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Austin v. Life Insurance Company of North America

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA


April 13, 2010

ZAINAB AUSTIN, PLAINTIFF,
v.
LIFE INSURANCE COMPANY OF NORTH AMERICA; UBS AG LONG TERM DISABILITY PLAN; UBS AG LIFE INSURANCE PLAN, DEFENDANTS.

The opinion of the court was delivered by: Percy Anderson United States District Judge

FINDINGS OF FACT AND CONCLUSIONS OF LAW

This is an Employee Retirement Income Security Act ("ERISA") action for recovery of long-term disability benefits. Plaintiff Zainab Austin ("Plaintiff") seeks benefits under an employee welfare benefit plan established by her employer, UBS. On March 29, 2010, following the filing of the Administrative Record and briefing by the parties, the Court, sitting without a jury, conducted a bench trial. Having considered the materials submitted by the parties and reviewed the evidence, the Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a):

I. Factual and Procedural Background

Plaintiff, who is now 51 years old, was formerly employed by UBS as a Senior Sales Brokerage Assistant earning over $100,000 annually. (Administrative Record ("AR") 1031.) Plaintiff was insured by Life Insurance Company of North America ("LINA") for disability insurance through a group policy issued to UBS ("Disability Policy"). (AR 807.) Under the Disability Policy, total benefits are available for an employee disabled from performing her "regular occupation" during the first 24 months of disability. (AR 1054.) An employee is "totally disabled" if, during the first 24 months of disability, the employee is "unable to perform the material duties of [her] regular occupation, or solely due to injury or illness, [she was] unable to earn more than 80% of [her] indexed covered earnings." (AR 1054.) After the first 24 months, the definition of "total disability" changes so that an employee is considered "totally disabled" only if she cannot perform "the material duties of any occupation for which [she is] reasonably qualified by education, training, or experience, or solely due to injury or illness, [she is] unable to earn more than 80% of [her] indexed covered earnings." (AR 1054 (emphasis added).) The Disability Policy gives LINA the discretion "to interpret the terms of the Plan documents, to decide questions of eligibility for coverage or benefits under the Plan, and to make any related findings of fact." (AR 305.)

By virtue of her employment at UBS, Plaintiff was also insured by LINA for life insurance ("Life Policy"). The Life Policy provided that payment of life insurance premiums was waived for any UBS employee who was eligible for disability benefits ("WOP"). (AR 734.)

Plaintiff suffers from Supravalvular Aortic Stenosis and underwent open heart surgery at age four. (AR 251.) Complications from the disease resulted in more open heart surgery in March 2003. (AR 251.) Plaintiff returned to work less than two months later. (AR 232.) However, the surgery was not successful and in November 2004, Plaintiff sought a leave from work due to severe pain, fatigue, and shortness of breath. (AR 1031.) Plaintiff applied for short term disability benefits based on "[c]omplications from open heart surgery in 3/2003 -- loss of voice from too little oxygen and chest and back pains." (AR 902-903.) Plaintiff's primary cardiologist, Norman Lepor, M.D., certified her disability and opined that Plaintiff could not return to work until her heart valve was repaired or replaced. (AR 875, 879, 895.)

In a Medical Request Form dated January 21, 2005, Dr. Lepor indicated that Plaintiff was "not allowed to go to work" and noted that she was "severely limited functionally by the pulmonary artery stenosis[,] making her very short of breath even at rest." (AR 851.) Dr. Lepor also opined that Plaintiff "will not be able to work until congenital heart defects [are] repaired." (AR 875). On February 16, 2005, Plaintiff underwent right and left heart catheterization, selective coronary angiography and aortography, performed by Dr. Lepor. (AR 789-791.)

LINA extended Plaintiff's short-term disability benefits on February 17, 2005, finding Plaintiff was "symptomatic even at rest." (AR 201, 847-848, 838-839.) In February 2005, LINA determined that Plaintiff's job was "sedentary." (AR 874, 724-728.) Plaintiff described her job as assisting in the trading process, trades input, confirm, allocate and settle. (AR 772-775.) She also paid office expenses, maintained compliance files, and worked with vendors. (AR 772-775.) On May 20, 2005, UBS submitted Plaintiff's job description to LINA and confirmed that her job required mental acuity and that she worked in a "Highly stressful environment -- Strong multi-tasking environment." (AR 1073.)

The following month, Plaintiff's internist, Dr. Flyer, diagnosed Plaintiff with recurrent aortic valve stenosis and chest wall pain syndrome. (AR 743-744.) Dr. Flyer filled out a Physical Ability Assessment Form which indicated that Plaintiff could frequently sit, kneel, crouch, and perform fine manipulation, and occasionally push, pull, climb, balance, work extended shifts and overtime, and lift and carry ten to twenty pounds. (AR 743-744.)

On May 2, 2005, Plaintiff reported to LINA that shortness of breath and pain made it difficult for her to speak, she suffered headaches and chest pain, in addition to back pain with writing or typing, and found it difficult to concentrate or drive. (AR 772-775.)

Beginning May 24, 2005, LINA began paying Plaintiff long-term disability benefits pursuant to the Disability Policy. (AR 807.) LINA concluded that Plaintiff maintained unresolved cardiac issues which precluded her from working in a sedentary position. (AR 738-739.) LINA also determined that Plaintiff had "no functional capacity at present." (AR 135.) That same month, Plaintiff filed a claim for social security disability benefits through Advantage 2000, a company which provides technical support to individuals and employee benefit plan administrators, including LINA, in establishing entitlement to Social Security disability benefits. (AR 759.)

In October 2005, LINA received reports from June 2005 by cardiologist Drs. Fontana and Azita Farr. (AR 664-660.) Dr. Fontana noted that Plaintiff's chest pain was a limiting symptom and recommended pain management. (AR 667-668.) He further noted that the results of prior catheterization revealed "some mild to moderate degeneration of her pulmonary homograft only two years post surgery." (AR 667-668.)

Plaintiff then began pain management with specialist Jason Hymes, M.D. (AR 113.) Dr. Hymes diagnosed Plaintiff with "Intercostal Neuralgia,... sustained nerve damage after cardiothoracic surgery," and noted that "medication management, as yet unhelpful, multiple potential side effects anticipated would anticipate several months 4-6 before good control could be achieved." (AR 643.) Dr. Hymes indicated that Plaintiff's prognosis was "fair, at best." (AR 643.)

A note in Plaintiff's file dated February 1, 2006, indicates that Plaintiff informed a LINA claims representative that she wanted to try to return to work for four hours a day, and sought vocational assistance. (AR 110.)

On February 14, 2006, Plaintiff was advised by Advantage 2000 that her social security claim had been denied and would be appealed. (AR 613-614.)

On July 28, 2006, Dr. Flyer noted that Plaintiff had "chronic diffuse body pain and fatigue aggravated by activity[,]" and was "unable to sit, bend, lift, use upper extremities, and focus mentally on assigned tasks for any prolonged period." (AR 541.) On October 24, 2006, Dr. Flyer completed a form requested by Advantage 2000, on which he stated that Plaintiff had fibromyalgia, demonstrated 14 of 18 tender points, and suffered pain with activity, poor concentration, and poor sleep. (AR 510.) Dr. Flyer again noted that Plaintiff was "unable to stand, carry, lift or perform focused activity [for] greater than 1-2 hours." (AR 509.) He also stated that Plaintiff's pain/fatigue "constantly" interfered with her ability to concentrate. (AR 509-510.) On July 5, 2006, Dr. Flyer noted that Plaintiff was doing somewhat better, becoming gradually more active, and Plaintiff was planning a trip to Boston. (AR 498.)

Plaintiff's echocardiogram, taken on September 26, 2006, showed normal left ventricular size and function without wall motion abnormality, an ejection fraction of 56 percent, mildly increased mitral valve leaflet thickening, moderate mitral regurgitation, mild-moderate aortic insufficiency, trace pulmonary regurgitation, and mild tricuspid regurgitation. (AR 528.)

On November 13, 2006, LINA advised Plaintiff that the Policy definition of disability would change from "own occupation" to "any occupation" and that it had commenced a review to determine whether plaintiff would remain eligible for benefits. (AR 338-339.) That day, Dr. Lepor provided LINA with a completed Medical Request Form which advised that Plaintiff was suffering from "severe aortic insufficiency" and "mod[erate] mitral regurgitation," but could return to work "anytime," with specific restrictions of no lifting greater than 15 pounds and for Plaintiff to limit straining activities. (AR 522.) Dr. Lepor also provided LINA with a completed Physical Ability Assessment Form, on which he noted that Plaintiff continuously could sit, stand, manipulate and simple grasp; frequently could walk and firm grasp; and occasionally reach, lift, carry ten pounds, push and pull 15 pounds, and climb. (AR 523-524.)

On November 27, 2006, Plaintiff advised LINA that she continued to have chest and back pain, loss of voice increased by activity and stress, and was unable to focus due to pain and medications. (AR 452-454.) She noted that she drove only as necessary and was very limited in her activities. (AR 452-454.)

In February 2007, Dr. Hymes noted in Plaintiff's records that her pain had been going up and down, but that her speech was clear. (AR 472.) Dr. Hymes also completed a Physical Ability Assessment Form, in which he reported that Plaintiff continuously could reach, manipulate and simple grasp; frequently sit and firm grasp; occasionally walk, lift and carry ten pounds, climb stairs, stoop, kneel, crouch and crawl. (AR 465, 468.) Dr. Hymes does not appear to have offered any specific opinion on whether Plaintiff was ready to return to work at that time.

Dr. Flyer's office notes from February 2007 reflect that Plaintiff was doing somewhat better, and that her fibromyalgia was stable. (AR 298.) However, Dr. Flyer indicated that Plaintiff could not work due to aortic valve replacement surgery done in March 2003 and fibromyalgia. (AR 493, 494, 495, 509, 541.) He noted restrictions of no repetitive lifting, bending, transferring, standing or walking, and that activity aggravated Plaintiff's pain and fatigue. (AR 493, 494, 495, 509, 541.) LINA contacted Dr. Flyer in March 2007 to clarify his clinical rationale for the restrictions he had provided. (AR 433.) Dr. Flyer indicated that tender points identified upon exam "confirmed [Plaintiff's] diagnosis of fibromyalgia, a condition involving altered pain thresholds of the spinal cord level. Her function is impaired by activity-induced pain aggravation." (AR 433.) Dr. Flyer further stated that "[a] functional history review confirms ongoing pain aggravation with certain activities including use of upper extremities, bending, prolonged walking." (AR 433.) LINA characterized Dr. Flyer's report as lacking "objective physical or cognitive clinical findings that impair [Plaintiff's] function." (AR 61.)

LINA terminated Plaintiff's benefits by a letter dated March 14, 2007, in which LINA advised, "Neither of your specialists, Dr. Lepor or Dr. Hymes, provided any restrictions to preclude you from your Sedentary occupation... Although Dr. Flyer reported that you could not return to work, the medical information on file does not support any restrictions to preclude you from full-time Sedentary work. Your recent exam findings have been minimal and have failed to provide any significant clinical findings to support the restrictions. Dr. Flyer's restrictions are based solely on your subjective complaints of pain." (AR 430.)

On May 11, 2007, the Social Security Administration found Plaintiff to be totally disabled; the Administrative Law Judge (ALJ) agreed. (AR 418.) The ALJ stated in part: "I found [Plaintiff to be] disabled on November 23, 2004 because of Heart disease with serious narrowing of the aorta and pulmonary artery and Fibromyalgia so severe that [her] impairments medically equal the requirements for one of the impairments listed in the Listing of Impairments." (AR 399.) Advantage 2000 provided LINA with the decisions of the Social Security Administration and ALJ. (AR 398-405.) Attached to the award was a list of exhibits considered by the ALJ, which included the findings of the Social Security Administration's independent cardiologist. (AR 404-405.)

Plaintiff appealed LINA's decision on May 14, 2007. (AR 418-453.) In connection with her appeal, Plaintiff submitted a May 4, 2007 letter from Dr. Hymes, which stated that Plaintiff was taking medications that caused cognitive impairment and drowsiness from time to time throughout the day, was heavily impaired in reaching, unable to sit longer than ten minutes, encountered pain on a daily basis that significantly impaired her ability to sit, stand and walk, was severely disabled with lifting greater than 1 to 2 pounds, and rendered incapacitated at some times she stooping, kneeling, or crouching. (AR 420.) Dr. Hymes noted that Plaintiff's history of open heart surgery contributed to her pain, which was diagnosed as intercostal neuralgia and myofascial pain syndrome of the right anterior ribcage. (AR 420.) The letter further stated that Plaintiff's disability "is of the permanent state." (AR 420.)

LINA's medical director reviewed Plaintiff's file. (AR 379.) LINA upheld its decision by letter dated July 25, 2007, noting that Dr. Lepor indicated that no restrictions were imposed and that no testing had been provided to support a functional loss or severity in symptoms indicating that Plaintiff was incapable of performing the duties of her regular occupation. (AR 377.) The letter did not discuss the award from the Social Security Administration. (AR 379.)

On September 20, 2007, Dr. Lepor submitted another Physical Ability Assessment Form to LINA, which indicated that Plaintiff could frequently sit, fine manipulate and simple grasp, but could only occasionally walk, stand, reach, lift, carry, push and pull. (AR 367-368.) The form did not specifically ask Dr. Lepor if Plaintiff could return to work. On October 10, 2007, LINA advised Plaintiff that Dr. Lepor had not provided supporting treatment records "to support his assessment of [Plaintiff's] abilities." (AR 369.)

Plaintiff appealed again on December 10, 2007. (AR 357-364.) Plaintiff provided a form filled out by Dr. Lepor on September 28, 2007 which noted a specific restriction that Plaintiff could not work and had a "marked reduction in exercise tolerance." (AR 360.) Dr. Lepor also later sent LINA a November 26, 2007 echocardiography report which demonstrated abnormalities including moderate mitral valve regurgitation, mild to moderate aortic insufficiency, and mild tricuspid regurgitation. (AR 356.) A chest angiogram taken in May 2007 also showed narrowing of Plaintiff's pulmonary artery. (AR 987.) LINA was also provided with a November 21, 2007 letter from Dr. Hymes, noting that Plaintiff encountered extreme pain on a daily basis, while attempting to complete simple tasks such as reaching or picking up articles. (AR 363.) Dr. Hymes stated that Plaintiff was able to sit in ten-minute increments before experiencing pain and numbness in the upper and lower back, due to blocked circulation. (AR 363.) Dr. Hymes also noted that Plaintiff was frequently rendered incapacitated when she stooped, knelt, or crouched. (AR 363.)

Plaintiff's file was reviewed by a consulting physician, Dr. Seifarth. (AR 18, 907, 908.) LINA upheld its decision by letter dated May 27, 2008, stating that the information available did not support a restriction from a Sedentary occupation. (AR 313-314.) Although Dr. Lepor had indicated that Plaintiff was unable to work due to a decrease in exercise tolerance, LINA found that Plaintiff's EEG showed a normal ejection fraction and no other testing had been provided to support such a restriction. (AR 313.) LINA also noted that although Dr. Hymes noted that Plaintiff had pain, he did not provide updated office notes documenting any examination findings, and did not provide "formal cognitive measurements" or physical examination findings. (AR 313.) LINA advised that, "While we respect the opinion of all medical providers, in order to be eligible for Long Term Disability benefits, we must be provided with the clinical documentation upon which their opinion are based. Based upon the current information on file, you do not meet the definition of total disability." (AR 313.) Accordingly, LINA upheld its prior decision to deny Plaintiff's claim. (AR 313.) Again, LINA did not address the Social Security Administration's disability determination.

On August 14, 2009, this Court ordered LINA to consider Dr. Grewal's report and additional records of Dr. Lepor produced by Plaintiff, finding that LINA had failed to consider these documents in the first instance. (Docket No. 50.) After reviewing these documents, LINA affirmed its previous denial of Plaintiff's claim, concluding that Plaintiff's medical records do not support the assertion that she cannot work due to congenital heart disease or a psychiatric condition that would preclude her from performing work duties consistent with her job. (AR S056-057.)

II. Jurisdiction and Venue

This action involves a claim for long term disability benefits under an employee welfare benefit plan regulated by ERISA. As such, the Court has original jurisdiction over this matter under 28 U.S.C. § 1331 and 29 U.S.C. § 1132(e). See, e.g., Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 1546, 95 L.Ed. 2d 55 (1987); Parrino v. FHP, Inc., 146 F.3d 699, 703-04 (9th Cir. 1998). Venue in the United States District Court for the Central District of California is invoked pursuant to 29 U.S.C. § 1132(e)(2). The parties do not dispute the facts requisite to federal jurisdiction and venue.

III. Standard of Review

A "denial of benefits challenged under 29 U.S.C. § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956-57, 103 L.Ed. 2d 80 (1989); Saffon v. Wells Fargo & Co. Long Term Disability Plan, 522 F.3d 863, 866 (9th Cir. 2008). Where the plan vests such discretionary authority in the administrator or fiduciary, the Court reviews the denial of benefits under the plan for an abuse of discretion. Firestone, 489 U.S. at 115, 109 S.Ct. at 957. However, in order for the abuse of discretion standard to apply, the Plan must unambiguously grant discretion to the administrator or fiduciary. Kearney v. Standard Ins. Co., 175 F.3d 1084, 1089 (9th Cir. 1999).

In this case, the policy confers discretionary authority on LINA. The Disability Policy gives LINA the discretion "to interpret the terms of the Plan documents, to decide questions of eligibility for coverage or benefits under the Plan, and to make any related findings of fact." (AR 305.) The Court concludes that the foregoing language unambiguously grants discretion to LINA.

Once the Court concludes that the policy vests discretionary authority in the administrator or fiduciary, the Court must determine whether the administrator or fiduciary is operating under a conflict of interest. In recent decisions, first the Ninth Circuit, and then the Supreme Court, determined that the abuse of discretion standard still applies even when the administrator has a conflict of interest. See Metro. Life Ins. Co. v. Glenn, 128 S.Ct. 2343, 2346, 171 L.Ed. 2d 299 (2008) ("Often the entity that administers the plan, such as an employer or an insurance company, both determines whether an employee is eligible for benefits and pays benefits out of its own pocket. We here decide that this dual role creates a conflict of interest; that a reviewing court should consider that conflict as a factor in determining whether the plan administrator has abused its discretion in denying benefits; and that the significance of the factor will depend upon the circumstances of the particular case."); Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 965 (2006) ("Abuse of discretion review applies to a discretion-granting plan even if the administrator has a conflict of interest. But Firestone also makes clear that the existence of a conflict of interest is relevant to how a court conducts abuse of discretion review.").

Where, as here, an insurer "acts as both the plan administrator and the funding source for benefits," the insurer "operates under what may be termed a structural conflict of interest." Abatie, 458 F.3d at 965. In the case of such a structural conflict of interest, the Court is to apply an abuse of discretion review which is "tempered by skepticism commensurate with the plan administrator's conflict of interest." Id. at 968. As the Supreme Court explained:

We believe that Firestone means what the word 'factor' implies, namely, that when judges review the lawfulness of benefit denials, they will often take account of several different considerations of which a conflict of interest is one.... In such instances, any one factor will act as a tiebreaker when the other factors are closely balanced, the degree of closeness necessary depending upon the tiebreaking factor's inherent or case-specific importance.

Glenn, 128 S.Ct. at 2351; see also Abatie, 458 F.3d at 968 ("A district court, when faced with all the facts and circumstances, must decide in each case how much or how little to credit the plan administrator's reason for denying insurance coverage. An egregious conflict may weigh more heavily (that is, may cause the court to find an abuse of discretion more readily) than a minor, technical conflict might."); id. at 968-69 ("The level of skepticism with which a court views a conflicted administrator's decision may be low if a structural conflict of interest is unaccompanied, for example, by any evidence of malice, of self-dealing, or of a parsimonious claims-granting history. A court may weigh a conflict more heavily if, for example, the administrator provides inconsistent reasons for denial; fails adequately to investigate a claim or ask the plaintiff for necessary evidence; fails to credit a claimant's reliable evidence; or has repeatedly denied benefits to deserving participants by interpreting plan terms incorrectly or by making decisions against the weight of evidence in the record.") (internal citations omitted). In determining whether the insurer has abused its discretion, the court must also consider other case-specific factors, including the quality and quantity of the medical evidence, whether the plan administrator subjected the claimant to an in-person medical evaluation or relied instead on a paper review, whether the administrator provided its experts with all of the relevant evidence, and whether the administrator considered a contrary Social Security Administration disability determination. Montour v. Hartford Life & Accident Ins. Co., 588 F.3d 623, 630 (9th Cir. 2009); Metro Life Ins., 128 S.Ct. at 2352; Saffon, 522 F.3d at 869-73. "What the district court is doing in an ERISA benefits denial case is making something akin to a credibility determination about the insurance company's or plan administrator's reason for denying coverage under a particular plan and a particular set of medical and other records." Abatie, 458 F. 3d at 969. In other words, "[a] district court, when faced with all the facts and circumstances, must decide in each case how much or how little to credit the plan administrator's reason for denying insurance coverage." Id. at 968; Saffon, 522 F.3d at 868-69. "The district court may, in its discretion, consider evidence outside the administrative record to decide the nature, extent, and effect on the decision-making process of any conflict of interest; the decision on the merits, though, must rest on the administrative record once the conflict (if any) has been established, by extrinsic evidence or otherwise." Abatie, 458 F.3d at 970.

IV. Analysis

LINA does not dispute that it is an inherently conflicted administrator insofar as it is both the claim administrator and insurer of the Disability Policy. (LINA Trial Brief, p. 12.) However, LINA contends that a heightened level of scrutiny is not warranted here because its conflict of interest did not affect its decision to deny Plaintiff benefits under the Policy. (LINA Responsive Brief, p. 5.) Under Abatie, the Court may weigh LINA's conflict more heavily if it failed to investigate Plaintiff's claim adequately, failed to credit Plaintiff's reliable evidence, or made decisions against the weight of evidence in the record. For the reasons set forth below, the Court finds that LINA's conflict of interest improperly motivated its decision to terminate Plaintiff's benefits, thereby constituting an abuse of discretion.

A. Failure to consider Plaintiff's Social Security Award

The administrative record shows that LINA did not address Plaintiff's Social Security Award at all, despite the similarity between the Social Security Administration's definition of "disability" and the Disability Policy's definition of "total disability." Under the Disability Policy, Plaintiff was considered "totally disabled" if she could not perform "the material duties of any occupation for which [she is] reasonably qualified by education, training, or experience, or solely due to injury or illness, [she is] unable to earn more than 80% of [her] indexed covered earnings." Similarly, the Social Security Administration defines "disability" as the "inability to engage in any substantial gainful activity by reason of any medically determinable physical... impairment" that is of "such severity that [the claimant]... cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy, regardless of whether such work exists in the immediate area in which he lives." 42 U.S.C. § 423(d)(1)(A), (2)(A).

ERISA plan administrators are not bound by the Social Security Administration's determination. Montour v. Hartford Life & Accident Ins. Co., 588 F.3d 623, 635 (9th Cir. 2009). However, "complete disregard for a contrary conclusion without so much as an explanation raises questions about whether an adverse benefits determination was the product of a principled and deliberative reasoning process." Id. "In fact, not distinguishing the [Social Security Administration's] contrary conclusion may indicate a failure to consider relevant evidence." Id.

Here, the Social Security Administration found that Plaintiff was totally disabled and thus entitled to an award of benefits "because of Heart disease with serious narrowing of the aorta and pulmonary artery and Fibromyalgia so severe that [her] impairments medically equal the requirements for one of the impairments listed in the Listing of Impairments." LINA made a contrary determination, but made no attempt to explain why its decision differed from that of the Social Security Administration. Even after Advantage 2000 provided the favorable ALJ decision to LINA, and it was established that the Social Security Administration's independent cardiologist found that Plaintiff was disabled, LINA made no attempt to address the findings of ALJ and distinguish the SSA's disability standard from its own. However, it was LINA that assisted Plaintiff in obtaining Social Security benefits and reaped a financial benefit when benefits were awarded. These factors raise a question whether LINA's decision was based on a failure to consider relevant evidence.

B. Reliance on Plaintiff's Expressed Desire to Work on a Part-Time Basis

LINA argues that Plaintiff's expressed desire to return to work on a part-time basis should be considered in determining whether LINA abused its discretion. Specifically, LINA refers to a conversation that Plaintiff had with a LINA claims representative in January 2006, in which she indicated that she wanted to try to return to work for four hours a day. (AR 110.) LINA contends that this statement supports its finding that Plaintiff was no longer suffering from a disability that would prevent her from returning to work on a full-time basis.

The Court disagrees. As an initial matter, the Court notes that Plaintiff's expressed desire to try to return to work on a part-time basis does not in itself establish that she was in fact able to do so. Given that the record does not reflect that Plaintiff ever returned to work at all, it is not clear that Plaintiff would have been able to work, even on a part-time basis. Further, even assuming that Plaintiff was physically able to return to work for four hours a day, this was not reliable evidence that Plaintiff was no longer "totally disabled." Under the Disability Policy, Plaintiff was "totally disabled" if she could not perform "the material duties of any occupation for which [she was] reasonably qualified by education, training, or experience, or solely due to injury or illness, [she was] unable to earn more than 80% of [her] indexed covered earnings." (AR 1054.) Thus, even if Plaintiff was able to work in a sedentary position for four hours a day, there was no indication that she would have been able to earn more than 80% of her indexed covered earnings. Whether Plaintiff was in fact able to return to work part-time and whether Plaintiff was not "totally disabled" under the Policy definition are completely separate inquiries. See Feibusch v. Integrated Device Tech., Inc., 463 F.3d 880, 886 (9th Cir. 2006). As such, LINA placed undue weight on Plaintiff's statement that she wanted to try to work for four hours a day.

C. Demand for Objective Evidence

LINA contends that it was entitled to require objective evidence that Plaintiff was totally disabled by her medical condition, such that she was prevented from performing the duties of her regular occupation. LINA contends that because Plaintiff never provided such evidence, it was entitled to discontinue her benefits. Specifically, LINA advised Plaintiff that: "Neither of your specialists, Dr. Lepor or Dr. Hymes, provided any restrictions to preclude you from your Sedentary occupation... Although Dr. Flyer reported that you could not return to work, the medical information on file does not support any restrictions to preclude you from full-time Sedentary work. Your recent exam findings have been minimal and have failed to provide any significant clinical findings to support the restrictions. Dr. Flyer's restrictions are based solely on your subjective complaints of pain." (AR 430.)

1. Dr. Lepor's Findings

LINA's assessment of Plaintiff's ability to return to work seemed to rely heavily on two items in the record: (1) a note made by Plaintiff's cardiologist, Dr. Lepor, on one of LINA's Medical Request Forms; and (2) the responses that Dr. Lepor provided on a Physical Ability Assessment Form. However, the questions on these Forms and, consequently, Dr. Lepor's responses to them, were ambiguous and confusing. As such, Dr. Lepor's responses required further investigation and clarification.

On the Medical Request Form, which was completed in November 2006, there is a question which asks, "Could your patient return to work at this time if accommodations were made for the listed restrictions?" (AR 522.) In response to this question, Dr. Lepor checked the box marked "Yes." (AR 522.) However, Dr. Lepor also answered the next question, which asked, "If no, based on your experience, what is your best estimate of when your patient can return to work?" (AR 522.) In response to this question, Dr. Lepor wrote "anytime" with restrictions. (AR 522.)

LINA's reliance on Dr. Lepor's responses on the Medical Request Form is questionable. As an initial matter, it appears that there may have been some confusion as to what the Form was asking, since Dr. Lepor answered the first question "Yes," but then proceeded to answer the next question, which was predicated on an answer of "No." Because Dr. Lepor should not have answered the second question if his answer to the first question was positive, the fact that he answered both questions indicates that he was either confused by the Form or careless in his responses. Even if Dr. Lepor had properly responded to the questions on the Form, his response was ambiguous at best. Given that Plaintiff previously informed LINA that she might be interested in returning to work for four hours a day, it is conceivable that Plaintiff also conveyed this interest to Dr. Lepor, since he was Plaintiff's primary cardiologist. However, the Form does not specify whether it is asking about Plaintiff's ability to return to work on a part-time or full-time basis. As such, Dr. Lepor's responses may have been based on his assumption that Plaintiff was only being evaluated on her ability to return to work for four hours a day, rather than eight. In the absence of any further explanation, LINA should have sought clarification of Dr. Lepor's statement. Instead, LINA relied on Dr. Lepor's responses to somehow conclude that Plaintiff was able to return to "full-time Sedentary work." By doing so, LINA not only came to a conclusion that was not supported by the evidence, but also placed undue weight on an ambiguous response in the Medical Request Form in determining whether Plaintiff was entitled to disability benefits.

Dr. Lepor's other statements and notes regarding Plaintiff's condition also seem to contradict his note on the November 2006 Medical Request Form. On an earlier Medical Request Form that Dr. Lepor completed in January 2005, he opined that Plaintiff "will not be able to work until congenital heart defects [are] repaired." (AR 875). Given that Plaintiff's heart defects still have not been repaired to date, Dr. Lepor's note that Plaintiff could return to work "anytime" was contrary to his January 2005 assessment of Plaintiff's condition. Dr. Lepor also completed a Medical Request Form in September 2007, in which he specifically noted that Plaintiff "cannot work" and had a "marked reduction in exercise tolerance." (AR 360.) Dr. Lepor's responses on the September 2007 Form were therefore in stark contrast to his note on the November 2006 Form. Given the inconsistency between Dr. Lepor's responses on the Medical Request Forms before and after the November 2006 Form, it appears that LINA overemphasized the importance of the November 2006 Form. At a minimum, LINA failed to adequately investigate Plaintiff's claim insofar as it failed to follow up with Dr. Lepor to seek clarification of his opinion that Plaintiff could return to work.

LINA's reliance on Dr. Lepor's responses to the November 2006 Physical Ability Assessment Form is also questionable. The Physical Ability Assessment Form is a grid form in which physicians are asked to place a check mark in the applicable box noting the frequency with which a patient can perform tasks such as sitting, standing, walking, grasping, and lifting. (AR 523.) On the Physical Ability Assessment Form that Dr. Lepor completed in November 2006, he checked off boxes indicating that Plaintiff could "continuously" sit and stand, "frequently" walk, and "occasionally" reach, lift, push and pull 15 pounds, and climb. (AR 523-524.) LINA relies on this Form in noting that Dr. Lepor did not impose any restrictions on Plaintiff that would prevent her from working full-time in a sedentary occupation.

However, the Form specifically asks that a physician "check the boxes corresponding to the patient's level of physical functioning," thereby asking that the responding physician focus entirely on the patient's physical ability, notwithstanding any pain that might result. Given that one of the most limiting restrictions on Plaintiff's ability to return to work was her constant pain, Dr. Lepor's responses on the Physical Ability Assessment Form were not necessarily an accurate reflection of Plaintiff's actual ability to engage in full-time work. As such, LINA failed to adequately investigate Plaintiff's claim by relying solely on Dr. Lepor's check marks, rather than attempting to clarify his responses.

2. Dr. Hymes' Findings

LINA also appears to have placed great weight on Dr. Hymes' completion of a Physical Ability Assessment Form in February 2007, in which he indicated that Plaintiff could frequently sit, occasionally walk, and continuously reach, manipulate and simple grasp. (AR 465, 468.) However, as discussed above, the wording of the Form raises a question as to whether Dr. Hymes' assessment accounted for the possibility that Plaintiff might experience disabling pain while performing these activities. Moreover, unlike Dr. Lepor, Dr. Hymes did not actually offer an opinion on Plaintiff's ability to return to work. Nor did Dr. Hymes address whether Plaintiff's pain medication might prevent her from returning to work or impair her ability to focus at work. Indeed, Dr. Hymes' office notes from February 2007 indicate that Plaintiff was suffering from level-4 pain on a scale of 1 to 10. (AR 472.) In response to Plaintiff's symptoms, Dr. Hymes renewed her pain medication and recommended a follow-up appointment in four to six weeks. (AR 472.) These office notes indicate that Plaintiff experienced constant, moderate pain even while taking pain medication. However, LINA did not ask Dr. Hymes for clarification of his responses to the Physical Ability Assessment Form, despite the apparent incongruity between his responses on the Form and his office notes.

Other evidence in the record also suggests that LINA overemphasized the importance of Dr. Hymes' evaluation of Plaintiff's physical abilities. On November 21, 2007, Dr. Hymes wrote a letter to LINA stating that Plaintiff encountered extreme pain on a daily basis while attempting to complete simple tasks, was only able to sit in ten-minute increments before experiencing pain and numbness in the upper and lower back, and was frequently rendered incapacitated when she stooped, knelt, or crouched. (AR 363.) This letter, which spans just over one full page, goes into considerably more detail than LINA's Physical Ability Assessment Form, which consists of a two-page grid for check mark responses. Again, this apparent disparity between Dr. Hymes' responses on LINA's grid form and his subsequent letter noting Plaintiff's extreme pain and frequent incapacitation warranted further investigation and clarification. However, LINA did not seek any clarification from Dr. Hymes.

3. Dr. Flyer's Findings

Dr. Flyer, Plaintiff's internist, indicated on a Medical Request Form completed in February 2007 that Plaintiff could not yet return to work, due to a primary diagnosis of fibromyalgia. (AR 493.) In an accompanying Physical Ability Assessment Form, Dr. Flyer also indicated that Plaintiff's pain and fatigue was aggravated by physical activity, and that Plaintiff could only occasionally sit, stand, walk, and reach. (AR 494, 495.) Although LINA did not contact Drs. Lepor and Hymes regarding their assessments of Plaintiff's physical condition, it did contact Dr. Flyer to clarify his clinical rationale. When Dr. Flyer indicated that tender points identified upon examination confirmed Plaintiff's diagnosis of fibromyalgia, and that a functional history review confirmed ongoing pain aggravation with certain activities, LINA concluded that Dr. Flyer's report was lacking "objective physical or cognitive clinical findings that impair [Plaintiff's] function." (AR 61.)

A plan administrator is bound to engage in a "meaningful dialogue" with the claimant and to consider evidence presented by the claimant. Booton v. Lockheed Med. Benefit Plan, 110 F. 3d 1461, 1463-1464 (9th Cir. 1997). Failing to properly identify information needed from the claimant or refusing to consider evidence presented is evidence of a conflict and an abuse of discretion. Id.

The Ninth Circuit has noted that "individual reactions to pain are subjective and not easily determined by reference to objective measurements." Saffon, 522 F.3d at 872; see also Cotton v. Bowen, 700 F. 2d 1403, 1407 (9th Cir. 1986) ("Requiring full objective confirmation of pain complaints before believing them 'would overlook the fact that pain is a highly idiosyncratic phenomenon, varying according to the pain threshold and stamina of the individual victim,' and it would trivialize the importance that we have consistently ascribed to pain testimony, rendering it, in the final analysis, almost superfluous."). Fibromyalgia is a particularly problematic condition insofar as the nature of the condition is entirely "subjective." Jordan v. Northrop Grumman Corp. Welfare Benefit Plan, 370 F.3d 869, 872 (9th Cir. 2004) ("Fibromyalgia's cause or causes are unknown, there is no cure, and, of greatest importance to disability law, its symptoms are entirely subjective. There are no laboratory tests for the presence or severity of fibromyalgia."); see also Minton v. Deloitte & Touche USA LLP Plan, 631 F. Supp. 2d 1213, 1219 (N.D. Cal. 2009) ("By effectively requiring 'objective' evidence for a disease that eludes such measurement, [the insurer] has established a threshold that can never be met by claimants who suffer from fibromyalgia, no matter how disabling the pain.").

Here, LINA did not specify what type of "objective" evidence it required to support Dr. Flyer's conclusion that Plaintiff was not able to return to work. Indeed, given the subjective nature of fibromyalgia, there does not appear to be any purely objective test to measure Plaintiff's inability to function due to pain. As such, LINA's request for "objective" evidence was essentially a request for evidence that was not available. To the extent that LINA's denial of Plaintiff's claim was based on the failure to produce evidence that is simply not available, that bears on the degree of deference that the Court should accord LINA's decision. Saffon, 522 F.3d at 872.

It is also notable that LINA did not have any of its doctors conduct an in-person examination of Plaintiff. Although an in-person examination is neither required nor determinative, it is a relevant consideration, particularly with respect to such "subjective" conditions such as fibromyalgia. Thus, LINA's purely "paper review" of Plaintiff's file, in addition to its request for unavailable evidence, supports a finding that it abused its discretion in denying Plaintiff's benefits.

D. Failure to Consider the Lack of Change in Plaintiff's Condition

Plaintiff argues that LINA abused its discretion in failing to consider the lack of improvement in Plaintiff's heart condition when it terminated her benefits.

Where an insurer has already been paying long-term disability benefits to a claimant, that suggests that the claimant was already disabled. In order to find the claimant no longer disabled, "one would expect the [tests] to show an improvement, not a lack of degeneration." Saffon, 522 F.3d at 871 (emphasis in original). "It is not clear why further degeneration is necessary sustain a finding that [Plaintiff] is disabled." Montour, 588 F.3d at 635 (internal citations omitted).

Here, LINA acknowledges that "[t]he medical records do not document a change in [Plaintiff's] cardiac status since 2005... Echocardiography on November 26, 2007 and on November 20, 2008 demonstrated no appreciable changes when compared to the echocardiographic report dated August 30, 3005." (AR S57.) As such, LINA concedes that Plaintiff's cardiac condition has not changed. Nevertheless, LINA fails to explain how a lack of change in Plaintiff's condition supports a finding that she is no longer disabled. LINA also fails to explain why further degeneration is necessary to sustain a finding that Plaintiff is disabled.

Even if further degeneration is somehow necessary, the evidence shows that there is continued narrowing in Plaintiff's right pulmonary artery. Although LINA noted in its letter of denial that "[t]he CT Angiogram of May 24, 2007 demonstrated no progression of either ascending aortic or pulmonary narrowings[,]" (AR S57), the Angiogram report specifically states that there were indications that Plaintiff's right pulmonary artery was narrowing: "The previously seen 20mm right pulmonary artery narrowing to 9mm show a 17mm right pulmonary artery narrowing to 7mm. This is consistent with interval decreased size of the right pulmonary artery." (AR 987.) Thus, given LINA's express acknowledgment that Plaintiff's cardiac status remained unchanged, and the additional evidence that Plaintiff's condition actually degenerated, LINA's determination that Plaintiff was no longer disabled is not supported by Plaintiff's medical records.

Because the evidence does not support the conclusion that Plaintiff was capable of returning to full-time work in a sedentary occupation, and considering LINA's structural conflict of interest and failure to adequately investigate Plaintiff's claim, the Court concludes that LINA abused its discretion in terminating Plaintiff's benefits. Because the Court has reached this conclusion without relying on the additional evidence with which Plaintiff seeks to augment the record, the Court denies Plaintiff's request as moot.

V. Appropriate Remedy

At the trial on this matter, LINA argued that even if the Court found that it abused its discretion in denying Plaintiff her disability benefits, the proper remedy would be to award only those back benefits that would have been due to Plaintiff under the "regular occupation" period of disability. LINA contends that Plaintiff should not be awarded back benefits under the "any occupation" period of disability because LINA "did not complete its analysis or make a determination under the 'any occupation' standard." (Def. Supp. Brief, p. 2.)

While it is true that LINA terminated Plaintiff's disability benefits during the "regular occupation" disability period, the record establishes that LINA's denial of benefits was actually premised on an evaluation of Plaintiff's disability as it related to both the "regular occupation" and "any occupation" standards. In LINA's letter to Plaintiff dated November 13, 2006, LINA informed Plaintiff that because her claim was approaching the 24-month mark on May 24, 2007, it had "begun a review to determine if [Plaintiff would] remain eligible for benefits beyond that date." (AR 228.)

LINA's subsequent notes in the claim file indicate that by March 14, 2007, it had completed the review of Plaintiff's disability under the "any occupation" standard. On a document with the heading "Claim Strategy," LINA notes the following under a section entitled "Update Rationale":

Title ongoing file plan, ao deny Update Rationale Any Occ Investigation (AR 57 (emphasis added).) On that same document, under "Claim Status Information," LINA's Reviewer and Title Senior Claim Manager, Kelly Mauro, notes:

I agree with the decision to close the claim at any occ. Two of clmt's three providers have indicated that clmt has sedentary abilities. The only AP stating clmt cannot work is clmt's PCP who indicates clmt's fibro symptoms are preventing her from working in any capacity. NCM contacted PCP who was not able to provide clinical findings to support his opinion regarding why clmt is unable to do even sedentary work. At this time we do not have medical documentation to support clmt is TD from any work. Claim will be closed. (AR 57 (emphasis added).) In a letter dated the same day, LINA informed Plaintiff that her long-term disability benefits had been terminated. (AR 430.)

Consistent with the March 2007 notes in the claim file, LINA's notes from Plaintiff's first appeal, dated July 24, 2007, state: "Recommendation Affirmed, medical does not support CX TD from own occupation and any occupation. Medical does not provide clinical evidence of severity in symptoms or functional loss to support disability." (AR 29 (emphasis added).) In the same document, under a section entitled, "Medical Investigation Results," the LINA reviewer states, "Based on the review of the LTD and WOP claims, it is concluded that the information on file does not provide the clinical documentation to support a severity in symptoms or functional loss to preclude the cs from performing her regular or any occupation." (AR 29 (emphasis added).)

LINA repeats these findings in its letter to Plaintiff dated the next day: "Based on the review of your claim, we have concluded that the information on file does not provide the clinical evidence to support a severity in symptoms or functional loss to preclude you from performing your regular or any occupation." (AR 377 (emphasis added).)

Given that LINA's own records show that it denied Plaintiff's claim based on its conclusion that Plaintiff was not disabled under either the "regular occupation" or "any occupation" standards, the Court finds that Plaintiff's disability benefits should be reinstated from the date of termination, March 14, 2007, to the date of judgment in this case. The Ninth Circuit has held that "retroactive reinstatement of benefits is appropriate in ERISA cases where... but for the insurer's arbitrary and capricious conduct [the insured] would have continued to receive the benefits or where there was no evidence in the record to support a termination of benefits." Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1163 (9th Cir. 2001). "[A] plan administrator will not get a second bite at the apple when its first decision was simply contrary to the facts." Id.

Although LINA cites to a number of cases in support of its assertion that this Court may not award a plaintiff disability benefits under the "any occupation" standard when the insurer itself has not made a determination of the plaintiff's eligibility under that standard, those cases are inapposite. See Lavino v. Metro. Life Ins. Co., 2010 U.S. Dist. LEXIS 2510 (C.D. Cal., Jan. 13, 2010); Frost v. Metro. Life Ins. Co., 320 Fed. Appx. 589 (9th Cir. 2009); Caplan v. CNA Financial Corp., 544 F.Supp.2d 984, 993 (N.D. Cal. 2008). Unlike the facts in Lavino, Frost, or Caplan, the evidence here shows that even though LINA terminated Plaintiff's benefits while she was still in the 24-month period for evaluation under the "regular occupation" standard, its determination that Plaintiff was not totally disabled was made after evaluating the extent of Plaintiff's disability under both the "regular occupation" and "any occupation" standards. Thus, because LINA has already made a determination that Plaintiff was not disabled under the "any occupation" standard, this case more closely resembles Pannebecker v. Liberty Life Assurance Co., 542 F.3d 1213 (9th Cir. 2008) and Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154 (9th Cir. 2001), where it was found that retroactive reinstatement of benefits to the date of judgment was appropriate. If the Court were to remand Plaintiff's claim to LINA so it could again decide whether Plaintiff was eligible under the "any occupation" standard, LINA would be afforded a "second bite at the apple." Given that the evidence establishes LINA's abuse of its discretion in failing to seek clarification from Plaintiff's physicians and failing to credit the reliable evidence submitted by Plaintiff, there is no basis on which to find that such an opportunity is warranted.

Conclusion

LINA is ordered to reinstate long-term disability benefits to Plaintiff immediately after final entry of judgment by this Court. LINA is also ordered to retroactively reinstate Plaintiff's long-term disability benefits effective to March 14, 2007. See Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1163 (9th Cir. 2001) ("[R]etroactive reinstatement of benefits is appropriate in ERISA cases where... but for [the insurer's] arbitrary and capricious conduct, [the insured] would have continued to receive the benefits or where there [was ] no evidence in the record to support a termination or denial of benefits.") (internal citations omitted). Plaintiff is awarded pre-judgment interest on the retroactive benefits in accordance with the rate set forth in 28 U.S.C. § 1961.

Given that Plaintiff qualified for a waiver of life insurance premiums while she was disabled under the Disability Policy, and LINA terminated Plaintiff's waiver of premiums when it terminated her disability benefits, this Court also awards Plaintiff past life insurance premiums paid after March 17, 2007. LINA is further ordered to reinstate the waiver of Plaintiff's life insurance premiums pursuant to the Life Policy, during such time as she remains disabled.

"[T]he court in its discretion may allow reasonable attorney's fees and costs of action to either party" in an ERISA action. 29 U.S.C. § 1132(g)(1). Accordingly, if Plaintiff............ chooses to move for attorney's fees, such motion shall be filed in accordance with the Local Rules of the United States District Court for the Central District of California. See Smith v. CMTA-IAM Pension Trust, 746 F.2d 587, 589 (9th Cir. 1984).

The Court will enter judgment in favor of Plaintiff.

IT IS SO ORDERED.

20100413

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