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Denney v. Unum Life Insurance Co. of America

United States District Court, D. Colorado

August 2, 2018

CARA R. DENNEY, Plaintiff,


          Nina Y. Wang Magistrate Judge.

         This civil action comes before the court on the Administrative Record, [#16, filed April 28, 2017], and the Parties' Joint Motion for Determination on the Record (“Joint Motion”). [#38, filed November 27, 2017]. The Joint Motion was referred to the undersigned Magistrate Judge pursuant to the Order Referring Case dated February 6, 2017, [#12], and the memorandum dated November 27, 2017, [#39]. The undersigned Magistrate Judge has reviewed the Administrative Record, the associated briefing, the case file, and the applicable law, and, for the reasons stated below, respectfully RECOMMENDS that the court REMAND the decision to the Plan Administrator.


         Underlying Facts

         On December 13, 2016, Plaintiff Cara Denney (“Plaintiff” or “Ms. Denney”) initiated this action pursuant to the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1101, et seq., seeking long-term disability benefits pursuant to a Group Long Term Disability Plan (“Plan”), administered by Defendant Unum Life Insurance Company of America (“Unum”), and made available through Plaintiff's employer, Wagner Equipment Company (“Wagner”). The Parties agree that Plaintiff's claim is governed by ERISA, and the court exercises subject matter jurisdiction pursuant to 29 U.S.C. § 1132(a)(1)(B).

         Plaintiff previously worked full-time for Wagner as a Computer and Technology Instructor. [#1 at 3]. She asserts that the position “required extensive computer use” and “the ability to instruct employees on the use of various computer systems, ” [id.], and further required that she travel up to 50 percent of the time, stand and/or walk more than one third of the workday, and lift up to twenty-five pounds. [#23 at 2; #16-5 at 80-82].[1][2]

         Plaintiff was 37 years old in 2015 when she underwent bilateral reconstructive surgery on her feet. June 22, 2015 marked Plaintiff's last day of full-time work; she underwent surgery on her left foot the following day, and underwent surgery on her right foot on July 20, 2015. [#1 at 3; #16-1 at 12-15; #16-28 at 848-851; #16-46 at 1567-1568]. During this time, Plaintiff sought and received short-term disability benefits under the Plan. [#1 at 3]. Her surgeon, Joseph Mechanik, D.P.M., predicted that Plaintiff would require an extended recovery period of up to six months, and that she could return to work on December 31, 2015. [#16-5 at 67-69, 73; #16-1 at 13-14; #16-4 at 53; #16-17 at 464; #16-28 at 848-851]. With Dr. Mechanik's approval, Plaintiff began working part-time beginning October 5, 2015. [#16-1 at 12-14; #16-4 at 51-55; #16-5 at 68, 73].

         Plaintiff has a history of lower back pain dating to the occurrence of two herniated disks, for which she underwent an L4-S1 lumbar fusion in October 2001. See, e.g., [#16-16 at 435]. While she reported to her physicians that she had experienced intermittent “flareups, ” since having the lumbar fusion, and that she had been diagnosed with “failed back surgery syndrome, ” she stated that she had had good results from the lumbar fusion “and overall improvement of her severe pain from the surgery.” [Id.] While participating in physical therapy following the bilateral reconstructive surgery on her feet, Plaintiff began to experience severe neck and back pain. See [#16-1 at 13-15]. Dr. Mechanik referred Plaintiff to Michael Gesquiere, M.D., a Pain Management Specialist, whom Plaintiff first saw on September 10, 2015. [#16-16 at 433-434]. Plaintiff received care from Dr. Gesquiere for chronic low back pain related to the lumbar fusion and for neck pain. Dr. Gesquiere subsequently referred Plaintiff to Christopher LaFontano, D.O., a neuromuscular specialist, for evaluation and osteopathic manipulation treatment for her neck and back pain, and she was initially evaluated and treated by Dr. LaFontano on October 19, 2015.

         Following an exam on December 14, 2015, Dr. Mechanik restricted Plaintiff to no more than fifteen minutes of standing per hour, for a total of forty-five minutes per day, and maintained Plaintiff's restriction of part-time work, extended through February 2016. [#16-1 at 13-15; #16-4 at 54-55; #16-5 at 74-75; #16-28 at 848-851; #16-30 at 941]. Due to the neck and back pain that Plaintiff was experiencing, Dr. Mechanik restricted Plaintiff from lifting weight over ten pounds and from bending or stooping. [#16-43 at 1446]; see [#16-16 at 412-414]. Plaintiff continued working part-time until January 11, 2016, when, following a medical exam, Dr. LaFontano recommended that she stop working entirely. He wrote that he had treated Plaintiff on five occasions since October 19, 2015, which he identified as the onset of her back condition, and that she was unable to sit or stand for prolonged periods of time, could not lift more than ten pounds, and should not extend her arms for more than ten to twenty minutes. [#16-5 at 77; #16-39 at 1302-1303]. Dr. LaFontano opined that Plaintiff's neck and back pain was disabling and he restricted her from working altogether. [#16-5 at 78]. See [#16-1 at 12-15; #16-3 at 45; #16-4 at 46-47]. In the following months, Dr. LaFontano opined that these restrictions were likely permanent, and that another surgery may be required. [#16-4 at 45-47; #16-37 at 1226-1229; #16-38 at 1231-1234, 1239-1243; #16-39 at 1302-1307]. On January 26, 2016, Dr. Gesquiere opined that Plaintiff suffered from a chronic pain syndrome, lumbar postlaminectomy syndrome, cervicalgia with myofascial pain, and a C5-6 right side para-central disc protrusion. [#16-16 at 435-436].

         Plaintiff filed a claim for long-term disability (“LTD”) benefits, based on the condition of her feet and back. [#23 at 19]. Plaintiff represented in the Disability Claim Form dated January 12, 2016 that her medical condition was “back pain, pinched nerve (2), radiating pain, ” and she described first experiencing the symptoms after the bilateral foot surgery, “I had bilateral foot surgery…while I was recuperating I started having excessive back pain, radiating pain and numbness.” [#16-3 at 40]. On April 22, 2016, Defendant denied the claim, finding that Plaintiff was disabled from June 23, 2015 through December 14, 2015, and thus for only 175 days of the 180-day elimination period, which ended December 19, 2015. The denial notice stated, “We have determined you are able to perform the duties of your occupation on a full-time basis prior to the end of the 180 day elimination period and benefits are not payable.” [#16-29 at 910-915]. The Parties agree that Plaintiff's disability extended 175 days, [#23 at 10; #16-1 at 13-15], but disagree as to whether she was thereafter disabled.

         On June 1, 2016, Plaintiff provided Unum with updated medical records from Dr. LaFontano and Dr. Mechanik. See [#16-32 at 1034]. She appealed Unum's decision the following day. [#16-42 at 1413-1415]. Unum asserts in its Response Brief that Plaintiff's appeal focused on Dr. Mechanik's opinion that she was restricted to part-time work on and after December 14, 2015, and the assertion that her feet and back issues were interrelated. [#29 at 16]. See [#16-42 at 1414].[3] Unum framed the appeal as follows:

Does the available information support a loss of functional capacity relating to established medical conditions noted above and the insured's reports of symptoms including (chronic back, neck and foot pain), so as to prevent reliable sustained functional activity (as noted below) as of 6/23/15-12/19/15 (EP) and beyond?

[#29 at 17; #16-45 at 1546-47]. Unum denied the appeal by letter dated August 19, 2016, and states in its Response Brief that it found that Plaintiff “was able to perform the duties of her occupation as of December 14, 2015, prior to the date that LTD benefits begin.” [#29 at 20; #16-47 at 1589-96]. Plaintiff filed a second, voluntary appeal, see [#16-48 at 1620-1622, 1625, 1636-1637], and Unum issued its final decision denying the claim on November 21, 2016. See [#16-48 at 1649].

         The Policy

         Unum issued Group Policy No. 418405 002 (the “Policy”) to Wagner to fund the LTD benefits under the Plan. [#16-7 at 128; #16-8 at 163]. The “summary plan description and the policy constitute the Plan.” [#16-8 at 162].

         The Policy requires a claimant to submit proof of loss showing that he or she is disabled under the Policy's terms and conditions. [#16-7 at 133]. Unum asserts that “[t]he test of the Plan's definition of disability initially is whether a claimant is able to perform the duties of her own occupation.” [#29 at 1-2]. The Policy defines Own Occupation Disability as follows:

- you are limited from performing the material and substantial duties of your regular occupation due to your sickness or injury; and
- you have a 20% or more loss in your indexed monthly earnings due to the same sickness or injury.
After 36 months of payments, you are disabled when Unum determines that due to the same sickness or injury, you are unable to perform the duties of any gainful occupation for which you are reasonably fitted by education, training or experience.
You must be under the regular care of a physician in order to be considered disabled.
The loss of a professional or occupational license or certification does not, in itself, constitute disability.

[#16-7 at 142] (emphasis in original).

         The Policy specifies duration of disability as follows:

You must be continuously disabled through your elimination period. The days that you are not disabled will not count toward your elimination period.
Your elimination period is 180 days.
In addition, if you return to work while satisfying your elimination period, and are no longer disabled, you may satisfy your elimination period within the accumulation period. You do not need to be continuously disabled through your elimination period if you are satisfying your elimination period under this provision. If you do not satisfy the elimination period within the accumulation period, a new period of disability will begin.
Your accumulation period is 360 days.

Id. (emphasis in original). The Policy defines elimination period to mean “a period of continuous disability which must be satisfied before you are eligible to receive benefits from Unum, ” and accumulation period to mean “the period of time from the date disability begins during which you must satisfy the elimination period.” [#16-8 at 158]. The Policy provides that if a person works while disabled, “the days you are disabled will count toward your elimination period.” [#16-7 at 142].


         Unum has discretionary authority to determine claims for benefits under the Policy, including the discretionary authority to determine whether a claimant meets the definition of disability. [#16-7 at 142, 133; #16-8 at 162-164]. Ordinarily, the fact that the Plan delegates discretionary authority to Unum would result in review of the administrator's decision by the court pursuant to an abuse of discretion standard. Murphy v. Deloitte & Touche Group Ins. Plan, 619 F.3d 1151, 1157 (2010) (citations omitted); see Weber v. GE Group Life Assurance Co., 541 F.3d 1002, 1011 (10th Cir. 2008) (describing terms “arbitrary and capricious” and “abuse of discretion” as interchangeable in this context). Under such a standard, the court will uphold the administrator's determination “so long as it was made on a reasoned basis and supported by substantial evidence, ” Van Steen v. Life Ins. Co. of N. Am., 878 F.3d 994, 997 (10th Cir. 2018). “Substantial evidence is such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the decisionmaker, ” Caldwell v. Life Ins. Co. of N. Am., 287 F.3d 1276, 1282 (10th Cir. 2002) (alteration, quotations omitted), and “[t]he substantiality of the evidence is evaluated against the backdrop of the administrative record as a whole.” Adamson v. Unum Life Insurance Co. of America, 455 F.3d 1209, 1212 (10th Cir. 2006) (citations omitted). Interpretation of the terms in a plan is arbitrary and capricious if it is unreasonable based on the plain language in the plan, made in bad faith, or severely undermines the policy concerns underlying ERISA. Torix v. Ball Corp., 862 F.2d 1428, 1429 (10th Cir. 1988). So long as the basis for the administrator's decision is reasonable, the decision “need not be the only logical one nor even the best one.” Nance v. Sun Life Assur. Co., 294 F.3d 1263, 1269 (10th Cir. 2002). In applying this standard of review, the court considers the evidence before the plan administrator at the time it made the decision to deny benefits. See Id. Indicia of arbitrary and capricious decisions include lack of substantial evidence, mistake of law, bad faith, and conflict of interest by the fiduciary. Caldwell, 287 F.3d at 1282. There are also instances where the court must exercise de novo review, even when the plan administrator is vested with discretionary authority. See Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 631 (10th Cir. 2003). “[T]o be entitled to deferential review, not only must the administrator be given discretion by the plan, but the administrator's decision in a given case must be a valid exercise of that discretion.” Id.

         Here, Defendant contends that the Parties agree that the arbitrary and capricious standard applies. [#29 at 2]. Plaintiff argues in her Opening Brief that “the policy language is not entirely clear, ” but that it is “at least arguable” that Defendant has such discretion. [#23 at 22]. On Reply, Plaintiff does not respond to Defendant's arguments regarding the applicable standard of review. [#37]. In any event, it is clear the Parties do not agree as to the amount of deference owed to Unum's decision, and Plaintiff argues that Unum's decision “should be given little, if any, deference.” [#23 at 25].

         An insurance company's dual role as both the claim administrator and the source funding the benefits of an ERISA plan constitutes a conflict of interest for ERISA purposes. Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 114, 128 S.Ct. 2343 (2008) (holding an insurer's dual role as administrator and payer of benefits “creates a conflict of interest [such that] a reviewing court should consider that conflict as a factor in determining whether the plan administrator has abused its discretion in denying benefits.”).[4] The conflict is given more weight “when circumstances suggest a likelihood that it affected the benefits decision, ” and less weight “when the conflicted party has taken active steps to reduce potential bias and to promote accuracy.” Cardoza v. United of Omaha Life Ins. Co., 708 F.3d 1196, 1202 (10th Cir. 2013). Put another way, “the reviewing court ‘must decrease the level of deference given to the conflicted administrator's decision in proportion to the seriousness of the conflict.” Caldwell, 287 F.3d at 1282.

         Because it finds that the Plan vests discretionary authority in Unum, and there is no argument that Unum acted outside of that discretion (rather than simply exercising its discretion incorrectly), this court applies the arbitrary and capricious. But like in Caldwell, this court finds that it need not address the issue of deference because it concludes that the Plan Administrator's decision must be remanded, without regard to any conflict. For the reasons ...

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