United States District Court, D. Colorado
KENT D. MENGE, Plaintiff,
AT&T, INC., a Delaware corporation, AT&T UMBRELLA BENEFIT PLAN NO. 1, AT&T OPERATIONS, INC., a Delaware corporation, and THE AT&T DISABILITY INCOME PROGRAM, Defendants.
PHILIP A. BRIMMER, District Judge.
This matter is before the Court on Plaintiff's Opening Brief [Docket No. 28] filed by plaintiff Kent D. Menge against defendants AT&T Inc., AT&T Umbrella Benefit Plan No. 1, AT&T Operations, Inc., and the AT&T Disability Income Program (collectively, "AT&T"). Plaintiff seeks review of defendants' denial of his claim for short-term and long-term disability benefits.
Plaintiff was an employee of AT&T Operations, Inc. from April 18, 2007 through September 15, 2008. Docket No. 28 at 5, ¶ 11; Docket No. 30 at 17, ¶ 1. As an employee, plaintiff participated in the SBC Umbrella Plan No. 1 (the "Plan"), a retirement benefit umbrella plan governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001, et seq. Docket No. 28 at 6, ¶ 12; Docket No. 30 at 18, ¶ 6; R. at 36. The Plan provides both short-term and long-term disability benefits to qualified participants. Docket No. 28 at 6, ¶ 17; Docket No. 30 at 18, ¶ 6; R. at 156.
On September 26, 2007, plaintiff was rear-ended while driving into the AT&T parking lot. Docket No. 28 at 9, ¶ 27; Docket No. 1 at 3, ¶ 17; Docket No. 7 at 3, ¶ 17. Plaintiff alleges that, following the accident, his mental and physical condition deteriorated: he suffered from chronic pain, memory deficits, depression, and bipolar disorder. Docket No. 28 at 10, ¶¶ 29-31.
In April 2008, plaintiff submitted a claim to the AT&T Integrated Disability Service Center (the "IDSC") for short-term disability benefits beginning on April 11, 2008. R. at 518. Under the Plan, a claimant qualifies for short-term disability benefits if, "because of illness or injury, " he is "unable to perform all of the essential functions of [his] job or another available job assigned by the Participating Company, with the same full- or part-time classification for which the employee is qualified." R. at 942. After reviewing medical information from plaintiff's primary care physician, Kari Kearns, and plaintiff's chiropractor, Evan Katz, the IDSC approved his claim for benefits from April 18, 2008 through May 18, 2008. R. at 555.
On June 2, 2008, the IDSC denied plaintiff's claim for benefits from May 19, 2008 through plaintiff's return to work, R. at 639, which the IDSC later determined to be July 11, 2008. R. at 758. From May 19, 2008 through July 10, 2008, plaintiff was on leave pursuant to the Family and Medical Leave Act ("FMLA"). See 29 U.S.C. § 2601 et seq. Over the summer of 2008, plaintiff submitted records from additional healthcare providers; the IDSC reviewed these records but did not alter its determination. See R. at 657, 670, 686, 734.
Plaintiff disputed and continues to dispute the determination that he returned to work on July 11, 2008, on the basis that he never returned to work, but instead began using vacation and personal days on July 11 when his FMLA leave ran out. R. at 768-69; Docket No. 34 at 15. Once plaintiff exhausted his vacation days, his supervisor allowed him sixty days to remain at home and search for other jobs within the company that he would be able to perform. R. at 770, 781 ("If at the end of the sixty (60) day job search period, you have not been successful in finding another position that will accommodate your work restrictions, you will be removed from the AT&T payroll."); Docket No. 28 at 21-23. Plaintiff was unable to find another position and was terminated on September 15, 2008. Id. He contends that the period of review for his benefits claim should run from May 19, 2008 through the present because he was never able to return to work. Id.
On November 14, 2008, plaintiff appealed the denial of short-term disability benefits after May 19, 2008. R. at 755. In a letter sent on January 9, 2009, plaintiff's attorney stated that, "should Mr. Menge's disability continue beyond May 19, 2009, then he will be entitled to long term benefits under the Plan." R. at 770. The letter set forth plaintiff's requests that the "previous denial of his claim for disability benefits be reversed, " "benefits be paid up to the present, " and the IDSC issue a determination that plaintiff's "disability is continuing at this time." R. at 776.
On appeal, the IDSC's Quality Review Unit ("QRU") reviewed medical records submitted by Drs. Kearns and Katz, as well as by psychiatrist Frederick Sakamoto, neuropsychologist Mark Zacharewicz, internist Elizabeth Yurth, chiropractor Margaret Seron, and radiologist David Oppenheimer. R. at 942. The QRU retained five independent physician advisors to review plaintiff's file. R. at 943-44.
On February 27, 2009, the QRU denied plaintiff's appeal. R. at 944. The QRU found that none of plaintiff's documented conditions were "so severe as to prevent" him from "performing the duties of his job as Sales Executive I Remote PCG, with or without reasonable accommodation from May 19, 2008 through July 10, 2008." R. at 944.
In March 2009, plaintiff applied for Social Security Disability Insurance. R. at 390. On December 9, 2009, he was awarded benefits. R. at 395.
On March 23, 2011, plaintiff filed this case, alleging that AT&T arbitrarily and capriciously denied his claim for benefits from May 19, 2008 onwards and requesting relief under 29 U.S.C. § 1132(a)(1)(B). Docket No. 1 at 14. Plaintiff seeks short-term disability benefits from May 19, 2008 through July 10, 2008 at the rate of $1, 730.08 per month; long-term disability benefits from July 18, 2008 through February 18, 2012, at the rate of $1, 745.00 per month or until he has received a total of $75, 035.00; a penalty pursuant to 29 U.S.C. § 1132(c)(1) of $110 per day from December 5, 2010 through May 4, 2011; and reasonable attorney's fees, costs, and interest. Docket No. 28 at 24-25, ¶¶ 67-70.
II. STANDARD OF REVIEW
Plaintiff argues that the Court should apply a de novo standard of review or a standard of "reduced deference to the plan administrator." Docket No. 28 at 5, ¶ 10. Defendants argue that the applicable standard is abuse of discretion. Docket No. 30 at 7.
AT&T Inc. is both the Plan Sponsor and the Plan Administrator. R. at 993. The Plan provides that:
The Plan Administrator (or, in matters delegated to third parties, the third party that has been so delegated) will have sole discretion to interpret the Program, including, but not limited to, interpretation of the terms of the Program, determinations of coverage and eligibility for benefits, and determination of all relevant factual matters. Any determination made by the Plan Administrator or any delegated third party will not be overturned unless it is arbitrary and capricious.
R. at 995. With respect to the AT&T Disability Income Program (the "Program"), a third-party "Claims Administrator has been delegated authority by the Plan Administrator to determine whether a particular Eligible Employee who has filed a claim for benefits is entitled to benefits." R. at 995.
When a retirement plan grants the plan administrator discretionary authority to determine eligibility for benefits, the Court reviews the administrator's decision for an abuse of discretion. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). The administrator's decision will be upheld so long as it is not arbitrary and capricious-that is, so long as it is supported by "substantial evidence" and "is predicated on a reasoned basis." Adamson v. Unum Life Ins. Co., 455 F.3d 1209, 1212 (10th Cir. 2006) (internal citation omitted). "[T]here is no requirement that the basis relied upon be the only logical one or even the superlative one." Id. A review for abuse of discretion "is limited to determining whether the interpretation of the plan was reasonable and made in good faith." Kellogg v. Metro. Life Ins. Co., 549 F.3d 818, 826 (10th Cir. 2008) (internal citations and alterations omitted). Substantial evidence "is such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the decision maker." Rekstad v. U.S. Bancorp., 451 F.3d 1114, 1119-20 (10th Cir. 2006).
Where the same entity both administers a retirement plan and pays plan benefits out of its own funds, a conflict of interest exists that does not alter the standard of review, but rather constitutes one factor to be considered in deciding whether there has been an abuse of discretion. Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 117 (2008) ("when judges review the lawfulness of benefit denials, they will often take account of several different considerations of which a conflict of interest is one"). A conflict of interest, like any other factor relevant to the analysis, "will act as a tiebreaker when the other factors are closely balanced." Id. at 117. Thus, a conflict of interest "should prove more important... where circumstances suggest a higher likelihood that it affected the benefits decision" and less important "where the administrator has taken active steps to reduce potential bias and to promote accuracy." Id. In Glenn, the Court considered several factors in addition to the conflict of interest, including the fact that the plaintiff, MetLife, had (1) encouraged the defendant to argue to the Social Security Administration ("SSA") that she could not work; (2) received the bulk of the Social Security benefits she was subsequently awarded; (3) failed to provide all relevant medical evidence to its independent reviewers; (4) emphasized those parts of the record that disfavored the defendant's claim and de-emphasized those parts of the record that favored it; and (5) ignored the SSA's finding in concluding that the defendant could perform sedentary work. Id. at 118.
There is no dispute that the Plan grants the Plan Administrator discretion in interpreting the terms of the Plan and making individual decisions regarding the payment of benefits. See R. at 48. Nor is there any dispute that AT&T Inc. is both the sponsor and the administrator of the Plan. See Docket No. 30 at 10.
Plaintiff asserts that "[a]ll of the factors mentioned in Glenn are present here." Docket No. 28 at 4, ¶ 6. However, the relevant facts in this case differ significantly from Glenn. R. at 163. Plaintiff did not receive a determination of his disability claim until December 2009-eleven months after defendants denied his appeal. R. at 395, 942. Thus, defendants could not have wrongfully ignored the Social Security disability determination because it had not been issued at the time the appeal was decided. See Nelson v. Aetna Life Ins. Co., 2013 WL 2177876, at *11 (N.D. Okla. May 20, 2013) ("Aetna cannot be faulted for failing to consider a social security award that was not in existence at the time it made its decision"). Nor is there any evidence that an offset was applied against the short-term disability benefits that plaintiff did receive from defendants. Furthermore, the plan administrator "took steps to reduce its inherent bias" by retaining five independent reviewing physicians to consider plaintiff's claim. R. at 942-44; see Holcomb v. Unum Life Ins. Co. of Am., 578 F.3d 1187, 1193 (10th Cir. 2009). The record shows that defendants provided the medical reviewers with all relevant evidence and, as will be discussed further below, there is no indication that defendants weighed the evidence in bad faith. Taking all of these factors into account, the Court finds that the conflict of interest does not warrant a heightened standard of review.
Plaintiff also argues that the Court should review the determination de novo pursuant to Colo. Rev. Stat. § 10-3-1116, which provides that:
An insurance policy, insurance contract, or plan that is issued in this state shall provide that a person who claims health, life, or disability benefits, whose claim has been denied in whole or in part, and who has exhausted his or her administrative remedies shall be entitled to have his or her claim reviewed de novo in any court with jurisdiction and to a trial by jury.
Colo. Rev. Stat. § 10-3-1116(3). Defendants argue that this section is preempted by ERISA and that it does not apply to the Plan in any event because the Plan is funded by a trust, and not by insurance, and because the Plan was not issued in Colorado. Docket No. 30 at 14-16.
The Court need not reach this dispute because plaintiff's coverage under the Plan began in April 2007, see Docket No. 28 at 5-6, ¶¶ 11-12, over one year before the statute took effect on August 8, 2008 and the statute does not apply retroactively. McClenahan v. Metro. Life Ins. Co., 416 F.App'x 693, 695-96 (10th Cir. 2011); Holingshead v. Stanley Works Long Term Disability Plan, No. 10-cv-03124-WJM-CBS, 2012 WL 959402, at *2 (D. Colo. Mar. 21, 2012) ("As the Plan came into effect before Colo. Rev. Stat. § 10-3-1116 was enacted, the Court finds that the statute cannot retroactively apply to Plaintiff's claim."); Kohut v. Hartford Life & Accident Ins. Co., 710 F.Supp.2d ...