Jantos v. Prudential Life Insurance Company of America

Filing 85

REDACTED ORDER granting in part and denying in part Plaintiff's 63 Motion for Summary Judgment; and denying Defendant's 68 Cross MOTION for Summary Judgment or for Entry of Judgment Under Rule 52. Signed by Judge Richard A. Jones. (TH)

THE HONORABLE RICHARD A. JONES

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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LAURA D. JANTOS,
Plaintiff,

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Case No. 2:15-cv-01530-RAJ
v.
ORDER
THE PRUDENTIAL LIFE INSURANCE
COMPANY OF AMERICA,

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Defendant.

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This matter comes before the Court on Plaintiff Laura D. Jantos’ (“Plaintiff” or
“Ms. Jantos”) Motion for Summary Judgment and Defendant Prudential Life Insurance
Company of America’s (“Prudential” or “Defendant”) Cross-Motion for Summary
Judgment. Dkt. ## 62, 63, 67, 68. Both parties have opposed the other’s Motion and
filed a Reply in support of their own. Dkt. ## 72, 73, 74, 78, 79, 80.
For the reasons that follow, the Court GRANTS IN PART AND DENIES IN
PART Plaintiff’s Motion for Summary Judgment, DENIES Defendant’s Cross-Motion

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ORDER-1

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for Summary Judgment, and REMANDS this case to Defendant with instructions to

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reprocess Plaintiff’s claim in accordance with this Order.

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I.

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Plaintiff worked at ECG Management Consultants, Inc. (“ECG”) from 1995 to

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2005, when she became a shareholder. AR79-80; AR345-60. 1 Plaintiff is a beneficiary
to a Long Term Disability (“LTD”) Plan that Defendant administers. AR1041. In April
2012, Plaintiff suffered a traumatizing brain injury in a snowboarding accident and
became disabled. AR83-86. Plaintiff then submitted a claim for LTD benefits under
the Plan. Id.
Plaintiff’s Plan provided that it would pay sixty-percent of Plaintiff’s “monthly

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earnings,” up to $15,000. AR27; AR37-38. “Monthly earnings” was defined in the
Plan as the participant’s “gross monthly income from your Employer in effect just prior
to your date of disability. It does not include income received from commissions,
bonuses, overtime pay, any other extra compensation, or income received from sources
other than your Employer.” AR37-38. The Plan further informs participants that
Defendant would “multiply your monthly earnings by 60%” and then compare that
figure with the maximum benefit ($15,000). Id. The lesser of those two numbers is the
gross disability payment, which may be reduced by certain other income the participant
receives, including social security. Id.
During its initial review of Plaintiff’s disability claim in October 2012, Defendant

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BACKGROUND

informed ECG that it was “completing our initial review of Ms. Jantos’ claim . . . and
needed to confirm her monthly earning[s]” and stated:
Monthly earnings means her gross monthly income from the employer in
effect just prior to her date of disability (April 3, 2012). It does not include
income received from commissions, bonuses, overtime pay, any other
extra compensation, or income received from sources other than her
Employer. Copy of pay stubs for the month of March 2012 should suffice

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Pages from the Administrative Record are cited as, e.g., “AR1,” where the number in the citation refers to the
final six-digit number of the page’s Bates number with preceding zeroes excluded. See Dkt. # 82.

ORDER-2

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the request. Can you also send in her timesheet beyond September 15,
2012 through present.

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AR212-17. In response, ECG provided Plaintiff’s February 29, 2012 and March 15,
2012 pay stubs. Id.
On October 11, 2012, Defendant approved Plaintiff’s LTD claim. AR 964-66.
Defendant then calculated Plaintiff’s base salary at $190,000 per year, and took this
amount, divided by 12, to be her “monthly earnings” for the purposes of assessing her
LTD benefits under the plan. AR79; AR213-14. In the October 2012 approval letter,
Defendant stated that Plaintiff’s “monthly earnings” were $15,833.33 and that her
“Scheduled Benefit (60.00% of salary)” was therefore $9,500. AR965.
On July 28, 2015, Defendant terminated Plaintiff’s LTD benefits effective July
31, 2015 because it concluded she no longer met the Plan’s definition of disability.
AR1113-14. Plaintiff then filed this lawsuit on September 25, 2015 arguing (1) that
Defendant had underpaid her monthly benefit; and (2) that Defendant had improperly
stopped paying LTD benefits. Dkt. # 1, at ¶¶ 6-7. The Court stayed the case pending
resolution of the ERISA claim process. Dkt. ## 13, 17.
In December 2015, Plaintiff appealed Defendant’s termination of her LTD
benefits. AR2419-24. Defendant reinstated her claim on March 10, 2016 effective
August 1, 2015, and paid out based on the same monthly benefit amount it had
previously paid. AR2448-49. The parties notified the Court, and the Court reopened
this case on May 24, 2016. Dkt. # 18. Defendant then moved to dismiss Plaintiff’s
Complaint, arguing that (1) Plaintiff failed to exhaust her administrative remedies; and
(2) Plaintiff did not provide sufficient detail in her Complaint regarding her
“miscalculation” claim. Dkt. # 38. The Court granted Defendant’s motion and
dismissed Plaintiff’s Complaint without prejudice. Dkt. # 44. Plaintiff then appealed
Defendant’s determination of her monthly benefit amount, alleging that Defendant
undercalculated her “monthly earnings” under the plan. AR2419-424. As part of this

ORDER-3

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appeal, Plaintiff submitted her W-2’s from ECG for 2010-2012, which reflected total

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annual earnings of $690,462.51 in 2010, $716,595.18 in 2011, and $598.015.84 in 2012.

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AR2422-24.

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Defendant denied the appeal by letter dated June 21, 2017, reasoning that it could

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not tell from the W-2’s whether the income figure included excludable items, such as

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bonuses. AR 2453-57; Dkt. # 56. In deciding this appeal, Defendant contacted ECG on

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June 1, 2017. AR2491. Defendant contends that they informed ECG of the appeal and

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asked that ECG confirm the information in ECG’s June 22, 2012 “Employer Statement”

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form provided by Defendant, which indicated that Plaintiff’s “Normal Earnings Prior to

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this Absence (exclude bonus, overtime, etc.)” were $190,000.00 per year. AR 79;

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AR2491. According to Defendant’s records, ECG’s Chief Human Resources Officer

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responded on June 5, 2017, stating that “[b]elow is our final record of Ms. Jantos’[]

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annual base salary, which was $190,000. This figure excludes annual incentive pay,

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bonus, commission, profit sharing, etc.” AR2492.

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After receiving Defendant’s decision, Plaintiff filed her Second Amended

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Complaint. Dkt. # 51. On July 20, 2018, Plaintiff filed her Motion for Summary

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Judgment. Dkt. ## 62, 63. Defendant responded with its Cross-Motion for Summary

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Judgment. Dkt. ## 67, 68. These Motions are now before the Court.

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II.

LEGAL STANDARD

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The first issue the Court must decide is whether to consider the parties’ Motions

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under Federal Rule of Civil Procedure 52 or 56. Plaintiff filed her Motion as one

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arising under Rule 56; Defendant filed its Motion as one arising Rule 56 or “in the

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alternative” Rule 52. Dkt. ## 63, 68. Both parties appear to treat their respective

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motions as arising under Rule 56; neither provides any proposed factual findings or

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cites any standard from Rule 52 that would guide this Court’s analysis. The only legal

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standard Defendant cites is the standard for summary judgment under Rule 56. Dkt. #

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68 at 9-10.

ORDER-4

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Accordingly, as neither party appears to oppose treating this dispute as arising

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under Rule 56, the Court will construe both Motions as motions for summary judgment.

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Summary judgment is appropriate if there is no genuine dispute as to any material fact

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and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).

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The moving party bears the initial burden of demonstrating the absence of a genuine

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issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the

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moving party will have the burden of proof at trial, it must affirmatively demonstrate

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that no reasonable trier of fact could find other than for the moving party. Calderone v.

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United States, 799 F.2d 254, 259 (6th Cir. 1986). On an issue where the nonmoving

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party will bear the burden of proof at trial, the moving party can prevail merely by

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pointing out to the district court that there is an absence of evidence to support the non-

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moving party’s case. Celotex Corp., 477 U.S. at 325. If the moving party meets the

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initial burden, the opposing party must set forth specific facts showing that there is a

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genuine issue of fact for trial in order to defeat the motion. Anderson v. Liberty Lobby,

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Inc., 477 U.S. 242, 250 (1986). The court must view the evidence in the light most

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favorable to the nonmoving party and draw all reasonable inferences in that party’s

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favor. Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 150-51 (2000).

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In this ERISA action, both parties agree the applicable standard of review is de

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novo. Dkt. # 63 at 14-15; Dkt. # 68 at 10. The Court accepts the parties' apparent

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agreement and reviews the record de novo. “When conducting a de novo review of the

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record, the court does not give deference to the claim administrator’s decision, but rather

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determines in the first instance if the claimant has adequately established that he or she is

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disabled under the terms of the plan.” Muniz v. Amec Constr. Mgmt., Inc., 623 F.3d 1290,

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1295-96 (9th Cir. 2010). The administrator’s “evaluation of the evidence is not accorded

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any presumption of correctness.” Perryman v. Provident Life Ins. & Acc. Ins. Co., 690

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F. Supp. 2d 917, 942 (D. Ariz. 2010). In reviewing the administrative record and other

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admissible evidence, the Court “evaluates the persuasiveness of each party’s case, which

ORDER-5

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necessarily entails making reasonable inferences where appropriate.” Oldoerp v. Wells

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Fargo & Co. Long Term Disability Plan, 12 F.Supp.3d 1237, 1251 (N.D. Cal. 2014)

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(quoting Schramm v. CNA Fin. Corp. Insured Grp. Ben. Program, 718 F. Supp. 2d 1151,

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1162 (N.D. Cal. 2010)).

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When a district court “reviews a plan administrator’s decision under the de novo

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standard of review, the burden is placed on the claimant.” Muniz, 623 F.3d at 1294; see

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also Horton v. Reliance Standard Life Ins. Co., 141 F.3d 1038, 1040 (11th Cir. 1998)

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(claimant “bears the burden of proving his entitlement to contractual benefits”).

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However, this does not relieve the plan administrator from its duty to engage in a

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“meaningful dialogue” with the claimant about her claim. See Booton v. Lockheed Med.

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Ben. Plan, 110 F.3d 1461, 1463 (9th Cir. 1997) (“[W]hat 29 C.F.R. § 2650.503-1(g) calls

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for is a meaningful dialogue between ERISA plan administrators and their beneficiaries .

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. . [I]f the plan administrators believe that more information is needed to make a reasoned

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decision, they must ask for it.”).

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III.

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Plaintiff’s primary claim arises under 29 U.S.C. § 1132(a)(1)(B). Dkt. # 51 at ¶¶

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29-31. She alleges that Defendant underpaid her LTD benefits, and she seeks to enforce

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her rights under the Plan as well as clarify her right to future benefits under the terms of

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the Plan. Id. Section 1132(a)(1)(B) provides that a “civil action may be brought by a

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participant or beneficiary to recover benefits due to him under the terms of his plan, to

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enforce his rights under the terms of the plan, or to clarify his rights to future benefits

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under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). Plaintiff also alleges that

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Defendant violated its obligations as an ERISA fiduciary “by failing to act in

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accordance with the documents and instruments governing the LTD Plan” when

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calculating Plaintiff’s monthly benefit, in violation of 29 U.S.C. § 1132(a)(3). Id. at ¶¶

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32-39. Plaintiff alleges that Defendant breached its fiduciary duty by, inter alia,

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“failing to fully and fairly investigate the correct amount of Plaintiff’s ‘monthly

ORDER-6

DISCUSSION

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earnings’ in making its determination of the ‘gross disability payment’ and ‘monthly

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payment’ due Plaintiff.” Id. at ¶ 36. In her Motion for Summary Judgment, Plaintiff

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requests that this Court order a recalculation of her “monthly earnings” to include

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sources of income besides her base salary, to order Defendant to provide Plaintiff a

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monthly payment of $15,000 (subject to Social Security offset) since July 2012, and to

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pay prejudgment interest. Dkt. # 63 at 26-27. Defendant’s Cross-Motion requests that

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this Court find that Defendant has paid Plaintiff precisely the benefit she is sue under

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the Plan, and to therefore dismiss Plaintiff’s claim with prejudice. Dkt. # 68 at 16.

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Accordingly, the main issue in this case is whether Defendant properly

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investigated and calculated Plaintiff’s “monthly earnings” under the Plan for purposes

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of paying out her LTD benefits. The Plan states that it will pay sixty-percent of

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Plaintiff’s “monthly earnings,” not to exceed $15,000. AR37-38. In this case, the

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Administrative Record consists primarily of evidence of only one type of “monthly

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earning”: Plaintiff’s salary. Defendant found that Plaintiff earned $15,833.33 per

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month, as this figure represents the monthly division of her $190,000 annual salary.

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AR965. Defendant agreed to pay Plaintiff sixty-percent of this amount, which equals

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approximately $9,500. Id. Thus, if Plaintiff’s salary is truly the only type of income

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that qualifies as “monthly earnings” under the Plan’s definition, then Defendant’s

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calculations are correct and they would be entitled to summary judgment. Dkt. # 68.

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It seems that from the outset of Plaintiff’s claim, Defendant believed it only needed

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to determine Plaintiff’s annual salary in order to calculate her “monthly earnings” under

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the Plan. See, e.g., AR2419. 2 The Court does not believe the resolution of this case to

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be so simple. The Plan does not contain any language explicitly limiting “monthly

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earnings” to a participant’s annual salary; instead, the Plan calculates “monthly earnings”

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as the participant’s “gross monthly income” excluding “income received from

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It is perhaps for this reason that Defendant only requested pay stubs from ECG in 2012 and did not request any
other information about Plaintiff’s compensation structure. AR216-17. The Court notes that Plaintiff’s pay stubs
for two months may not, and in this case did not, reflect the total amount of Plaintiff’s income.

ORDER-7

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commissions, bonuses, overtime pay, [or] any other extra compensation.” AR37-38.

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None of these more specific terms are defined anywhere else in the Plan documents

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provided to the Court. Under the doctrine of contra proferentem, the Court should

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interpret any ambiguities in favor of the non-drafting party. See Kunin v. Benefit Trust

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Life Ins. Co., 910 F.2d 534, 538-40 (9th Cir. 1990). Contra proferentem, which is

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recognized by federal common law and the law of every state, holds that “if, after

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applying the normal principles of contractual construction, the insurance contract is fairly

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susceptible of two different interpretations, another rule of construction will be applied:

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the interpretation that is most favorable to the insured will be adopted.” Id. Accordingly,

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to the extent ambiguities exist with respect to terms such as “gross monthly income” or

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“bonus,” they are to be resolved in favor of Plaintiff, the non-drafting party.

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Under this analytical framework, the Court finds that the evidence submitted by

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Plaintiff in her Affidavit (Dkt. # 67) indicates the existence of potential sources of income

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that should have been considered by Defendant in calculating Plaintiff’s “monthly

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earnings.” In her Motion, Plaintiff argues that Defendant undercalculated her monthly

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benefits by only including her base salary as “monthly earnings.” Dkt. # 62 at 4. Plaintiff

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contends that her income from ECG consisted of (1) a base salary; (2) “ordinary business

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income” as a shareholder of ECG, a subchapter S corporation, 3 and (3) income through

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ECG’s Performance Incentive Program (“PIP”). Id. In support of her argument, Plaintiff

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submits a number of documents that are not included in the Administrative Record,

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including (1) Schedule K-1’s from 2010 to 2012 indicating “ordinary business income”

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Plaintiff received as a shareholder of ECG; and (2) documentation evidencing the

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Plaintiff notes that as a subchapter S corporation, ECG was treated as a pass-through entity, with all items of
income generated by the company allocated personally to individual shareholders as reported annually by ECG on
Form K-1 (via Form 1120S). Dkt. # 63 at 6. A Schedule K-1 is the form “used by an S corporation to report the
shareholder’s share of income, losses, deductions and credits.” Rubin v. United States, 904 F.3d 1081, 1083 (9th
Cir. 2018). Plaintiff continues that as a subchapter S corporation, ECG did not have its own tax liability because
its income was divided among and passed through to its shareholders based on percentage of ownership. Id.
Defendant does not dispute this characterization.

ORDER-8

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existence of a multi-leveled PIP plan in 2012, through which Plaintiff purportedly

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qualifies for inclusion in three of the six levels; and (3) financial records showing the PIP

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income Plaintiff received in 2012. Dkt. # 67, Exs. 1-8. Plaintiff contends that these

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documents show additional income sources that would entitle her to the “maximum

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monthly benefit” of $15,000 per month. Dkt. # 63 at 21.

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Defendant’s counterarguments here, and elsewhere in its Response, rely mostly on

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dictionary definitions and analogies, glossing over the ambiguities and vagueness in the

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Plan’s definition of “monthly earnings.” Dkt. # 73 at 6-14. Defendant argues, for

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instance, that the Schedule K-1 income should be excluded as “bonus” or “extra

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compensation” income because it was dependent on ECG’s profitability, and therefore

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not guaranteed or ascertainable until after Plaintiff became disabled. Dkt. # 73 at 10. The

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vague wording and definition of “monthly earnings” in the Plan do not support

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Defendant’s limited construction. It is hard to see, based on the current record, how the

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Schedule K-1 income qualifies as a “bonus,” especially where this term is not defined or

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limited in the Plan itself. Even though Defendants argues that a dictionary definition of

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“bonus” includes “something in addition to what is expected or strictly due,” Defendant

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has not shown how this income is in “addition” of what would normally be given. Dkt.

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# 73 at 8. Instead, Plaintiff established that she had received this income as part of her

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normal compensation for years. Dkt. # 67, Exs. 1-3. The record also contains little

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indication as to how the Schedule K-1 payments are in any way discretionary, or not

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ascertainable. As Plaintiff notes, passthrough income on a Schedule K-1 reflects payouts

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typical of all S corporations and accumulates throughout the year, and had done so for the

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many years Plaintiff was a shareholder. Dkt. # 80 at 3. At best, the Court cannot

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categorically reject all of Plaintiff’s Schedule K-1 income as a “bonus” or “extra

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compensation,” as Defendant suggests. These terms are ambiguous as defined in the Plan,

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and ambiguities are to be resolved in favor of Plaintiff. Patterson v. Hughes Aircraft Co.,

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11 F.3d 948, 950 (9th Cir. 1993).

ORDER-9

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Defendant also admits that the Schedule K-1 and PIP income qualify as “income,”

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but contends that it was not included in the earnings calculation because it was not paid

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out “monthly.” Dkt. # 73 at 7, n.14 (“Prudential recognizes that Plaintiff’s K-1 and

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Performance Incentive Plan payments constitute gross income to Plaintiff from ECG, as

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those terms are defined per their plain and ordinary meaning. But, as addressed above,

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this income was not paid monthly.”). The Court agrees with Plaintiffs that this appears

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to be an overly reductive interpretation of “monthly” as used in the Plan. Under

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Defendant’s literal interpretation, any income that is not paid strictly on a “monthly” basis

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would be excluded. Dkt. # 73 at 7. As Plaintiff argues, this would have the effect of

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potentially excluding Plaintiff’s salary, which is paid biweekly, leaving Plaintiff with

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theoretically no “monthly earnings.” Dkt. # 80 at 2. The Court cannot construe the terms

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of the Plan in such a fashion as to potentially deny Plaintiff any LTD benefits, especially

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where her eligibility is no longer in dispute. Moreover, this construction is seemingly

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contradicted by Defendant’s own actions in allocating Plaintiff’s monthly benefits by

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dividing her annual salary by twelve. AR212-16; 964-66. Defendant’s interpretation also

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would apparently ignore the word “gross,” which would seemingly provide for more than

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one source of income beyond a participant’s salary. Cf. Stephan v. Unum Life Ins. Co. of

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Am., 697 F.3d 917, 936 (9th Cir. 2012) (rejecting insurer’s argument that “gross monthly

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income” included only income actually received prior to disability).

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As a result, applying the doctrine of contra proferentem, the Court would interpret

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ambiguities in favor of the Plaintiff and conclude that Plaintiff’s “monthly earnings” are

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not necessarily limited to her annual salary and could include, at least, the income

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reflected in her Schedule K-1’s. The Court is in a more difficult position with Plaintiff’s

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income through the PIP’s at ECG. It is not clear from the current record whether the

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income Plaintiff received from the PIP’s should have been included in the monthly

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earnings calculation. As mentioned above, “monthly earnings” under the Plan explicitly

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excludes “bonuses.” AR37-38. As Defendant notes, the PIP documents provided by

ORDER-10

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Plaintiff indicate that some PIP payments are additional payments given to employees

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based on performance and thus could have been discretionary, which would come closer

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to resembling a properly excludable “bonus” under the Plan. Dkt. # 73 at 11. However,

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the word “bonus” is not used in the PIP plan documents presented by Plaintiff, and it is

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not clear from the documentation provided if all of the PIP disbursements were

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discretionary when applied to high-ranking individuals like Plaintiff. Dkt. # 67, Ex. 4; cf.

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Russell v. Prudential Ins. Co. of Am., 437 F.2d 602, 606 (5th Cir. 1971) (finding that

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portions of income that are “in the nature of a commission or incentive pay [do] not have

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that quality of unexpectedness implied by the word ‘bonus’” and are thus properly

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included in benefits determination under ERISA plan). There simply is not enough

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evidence in the Administrative Record supporting either construction, primarily because

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the only evidence on this point was first submitted by Plaintiff is support of her Motion

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for Summary Judgment, and Defendant has not yet investigated or analyzed this evidence.

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Dkt. # 67.

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determine how payments under these PIP’s operated, and how these operations interact

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with the Plan’s definitions.

More development of the Administrative Record would be needed to

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This leaves the Court in a difficult position. On one hand, Plaintiff has submitted

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seemingly compelling evidence that Defendant miscalculated her “monthly earnings” by

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not including, at least, her shareholder income, and potentially her PIP income. On the

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other hand, the Court is wary of the Ninth Circuit’s warning about considering evidence

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that is not contained in the Administrative Record, and evidence that “could easily have

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been submitted to the administrator is disfavored.” Nicula v. First UNUM Life Ins. Co.,

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23 F. App’x 805, 808 (9th Cir. 2001); see also Kearney v. Standard Ins. Co., 175 F.3d

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1084, 1091 (9th Cir. 1999).

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additional income was likely in Plaintiff’s possession throughout the appeal process, and

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should have been offered earlier for Defendant to consider and note in the Administrative

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Record. Dkt. # 72 at 14-17. Plaintiff’s argument that she was prevented from doing so

ORDER-11

Defendant persuasively argues that this evidence of

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because of “confidentiality” agreements with ECG is unconvincing and largely

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unsupported by evidence in the record. Dkt. # 80 at 11.

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However, the Court also notes that the Administrative Record is likely

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incomplete due to Defendant’s lack of investigation into Plaintiff’s earning situation.

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Although the insured carries the burden of showing she is entitled to benefits, ERISA

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administrators have a fiduciary duty to conduct an adequate investigation when

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considering a claim for benefits. Cady v. Hartford Life & Accidental Ins. Co., 930 F.

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Supp. 2d 1216, 1226 (D. Idaho 2013) (citing Booton v. Lockheed Med. Ben. Plan, 110

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F.3d 1461, 1463 (9th Cir. 1997)); see also Rasenack v. AIG Life Ins. Co., 585 F.3d

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1311, 1324 (10th Cir. 2009). “This requires that the plan administrator engage in

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‘meaningful dialogue’ with the beneficiary. If the administrator ‘believes more

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information is needed to make a reasoned decision, they must ask for it.’” Cady, 930 F.

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Supp. 2d at 1226 (quoting Booton, 110 F.3d at 1463).

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The Court agrees with Plaintiff that Defendant’s investigation into Plaintiff’s

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compensation structure, as reflected in the Administrative Record, was likely

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inadequate. While the Administrative Record does not contain the compensation

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evidence Plaintiff now provides on summary judgment, it did contain indications that

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Plaintiff’s “gross monthly income” was not limited to her yearly salary. For instance,

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Plaintiff’s W-2’s, submitted during the administrative appeal process, indicated that her

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income was much higher than $190,000. AR2419-24. Defendant argues that it is

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impossible to tell from these W-2’s alone whether these amounts included bonuses or

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other compensation excludable from the “monthly earnings’ calculation under the Plan.

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Dkt. # 68 at 14; AR 2453-2457, AR2486. This observation, while true, should have

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triggered additional inquiries into Plaintiff’s compensation structure, not the cessation

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of Defendant’s investigation. A plan administrator may not “shut [its] eyes to readily

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available information when the evidence in the record suggests that the information

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ORDER-12

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might confirm the beneficiary's theory of entitlement.” Rodgers v. Metropolitan Life

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Ins. Co., 655 F. Supp. 2d 1081, 1087 (N.D. Cal. 2009) (citations omitted).
Moreover, both ECG and Plaintiff repeatedly informed Defendant that Plaintiff

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was a shareholder of ECG, which should have indicated to Defendant that Plaintiff may

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have income sources beyond those of a typical employee. AR79-80; AR358; AR1041.

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It is true that from 2012 to 2017, the only income reported by ECG was Plaintiff’s

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$190,000 salary, and Plaintiff did not seem to contest the monthly benefits amount;

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accordingly, during that time period, it may have been reasonable for Defendant to

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believe there was only one income source. This situation changed when Plaintiff

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submitted her W-2 evidence in 2017. The W-2’s, combined with other evidence in the

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record that indicated additional income, should have triggered a more thorough inquiry

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as to the sources of income that generated the W-2 numbers. 4 Instead, Defendant used

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the ambiguity as an excuse to avoid further investigation. Had Defendant conducted a

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more thorough investigation of Plaintiff’s compensation structure, the relevant evidence

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(such as the Schedule K-1’s and the PIP documentation) would likely be in the

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Administrative Record, and the Court would not be faced with the current dilemma.
Instead of making a determination on an incomplete record, the Court believes it

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to be more prudent to remand this matter to the plan administrator for a new factual

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determination of Plaintiff’s “monthly earnings” based on the evidence now before the

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Court on summary judgment. Even on de novo review, this Court can remand a

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disability claim to the plan administrator if the record is not sufficiently developed. See

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Mongeluzo v. Baxter Travenol Long Term Disability Ben. Plan, 46 F.3d 938, 944 (9th

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Cir. 1995) (finding that “additional evidence is necessary to conduct an adequate de

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Although Defendant contends that ECG definitively confirmed Plaintiff’s income was limited to her salary, the
Administrative Record is not so clear. Dkt. # 73 at 8. Initially, Defendant’s communications with ECG indicated
that ECG only needed to provide one set of pay stubs, and the “Employer Statement” form did not solicit any
additional information about Plaintiff’s compensation structure. AR2421. In responding to Defendant’s requests,
ECG indicated that it believed that it only needed to provide information concerning Plaintiff’s salary. AR2486;
AR2491-92. Given the considerably more complicated circumstances of Plaintiff’s actual compensation structure,
these efforts do not bear the indications of an adequate investigative effort of Plaintiff’s potential LTD benefits.

ORDER-13

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novo review of the benefit decision” and “leav[ing] to the district court whether to

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remand to the plan administrator for an initial factual determination”); Kowalski v.

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Farella Braun & Martell, LLP, No. C-06-3341 MMC, 2008 WL 5397511, at *15 (N.D.

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Cal. Dec. 23, 2008) (finding, on de novo review, that there was “inadequate medical and

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vocational evidence in the record to support a finding on such an issue” and remanding

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the claim to the administrator for consideration.”).

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The Court finds that Defendant has not yet fully examined the compensation
structure evidence it should have examined, and thus has not yet made the appropriate

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findings for this Court to review. The Court will DENY Defendant’s Cross-Motion and

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GRANT IN PART AND DENY IN PART Plaintiff’s Motion. The Court grants

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Plaintiff’s Motion only to the extent it requests a reexamination and recalculation of her

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monthly benefits in accordance with this Order, but otherwise denies Plaintiff’s Motion.

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The Court thus exercises its discretion to REMAND this matter to the Plan

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Administrator, Defendant, to reinvestigate and recalculate Plaintiff’s “monthly

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earnings.” In doing so, Defendant should reexamine and recalculate Plaintiff’s LTD

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benefits considering the information attached to Plaintiff’s Affidavit submitted in

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support of her Motion (Dkt. # 67), and conduct an appropriate investigation based on

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this evidence. Should Plaintiff conclude that Defendant’s resulting findings are faulty,

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or a reasonable investigation was again not conducted, Plaintiff may appeal Defendant’s

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determination.

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IV.

CONCLUSION

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For all the foregoing reasons, the Court GRANTS IN PART AND DENIES IN

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PART Plaintiff’s Motion for Summary Judgment, and DENIES Defendant’s Cross-

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Motion for Summary Judgment. Dkt. ## 63, 68. The Court REMANDS this matter to

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ORDER-14

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Defendant to reexamine the calculation of Plaintiff’s LTD benefits in accordance with

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this Order.

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Dated this 21st day of March, 2019.

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A

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The Honorable Richard A. Jones
United States District Judge

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ORDER-15