The opinion of the court was delivered by: Stephen V. Wilson United States District Judge
FINDINGS OF FACT AND CONCLUSIONS OF LAW [JS-6]
Plaintiff Kelly Lavino filed this suit seeking ERISA-governed long-term disability benefits from Defendant Metropolitan Life Insurance Company ("MetLife") under her Malcolm Pirnie Welfare Benefit Plan ("the Plan"). On January 13, 2010, this Court issued a Findings of Fact and Conclusions of Law in a related matter, Lavino v. Metropolitan Life Insurance Company, CV 08-2910 SVW (FMCx), 2010 WL 234817 (C.D. Cal. Jan. 13, 2010) (hereinafter, "Lavino I"), and issued judgment thereon on January 19, 2010 (collectively, "the January Order"). The January Order found that MetLife had abused its discretion in prematurely terminating Lavino's benefits under the policy's "own occupation" standard of disability. The Court ordered MetLife to review Lavino's eligibility for continuing benefits under the policy's "any occupation" standard. The Court also ordered MetLife to assess whether the proper benefit percentage to which Lavino is due is 60% or 70% of her former earnings. The parties have since agreed that 70% is the appropriate percentage, although it is unclear whether MetLife has actually transmitted the 10% balance to Plaintiff. (Def. Trial Brief, Docket no. 23, at 24).
Following numerous delays in rendering a decision, MetLife has since determined that Lavino suffers from a psychiatric disability that prevents her from working, thus entitling her to two years of benefits under the "any occupation" standard pursuant to the Plan. MetLife denies that Lavino has a physical disability that would warrant continuing benefits thereafter. Lavino argues that her disability is physical in nature, not psychiatric, and that her benefit entitlement should not be restricted to two years. Having conducted a bench trial on January 4, 2011, the Court now makes the following Findings of Facts and Conclusions of Law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure. For the reasons stated herein, the Court finds that MetLife abused its discretion in determining that Lavino's disability was psychiatric in nature, and not physical.
II. Relevant Background Facts
A. The Events Leading Up to Lavino I
The Court will not exhaustively repeat the contents of the administrative record relied upon or the legal reasoning analyzed in Lavino I here. In brief, Lavino worked as a project engineer for Malcom Pirnie, Inc. ("Malcom Pirnie"). As an employee of Malcom Pirnie, Lavino was covered under a long-term disability plan issued by MetLife. The Plan defines "Disabled" as follows:
"Disabled" or "Disability" means that, due to sickness, pregnancy or accidental injury, you are receiving Appropriate Care and Treatment from a Doctor on a continuing basis; and
1. during your Elimination Period and the next 24 month period, you are unable to earn more than 80% of your Predisability Earnings or Indexed Predisability Earnings at your Own Occupation for any employer in your Local Economy; or
2. after the 24 month period, you are unable to earn more than 80% of your Indexed Predisability Earnings from any employer in your Local Economy at any gainful occupation for which you are reasonably qualified taking into account your training, education, experience and Predisability Earnings.
(Administrative record [hereinafter, "AR"] 563). With regard to psychiatric disabilities, the Plan provides:
Monthly benefits are limited to 24 months during your lifetime if you are Disabled due to a Mental or Nervous Disorder or Disease, unless the Disability results from:
4. organic brain disease.
(AR 576). Importantly, the Plan granted MetLife discretionary authority in making benefits determinations. The relevant portion with regard to discretion provides:
In carrying out their respective responsibilities under the Plan, the Plan Administrator and other Plan fiduciaries shall have discretionary authority to interpret the terms of the Plan and to determine eligibility for an entitlement to Plan benefits in accordance with the terms of the Plan. Any interpretation or determination made pursuant to such discretionary authority shall be given full force and effect, unless it can be shown that the interpretation or determination was arbitrary and capricious. (AR 597).
In early 2006, Lavino ceased working and began to receive short-and long-term disability benefits from MetLife. MetLife approved Lavino's claim for long-term disability benefits on March 12, 2007 due to physical disability stemming from her fibromyalgia. It is undisputed that Lavino suffered then and continues to suffer from fibromyalgia. However, MetLife terminated her benefits on January 7, 2008, two months before her "own occupation" benefits were set to expire. MetLife determined that "the medical information contained in [Plaintiff's] file does not support a severity of a condition that would prevent [Plaintiff] from performing the essential duties of [her] job." Lavino I, 2010 WL 234817 at *5. Following an administrative appeal, MetLife upheld the denial of Lavino's benefits on February 27, 2008, which prompted Lavino to file her first lawsuit, Lavino I.
The Court reviewed the administrative record and determined that MetLife had abused its discretion in terminating Lavino's benefits. The Court noted conflicts of interests on the part of the doctors selected by MetLife to review Lavino's claim, failures to ask Lavino for necessary evidence, and inconsistencies in classifying Lavino's job as relevant factors in reviewing MetLife's decision with skepticism. The Court accordingly ordered MetLife to reinstate Lavino's "own occupation" benefits and remanded the matter for MetLife to review Lavino's eligibility for continuing benefits under the Plan's "any occupation" standard. Id. at *14. The Court's January Order was a determination that Lavino had a physical disability in January 2008 stemming from her fibromyalgia.
B. Procedural Irregularities in Reaching the Benefits Decision
The facts in dispute in this case occurred subsequent to the January Order. At the time of the January Order, MetLife was in possession of all of Lavino's relevant medical records spanning from the claim's inception in 2006 through September 2008. On February 22, 2010, Lavino forwarded 82 pages of additional information for MetLife's review that consisted of a social security award finding Lavino disabled and unable to perform any work effective January 2006, Lavino's updated examination notes from her long-term treating physician and her rheumatologist, and other relevant information. The records were received by MetLife on February 26. On March 11, MetLife disability analyst Paul Baechle informed Lavino that he wished to interview her and that he might also require Lavino to be interviewed by a MetLife nurse. Baechle interviewed Lavino on March 17. Baechle advised Lavino that he would decide if a further interview was necessary with MetLife nurse, Michelle Haas.
On March 23, Lavino's attorney, Tracy Collins, spoke with Haas, who informed Collins that a further interview may not be necessary because the medical record could be sufficient to render a claim. Haas advised Collins that she would speak with Baechle and would request a further interview only if necessary. On March 23, Lavino also faxed MetLife Dr. Flaningam's most recent progress note dated March 15, 2010. On both April 1 and April 12, Collins called Baechle to determine the status of the decision, at which time Baechle informed Collins that a decision had not been made and offered no time frame for a decision. Baechle informed Collins on April 12 that MetLife did not intend to conduct a further medical review. However, on April 13, Collins was informed by Erin Cornell, MetLife's counsel, that MetLife desired to conduct an independent medical examination ("IME") of Lavino and that MetLife would shortly be sending Collins a letter about the proposed examination. Collins responded on April 15 requesting more information regarding the IME.
On April 19, Collins again emailed Cornell to inquire about the IME because she had not yet received additional instructions from MetLife. She also informed MetLife that the deadline for issuing a decision on Lavino's claim had passed. On April 30, having still received no information from MetLife regarding the decision or the IME, Collins sent another letter informing them that they had failed to render a timely decision on the claim and that she would file suit if a decision was not made by May 5. Receiving no word from MetLife, Collins filed this suit on May 17.
In failing to reach a timely decision, MetLife violated the procedures set forth in the Plan. In relevant part, the Plan's terms provide as follows:
After you submit a claim for disability benefits to MetLife, MetLife will review your claim and notify you of its ...