The opinion of the court was delivered by: William A Lsup United States District Judge
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT; GRANTING IN PART AND DENYING IN PART PLAINTIFF'S REQUEST FOR FURTHER / DISCOVERY INTRODUCTION
In this disability-benefits action, plaintiff Dawn Rutherford sued defendants Scene 7, Inc. Long Term Disability Plan, and Prudential Insurance Company of America under the Employment Retirement Income Security Act. Ms. Rutherford claimed that Prudential, the claims administrator for the plan, wrongfully terminated her long-term disability benefits. Defendants now move for summary judgment on the ground that Prudential's termination decision was proper because Ms. Rutherford's claimed disabilities were either primarily self-reported or due to mental illness. For the reasons stated below, defendants' motion is GRANTED IN PART AND DENIED IN PART. Ms. Rutherford's request to seek additional discovery is also GRANTED IN PART AND DENIED IN PART.
Ms. Rutherford was hired to work as a software product producer for Scene 7, Inc., on July 16, 2001. She participated in the employee-benefit plan offered by Scene 7, Inc. Prudential was the claims administrator. The Plan provided (PRUR 1147): Disabilities due to a sickness or injury which, as determined by Prudential, are primarily based on self-reported symptoms have a limited pay period during your lifetime. Disabilities which, as determined by Prudential, are due in whole or part to mental illness also have a limited pay period during your lifetime. The limited pay period for self-reported symptoms and mental illness combined is 24 months during your lifetime. * * * Self-reported symptoms means the manifestations of your condition, which you tell your doctor, that are not verifiable using tests, procedures and clinical examinations standardly accepted in the practice of medicine. Examples of self-reported symptoms include, but are not limited to headache, pain, fatigue, stiffness, soreness, ringing in ears, dizziness, numbness and loss of energy. Mental illness means a psychiatric or psychological condition regardless of cause. Mental illness includes but is not limited to schizophrenia, depression, manic depressive or bipolar illness, anxiety, somatization, substance related disorders and/or adjustment disorders or other conditions. These conditions are usually treated by a mental health provider or other qualified provider using psychotherapy, psychotropic drugs, or other similar methods of treatment as standardly accepted in the practice of medicine. Appended to the Plan was a section entitled, "This ERISA Statement is not part of the Group Insurance Certificate." The first paragraph stated that "[t]he Prudential Insurance Company of America as Claims Administrator has the sole discretion to interpret the terms of the Group Contract, to make factual findings, and to determine eligibility for benefits. The decision of the Claims Administrator shall not be overturned unless arbitrary and capricious" (PRUR 1162). Ms. Rutherford made her first claim for Plan benefits on August 28, 2001, over a month after she began working. When asked to describe the nature of her illness, she wrote, "Extreme fatigue, nausea, headaches, lower back pain, feverish, muscle and joint pains" (PRUR at 865). As a result, she received disability benefits. In December 2001, Prudential terminated Ms. Rutherford's long-term benefits under the Plan, based on a review by Dr. Gwen Brachman. Dr. Brachman had concluded that, "to a reasonable degree of medical certainty," Ms. Rutherford was "not physically impaired from performing essential functions" of her own occupation (PRUR 887). Plaintiff appealed. Prudential referred her file to Dr. Stephen Gerson for review. He found that she met the criteria for a diagnosis of fibromyalgia, chronic fatigue syndrome, and severe depression. She also reacted poorly to medication and was frequently bedridden. In his lengthy letter dated April 26, 2002, Dr. Gerson listed the documents he reviewed to arrive at his conclusions. Of interest is a note from Dr. Michael Kurtz, in which he reported on the treatment for Ms. Rutherford's "ongoing disabling condition of fibromyalgia, degenerative cervical and lumbosacral spine disease. He reports multiple trigger points and he has prescribed physical therapy" (PRUR 481).
Accordingly, Prudential reinstated Ms. Rutherford's benefits in May 2002. The letter noted that she had a pre-existing condition under the definitions of the Plan. The pre-existing symptoms, which emerged after her May 2001 layoff (but before her July 2001 start date). included severe exhaustion, nausea, forgetfulness, flashes, generalized tender points, heaviness to the upper extremities, and difficulty sleeping. The benefits were therefore approved only on the basis of her psychiatric condition. Over the next year, Ms. Rutherford continued to complain of pain, sleep disorders, side effects due to medication, and mental illness. She took medication, including antidepressants and pain medications. She consulted with numerous physicians, many of whom diagnosed her with, inter alia, fibromyalgia. Some of them wrote letters on her behalf, recommending that her disability payment period be extended. In April 2003, Prudential sent Ms. Rutherford a letter advising her of the mental-illness limitation under the Plan and saying that her benefits were only authorized through November 11, 2003. Because her benefits had been reinstated only on the basis of Ms. Rutherford's mental illness, Prudential would only provide 24 months of benefits. The letter further stated that there were no objective medical records (e.g., x-rays or MRI reports) that supported a claim of physical problems.
Ms. Rutherford made three appeals - in September 2003, July 2005, and May 2007. Each time, she asserted that she continued to suffer from physical and mental disabilities. Prudential would then refer her file to physicians who concluded that nothing in Ms. Rutherford's file justified reinstating disability benefits. Prudential upheld its earlier termination decision in each of the appeals. In July 2007, Prudential notified Ms. Rutherford of its final decision to terminate her long-term disability benefits. Ms. Rutherford filed suit against defendants on December 20, 2007, alleging that Prudential improperly and wrongfully denied her disability benefits. She sought to recover benefits, reasonable attorney's fees and costs, and injunctive relief pursuant to ERISA, 29 U.S.C. 1132.
Summary judgment is granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FRCP 56(c). A district court must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there is any genuine issue of material fact. Giles v. General Motors Acceptance Corp., 494 F.3d 865, 873 (9th Cir. 2007). A genuine issue of fact is one that could reasonably be resolved, based on the factual record, in favor of either party. A dispute is "material" only if it could affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986).*fn1 The moving party "has both the initial burden of production and the ultimate burden of persuasion on a motion for summary judgment." Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F. 3d 1099, 1102 ( 9th Cir. 2000). When the moving party meets its initial burden, the burden then shifts to the party opposing judgment to "go beyond the pleadings and by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Celotex Corp. v. Catrett, 477 U. S. 317, 324 (1986).
Although Prudential is the moving party, Ms. Rutherford argues that the Court should sua sponte grant summary judgment in her favor. "It is generally recognized that a court has the power sua sponte to grant summary judgment to a non-movant when there has been a motion but no cross-motion." Kassbaum v. Steppenwolf Productions, Inc., 236 F.3d 487, 494 (9th Cir. 2000). The propriety of granting summary judgment in favor of a non-moving party is, however, a "close question." Ibid. "[G]reat care must be exercised to assure that the original movant has had an adequate opportunity to show that there is a genuine issue and that his [or her] opponent is not entitled to judgment as a matter of law." Ibid.
This order must first determine the applicable standard of review in resolving this ERISA dispute. District courts must review ERISA benefit-denial claims de novo unless the plan administrator or fiduciary unambiguously retained the discretion to grant or deny claims. Otherwise the standard is the more lenient abuse of discretion. Feibusch v. Integrated Device Technology, Inc. Employee Benefit Plan, 463 F.3d 880, 883 (9th Cir. 2006). If de novo review applies, a district court "simply proceeds to evaluate whether the plan administrator correctly or incorrectly denied benefits, without reference to whether the administrator operated under a conflict of interest." Ibid. Under an appended section entitled, "This ERISA Statement is not part of the Group Insurance Certificate," the Plan stated: "The Prudential Insurance Company of America as Claims Administrator has the sole discretion to interpret the terms of the Group Contract, to make factual findings, and to determine eligibility for benefits. The decision of the Claims Administrator shall not be overturned unless arbitrary and capricious" (PRUR 1162). This language unambiguously confers discretion to the plan administrator. See e.g., Jordan v. Northrop Grumman Corp. Welfare Benefit Plan, 370 F.3d 869, 875 (9th Cir. 2004); Bergt v. Ret. Plan for Pilots Employed by MarkAir, Inc., 294 F.3d 1139, 1142 (9th Cir. 2002). Facially, abuse of discretion appears to be the appropriate standard. There is, however, a wrinkle. In its moving papers, Prudential "stipulates that the Court's review will be de novo" (Br. 13). Plaintiff does not dispute this. As a matter of fact, she states in her opposition memorandum: "Prudential has 'stipulated' to a de novo adjudication by the court in this matter.
Therefore the court need not concern itself with any multi-layered conflict-of-interest analysis, and may proceed directly to decide whether Ms. Rutherford's benefits were incorrectly terminated" (Opp. 2). Accordingly, per both parties' wishes, this order will review the ERISA dispute de novo.
2. CONTRACTUAL LIMITATIONS
Prudential contends that plaintiff's disability benefits were rightfully terminated. The Plan provided (PRUR 1147) (emphasis added): Disabilities due to a sickness or injury which, as determined by Prudential, are primarily based on self-reported symptoms have a limited pay period during your lifetime. Disabilities which, as determined by Prudential, are ...