The opinion of the court was delivered by: Jenkins, District Judge.
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Before the Court is defendant's motion for summary judgment. For the
reasons outlined ill this memorandum and order, the Court hereby GRANTS
This is an ERISA denial of benefits case, brought by Steven Martin
("Martin"). Beginning ill 1997, Martin, who was then a senior underwriter
at AIG insurance company, began to consult physicians regarding neck and
shoulder pain and fatigue. Martin underwent surgery on his right rotator
cuff in February 1997, and saw several practitioners for, chronic pain
thereafter. In September 1997, Martin submitted a claim for total
disability to AIG's ERISA plan, which is funded and managed by defendant
Continental Casualty Company ("Continental").*fn1
The record reflects four separate administrative denials of Martin's
disability claim. To support his initial claim, Martin submitted his
hospital records from two treating physicians. Continental reviewed
Martin's claim, and denied it on November 13, 1997. Before appealing of
right, Martin submitted follow-up reports from two doctors to the initial
reviewer. On December 24, 1997, Continental upheld its initial denial
after considering the additional information.
Martin then availed himself of his appeal right, and Continental's
appeals board submitted his file to an independent physician for review.
Based in part on the reviewing physician's conclusion that Martin had not
demonstrated total disability within the meaning of the policy language,
Continental denied Martin's appeal on March 30, 1998.
After his appeal was denied, Martin filed this lawsuit. During the
pendency of this litigation, Martin was initially diagnosed by one doctor
as having post-polio syndrome. On the basis of this diagnosis, the
parties stipulated to a de novo review of Martin's claim, including the
new evidence. Martin submitted the reports of five additional
practitioners. Continental reviewed the submission de novo, and on July
1, 1999 again denied Martin's claim.*fn2
Now before the Court is Continental's motion for summary judgment.
Relying on the stipulation of the parties, Continental asserts that an
abuse of discretion/arbitrary and capricious standard applies, and that
Continental's denials of coverage comply with this standard as a matter
Martin concedes that the policy on its face reserves discretion to the
plan, and therefore has no qualm with the abuse of discretion as the
nominal standard of review.*fn3 However, Martin claims that because
Continental itself funds the plan, thereby creating the potential for
self-interested decisionmaking, serious questions as to a conflict of
interest arise and, under Ninth Circuit law, the de novo standard
ultimately should apply. Martin argues that Continental's denials reflect
an unreasonable treatment of his claim under either standard. Martin
alleges that Continental engrafted standards not within the purview of
plan language to deny his claim, namely (1) that "objective medical
evidence" be offered to support his claim and (2) that the evidence
demonstrate he was not well enough to fill a "sedentary position."
Moreover, Martin alleges that in denying his claim, Continental
impermissibly overlooked objective evidence that supported the grant of
permanent disability status.
Continental's plan provides benefits to beneficiaries for, inter
alia, total disability. That term is defined as follows:
"The Insured Employee because of Injury or Sickness is:
(1) Continuously unable to perform the substantial and material duties
of his regular occupation;
(2) Under the regular care of a licensed physician other then himself;
(3) Not gainfully employed in any occupation for which he is or becomes
qualified for by education, training or experience."
In the plan's denial letters to Martin, it is stated that "the
attending physician must be able to provide objective medical evidence to
support his/her opinion as to why you are not able to perform the duties
of your occupation. Medical evidence means medical signs and findings
established by medically acceptable diagnostic techniques which show the
existence of a medical impairment that results from an anatomical,
physiological, or psychological abnormality which could reasonably be
expected to produce pain, or other ...