The opinion of the court was delivered by: Jan M. Adler U.S. Magistrate Judge
ORDER: GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT [Doc. 78] AND DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [Doc. 90]
This ERISA case involves the issue of whether claims administrator Voluntary Plan Administrators, Inc. ("VPA"), acting on behalf of Defendants, abused its discretion in denying Plaintiff's claim for long-term disability ("LTD") benefits under the Hewlett-Packard Company Disability Plan ("the Plan"). On January 23, 2009, Plaintiff Lyn Patrick ("Patrick" or "Plaintiff") and Defendants Hewlett-Packard Company Employee Disability Plan and Hewlett-Packard Company ("HP" or "Defendants") filed cross-motions for summary judgment ("MSJ") [Docs. 78, 90]. On March 2, 2009, each party filed an opposition to the other side's motion for summary judgment [Doc. Nos. 97-104]. On March 2, 2009, Plaintiff filed an Objection to evidence submitted by Defendants [Doc. 98], to which Defendants responded on April 6, 2009 [Docs. 107-108]. Defendants filed Objections to evidence submitted by Plaintiff on March 3, 2009 [Doc. 102]. On April 6, 2009, the parties filed replies in support of their motions for summary judgment [Docs. 108, 111].
On June 24, 2009, the Court heard oral argument on the parties' cross-motions for summary judgment. Upon due consideration of the written and oral arguments of the parties and the record herein, the Court GRANTS Plaintiff's Motion for Summary Judgment [Doc. 78] and DENIES Defendants' Motion for Summary Judgment [Doc. 90]. The Court OVERRULES Plaintiff's Objections to evidence submitted by Defendants, [Doc. 98] and SUSTAINS Defendants' Objections to evidence submitted by Plaintiff. [Doc. 102].
Plaintiff Lyn Patrick worked for Hewlett-Packard for nearly 20 years as a senior technical and management employee. Declaration of Lyn Patrick filed in support of Plaintiff's MSJ [Doc. 82] ("Patrick Decl." ¶2). On or about August 26, 2002, Plaintiff applied for, and began receiving, workers' compensation benefits and short-term disability benefits under the Plan due to right shoulder tendonitis, right forearm lateral epicondylitis ("tennis elbow") and right hand carpal tunnel syndrome. Administrative Record ("AR") 286.*fn1 The last day Patrick worked at HP due to her disabilities was August 23, 2002. Id. Pursuant to the terms of the Plan, Plaintiff was paid short-term disability benefits for one year, until August 24, 2003. See Ex. A, §(o)(I) at 10 (providing that short-term disability be paid for a maximum of 52 weeks).
Before Plaintiff went on short-term disability, she was seen at least three times by Dr. Joan Collins in 2002 for pain in her shoulder, forearm, elbow and/or fingers. AR 376-78.*fn2 From Patrick's first day of disability on August 26, 2002 and over the next year, Plaintiff was seen and examined by Dr. Rodney Henderson, her primary treating physician, every month. Dr. Henderson indicated on October 7, 2002 that Patrick would be "started on therapy" (AR 218), and on November 13, 2002, noted that she "needs more therapy for her shoulder and elbow" and a repeat nerve study for her carpal tunnel. AR 217. Each of the reports discussed Plaintiff's shoulder pain.*fn3 On December 11, 2002, Dr. Henderson noted that although Patrick's "elbow is quite a bit better," she was "now having intermittent pain in the shoulder." AR 216. On January 8, 2003, Dr. Henderson concluded that Patrick was "currently temporarily disabled secondary to her calcific tendinitis, epicondylitis, and right carpal tunnel syndrome and will be so for probably the next three months." AR 189-191.*fn4 Dr. Henderson performed right carpal tunnel release surgery on Plaintiff on February 12, 2003. AR 180-181. On February 26, 2003, Dr. Henderson found she was "[t]emporar[ily] totally disabled until further notice." AR 176-77.
On May 4, 2003, Patrick filed her claim for long-term disability benefits ("LTD benefits") with VPA.*fn5 AR 286-94. Patrick listed her right shoulder, elbow and hand as the basis for her claim for LTD benefits, specifically: (1) right shoulder disorder of the "bursa tendon," (2) right forearm lateral epicondylitis (i.e. tennis elbow), and (3) right hand carpal tunnel syndrome. AR 286. Patrick indicated that she had seen Dr. Joan Collins and Dr. Rodney Henderson for treatment. Id.*fn6
On May 14 and May 21, 2003, Dr. Henderson found that Patrick still had pain in her elbow and shoulder and swelling and stiffness in her fingers, and that she could not return to her previous job, but that she would be eligible for vocational rehabilitation, working up to 4 hours per day, as long as she did no keyboard or mouse work, no overhead work and no forceful or repetitive gripping. AR 278-280, 150-51. On June 25, 2003, Dr. Henderson concluded that Patrick had "reached a point of maximal medical improvement and she will be considered permanent[ly disabled] and stationary." AR
1. VPA Denies Plaintiff's Claim
On August 11, 2003, VPA denied Plaintiff's initial claim for LTD benefits. AR 261-64. The letter outlined Plaintiff's medical history on one page (AR 262) and concluded that Plaintiff could perform other jobs for which she might have been qualified. AR 263. The letter indicated that Plaintiff's file had been referred to a vocational specialist for review, who determined that she could perform the following jobs: (1) Credit Analyst, (2) Management Analyst, (3) Sales Agent and (4) Order Department Supervisor. Id. The letter acknowledged that Dr. Henderson diagnosed Plaintiff with carpal tunnel syndrome, lateral epicondylitis and calcific tendonitis, and recommended that any work should be restricted by "no forceful or repetitive gripping, no keyboarding or mouse work and no overhead work." AR 262. However, there was no analysis or indication of whether these four positions required computer, keyboarding or mouse work.
On August 27, 2003, Dr. Henderson continued to diagnose Patrick with disorders of right shoulder bursa/tendon, elbow pain and lateral epicondylitis, and stated that these restrictions continued to make Patrick disabled. AR 254-55. On November 19, 2003, Dr. Henderson noted that Patrick's symptoms were getting worse and were now in both Plaintiff's right and left hands. AR 253. On January 19, 2004, Dr. Henderson recommended that Patrick be taken out of her vocational rehabilitation training because it "is aggravating her symptoms." He found that she was "demonstrating symptoms of carpal tunnel reoccurrence on the right hand and a development on the left hand as well." He concluded that "[s]he is now TTD [temporarily totally disabled]." AR 142-
On February 3, 2004, Dr. Shack performed an EMG test which "reveal[ed] no electrical evidence of entrapment neuropathy," and "no evidence of carpal tunnel (postop on the right) or cubital tunnel slowing on either side." AR 137-41. However, Dr. Shack specifically qualified his findings by stating that "this is a difficult diagnosis to make on EMG/NCV, and false negative tests are often seen." AR 138.
2. Patrick Appeals the Denial of Her Claim
On February 5, 2004, Patrick (who was not represented by counsel at this time) timely sent a letter to VPA appealing the denial of her claim for LTD benefits. AR 251-255. She stated that since her LTD claim was denied on August 11, 2003, she continued to have pain and swelling in her right wrist, arm and shoulder, and that due to favoring her right arm, she was now experiencing pain and swelling in her left hand and arm. AR 251 She indicated that she was "again on 'TTD' (Temporary Total Disability"), as per Dr. Henderson's orders. Id. She stated that she had been in vocational rehabilitation training as a Medical Assistant, but was "unable to complete my externship because of my injuries. At this time my injuries do not make me a suitable candidate for employment." Id. In regard to the jobs listed in the denial letter, Patrick stated that: "they all involve working on a computer and as Dr. Henderson stated . . .back on May 14, 2003 I'm no longer a suitable candidate for any type of computer or repetitive motion employment." Id. Patrick also indicated that while during the first part of 2003, her right hand and arm improved because she was participating in physical therapy three times a week, and was otherwise using them minimally, the pain and problems returned with normal use during her vocational rehabilitation. Id. She enclosed copies of additional reports from Dr. Henderson, including Primary Treating Physician ("PTP") progress reports, a Physician's Supplemental Certificate and a Supplemental Report. Id.
On February 12, 2004, VPA wrote to Patrick, stating that it had received her appeal and her supplemental reports from Dr. Henderson dated August 27, 2003, November 19, 2003 and January 19, 2004. AR 246. It stated that Patrick had "not submitted any evidence or documentation to substantiate [her] disability beyond August 24, 2003" (Id.), notwithstanding the fact that Dr. Henderson's January 19, 2004 report concluded that Patrick was temporarily totally disabled.VPA indicated that it would give Patrick another 30 days to submit additional documentation in support of her claim.
On March 3, 2004, VPA wrote Patrick informing her that it had requested medical records from her worker's compensation carrier, and that the initial 45-day review period would be suspended pending receipt of this information. AR 245.
On April 7, 2004, VPA sent Patrick's file to Dr. Richard Kaplan, a physiatrist,*fn7 and requested that he perform a Complete Medical Record Review. VPA 4/7/04 lttr to Dr. Kaplan, AR 130-131. VPA specified that the purpose of the review was to provide it "with a second opinion regarding the claimant's medical condition, restrictions and limitations," but that it was "not asking whether the claimant can return to work. We will make a vocational determination." AR 130.*fn8 Dr. Kaplan prepared a 3-page report on April 9, 2004, concluding that in his opinion, "there is no objective evidence of any remaining restrictions at this time for this patient." AR 127-29.
Dr. Kaplan referred to Dr. Henderson's reports from 11/13/02, 2/26/03, 6/25/03 and 2/9/04, as well as the 2/3/04 EMG test. In regard to the more recent reports, he acknowledged that Dr. Henderson's 6/25/03 report documented "a permanent and stationary" disability, "minimal pilar pain and mild provocative test for epicondylitis," and that Patrick should be restricted from using a computer keyboard or mouse and should not perform forcible gripping, grasping or fine finger manipulation. AR 128. He also acknowledged Dr. Henderson's 2/9/04 report noting that Patrick had bilateral hand swelling, numbness and tingling and that vocational rehabilitation had been discontinued, and stated that the report found decreased sharp pain in her arms, no obvious edema as well as good flexion and extension of the digits, and negative tests for Tinel's and elbow flexion. Id. Dr. Kaplan concluded: "There is no documentation of any objective abnormalities on physical examinations which would result in limitations in reference to the patient's lateral tendonitis in her shoulder or calcific tendonitis. The patient is noted to have full range of motion with essentially subjective symptoms of pain though no objective evidence of synovitis or inflammation in any of those areas." Id.
In his last report prior to the denial of Plaintiff's appeal, dated June 7, 2004, Dr. Henderson noted that Patrick reported a "significant flare-up" of symptoms in her right upper extremity. AR 437-38. "She is now having worsening symptoms of her elbow wrist and even the shoulder. She is back in her elbow band and tunnel brace and using ice with improvement." Id. He stated that Patrick was "exquisitely tender over the lateral epicondylar area and ERCB with pain with resisted wrist extension;" the "carpal tunnel is minimally tender with negative provocative tests for carpal tunnel," and that she had "decreased grip strength." Id. He indicated that her work status remained unchanged from his January 19, 2004 report -- temporarily totally disabled. Id.
3. VPA Denies Plaintiff's Appeal
On July 9, 2004, VPA denied Plaintiff's appeal. AR 444-48. VPA described certain medical reports, including several of Dr. Henderson's reports, Dr. Kaplan's report and the EMG test. AR 446. The letter discussed Patrick's complaints of pain, tenderness, swelling, numbness and tingling, but relied heavily on the EMG test which "was essentially a normal examination." No mention was made of Dr. Henderson's findings of "temporary total disability." The VPA acknowledged Dr. Henderson's opinion that Patrick should not use a computer keyboard or mouse, and should not perform repetitive forceful gripping, grasping or other fine finger manipulation. Id.
VPA cited the vocational consultant report and stated that considering Patrick's education, training, expertise, and in light of her physical restrictions, she could perform the following jobs: (1) Credit Analyst, (2) Management Analyst, (3) Sales Agent and (4) Order Department Supervisor. Id. However, there was no analysis or indication of whether these four positions required computer, keyboarding or mouse work. The letter concluded that while Plaintiff "may be unable to return to [her] former position at Hewlett-Packard, the medical and vocational information substantiates [she is] capable of performing other qualifications for which [she is] or could become qualified." Id. at 447. Therefore, VPA reaffirmed its denial of Patrick's claim for LTD benefits.Id.
4. Plaintiff Submits Additional Evidence to VPA After the Denial of Her Appeal
On November 24, 2004, nearly five months after VPA denied Plaintiff's appeal for LTD benefits, Patrick, through her counsel, sent VPA and HP a letter requesting that VPA reopen Plaintiff's claim file so that Plaintiff could file a "supplemental appeal." Ex. E to Def. MSJ [Doc. 91-8] at 455. VPA did not respond to Plaintiff's counsel's request or agree to reopen Plaintiff's file. Compl. ¶ 52.
Nonetheless, on February 9, 2006 -- over 1-1/2 years after Plaintiff's appeal was denied on July 9, 2004 -- Plaintiff's counsel sent a second letter to VPA and HP, purporting to "perfect" her appeal that VPA had denied back in July 2004. Ex. F to Def. MSJ [Doc. 91-9]. Plaintiff demanded that HP and/or VPA grant Plaintiff "full LTD benefits," and submitted several medical records regarding examinations conducted of Plaintiff "[s]ince the time of HP's denial of her LTD benefits." Id. at 473, 499 and Exs. GO. Each of the medical records submitted by Plaintiff's counsel with his February 6, 2006 letter was dated between January and December 2005.*fn9 As the medical records were not in existence at the time VPA denied Plaintiff's appeal in July 2004, Defendants had no obligation to consider the reports, and the Court may not consider these reports, as addressed in Section IV below.
1. "Total Disability" Under the Terms of the Plan
To be eligible for benefits under the Plan, the claimant must establish that she is "Totally Disabled" as defined by the Plan. A member applying for short-term disability benefits must show that "following the onset of the injury or sickness, the Member is continuously unable to perform each and every duty of his or her "Usual Occupation."
Plan, Ex. A to Def. MSJ, § 2(o)(I) at 10. A member's "Usual Occupation" is defined as the normal work assigned to the member by HP. Id., § 2(t) at 13. If a member qualifies, she is entitled to receive up to a maximum of 52 weeks of short-term disability benefits. Id., § 2(o)(I) at 10.
A member who applies for long-term disability benefits must show that "the Member is continuously unable to perform any occupation for which he or she is or may become qualified by reason of his or her education, training or experience." Id., § 2(o)(ii) at 10. The Plan provides that "the determination of Total Disability shall be made by the Claims Administrator on the basis of objective medical evidence. 'Objective medical evidence' shall mean that evidence establishing facts or conditions as perceived without distortion by personal feelings, prejudices or interpretations." Id., § 2(o) at 11.
2. The Plan's Delegation of Authority to VPA
The Company is the named fiduciary which has the discretionary authority to act with respect to any appeal from a denial of benefits. The Company's discretionary authority includes the authority to determine eligibility for benefits and to construe the terms of the Plan. The Claims Administrator shall administer the review of denied claims on the Company's behalf and make the decision on review.
The Plan vests discretionary authority in VPA, as Claims Administrator, to determine "Total Disability" and to "process claims." Id. at § 2(o) and § 4(f) at 11 and
The Plan also states that the "Claims Administrator shall have the discretionary power to construe the language of the Plan and make the decision on review on behalf of the Company." Id., § 8(e).
A. Summary Judgment Standard In ERISA Cases
Normally, summary judgment is appropriate if the evidence presented "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Leisek v. Brightwood Corp., 278 F.3d 895, 898 (9th Cir. 2002). However, in the Ninth Circuit, "where the abuse of discretion standard applies in an ERISA benefits denial case, a motion for summary judgment is merely the conduit to bring the legal question before the district court and the usual tests of summary judgment, such as whether a genuine dispute of material fact exists, do not apply." Nolan v. Heald College, 551 F.3d 1148, 1154 (9th Cir. 2009) (noting that traditional rules of summary judgment may apply if, unlike here, there is a structural conflict of interest). Thus, the issue before the Court is whether VPA abused its discretion in denying Plaintiff's claim for long-term disability benefits on behalf of Defendants.
B. "Abuse of Discretion" Standard of Review Applies
This Court previously ruled on September 7, 2007 that "the proper standard of review of VPA's denial of LTD benefits in this action is abuse of discretion." [Doc. 48 at 15]. The Court confirmed for a second time, on December 1, 2008, that "VPA's decision to deny Plaintiff's LTD benefits claim will be reviewed under the 'arbitrary and capricious' (or, synonymously, 'abuse of discretion') standard." [Doc. 76 at 14]. Despite these unambiguous rulings, Plaintiff yet again argues at length that the de novo standard of review should apply because: (1) the Plan does not vest sufficient discretion in VPA to trigger the "arbitrary and capricious" standard of review and/or HP improperly delegated its fiduciary responsibility to VPA, and (2) procedural irregularities and/or structural conflicts of interest require de novo review or must be considered as factors in abuse of ...