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Murphy v. California Physicians Service

United States District Court, N.D. California

April 11, 2017



          PHYLLIS J. HAMILTON, United States District Judge.

         Order The parties' cross-motions for summary judgment came on for hearing before this court on March 15, 2017. Plaintiff appeared by her counsel Corinne Chandler, and defendants appeared by their counsel Linda Lawson. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, the court GRANTS plaintiff's motion and DENIES defendants' motion as follows.


         Plaintiff Cathleen Murphy brings this action under § 502 of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(a), seeking payment of benefits under a Long-Term Disability ("LTD") policy. Defendant California Physicians Service d/b/a Blue Shield of California Long Term Disability Plan ("the Plan") is an employee welfare benefit plan subject to ERISA. The Plan was established by California Physicians Service, which does business as Blue Shield of California ("Blue Shield"). Plaintiff was employed by Blue Shield, and was a participant in the Plan. Defendant The Prudential Insurance Company of America ("Prudential") issued Group Contract No. G-43995-CA to Blue Shield, and is also the Plan Administrator.

         With regard to LTD coverage, the Plan provides, in relevant part:

         You are disabled when you are either totally disabled or partially disabled. . . .

         You are totally disabled when as a result of your sickness or injury:

• you are unable to perform with reasonable continuity the substantial and material acts necessary to pursue your usual occupation; and
• you are not working in your usual occupation.

         Administrative Record ("AR") 27. Plaintiff originally submitted her claim for LTD benefits on December 23, 2013. Plaintiff filed the original complaint in this action on June 4, 2014, asserting that Prudential had failed to respond to her claim. Prudential subsequently issued its decision, denying the claim.

         The Plan further provides that after 24 months, the definition of disability changes such that in order to be qualified to receive benefits, the participant, based on the same condition, must be unable to perform any occupation that he/she could reasonably be expected to perform based on age, education, training, experience, station in life, and physical and mental capacity. AR 27. It is undisputed that Prudential has made no decision with respect to whether plaintiff is disabled under this second definition.

         Plaintiff filed the first amended complaint ("FAC") on June 20, 2014, asserting a single cause of action for ERISA benefits under 29 U.S.C. § 1132(a)(1)(B), seeking payment of benefits, plus interest, and attorney's fees and costs. At the October 16, 2014, initial case management conference (“CMC”), the parties indicated that plaintiff's administrative appeal was still in progress. The court informally stayed the litigation during the appeal process. At a further CMC held on March 3, 2016, the court set a date for plaintiff to file a motion on the appropriate standard of review.

         Plaintiff filed a motion to determine that the standard of review is de novo, and on October 3, 2016, the court issued an order granting plaintiff's motion. Pursuant to a briefing schedule set by the court, the parties filed cross-motions for summary judgment on January 18, 2017. They also jointly filed the administrative record.


         Plaintiff's Education, Training, and Work History Plaintiff has undergraduate and graduate degrees in nursing, and worked as a nurse at various locations, including at the University of California - San Francisco (“UCSF”) Medical Center. AR 498-499.

         In 1996, plaintiff began her career in Human Resources. She worked as an executive for different companies until 2004, when she became the Director of Human Resources for Blue Shield. AR 499. After one year, she was promoted to Vice President, Human Resources Operations and Welfare (“VP of Human Resources”). She held that position until 2013. AR 478-480.

         Until early 2013, plaintiff's supervisor at Blue Shield was Marianne Jackson, the Chief Human Resources Officer. Plaintiff worked with Ms. Jackson on a daily basis. Plaintiff has submitted a declaration by Ms. Jackson, in which she states that plaintiff's job had a high level of responsibility and was "very cognitively demanding[, ]" and that plaintiff performed her duties "in a competent manner." See Declaration of Marianne Jackson (“Jackson Decl.”), AR 1932-1935, at ¶¶ 2-4.

         Plaintiff's Prior Surgery and Diminished Cognitive Abilities

         In 1988, while working as a nurse, plaintiff began experiencing auditory seizures, precipitated by "hearing a song in her head." AR 1609. A neurologist diagnosed a left temporal AVM (arteriovenous malformation). After experiencing symptoms for approximately three years, plaintiff had an open resection of what she describes as "a lesion in her brain" in 1991. AR 1609, 1665, 1874. Following the surgery, she took anti-seizure medication for two years. AR 1609. Although she felt dyslexic, and had trouble thinking, she returned to her job after the surgery. AR 1609.

         Plaintiff's former supervisor Ms. Jackson states that, starting in 2011, she began to notice problems with plaintiff's "ideas" (referring to them as "illogical"), and also noticed a decline in plaintiff's speaking and presentation skills. Jackson Decl. ¶ 4. As a result, "we created an Individual Development Plan (hereinafter ‘IDP') for her to improve some areas of her performance, including improving at making presentations[, ]" and also "arranged for her to take a few courses/coaching sessions to improve her presentation skills." Id. At that time, Ms. Jackson was unaware of plaintiff's prior brain surgery. Id.

         Ms. Jackson reports that during the period 2011 to 2012, she also noticed a decline in plaintiff's "word-retrieval process" and “speaking/presentation skills.” Id. ¶¶ 4-5. In addition, she asserts, a number of plaintiff's colleagues commented on plaintiff's difficulties in meetings during this time period, and also noticed she was having problems with memory, concentration, and word retrieval abilities. Id. ¶ 5.

         Plaintiff provides declarations by former co-workers Craig Cadwallader, Earl Barron, and Kerry Hanchett. Mr. Cadwallader worked at Blue Shield as a Senior Manager of Compensation at the time plaintiff was employed there as VP of Human Resources. He left Blue Shield in September 2013, and states that he began to notice a decline in plaintiff's abilities over the course of the last 1/2 to 2 years he worked with plaintiff. Cadwallader Declaration, AR 1928-1930, ¶¶ 3-4.

         Mr. Barron was Director of Technology at Blue Shield while plaintiff was employed there. He left Blue Shield in 2013, and states that he noticed that plaintiff "had problems with finding words and finishing her thoughts for quite some time, but because we worked closely, I could often figure out what she meant, so I thought little of it." Barron Declaration, AR 2100-2101, ¶¶ 3-4.

         Ms. Hanchett worked at Blue Shield as Senior Program Manager from the time plaintiff was employed as VP of Human Resources, and worked directly with plaintiff on a number of projects. She was laid off in November 2013, and states that in the 11-month period preceding her departure, she noticed that plaintiff had problems with memory, comprehension, “connecting the dots.” Hanchett Declaration, AR 2113-2115, ¶¶ 1-4.

         Ms. Jackson states that at some point after they put the IDP in place, plaintiff told her that she had had brain surgery about 20 years before, and said that she thought that her medical condition was causing cognitive impairment, memory loss, and difficulties with speech. Jackson Decl. ¶¶ 6-7. Ms. Jackson asserts that plaintiff lost confidence in her ability to adequately present in senior-level meetings, and that around the time that plaintiff disclosed her condition, the two of them decided that Ms. Jackson would conduct the meeting presentations herself, while giving plaintiff credit for the content. Id. ¶¶ 7-8. Ms. Jackson explains that she did this "to ensure our department objectives were not impaired and to personally help [plaintiff] even though it was to my own detriment as it appeared to others I was trying to take credit for [plaintiff's] ideas and micro-managing her department." Id. ¶ 8.

         Near the end of 2011, the Chief Executive Officer of Blue Shield announced he was leaving the company. Id. ¶ 9. Ms. Jackson states that this led to her decision to leave the company, which she did in February 2013. Id. She adds that she disclosed plaintiff's cognitive impairment to Blue Shield's then-current Chief Executive Officer and Chief Financial Officer at the time of her departure from the company. Id. ¶ 10.

         Planning for Plaintiff's Departure from Blue Shield

         Mary O'Hara replaced Ms. Jackson as Chief Human Resources Officer at Blue Shield. On May 2, 2013, plaintiff wrote Ms. O'Hara an email, stating, "I am currently seeking medical care for treatment for exacerbation of a medical condition." AR 2152. A week later, on May 9, 2013, plaintiff wrote Ms. O'Hara early in the morning to say she was taking time off that day for a medical examination, as she had seen her physician the previous day and had received a referral to a neurologist for an MRI and further testing. She added that she hoped to be able to meet with Ms. O'Hara later to discuss the "transition approach" for her role and other issues. AR 2158.

         Ms. O'Hara responded approximately an hour later, stating she "was hoping to follow on from our conversation regarding a transitional approach, " and adding that she was "glad you are getting quick attention for your medical issue." AR 2161. In a return email a few hours later, plaintiff thanked Ms. O'Hara for her words of support, and stated, "As I get a better sense of the magnitude of this in the coming week or so, I will have a better sense of what I may need from a flexibility/accommodation perspective." She also noted they were set to meet that afternoon on the "transition approach." AR 2161.

         Later that afternoon, Ms. O'Hara sent an email to "Senior Staff, " advising them "in confidence" that she and plaintiff “have been discussing her role and performance for the past few weeks and some medical issues that she is dealing with[, ]" and that they "now agreed that the best outcome is for her to transition in a flexible way for a few months, whilst also dealing with her health issues[, ]" at which point plaintiff would depart Blue Shield. AR 2160. She added that plaintiff's role "will be split going forward." AR 2160. Plaintiff received an email from a Senior Staff member that evening, saying he had "just heard about your transition, " and asking if there was anything he could do to help. AR 2163.

         Early on the morning of May 10, 2013, plaintiff forwarded the Senior Staff member's email to Ms. O'Hara, asking that she send her the original message or summarize it “so I'm clear in what they hear so I can craft my response.” AR 2163. Ms. O'Hara responded approximately half an hour later, confirming that she had advised Senior Staff members that plaintiff would be "transitioning flexibly for the next few months and then depart[, ]" and would be looking after her health for a while and “we will be backfilling your role but split into total rewards and shared services.” AR 2163.

         On May 13, 2013, plaintiff sent Ms. O'Hara an email enclosing the text of an announcement she wanted to send to "all HR" as soon as Ms. O'Hara approved it. The announcement described various "organizational structure changes" anticipated to follow plaintiff's departure from Blue Shield, which would result in areas of plaintiff's responsibility being re-allocated. Plaintiff added, "I will be transitioning my role through August." AR 2165. Blue Shield later confirmed that over the next few months, entire duties were “transitioned” from Ms. Murphy, including her responsibility for HR Technology, Employee Relations, and Corporate Security. See AR 247-248.

         As of May 24, 2013, plaintiff began taking time off to deal with her medical issues. AR 2195, 2213. As of that time, she generally worked four days a week. Because she was upper management, her pay was not reduced, but the time off was recorded as "Personal Time Off" or "PTO." AR 246-247. Blue Shield also advised plaintiff that "PTO time" did not count as "earnings" for purposes of the disability plans. AR 2183.

         Kerry Daley, the Blue Shield Manager in charge of Absence Management, also corresponded directly with Prudential and with plaintiff regarding plaintiff's eligibility for STD benefits. AR 2183. Plaintiff received confirmation from Blue Shield that her PTO time was being recorded. AR 2195. On July 18, 2013, Ms. Daley reported the status of plaintiff's reduced schedule to Ms. O'Hara. AR 2213-2215. Plaintiff worked a reduced schedule and assisted with the transition of her job duties until August 28, 2013, when she went out on administrative leave. She remained a full-time employee of Blue Shield, with benefits, until January 3, 2014. AR 419.

         Initial Medical Testing and Evaluations

         Plaintiff consulted with her primary care physician, Margaret Forsyth, M.D., on May 8, 2013, regarding the symptoms she had been experiencing. AR 561. Dr. Forsyth referred plaintiff to a neurologist, Adama Frye, M.D. AR 559-561, 1609. Dr. Frye referred plaintiff for an EEG on May 18, 2013, and a brain MRI on May 20, 2013. AR 552-556. The EEG was normal, and the brain MRI revealed mild gliosis around the surgical resection cavity. AR 550, 669-670.

         At the initial consultation with Dr. Frye on June 6, 2013, plaintiff reported occasional auditory seizures "[o]ver the past several years, " and also stated that "in the last 6-8 months her degree of dysphasia seems to be worsening, noted personally and from friends" and co-workers." AR 547. Dr. Frye conducted mental status and language screening tests, and recommended formal neuropsychological assessment, to include language testing, and also suggested anti-seizure medication. AR 549-550, 1609-1615. Dr. Frye also discussed EEG testing, but explained that local seizures are potentially missed on EEG testing. AR 550, 1615.

         Plaintiff was initially reluctant to try Keppra, the anti-seizure medication recommended by Dr. Frye, because of a prior bad experience with another anti-seizure medication. AR 545-546. However, she ultimately agreed to a trial of Keppra, but on July 22, 2013, reported to Dr. Frye that she had to stop taking it because it was worsening her symptoms. AR 538-539. Dr. Frye responded that plaintiff's reported symptoms were "very unusual with Keppra, " but agreed on July 26, 2013, to a trial of another medication, Vimpat. AR 537-538. Plaintiff agreed, but asked that the trial be delayed until after completion of the baseline speech assessment. AR 536-537.

         In July 2013, plaintiff submitted a claim for STD Benefits, which was handled by Sedgwick Claims Management Services, Inc. (“Sedgwick”), the STD administrator. AR 1854. In support of plaintiff's claim, Dr. Frye reported that plaintiff had a seizure disorder and had only been working 4 days a week since May 24, 2013. AR 101-102, 740-741, 1575.

         Sedgwick determined that plaintiff should undergo a neuropsychological examination. On August 16, 2013, Sedgwick's evaluation service sent plaintiff notice of an Independent Neuropsychological Evaluation scheduled for September 9, 2013, with William D. Hooker, Ph.D. AR 2345. Three days later, another Sedgwick evaluation service sent plaintiff notice of an Independent Neuropsychological Evaluation scheduled for September 12, 2013, with Peter Karzmark, Ph.D. AR 2347. Plaintiff notified Sedgwick of the scheduling mistake and additionally advised that the examinations would conflict with the examination ordered by her physician. On September 16, 2016, Sedgwick denied the claim. The sole explanation in the denial letter was “Insufficient Medical received.” AR 1651. However, Sedgwick's claim notes indicate that the reason for the denial was that “medical does not support ongoing disability as severity has not been established per plan and [claimant] did not attend scheduled IME.” AR 1864.

         Meanwhile, Dr. Frye saw plaintiff for a follow-up appointment on August 28, 2013. AR 527-529. Dr. Frye ordered an EKG, and advised plaintiff later in the day on August 28, 2013, that it appeared "normal." AR 532. Dr. Frye also instructed plaintiff to "go ahead and start the Vimpat." AR 532. On September 19, 2013, plaintiff reported that she had tried the sample of Vimpat that Dr. Frye had given her, and stated that "it seems to be tolerated[, ]" and that "the cognitive and speech difficulties" she had on the last medication had not occurred, although she reported some side effects. AR 521. However, on September 25, 2013, plaintiff was advised that her insurance would not cover the Vimpat prescription. AR 518-519. Dr. Frye agreed to provide plaintiff with additional samples of the medication. AR 518. Plaintiff had a follow-up neurology consultation with Dr. Frye on August 28, 2013. AR 2010.

         On September 18, 2013, as recommended by Dr. Frye, plaintiff underwent a speech-language and cognitive-linguistic evaluation with Michelle Shimamoto, a Speech-Language Pathologist at Mills Peninsula` Medical Group. AR 147-149. Ms. Shimamoto noted that plaintiff's "language and cognition" were "grossly functional for routine/daily activities and simple/social conversation, " but that "[d]ifficulty occurs with discussion surrounding complex/abstract ideas." AR 149.

         Ms. Shimamoto found that plaintiff was unable to express herself in a timely manner, which was required for “managing medical, financial and vocational affairs[;]” that she had delayed auditory processing and reduced comprehension for conversation; that she employed compensatory measures, and that she had "deficits within the areas of attention, auditory processing memory, thought organization and executive functioning." AR 149. Ms. Shimamoto also noted that plaintiff "required a very high functioning baseline to conduct the level of work that was required of her in her previous job duties, " but stated that it was "unclear . . . what the etiology of this progressive decline might be" and added that she would "lean heavily upon further work-up by physician and future neurology and neuropsychology evaluation results to hopefully gain some answers." AR 149.

         On October 10 and 14, 2013, Dr. Hooker conducted the previously-scheduled Independent Neuropsychological Evaluation, and he issued a report October 16, 2013. AR 491-517. Dr. Hooker's tests included embedded validity measures. AR 502. Dr. Hooker reported that the test results were valid and that measures of plaintiff's auditory attention, concentration, language functioning, speed in detecting numbers, and working memory were borderline impaired to low average. AR 516. Plaintiff's overall immediate memory and reasoning were “average” which fell “significantly below the predicted range, ” for one with her post graduate education and executive occupation. AR 516. Dr. Hooker diagnosed plaintiff with a cognitive disorder and opined that she could not perform the usual and customary duties of her executive position or any occupation requiring higher cognitive functioning. AR 517.

         In the October 29, 2013, report of neurology follow-up visit, Dr. Frye wrote that in the “mental status” evaluation, plaintiff had halting speech at times, with word-finding difficulties. AR 2008. Dr. Frye recommended that plaintiff consult with the UCSF Memory/Behavioral Clinic to determine if a clear diagnosis could be made. Dr. Frye stated that she would continue to support plaintiff's disability claim. AR 2010.

         On December 2, 2013, plaintiff consulted with Georges Nassan, M.D., at the UCSF Memory Clinic. AR 1672, 2261-2263. On December 9, 2013, plaintiff reported to Dr. Frye that Dr. Nassan believed her cognitive and language impairments were permanent, as the repaired area in her brain was more “vulnerable” to cognitive and memory decline which happens with aging. Thus, the compensation techniques she had previously successfully employed were no longer working. AR 2042. Dr. Nassan requested that plaintiff obtain her prior MRI and submit it for comparison, that “all vascular risk factors be controlled” (blood pressure, LDL cholesterol, glucose), that plaintiff engage in “routine exercise and a healthy diet, ” and she begin some “cognitive rehabilitation.” AR 2261. He also recommended that she obtain a driving evaluation. AR 2263. Plaintiff advised Dr. Frye that Dr. Nassan would be sending her a note, and Dr. Frye confirmed on December 10, 2013 that she had received the note. AR 2042.

         Appeal of Denial of STD Benefits Claim

         On December 23, 2013, plaintiff submitted her appeal to Sedgwick regarding the denial of STD benefits. To facilitate the transition to LTD benefits, plaintiff also provided a copy of the STD appeal submission to Prudential, and requested that Prudential begin processing her LTD claim. AR 1663. The claim request was delivered to Prudential on December 29, 2013. AR 462. With the appeal, plaintiff submitted the speech therapy records, Dr. Hooker's neuropsychological testing, and updated medical records from Drs. Frye and Forsyth. AR 1663-1669.

         Sedgwick referred plaintiff's claim for review by Staci Ross, Ph.D., an internal clinical psychologist. Based on her review of the speech therapy records and Dr. Hooker's neuropsychological testing, Dr. Ross concluded in a report dated February 11, 2014, that Ms. Murphy was disabled. AR 079. Dr. Ross stated that those records “confirmed a cognitive disorder, impacting language disturbances, memory, executive functioning, right sided motor skills and visual spatial dysfunction, in which the combination of cognitive difficulties demonstrated would preclude her ability to function in her regular, unrestricted occupation.” AR 079.

         Dr. Ross concluded that this cognitive disorder would impact plaintiff's ability to “function in her regular unrestricted position in that she would have difficulties with higher level skills of thinking creatively, strategically, abstractly, analytically . . . ." AR 079. Plaintiff would also have “difficulties being able to think critically, evaluate situations, problem solve, and make decisions as well as organize priorities, and manage time effectively.” AR 079. Dr. Ross opined that “[d]isability would be expected to be indefinite, secondary to neurological changes that have occurred.” AR 079. However, she also recommended “re-assessment of disability” in approximately two years. AR 079.

         On February 24, 2014, Sedgwick reversed its claim decision and approved plaintiff's disability through the maximum STD duration, to November 19, 2013. AR 077-078. A separate disability carrier, Unum, also approved plaintiff's STD disability claim. AR 2359.

         Prudential's Review of Plaintiff's LTD Claim

         On February 24, 2014, Prudential referred plaintiff's claim to Melvyn Attfield, Ph.D., an internal Prudential consulting neuropsychologist. AR 820-822. Dr. Attfield reviewed plaintiff's claim and issued a report on March 4, 2014. AR 815-820. Among other things, Prudential asked Dr. Attfield to determine whether the neuropsychological testing showed that plaintiff had significant memory and/or cognitive impairments which would preclude her ability to perform the job of VP of HR Operations. Dr. Attfield concluded that Dr. Hooker's testing revealed cognitive deficits that prevented plaintiff from performing her occupation:

         In conclusion Dr. Hooker provided a validated and comprehensive assessment of neuropsychological function . .

[T]he clinical impressions of the examiner suggested the insured employed active compensatory strategies (requesting clarification, circumlocution, using her digits and rehearsing during digits reverse and sequencing tasks) to enhance her performance. It would therefore be reasonable to conclude areas of impairment in right hand motor function, difficulty processing complex information, efficiently naming problems within the context of generally average but likely below pre-morbid function in aspects of memory, non-verbal intellectual abilities (more fluid aspects of intelligence.)

AR 819-820.

         Dr. Attfield noted that "[t]here is no report of the seizures limiting the insured from her job, " and "[t]here is no report of an antecedent medical event impacting her current condition." AR 820. Nevertheless, he found that plaintiff "has a work capacity but based upon the likely job demands assumed by a VP of HR the cognitive restrictions would be expected to limit her from a position requiring higher executive skills and facile social ...

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