United States District Court, N.D. California
March 28, 2003
Salah MHADBHI, Plaintiff,
JEFFERSON PILOT FINANCIAL, Jefferson Pilot Insurance Company, Guarantee Life Insurance Company, One, Both or all Nebraska Corporations; and DOES 1-15, Defendants.
The opinion of the court was delivered by: WILLIAM HASKELL ALSUP, District Judge.
ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND
REMANDING MATTER TO PLAN ADMINISTRATOR
Plaintiff filed suit under 29 U.S.C. § 1132(a)(1)(B), the civil
enforcement provision of the Employee Retirement Income Security
Act of 1974 ("ERISA"), to recover benefits allegedly due.*fn1
order DENIES the motion for summary judgment of defendant
Jefferson Pilot Financial Insurance Company ("Jefferson Pilot")
and REMANDS the matter to the plan administrator for a
redetermination of plaintiff's eligibility for benefits.
Plaintiff worked as an assistant sales manager at Serramonte
Auto Plaza, an automobile dealership. Serramonte provided its
employees, including plaintiff, with disability insurance. A
group insurance policy issued by Guarantee Life Insurance Company
to Serramonte Auto Plaza set forth the terms of coverage (Maley
Plaintiff suffers from diabetic neuropathy and alleges that
this condition has rendered him unable to perform the main duties
of his job. In February 2001, plaintiff submitted a short-term
disability claim form to Guarantee Life Insurance (Maley Exh. 1).
Included with plaintiff's submission was an "Attending Physician
Statement," a Guarantee Life Insurance form signed on by Dr.
Aruna Chinnakotla, plaintiff's physician (ibid.). Dr. Chinnakotla
indicated on the form that plaintiff suffered from diabetes with
neuro/renal manifestations and was totally disabled from his
present occupation from February 5 through May 4, 2001 (ibid.).
The insurer's definition of total disability was printed on this
Jefferson Pilot, which administered the insurance plan,
concluded that there was not enough medical information to
support plaintiff's claim of disability (Maley Exh. 4). Jefferson
Pilot informed plaintiff of this assessment and requested
relevant medical records from Dr. Chinnakotla (Maley Exh. 5).
After reviewing the material submitted by Dr. Chinnakotla,
Jefferson Pilot denied
[255 F. Supp.2d 1111]
plaintiff's request for disability benefits (Maley Exh. 7). In a
letter dated April 4, 2001, Jefferson Pilot informed plaintiff of
its decision (ibid.). The letter stated in part (ibid.):
Benefits are being denied based on the following
"Total Disability" means the "Insured Person's
inability, due to Sickness or Injury, to perform each
of the material duties of his or her regular
occupation". A person engaging in employment for wage
or profit is not Totally Disabled.*fn2
The letter further explained that "there is not sufficient
medical information to support a severity of impairment, which
would render you, totally disabled from your occupation" (ibid.).
The letter noted that Dr. Chinnakotla characterized plaintiff's
condition as "under control" and that plaintiff's symptoms of
"burning, tingling and sometimes electrical shock sensation in
the feet, especially at nighttime" were to be treated by an
increased dosage of medication (ibid.). "Taking a medication
alone," the letter stated, "does not substantiate Total
Disability as defined above" (ibid.).
On May 5, 2001, plaintiff wrote to Jefferson Pilot requesting a
reconsideration of the decision to deny him benefits (Maley Exh.
8). He explained that his job in car sales required him to stand
on his feet for long periods of time and that his job and
diabetes were causing pain in his feet (ibid.). He further stated
that he was "unable to perform [his] job" because he was "unable
to stand for longer than half and [sic] hour" (ibid.). Plaintiff
enclosed a letter from a neurologist, Dr. Chi-Chen Mao,
confirming that plaintiff had difficulty performing work duties
because his diabetic neuropathy caused him to experience pain
while on his feet (ibid.). Also enclosed was a health-care
provider form noting that plaintiff's "peripheral neuropathy
. . . is aggravated by the weight bearing demands of his job" and
"[h]is condition would improve with a new job with less weight
bearing" (ibid.). Jefferson Pilot wrote to plaintiff on June 7,
2001, explaining that it was unable to overturn its decision
because plaintiff's submissions contained no new medical evidence
of total disability (Maley Decl. ¶ 11).
In November 2001, Jefferson Pilot received a letter from the
California Department of Insurance indicating that plaintiff had
requested assistance and asking Jefferson Pilot to reevaluate the
matter (Maley Exh. 9). Jefferson Pilot requested and received
additional medical information from Dr. Chinnakotla and Dr. Mao.
It then arranged for a third physician, licensed in California
and selected by a third-party vendor, to review plaintiff's
medical records. The third physician, Dr. Fred Nowroozi,
requested a job description for plaintiff's regular occupation,
which plaintiff's employer subsequently provided. The job
description indicated that plaintiff's duties as a car
salesperson required him to sit for three hours, stand for two
hours, and walk for three hours each workday, all with rest
(Maley Exh. 20). Furthermore, plaintiff's job occasionally
required him to bend, to squat, and to lift and carry loads of up
to ten pounds (ibid.). "Driving automotive equipment" was also
included among the activities the job involved (ibid.).
[255 F. Supp.2d 1112]
Dr. Nowroozi recommended that plaintiff undergo additional
testing to evaluate his ability to return to work (Maley Exh.
18). Another physician, Dr. David Discher, subsequently reviewed
plaintiff's medical records and examined him. Dr. Discher's
evaluation, dated July 20, 2002, included the following
conclusions (Maley Exh. 22):
Specific Limitations and Restrictions
Sitting limited to 30 minutes at a time. Standing
limited to 30 minutes at a time. Alternating between
both over an 8 hour work day is recommended. Walking
distance should be limited to 100 feet without uneven
terrain or stair climbing. Walking can be repeated
over the workday with the requirement of a sitting
rest of at least 30 minutes prior to a walk.
* * * * * *
Physical Capacity Findings
Is generally able to use his feet for standing and
walking alternating with appropriate sitting
intervals. Carrying light loads, lifting repetitively
light loads, and assuming mild bended or squatting
positions are all functionally safe within some
limits for repetitions. I do not recommend that this
person operate any vehicle.
Employer's Physical Requirements for Sales Person
With respect to [the requirements] listed by his
employer, I have interpreted that none of my
recommended limitations or restrictions are impacting
on job requirements, assuming that sitting and
standing/walking alternation can be worked out in the
details. These statements are limited to my
evaluation of his feet. The statements bear on
current abilities and functional capacities, not
Jefferson Pilot concluded from Dr. Discher's report that
plaintiff did not suffer from a sickness or injury that rendered
him unable to perform the main duties of his regular occupation
(Maley Exh. 24-25). Jefferson Pilot forwarded Dr. Discher's
report to plaintiff's treating physician, Dr. Chinnakotla, for
comment. As requested, Dr. Chinnakotla confirmed in writing that
she agreed with the Dr. Discher's findings (Maley Exh. 24).
Relying on the assessments by Dr. Discher and Dr. Chinnakotla,
Jefferson Pilot concluded that plaintiff was not totally disabled
within the meaning of the policy, and as a result, was not
entitled to benefits (Maley Exh. 25).
Plaintiff commenced the instant action in state court in May
2002, while all this was underway. The case was subsequently
removed to federal court. Defendant now moves for summary
judgment, contending that it did not abuse its discretion by
denying plaintiff's claim.
1. Standard of Review.
When an ERISA plan vests the plan administrator with
discretionary authority to determine eligibility for benefits or
to construe the plan's terms, a district court normally reviews
the administrator's determinations for abuse of discretion.
Alford v. DCH Found. Group Long-Term Disability Plan,
311 F.3d 955, 957 (9th Cir. 2002). Here, the plan explicitly gives the
administrator such discretionary authority.*fn3
[255 F. Supp.2d 1113]
That does not, however end the inquiry regarding the
appropriate standard of review. In spite of a plan's grant of
discretionary authority to the plan administrator, a conflict of
interest may actuate a less deferential standard of review. As
the Ninth Circuit recently explained:
The showing of a conflict does not automatically
eliminate the usual deference accorded to the plan
administrator; rather, the plaintiff must show that
the conflict may have influenced the decision. To
make such a showing, the affected beneficiary must
come forward with material, probative evidence,
beyond the mere fact of the apparent conflict,
tending to show that the fiduciary's self interest
caused a breach of the administrator's fiduciary
obligations to the beneficiary. If the plaintiff
makes this required showing, the plan then bears the
burden of rebutting the presumption by producing
evidence to show that the conflict did not affect its
decision to deny benefits. If the plan fails to do
so, the court should review its denial of benefits de
Ibid. (internal quotations and citations omitted).
In this case, the fact that the insurer administers the
benefits plan for plaintiff's employer creates an apparent
conflict. The insurer in this situation has an incentive to deny
coverage. Plaintiff argues that there is material, probative
evidence that the administrator's decision was influenced by this
conflict. Specifically, plaintiff points to the fact that the
administrator rejected the findings of Drs. Chinnakotla and Mao,
both of whom treated plaintiff and submitted that he was disabled
from his job, in favor of those of Dr. Discher, the examining
Plaintiff's argument is premised on Regula v. Delta Family-Care
Disability Survivorship Plan, 266 F.3d 1130 (9th Cir. 2001). in
Regula, the Ninth Circuit "add[ed] deviation from the treating
physician rule to the short list of factors by which a court may
determine that an apparent conflict of interest has ripened into
an actual, serious conflict, thereby permitting the court to
engage in de novo review." Id. at 1147; see also Nord v. Black
& Decker Disability Plan, 296 F.3d 823, 829 (9th Cir. 2002)
(identifying other factors as well). The plan administrator in
Regula had rejected the diagnoses of the appellant's treating
physicians in favor of contradictory diagnoses of examining
physicians to whom the appellant was referred by the plan. 266
F.3d at 1147. The district court was instructed to consider this
and other evidence on remand to determine whether there was
indeed a conflict of interest that would render abuse of
discretion an inappropriate standard of review. Ibid.
Upon consideration of the treating-physician rule in this case,
as well as the parties' submissions on point, this order
concludes that abuse of discretion remains the proper standard of
review. The Ninth Circuit stated in Regula:
[255 F. Supp.2d 1114]
When a nontreating physician's opinion contradicts
that of the treating physician but is not
based on independent clinical findings, or rests on
clinical findings also considered by the treating
physician the opinion of the treating
physician may be rejected only if the [administrator]
gives specific, legitimate reasons for doing so that
are based on substantial evidence in the record.
266 F.3d at 1140 (emphasis added) (internal quotations omitted).
Here, the examining physician, Dr. Discher, examined plaintiff
and performed a functional capacity analysis on him. Because Dr.
Discher's opinion was based on his independent clinical findings,
the treating-physician rule has no application here. This order
further notes that Dr. Discher's report was submitted to
plaintiff's treating physician, Dr. Chinnakotla, who indicated
that she agreed with Dr. Discher's findings.*fn4
reliance on Dr. Discher's findings, therefore, does not create a
rebuttable presumption that an actual conflict of interest
influenced the decision. Because plaintiff has failed to carry
his burden of showing that an actual conflict may have influenced
the administrator's decision, abuse of discretion is the
applicable standard of review.
2. Review for abuse of Discretion.
The question of whether the administrator abused its discretion
in denying disability benefits is a question of law. In such a
case, a motion for summary judgment functions as a "conduit to
bring the legal question before the district court." Bendixen v.
Standard Ins. Co., 185 F.3d 939, 942 (9th Cir. 1999).
Accordingly, "the usual tests of summary judgment, such as
whether a genuine dispute of material fact exists, do not apply."
Ibid. When reviewing an administrator's decision for abuse of
discretion, the district court must consider only the evidence
that was before the plan administrator when the decision was
made. Alford, 311 F.3d at 959; McKenzie v. Gen. Tel. Co.,
41 F.3d 1310, 1316 (9th Cir. 1994).
Turning to the merits, this order holds that Jefferson Pilot
abused its discretion in denying plaintiff's claim for disability
benefits. An ERISA plan administrator abuses its discretion when
it denies claims without explanation, construes plan provisions
in a way that conflicts with the plain language of the plan, or
relies on clearly erroneous findings of fact. Taft v. Equitable
Life Assurance Soc'y, 9 F.3d 1469, 1472-73 (9th Cir. 1993). A
decision that is not supported by substantial evidence in the
record likewise constitutes an abuse of discretion. McKenzie, 41
F.3d at 1316-18.
In reaching this conclusion, this order finds Saffle v. Sierra
Pacific Power Co. Bargaining Unit Long Term Disability Income
Plan, 85 F.3d 455 (9th Cir. 1996), instructive. There, the court
found that the plan administrator abused its discretion by
misconstruing the plan and thus applying an erroneous standard
for the determination of benefits. In the court's view, the
administrator "abused its discretion by erroneously factoring
`accommodation' into the criteria for total disability for
purposes of occupational disability benefits." Id. at 460. The
plan language at issue stated that a participant was "totally
disabled," if for a certain amount of time, he "is completely
unable to perform each and every duty of his regular occupation."
Id. at 457. The court of appeals objected to the administrator's
construction of that term to include "`work available for which
she is qualified' with accommodations that could have been made."
Id. at 460. That
[255 F. Supp.2d 1115]
interpretation, the court observed, effectively mposed new
coverage requirements. Id. at 459-60.
Jefferson Pilot made a similar error when it ultimately denied
plaintiff's claim in November 2002. The denial was premised on
the findings of Dr. Discher and Dr. Chinnakotla's agreement with
them. Dr. Discher concluded: "With respect to [the physical
requirements for salesperson] listed by [plaintiff's] employer, I
have interpreted that none of my recommended limitations or
restrictions are impacting on job requirements, assuming that
sitting and standing/walking alternation can be worked out in the
details" (Maley Exh. 22). From this, Jefferson Pilot summarily
concluded: "The above findings [of Dr. Discher] show that Mr.
Mhadhbi would not be prohibited from performing the main duties
of his regular occupation" (Maley Exh. 25).
There is a glaring gap between Dr. Discher's conclusions and
Jefferson Pilot's. Dr. Discher's report expressly conditioned his
conclusion that the recommended limitations and restrictions did
not impact plaintiff's job requirements on the "assum[ption] that
sitting and standing/walking alternation can be worked out in the
details" (Maley Exh. 22). There is no evidence in the record that
plaintiff's job allows for the satisfaction of this condition.
Jefferson Pilot contends that the fact plaintiff's job
description includes the term with rest" solves this problem.
This order disagrees. Dr. Discher's recommendations are not for
occasional rest; they are far more substantial. Specifically, Dr.
Discher recommends that plaintiff limit standing and sitting to
thirty minutes at a time and states that thirty minutes of
sitting rest should precede each walk, which itself should be
limited to a one-hundredfoot distance (ibid.). Plaintiff's job
description states that it requires him to be on his feet, either
standing or walking, for a total of five hours per eight-hour
shift. It is by no means clear that it is possible, much less
practical, to factor in the requisite sitting time into
plaintiff's workday. Indeed, Dr. Discher's reports seem to
confirm, rather than contradict, the other physicians'
conclusions that plaintiff is totally disabled from his job
because it requires him to spend long hours on his feet, which he
is unable to do.
This order also notes that in addition to the express condition
of working out the sitting and standing/walking alternation, Dr.
Discher's conclusion implicitly requires another job
modification: that plaintiff be relieved from his driving duties.
Dr. Discher plainly stated: "I do not recommend that [plaintiff]
operate any vehicle." Plaintiff's job description, however,
indicates that his job as a car salesperson involves at least
some driving (Maley Exh. 20). Neither Dr. Discher nor Jefferson
Pilot reconciles this point with their conclusions regarding
plaintiff's ability to complete his job requirements.
Jefferson Pilot plainly applied a definition of total
disability that is inconsistent with the plan language of the
plan when it premised denial of plaintiff's claim on Dr.
Discher's report. The plan defines total disability as the
insured's "inability, due to Sickness or Injury, to perform each
of the main duties of his or her regular occupation" (Maley Exh.
3). This is not the same as inability to perform each of the main
duties of his or her regular occupation as substantially modified
to accommodate sickness or injury. See Saffle, 85 F.3d at 459.
This point is underscored by the plan's definition of "main
duties" or "material and substantial duties," as those job duties
(1) are normally required to perform the Insured
Person's regular occupation; and
[255 F. Supp.2d 1116]
(2) cannot be reasonably modified or omitted.
It includes those main duties as performed in the
usual or customary way in the general workforce; not
as performed for a certain firm or at a certain work
Had Jefferson Pilot properly incorporated this definition into
the definition of total disability, it could not have reasonably
concluded as it did. Jefferson Pilot abused its discretion.
Having reached this conclusion, this order denies Jefferson
Pilot's motion for summary judgment. Under the circumstances,
there is no need for a trial; no issues of fact remain to be
determined in this forum. See Alford, 311 F.3d at 959; Bendixen,
185 F.3d at 942. Rather, the matter must be remanded to the plan
administrator for a reevaluation of plaintiff's claim in a manner
consistent with this order. See Saffle, 85 F.3d at 461 (stating
that "remand for reevaluation of the merits of a claim is the
correct course to follow when an ERISA plan administrator, with
discretion to apply a plan, has misconstrued the Plan and applied
a wrong standard to a benefits determination"). The primary task
on remand will be a determination of whether the limitations
recommended by Dr. Discher, as to driving and as to sitting,
standing, and walking, render plaintiff unable to perform each of
the main duties of his regular occupation. As provided by the
plan, the relevant duties are those of a car salesperson in the
general workforce that are normally required and cannot be
reasonably modified or omitted.
For the foregoing reasons, Jefferson Pilot's motion for summary
judgment is DENIED. The matter is REMANDED to the plan
administrator for reevaluation of plaintiff's claim. The parties'
submissions in support and in opposition of defendant's motion
shall be part of the administrative record upon remand.
IT IS SO ORDERED.