A plan through a fixed trust. I I I . DISCUSSION A . Defendants' Motion for Summary Judgment 1 . The Decision Was Not Arbitrary and Capricious T h e defendants contend that Sedgwick's decision was not arbitrary and capricious b e c a u s e the determination was reasonable and based on substantial evidence. Specifically, th e defendants assert that the record lacks any evidentiary support for the plaintiff's claim f o r long-term disability benefits. In Cimino v. Reliance Standard Life Ins. Co., the plaintiff c la im e d that her anxiety and depression, resulting from a nervous breakdown, rendered her to ta lly disabled. 2001 WL 253791, at *1 (E.D. Pa. 2001). After the plan's administrator d e n ie d her claim for long-term benefits, the plaintiff filed suit against the insurer claiming

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The plaintiff contends that the court prohibited any discovery into PNC's possible conflict of interest. Specifically, the plaintiff asserts that the heightened standard of judicial review is appropriate in this case due to the uncertainty surrounding the Plan's funding. This assertion is baseless; the defendants have submitted credible evidence that the Plan is self-funded and therefore, the arbitrary and capricious standard is appropriate. 6

the denial was arbitrary and capricious. Id. at *6. Granting summary judgment, the court re a so n e d that the defendant was not "unreasonable in its conclusion that the evidence p ro d u c e d by [the plaintiff] was insufficient to support a finding of total disability under the p la n " because the plaintiff's anxiety and depression, with accompanying tremors and p a lp ita tio n s , did not render her completely disabled. Id.; see also Goldberg v. RCA Corp., 1 9 9 0 WL 204229, at *4 (granting summary judgment to employer because employee's an x iety did not completely prevent him from performing his work duties). H e re , as in Cimino, the defendants contend that the plaintiff was not totally disabled. P N C relies on Dr. Magill's statement that the plaintiff's "cognitive functions were intact," h is prognosis was "good," and his condition was only temporary. This conclusion is further su p p o rte d by Dr. Gaul's observation that the plaintiff was "cognitively intact" and his " ra p id fine movements were normal." Based on this evidence, and from my review of the a d m in is tra tiv e record, I believe Sedgwick rationally determined that Mr. Cloud was not to ta lly disabled within the meaning of the Plan and therefore, reasonably denied the p la in tif f 's claim for long-term disability benefits. The medical opinions available to the p la n 's administrator (Sedgwick) did not support a finding of total disability from his duties a t PNC. Nor did the medical evidence support a finding that Mr. Cloud was unable to p e rf o rm the duties of "any gainful occupation." Accordingly, I find that Sedgwick's initial d e n ia l of plaintiff's claim for long-term disability benefits certainly was not arbitrary or ca p riciou s and was in fact consistent with the record before the administrator.

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2 . The Dr. Jennings report, produced by plaintiff on appeal from the denial of benefits, did not establish a disability. M r. Cloud provided additional medical information to support his appeal. This new in f o rm a tio n does not justify reversing Sedgwick's denial. Consistent with the medical re p o rts submitted with the plaintiff's initial claim for benefits, this supplemental medical in f o rm a tio n demonstrates that Mr. Cloud was not totally disabled. Dr. Arnold Jennings e x a m in e d Mr. Cloud for the Pennsylvania Bureau of Disability Determination in a c o m p le te ly separate proceeding. Although Dr. Jennings' report stated that Mr. Cloud's c o n d itio n severely restricted his performance as a Senior Investment Accountant, he did not c o n sid e r Mr. Cloud to be disabled. The Jennings Report does nothing to dispute the f in d in g s of the two board-certified physicians who evaluated this case for the defendants: Dr. Jares, a neurologist, and Dr. Greenberg, a psychiatrist, reviewed the plaintiff's medical re c o rd s and found that the plaintiff's condition did not prevent him from performing his job d u ties. Based on this evidence, Sedgwick's decision to uphold the denial of the plaintiff's c la im for long-term disability benefits was not arbitrary or capricious. B. The Plaintiff's Motion for Summary Judgment T h e plaintiff contends that the denial of his long-term benefit claim was arbitrary a n d capricious for several reasons. First, the plaintiff claims that the defendants failed to fo llo w established and controlling law defining disability when they denied the plaintiff's c laim despite Dr. Jennings' testimony that the plaintiff's condition severely restricted his p e rf o rm a n c e in his "regular occupation." The defendants assert that this accusation is 8

e n tire ly baseless and that Sedgwick concluded, in accordance with controlling law, that the p la in tif f was not disabled from performing the essential functions of his "regular o cc u p atio n of Senior Investment Accountant." Essentially, Mr. Cloud feels that Dr. J e n n in g s established "total disability" despite the fact that Dr. Jennings clearly stopped s h o rt of this conclusion. It does not require a strained level of deference to conclude that the opinions of Mr. Cloud's own doctors (Magill and Gaul) outweighed the findings of Dr. Jen n ing s. Indeed, on the central questions of total disability Dr. Magill, Dr. Gaul and Dr. J e n n in g s agreed: Mr. Cloud was not totally disabled. T h e plaintiff further contends that Sedgwick credited unreliable evidence during the a p p e lla te process when Sedgwick considered the opinions of the two independent rev iew ing physicians who had never met the plaintiff and who were not provided the entire a d m in istra tiv e record. The defendants respond by showing that Sedgwick conducted its o w n careful review of the entire Administrative Record. Sedgwick did not improperly rely o n the two independent physicians. Sedgwick's review of the record (which is entitled to d e f ere n c e) was informed by the opinions of four experts: Magill, Gaul, Jennings, Jares and G re e n b erg . Not one of them found Mr. Cloud to be disabled. The fact that two of the d o c to rs were retained by Sedgwick and "only" reviewed records concerns the weight of the e v id e n c e . There is nothing about the record to suggest that Sedgwick's evaluation of this c la im was flawed or its denial "arbitrary and capricious." T h ird , the plaintiff asserts that Sedgwick failed to consider the entire record.

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S p e c if ic a lly, the plaintiff contends that Dr. Gaul's complete medical record was not in c lu d e d in the administrative file. Dr. Gaul did not believe that the plaintiff had an ex isting neurological problem; the missing pages did not adversely affect the plaintiff's c la im for long-term disability benefits. Fourth, the plaintiff contends that Sedgwick should have considered the plaintiff's a p p ro v a l for Social Security Disability Benefits in rendering its final decision. I note that S e d g w ic k considered and addressed the plaintiff's Social Security Disability Benefit award, a n d that an award of Social Security Benefits is not determinative here because the criteria f o r awarding Social Security benefits are vastly different from the criteria for awarding E R IS A benefits. Finally, the plaintiff asserts that if a denial is premised on a "lack of objective v e rif ica tio n ," then it is contrary to law. First, the Administrator did not, in fact, base its d e c is io n to deny the plaintiff long-term disability benefits solely upon the lack of objective m e d ic a l evidence. Second, an Administrator may consider a lack of objective evidence w h e n evaluating a claim for ERISA benefits. Mr. Cloud has failed to establish that the d e n ial of his claim was arbitrary and capricious. His motion for summary judgment shall b e denied. A n appropriate Order follows.

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IN THE UNITED STATES DISTRICT COURT F O R THE EASTERN DISTRICT OF PENNSYLVANIA R O N A L D CLOUD, P laintiff : : : : : : : : : C IV IL ACTION

v. T H E PNC FINANCIAL SERVICES G R O U P , INC., et al., D efe n d a n ts

N O . 06-CV-1066

ORDER

A N D NOW, this 30th day of January, 2009, upon careful consideration of the d e f en d a n ts ' motion for summary judgment (Document #16), the plaintiff's motion for s u m m ary judgment (Document #17), and the responses thereto, IT IS HEREBY O R D E R E D that: 1. T h e defendants' motion for summary judgment (Document #16) is G R A N T E D in its entirety. T h e plaintiff's motion for summary judgment (Document #17) is DENIED in its entirety.

2.

T h e Clerk of Court is directed to mark this case CLOSED for all purposes.

B Y THE COURT:

/s/ Lawrence F. Stengel LAWRENCE F. STENGEL, J.

IN THE UNITED STATES DISTRICT COURT F O R THE EASTERN DISTRICT OF PENNSYLVANIA R O N A L D CLOUD, P laintiff : : : : : : : : : C IV IL ACTION

v. T H E PNC FINANCIAL SERVICES G R O U P , INC., et al., D efe n d a n ts ORDER

N O . 06-CV-1066

OF JUDGMENT

A N D NOW, this 30th day of January, 2009, in accordance with my Memorandum a n d Order granting the defendants' motion for summary judgment, and in accordance with F e d e r a l Rule of Civil Procedure 58, judgment is hereby entered in favor of the defendants, a n d against plaintiff Ronald Cloud.

B Y THE COURT:

/s/ Lawrence F. Stengel LAWRENCE F. STENGEL, J.