The opinion of the court was delivered by: Hayes, Judge:
The matter before the Court is the Findings of Fact and Conclusions of Law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.
This is an action for disability benefits under the Employee Retirement Income Security Act of 1974 ("ERISA"). Plaintiff Todd Nash submitted a claim for disability under a group insurance policy. Plaintiff received benefits for two years and one month. Plaintiff's benefits were subsequently terminated and Plaintiff appealed. This lawsuit followed.
On September 24, 2010, the Court conducted a bench trial. (ECF No. 97). Prior to trial, all exhibits had been filed with the Court.
Findings of Fact and Conclusions of Law
I. Governing Policy and Plan
Defendant Life Insurance of North America ("LINA" or "Defendant") issued a group insurance contract, Group Policy SLK-030024 ("Policy"), to Administaff of Texas ("Administaff") effective January 1, 2000, to provide short term disability ("STD") and long term disability ("LTD") coverage to all full time active employees of Administaff and its participating companies, including Morpho Technologies ("Morpho").
The Policy has two disability definitions related to a Disability Claim by a Class I insured, the first applicable to the first 30 months comprising the STD and the "regular occupation" disability period, and the second applicable to disabilities that continue beyond 30 months, known as the "any occupation" disability period. (Pretrial Order ("PTO") Ex. C at 27, ECF No. 77-1). The Policy states:
Definition of Disabled/Disability
The Employee is considered Disabled if, solely because of Injury or Sickness, he ... is either:
1. unable to perform all the material duties of his ... Regular Occupation or a Qualified Alternative; or
2. unable to earn 80% or more of his ... Indexed Covered Earnings.
After Disability has lasted 30 months, the Employee is considered Disabled if solely due to Injury or Sickness, he ... is either:
1. unable to perform all the material duties of any occupation for which he ... is, or may reasonably become, qualified based on education, training or experience; or
2. unable to earn 80% or more of his ... Indexed Covered Earnings.
The Insurance Company will require proof of earnings and continued Disability.
Id. The Policy provides that "[b]enefits will end" on "the date the Insurance Company determines [the Employee] is not Disabled." Id. at 43. The Policy provides that "[t]he Insurance Company, at its expense, will have the right to examine any person for whom a claim is pending as often as it may reasonably require." Id. at 45. Pursuant to the Policy, LINA is responsible for investigating the claim, making the decision whether to pay benefits, and payment of the benefits.
The Policy defines "Regular Occupation" as: "The occupation the Employee routinely performs at the time the Disability begins. In evaluating the Disability, the Insurance Company will consider the duties of the occupation as it is normally performed in the general labor market in the national economy." Id. at 50. The Policy defines "Qualified Alternative" as an occupation that meets all of the following conditions:
1. the material duties of the occupation can be performed by the Employee based on his ... training, experience or education;
2. it is within the same geographic area as the Regular Occupation the Employee holds with the Employer on the date the Employee's Disability begins;
3. a job in that occupation is offered to the Employee by the Employer; and
4. the wages for that occupation, including commissions and bonus, are 80% or more of the Employee's Indexed Covered Earnings.
The Policy provides that after six months of STD benefits, monthly LTD benefits will be paid for continuing disability at the rate of "the lesser of 60% of an Employee's monthly Covered Earnings rounded to the nearest dollar or the Maximum Monthly Benefit" of $10,000 per month. Id. at 28.
The Summary Plan Description states:
The Insurer is the Claims Administrator for the Plan. The Claims Administrator administers all claims and appeals on behalf of the Plan. For this purpose, the Claims Administrator is a named fiduciary of the Plan under ERISA. As Claims Administrator, the Insurer has the authority, in its discretion, to interpret the terms of the Plan, decide questions of eligibility for coverage or benefits under the Plan and make any related findings of fact. All decisions made by the Claims Administrator are final and binding on all persons covered under the Plan to the full extent of the law. (PTO Ex. A at 9, ECF No. 96).
Plaintiff, born in 1963, received a Bachelors Degree in Electrical Engineering in 1986. From 1988 to 2003, Plaintiff's occupation was in sales and marketing. In 2002, Plaintiff received an MBA and MSBA in Finance/Tax.
From April 9, 2001 to September 26, 2003, Plaintiff was Vice President of Business Development at Morpho. Plaintiff's duties encompassed all of the company's sales and marketing tasks, both foreign and domestic, and required domestic and international travel and associated business meetings, in addition to corporate management activities. Vice President of Business Development is a sedentary occupation requiring primarily sitting all day.
Plaintiff was co-employed by Morpho and Administaff and covered under Administaff's benefits plans including the disability Plan at issue in this case. Plaintiff was a "key employee" of Morpho and a Class I covered participant (applicable to "officials and managers") in the Plan. (PTO Ex. D at 912, ECF No. 69). Plaintiff's annual earnings before becoming disabled were $151,424.00, an average of $12,618.66 Covered Earnings.
In February of 1998, Plaintiff sought medical treatment for left hip pain. On February 3, 1998, X-rays of Plaintiff's pelvis and left femur "show[ed] mild degenerative change, with some subchondral sclerosis and osteophyte formation and slight joint space narrowing superiorly and laterally." (PTO Ex. C at 2257, ECF No. 83).
On April 27, 1998, orthopedic surgeon Leonard R. Ozerkis, M.D. examined Plaintiff and the February 3, 1998 X-rays. Plaintiff reported that he had been experiencing left hip pain and stiffness and difficulty tying his shoe laces. Dr. Ozerkis recorded Plaintiff's left hip range of motion ("ROM") as follows: "Hip flexion is to about 75E, extension is full. There is external rotation on the left side to 15-20E, internal rotation 0E. Abduction and adduction was mildly painful and somewhat limited."*fn1 Id. at 2245. Dr. Ozerkis' assessment was "early degenerative arthrosis left hip." Id. Dr. Ozerkis advised Plaintiff to lose weight, exercise and "explained to [Plaintiff] that he will probably need a joint replacement at sometime in the next 5-10 years but he should try to put it off as long as possible." Id.
On July 18, 2003, Plaintiff's then-family practitioner, Dr. Mahyar Ajir, D.O., referred Plaintiff to orthopedic surgeon Behrooz Tohidi, M.D. for "problem[s] with ROM" of the hip and ordered bilateral hip X-rays. Id. at 2261.
On July 18, 2003, X-rays of Plaintiff's hips were taken and compared to the February 3, 1998 X-rays. Jeffrey S. Miller, M.D. reported: "Again seen is apparent old left femoral neck fracture deformity with some remodeling. Again seen is osteophytosis and superior joint space narrowing, which may be slightly increased compared with prior study." Id. at 2885. Dr. Miller's impression was "post traumatic change of the left femoral neck, apparently due to old fracture with moderate to severe left sided osteoarthritis slightly progressed compared with prior study." Id.
On August 8, 2003, Dr. Tohidi examined Plaintiff and reported that "[t]here is marked limitation of motion to the left hip with 0 degrees of external rotation, about 30 degrees of internal rotation, 25 [degrees] of abduction, 15 degrees of adduction...." Id. at 2286. Plaintiff complained of "pain deep inside the left hip, which is constantly present.... Long sitting is painful, which he particularly notices when he is traveling overseas, which he does about once a month." Id. at 2285. Dr. Tohidi reported that Plaintiff is allergic to aspirin. With respect to the July 2003 X-ray films, Dr. Tohidi stated: "The x-rays elicit severe posttraumatic degenerative arthritis of the left hip with congruent loss of the articular space and bone-on-bone contact in the weight-bearing dome and in zone 3 of the acetabulum. The patient otherwise elicits with type-B bone in the proximal femur." Id. at 2286. Dr. Tohidi diagnosed Plaintiff with "[s]evere posttraumatic degenerative arthritis of the left hip." Id. Dr. Tohidi ordered standing X-rays of the left hip and stated: "In my opinion the treatment options include intermittent injections ... versus a total hip replacement. A hip fusion in this patient will be very debilitating as the present problem is inadequate flexion of the hip and problems with sitting." Id.
On August 14, 2003, Dr. Tohidi injected Xylocaine and Depo-Medrol in Plaintiff's left hip for "diagnostic and therapeutic" purposes. Id. at 2284. Dr. Tohidi reported the results of standing X-rays of Plaintiff's left hip taken on August 8, 2003: "severe degenerative arthritis with complete loss of the articular space and bone-on-bone contact." Id.
On September 5, 2003, Dr. Tohidi again saw Plaintiff. Dr. Tohidi stated: The injection was only helpful for a short-time basis, and the pain has been recurrent in the same way. [Plaintiff] describes severe pain when sitting in a confined area such as a chair or an airplane seat for any length of time, ranging from as little as 45 minutes to 90 minutes. Sitting after 90 minutes increases his pain and increases the length of time that he takes to recover.
His work as vice president in business development in his company requires attending many meetings at both customer locations and within the company's own offices. Meetings can last for several hours with limited breaks and very limited opportunity to move about or reposition himself to avoid pain. Of course, when aboard an airplane he sits anywhere from 90 minutes to in excess of 12 hours. He also, especially when traveling, has to board public transportation such as buses or passenger vans or trains and has to sit for anywhere from 30 minutes to in excess of three hours without being allowed to move around adequately. Driving a vehicle for anything over 30 minutes produces increased hip pain.
He states that his job has recently demanded that he travel much more frequently and for much longer distances such as international travel than he previously had to do, and he is finding it increasingly difficult because of his hip pain.
He is not able to take anti-inflammatory drugs, and he has not been able to reduce his hip pain with acetaminophen. If he takes narcotics for pain control, he is not in a cognitive state that allows him to perform his job or operate a vehicle in order to get to and from work or, especially while in a foreign country to operate a motor vehicle or seek other transportation while performing his work duties.
The treatment options were discussed with him. At this time it is obvious that the Injection did not provide any long-term improvement and therefore, symptomatic treatment and activity modification versus a hip replacement would be the options of treatment. Presently he does not wish to proceed with a total joint considering his age. He will eventually need such a procedure, but I would recommend that he wait until his symptoms are more severe and more disabling. Id. at 2283.
On September 10, 2003, Plaintiff filled a prescription for 40 tablets of Hydrocodone, the generic equivalent of Vicodin. Dr. Tohidi stated that Vicodin "affects [Plaintiff's] cognitive status." Id. at 2732. Plaintiff stated that he "[o]nly takes [Vicodin] if [he] can't manage [pain] by changing activity, i.e. laying down," because when he takes Vicodin, he "can't drive or do anything that takes thinking." Id. at 1368.
After seeing Plaintiff on September 26, 2003, Dr. Tohidi stated: [Plaintiff's] pain is essentially intolerable when he is confined to sitting for a prolong period, i.e., when he travels or when he is in meetings where he has to sit confined to a space for some time. He has reached the point where he is unable to withstand the extent of the pain and remain functional at his present job description.
The treatment of the hip condition, i.e., the osteoarthritis, will be a total hip replacement, but since he is capable of carrying out his daily living activities, therefore, I recommend that his job be modified to eliminate frequent travel and also frequent meetings so that he can remain functional. If that will not be a possible for him, then I would recommend he be considered disabled.
I would like him to follow up periodically and, obviously, if his hip pain continues to progress, at some point in the future he will be a candidate for total hip replacement.
On September 26, 2003, Dr. Tohidi completed and submitted LINA's Disability Questionnaire form listing a diagnosis of "severe osteoarthritis left hip," and stated Plaintiff was continuously disabled "from 9-26-03 thru to be determined." Id. at 2886. In the September 26, 2003 form, Plaintiff stated that his occupation was in "Sales & Marketing -- extensive travel, extensive sitting in confined spaces" and he had "severe pain in left hip." Id.
On October 1, 2003, Dr. Tohidi completed a LINA medical form, referring to his "dictation of 9-5-03" and providing the following responses:
[P]rimary diagnosis ... severe degenerative osteoarthritis left hip....
[C]urrent medications ... Vicodin - prescribed because he cannot take anti-inflammatory drugs. Acetaminophen does not help.
[S]pecific restrictions ... no sitting in a confined space over 30-45 minutes without the ability to get up & move around some.
Could your patient return to work at this time if accommodations were made for the listed restrictions? Yes ... provided pain is controlled - Vicodin affects cognitive status.
[W]hat is your best estimate of when your patient can return to work with restrictions? Unknown ... to be determined by ability to manage pain.
On October 7, 2003, Plaintiff told LINA that he was "[u]nable to sit for long periods of time"; that he "can sit 30-45 min w/o feeling a lot of pain, then it gets worse"; his condition impacts his activities of daily living "because he can not work and take [narcotic] pain medications"; and "Cortisone injections [had] failed." Id. at 1349.
On October 11, 2003, LINA's Nurse Case Manager Sharon Reeves contacted Dr. Tohidi, summarized his diagnosis and findings, and stated that "Continued [treatment] Appropriate" and "[Plaintiff] is medically supported." Id. at 1344.
On October 14, 2003, LINA approved Plaintiff's claim for STD benefits.
On October 15, 2003, LINA documented that it had "received word from the HR Specialist that the client company can not accommodate [LINA's] request for an early return with restrictions [of no sitting in confined places for longer than 30-45 minutes without the ability to get up and move around]." Id. at 2030.
On November 21, 2003, Dr. Tohidi completed and submitted LINA's Physical Abilities Assessment Form. Dr. Tohidi stated that Plaintiff's upright sitting, standing and walking were each limited to less than 2.5 hours per eight-hour workday. Dr. Tohidi stated that Plaintiff could tolerate a "sedentary" "physical work level (lift, carry, push, pull)." Id. at 2734. Dr. Tohidi wrote:
[Plaintiff] has severe L hip pain when sitting in a confined area, as a chair or airplane seat, walking over 1/4 mile, standing or climbing stairs. L hip limited motion precludes stooping or crouching. Hip pain occurs in 10 - 90 minutes with the above activities. Anti-inflammatory meds and ASA have not been remedial. Narcotics preclude cognitive function.
On December 29, 2003, Dr. Tohidi stated in a letter to Administaff that Plaintiff remained under his care for severe osteoarthritis. Dr. Tohidi repeated his statement of Plaintiff's physical limitations and stated that Plaintiff "remains incapable of performing his regular work, as described to me in a letter from Mary Beth Carney (General Counsel and VP Administration, Morpho Technologies)." Id. at 1320.
On January 2, 2004, Plaintiff started a business called "Todd Nash Financial Planning." Id. at 1596. Later in 2004, LINA reported in its claim file that Plaintiff's "actual occupation of a 'financial planner' ... was assessed [in the Dictionary of Occupational Titles] as sedentary in physical level ... [w]hich requires mostly sitting, may involve standing or walking for brief periods of time." Id. at 2091-92. Plaintiff subsequently reported to LINA that he was "not doing much with [his financial planning business].... [He] can't sit down [to] work consistently in position - causes pain." Id. at 2197.
On January 14, 2004, Dr. Tohidi again saw Plaintiff for re-examination and refill of Vicodin. Dr. Tohidi reported that Plaintiff's condition was unchanged and stated that Plaintiff has "limitations of sitting" to "about 30 minutes" and "limitation in mobility, such as prolonged standing or walking." Id. at 2280. Dr. Tohidi stated: "Since he is presently taking narcotic analgesics periodically, this is an issue that likely will be continuous on a long-term basis as part of the treatment for him. He is limited as far as cognitive functions are concerned in regard to the effect of narcotic analgesics." Id.
On January 16, 2004, Dr. Tohidi completed a second LINA Physical Abilities Assessment form, reiterating his prior opinion that Plaintiff's sitting, standing and walking were each limited to less than 2.5 hours per eight-hour workday.
In a note in LINA's claim file dated January 21, 2004, LINA's Nurse Case Manager Dana Edson stated that LINA learned that Plaintiff's employer terminated Plaintiff because Plaintiff "cannot perform essential job functions." Id. at 1368. In the same claim file note, Edson indicated that she spoke with Plaintiff and with Dr. Tohidi, who each repeated their statements concerning Plaintiff's diagnosis and restrictions. The note states:
Allergic to aspirin products, but does take vicodin, but then can't drive or do anything that takes thinking. Only takes if can't manage by changing activity, i.e. laying down. Sitting for 15 min hurts, sometimes can go an hour & 1/2 at home can slouch & lay down when pain arises. Always changing what he does, walking, laying, sitting.
LINA's claim file contains the following note from a LINA representative dated January 27, 2004: "39 yr old male [diagnosed] with osteoarthritis in Lt hip, [claimant] currently getting conservative [treatment] and still unable to work. Per [LINA Nurse Case Manager], Dana, medical is supportive thru STD term." Id. at 2090.
On January 29, 2004, a vocational rehabilitation counselor for Defendant wrote to Morpho's Human Resources Manager and stated:
We are hoping that it may still be possible to consider accommodations or job modifications for Mr. Nash, that would allow him to return to work in his own position or in an alternative position ... with your company. Would you please review these functional abilities, and let us know if there is any possibility of accommodating him? (PTO Ex. D at 579, ECF No. 65).
On January 30, 2004, LINA sent Plaintiff a letter indicating that LINA had received Plaintiff's application for LTD benefits under the Policy. LINA stated that, pursuant to the Policy, LTD benefits "are reduced by any other benefits you ... receive ..., including Social Security Benefits.... [Y]ou must fully cooperate with us regarding the status of these benefits.
Your lack of cooperation may result in a reduction of your Disability benefits by an estimated amount that we will assume you are receiving." (PTO Ex. C at 1324, ECF No. 80-1).
On February 9, 2004, Morpho informed LINA that Morpho could not sufficiently modify or provide further accommodations to Plaintiff's job that would enable Plaintiff to perform it and Morpho had no other alternative jobs that Plaintiff could perform.
On March 6, 2004, LINA's claim file notes state:
Symptoms support [diagnosis]: Yes - [Claimant] has severe pain in left hip w/limited range of motion. Pain upon extended sitting, walking, and standing.... Appropriate [treatment]: Yes - [Attending Physician]: Dr. Tohid[i]. [Claimant] has [received] pain medication w/cortisone injections. Surgical maybe inevitable - however [Claimant] is wanting to prevent that and undergo conservative treatment initially.... [Claimant's] position with the Company requires his presence in the Company's offices on a regular basis and **requires travel to potential customers**. Traveling 25-50%.... Medical Documentation in file already notes a functional deficit that is keeping the [Claimant] from extended times of sitting. [Claimant] needs the ability to change positions frequently and to lie down frequently when needed.... Recommend approval of benefits.
On March 12, 2004, a LINA representative stated in the claim file: I agree with approving this claim. [Claimant's] occ[upation] requires 25-50% travel, which is not unusual for this position.... [Employer] is unable to accommodate. Medical is supportive of [Claimant] being unable to sit, stand or walk more than occ[asionally] as [Claimant] has bone on bone pain with movement and requires to lay down to relieve.
On March 16, 2004, LINA sent Plaintiff a letter which stated:
We are pleased to advise you that your claim for Long Term Disability ... benefits have been approved.... To qualify for benefits under your Long Term Disability ... contract, during the first 24 months, you must be unable to perform the essential duties of your occupation. Thereafter, you must be unable to engage in the essential duties of any occupation to qualify for benefits.... We will be requesting periodic updates on the status of your disability and we reserve the right to have you examined by a physician of our choice.
On April 9, 2004, a LINA representative stated in the claim file: Left hip limited motion precludes stooping or crouching. Hip pain occurs within 10 - 90 minutes with the above activities, sitting for prolonged periods, walking over 1/4 mile, standing and climbing stairs.
Current Treatment Plan/Provider's Estimated [return to work] date: Claimant continues to receive treatment for osteoarthritis of the left hip. Claimant has severe left hip pain when sitting in a confined position such as in a chair or airplane seat, walking over 1/4 mile, standing, and climbing stairs. Anti-inflammatory medicines have not provided relief of his pain. He has been prescribed narcotic pain medication that precludes cognitive function.
Future Treatment Plan: the eventual treatment for claimant per [Dr. Tohidi] is a total hip replacement which has a finite life and obviously because of his age, that treatment has been reserved to be applied in the future.
On May 27, 2004, Plaintiff refilled his prescription for 50 tablets of Hydrocodone (Vicodin).
On June 1, 2004, Plaintiff informed LINA that the Social Security Administration had found Plaintiff disabled under its definition and awarded Plaintiff monthly Social Security Disability Insurance benefits.
On October 20, 2004, a LINA representative stated in the claim file: "Medical supports occasional sit/stand/walk only with severe [Osteoarthritis] of hip with future hip replacement surgery not yet scheduled due to young age. He has license to [work in] financial planning and may have trans[ferable] skills to other work not requiring travel." Id. at 1899. The October 20, 2004 claim file note indicates that a LINA representative spoke with Plaintiff, who "advised that he last saw Dr. Tohidi in May 2004. [Plaintiff's] insurance is requiring a referral for add[itional] visits. He says he cannot do anything for long periods of time such as sit at computer.... [Plaintiff] [p]lans on seeing the new [primary care physician] 11/04 and get referral to see Dr. Tohidi by 12/04." Id. at 1901. The "provider's estimated [return to work] date" is listed as March 29, 2006. Id. at 1900.
On October 29, 2004, a LINA representative stated in the claim file: The claimant has now been off work from his last position for over 1 year, but has started his own business after going out on disability. He states that he has cognitive difficulties from his narcotic medications.... It is unclear how he is impaired from cognitive tasks ... and no cognitive testing was found in the file to document any difficulties.... [Plaintiff] has an any occupation date of 3/29/06.
The earnings for the own occ[upation] definition of the contract would be 80 percent of the BME of $12,618.66, o[r] $10,094.93 a month.
Id. at 1897. The LINA representative wrote to LINA Nurse Case Manager Donna Simmons: "[Dr. Tohidi] has the claimant on narcotic meds, but it appears that this is all he plans to do indefinitely. No surgery planned, or mention of other med trials. Can you review the treatment plan and duration guidelines[?]" Id. at 1896.
On November 3, 2004, a LINA representative wrote in the claim file: Will eventually perform hip replacement - but wants to delay as long as possible because the first only last around 20 yrs. & 2nd replacement is much more difficult. 3rd is very high risk. So he & ... Dr. Tohidi have decided to delay as long as possible, realizing the first replacement is inevitable.
On November 8, 2004, Plaintiff saw his new Primary Care Physician, Stacey Lin, M.D. Dr. Lin noted on musculoskeletal examination, "tenderness to palpation, not only on that left hip around the femoral head but his range of movement is only able to lift his knee up off the table about five degrees." Id. at 2304.
On December 13, 2004, LINA sent Dr. Tohidi a letter requesting a copy of Plaintiff's medical records from "1/04 to the present" and asking him to complete LINA's Physical Abilities Assessment form. Id. at 2176.
On January 4, 2005, Dr. Tohidi examined Plaintiff and reported: [Plaintiff's] hip discomfort and pain remain the same. He has difficulty sitting and has developed more stiffness to his hip. He is essentially unable to sit normally in a chair and has to sit more or less with his hip flexed no more than about 50 degrees.
His gait remains antalgic, and he does limp because of the painful left hip. Indeed, range of motion has lessened and he does elicit significant pain with any active or passive motion.
He is managing his pain on a conservative level, and obviously he will require a total hip replacement in the future when his pain becomes more or less unbearable....
He will need to be followed periodically, and I would like to see him again in six months or anytime sooner if his pain would require a more definitive treatment.
On January 5, 2005, Plaintiff refilled his prescription for 60 tablets of Hydrocodone (Vicodin).
On March 31, 2005, Dr. Tohidi sent LINA a completed "Supplementary Disability claim form." Id. at 2170, 2738-39. Dr. Tohidi stated that Plaintiff was "unchanged"; Plaintiff's "physical impairment" was "[s]evere limitation of functional capacity; incapable of minimal (sedentary) activity," "limited range of motion in left hip precludes ability to perform work activity without significant pain," and "prescribed narcotic pain medication precludes cognitive function"; "patient continues to be disabled for any occupation"; Plaintiff was not a ...