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Williams v. Standard Insurance Co.

United States District Court, E.D. California

April 18, 2017



         This is an Employee Retirement Insurance Security Act (“ERISA”) case, brought plaintiff Ross Williams under 29 U.S.C. § 1001 et seq., and filed in this court on March 16, 2015. (Doc. No. 1.) Plaintiff challenges the denial of disability benefits by defendant Standard Insurance Company. The court has reviewed the record and considered the parties' briefing and oral arguments. For the reasons explained below, the court concludes that defendant's termination of benefits to plaintiff to be supported by the record.


         Plaintiff Ross Williams was employed as an Overnight Driver by Rent-A-Center. He was covered under the Rent-A-Center Group a Long Term Disability Plan (“Plan”) disability policy administered by Standard Insurance Company (“Standard”). While working for Rent-A-Center in January of 2012, plaintiff Williams fell, injured his back and thereafter applied for long term disability benefits. Standard determined that plaintiff Williams suffered from lumbar and cervical disease and that he could not perform the duties of an Overnight Driver. Accordingly, in July of 2012 Standard approved plaintiff's claim based upon its finding that he met the Plan's test of disability under the “own occupation” standard set out in the Plan. However, Standard also determined thereafter that plaintiff's back injuries were subject to the “Other Limited Conditions” of the Plan, thereby limiting his benefits to a maximum of twenty-four months. Defendant Standard concluded that plaintiff Williams had not provided objective evidence proving that an exception to this provision of the Plan applied in his case and could not establish that he was unable to work at any occupation. Based upon that determination, in June of 2014 Standard informed plaintiff Williams that they would be terminating his benefits at the end of the twenty-four month period in July of 2014. Plaintiff Williams' benefits were then terminated as of July 16, 2014. Plaintiff appealed this decision and in October of 2014 Standard denied his appeal. Plaintiff initiated this action challenging Standard's decision on March 16, 2015.[1]


         At the outset, the court must address the appropriate standard review to be employed in reviewing the plan administrator's decision to terminate and deny future benefits. Defendant argues that the administrator's decision is to be reviewed for abuse of discretion because the long term disability policy grants discretionary authority to defendant and provides for a single, four-year term beginning January 1, 2010. Plaintiff argues that the administrator's decision is subject to de novo review by this court because California Insurance Code § 10110.6 makes void and unenforceable discretionary language in an insurance policy like the one at issue here.

         Section 10110.6, which became effective on January 1, 2012, provides in relevant part:

If a policy, contract, certificate, or agreement offered, issued, delivered, or renewed, whether or not in California, that provides or funds life insurance or disability insurance coverage for any California resident contains a provision that reserves discretionary authority to the insurer, or an agent of the insurer, to determine eligibility for benefits or coverage, to interpret the terms of the policy, contract, certificate, or agreement, or to provide standards of interpretation or review that are inconsistent with the laws of this state, that provision is void and unenforceable.

Cal. Ins. Code § 10110.6. The statute defines “renewed” as “continued in force on or after the policy's anniversary date.” Id. In addition, the statute defines discretionary authority as “a policy provision that has the effect of conferring discretion on an insurer . . . to determine entitlement to benefits or that, in turn, could lead to a deferential standard of review by any reviewing court.” Id.

         Thus, pursuant to § 10110.6, an insurance policy that is “continued in force on or after the policy's anniversary date” is therefore renewed under the terms of the statute. A renewal of an insurance policy is significant because “[t]he law in effect at the time of renewal of a policy governs the policy. . . . ” Stephan v. Unum Life Ins. Co. of Am., 697 F.3d 917, 927 (9th Cir. 2012). “Each renewal incorporates any changes in the law that occurred prior to the renewal.” Id. Consequently, any relevant changes in the statutory or decisional law in force at the time the insurance policy is renewed “are read into each policy thereunder, and become a part of the contract with full binding effect upon each party.” Id. By its terms, § 10110.6 applies to any policy or agreement that provides “disability insurance coverage” to “any California resident” regardless of where it was offered, issued, delivered, or renewed. Here, the parties do not dispute that the policy confers discretion on defendant as the policy administrator and that plaintiff is a resident of California. Accordingly, if the policy renewed after § 10110.6 became effective on January 1, 2012 and before the claim accrued, the policy's grant of discretion to defendant would be void. The parties do, however, dispute whether or not the policy renewed and this turns on the meaning of “anniversary date” as that term is used in § 10110.6.

         Defendant argues that because § 10110.6 does not contain a statement of retroactivity and because the policy in question has no defined anniversary date, the term “renewed” only applies after the term of the policy expires and a new policy is issued. The “anniversary date” in this case would then be for the four-year term of the policy, i.e., every four years after the effective date of the policy and not every twelve months. If this were the case, the policy's “anniversary date” here would be January 1, 2014. According to this interpretation of § 10110.6, a policy's “anniversary date” may recur at intervals of any length of time, including periods of more than one year. In support of this position, defendant relies upon the decision in Polnicky v. Liberty Life Assur. Co. of Boston, 999 F.Supp.2d 1144 (N.D. Cal. 2013). In that case the employee benefit plan policy explicitly stated that anniversaries “shall occur each January 1st beginning in 2011.” 999 F.Supp.2d at 1148. The court therefore found that the policy was altered on the policy's anniversary date and § 10110.6 rendered void and unenforceable provisions in the plan attempting to confer discretionary authority to the insurance agency. Id. Defendant argues that, in contrast, the policy at issue here had no defined anniversary date but rather was for a four-year term that did not automatically renew each year.

         Conversely, plaintiff argues that “a policy automatically renews every year on the policy's anniversary date.” (Doc. No. 34, 2:19-20) (quoting Rapolla v. Waste Management Employee Benefits Plan, No. 3:13-cv-02860-JST, 2014 WL 2918863, at *6 (N.D. Cal. 2014)). Thus, plaintiff essentially contends that the policy “anniversary” is the annual recurrence of the policy's effective date of January 1, 2010. As such, the policy would have renewed on January 1, 2012 - the same date that § 10110.6 became effective.

         This same issue was confronted by the court in Curran v. United of Omaha Life Ins. Co., 38 F.Supp.3d 1184 (S.D. Cal. 2014). In that case, the policy did not specify an annual “anniversary date, ” but rather provided for a two-year term ending on January 1, 2013. 38 F.Supp.3d at 1189. Just as is the case here, the defendant argued that the “anniversary date” did not mean every twelve months after the policy's effective date, but rather the expiration of the policy's term, regardless of its length. Id. The court first noted that the term “anniversary date” is not defined in § 10110.6 or in any regulations promulgated pursuant thereto. Id. The court then acknowledged that when a term in a statute is undefined, it must be construed “in accord with its ‘ordinary, contemporary, common meaning.'” Id. at 1189-90 (quoting San Jose Christian Coll. v. City of Morgan Hill, 360 F.3d 1024, 1034 (9th Cir. 2004)). The court also observed that in determining “the plain meaning of a term undefined by a statute, resort to a dictionary is permissible.” Id. at 1190 (quoting Cleveland v. City of Los Angeles, 420 F.3d 981, 989 (9th Cir. 2005) (internal quotation marks omitted). Finally, following a thorough review of various dictionary definitions and available case law, the court in Curran concluded that “anniversary date” in this context refers to the annual recurrence of the policy's effective date of January 1, 2012-the same date that § 10110.6 went into effect. Id. at 1189-91. That court also concluded that the policy in effect on the date of the claim denial therefore “included a void and unenforceable discretionary clause” and that de novo review of the decision was therefore appropriate. Id. at 1191-92. The undersigned agrees with the analysis and conclusion reached by the court in Curran and will adopt it here.[2]

         Accordingly, the court concludes that the plan administrator's decision to deny plaintiff benefits is subject to de novo review.


         In conducting its de novo review of the plan administrator's decision, the court must first determine the admissibility of the following evidence proffered by plaintiff and attached to his brief from outside of the administrative record: (1) two transcripts of prior deposition testimony of Dr. John Hart, D.O. given in other cases (Doc. Nos. 25-2, 25-3); (2) two printouts from defining the medical terms “impingement” and “nerve root impingement” (Doc. Nos. 30-3, 30-4); and (3) a printout from describing the specialty of Dr. Williams Federal (Doc. No. 30-2). Defendant objects to this evidence on the grounds that it does not appear in the administrative record.

         A. Legal Rule

         Although an abuse of discretion standard limits the court's review to the record before the plan administrator, McKenzie v. General Tel. Co., 41 F.3d 1310, 1316 (9th Cir. 1994), this restriction does not necessarily apply where the “circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review.” Kearney v. Standard Insurance Co., 175 F.3d 1084, 1090 (9th Cir. 1999) (quoting Mongeluzo v. Baxter Travenol Long Term Disability Benefit Plan, 46 F.3d 938, 944 (9th Cir. 1995)); see also Quesinberry v. Life. Ins. Co. of N. Am., 987 F.2d 1017, 1025 (4th Cir. 1993) (en banc) (such extrinsic evidence should be considered “only when circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision.”) The Ninth Circuit has advised, however, that “a district court should not take additional evidence merely because someone at a later time comes up with new evidence.” Opeta v. Northwest Airlines Pension Plan for Contract Employees, 484 F.3d 1211, 1217 (9th Cir. 2007) (internal citation and quotation marks omitted). Indeed, “[i]n most cases, only the evidence that was before the plan administrator at the time of determination should be considered.” Id. (internal citation and quotation marks omitted).

         The court in Quesinberry described the circumstances under which evidence outside the administrative record could be considered necessary for the required review as follows:

claims that require consideration of complex medical questions or issues regarding the credibility of medical experts; the availability of very limited administrative review procedures with little or no evidentiary record; the necessity of evidence regarding interpretation of the terms of the plan rather than specific historical facts; instances where the payor and the administrator are the same entity and the court is concerned about impartiality; claims which would have been insurance contract claims prior to ERISA; and circumstances in which there is additional evidence that the claimant could not have presented in the administrative process.

987 F.2d at 1027; accord Opeta, 484 F.3d at 1217; Micha v. Sun Life Assur. Co. of Canada, 789 F.Supp.2d 1248, 1257-58 (S.D. Cal. 2011). In the end, the relevant inquiry is “whether each piece of extrinsic evidence [is] necessary for the district court to conduct an adequate de novo review.” Opeta, 484 F.3d at 1218.

         B. Analysis

         (1) Two transcripts from depositions of Dr. John Hart

         Plaintiff argues that these two transcripts of depositions given in other cases should be admitted to demonstrate bias on the part of Dr. John Hart, D.O. (Doc. No. 34, 3:12-4:23.) Specifically, plaintiff argues that the depositions indicate: Dr. Hart has worked for defendant a half to a full day a week since 2010 or 2011; he received $60, 000 in compensation from defendant in 2014; he has a work cubicle at defendant's offices; he receives “management emails” that are sent to all of defendant's employees; and in both cases in which the depositions were taken, Dr. Hart opined that the claimant was capable of performing sedentary work. (Id. at 3:17-25.)

         In Waggener v. UNUM Life Insurance, 238 F.Supp.2d 1179 (S.D. Cal. 2002), the court held that if the plaintiff could demonstrate that his insurer was functioning under a conflict of interest, it might be appropriate to allow the plaintiff to introduce evidence outside the record. Id. at 1185. In Hall v. UNUM Life Insurance Co., 300 F.3d 1197 (10th Cir. 2002), the case upon which the court in Waggener relied, the Tenth Circuit concluded that an alleged conflict of interest did not warrant the introduction of extra-record evidence, reasoning that there was no showing of the manner or extent to which the conflict of interest affected the insurer's decision-making process or how the additional evidence would address any shortcomings in the record before the court. Id. at 1205-06; see also Quesinberry, 987 F.2d at 1027 (“[I]f the evidence is cumulative of what was presented to the plan administrator, or is simply better evidence that the claimant mustered for the claim review, then its admission is not necessary.”).

         Here, there is nothing to suggest that the transcripts of Dr. Hart's depositions in two other cases are necessary in order for this court to adequately conduct its de novo review of the plan administrator's decision. Plaintiff has not pointed to anything contradictory between Dr. Hart's prior testimony and his report that appears in the administrative record in this case. Plaintiff has also not shown how the extrinsic evidence would address any shortcomings in the record before the court. Indeed, the record in this case already reflects that Dr. Hart is an independent contractor paid an hourly rate by defendant and that he has a “continued professional relationship with Standard.” (AR at 24.) Therefore, the deposition transcripts of Dr. Hart's prior deposition testimony in other cases offered by plaintiff will not be admitted or considered.

         (2) Two printouts defining medical terms

         Plaintiff has also offered for the court's consideration two printouts from an online medical dictionary defining the medical terms “impingement” and “nerve root impingement.” The first defines an “impingement” as “Neurology Compression of a nerve or blood vessel through a constricted space. See Nerve root impingement.” (Doc. No. 30-3.) The second defines “nerve root impingement” as “the abnormal protrusion of body tissue into the space occupied by a spinal nerve root.” (Doc. No. 30-4.) The printouts include a “Disclaimer” that “[a]ll content on this website, including dictionary. . . data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in a place of a visit, consultation, or advice of a legal, medical, or any other professional.” (Doc. Nos. 30-3, 30-4.)

         Plaintiff argues that these medical definitions are evidence that Dr. Williams Federal's diagnostic report regarding plaintiff's March 12, 2012 MRIs supports plaintiff's contention that he qualifies for an exception to the “Other Limited Conditions” provision under the insurance policy. (Doc. No. 34 at 4:25-5:13.) However, as noted above, district courts “should not take additional evidence merely because someone at a later time comes up with new evidence that was not presented to the administrator.” Mongeluzo, 46 F.3d at 944; Micha, 789 F.Supp.2d at 1266. These two definitions from online medical dictionaries would appear to be barred from consideration by the court by this recognized restriction. Moreover, the printouts expressly disclaim the reliability of the definitions provided and, accordingly, are of little value in resolving any medical questions presented in this case. Finally, if the court finds the need to consult a dictionary for definition of any terms in resolving this action, it can do so on its own.

         The two printouts offered by plaintiff would add nothing of significance to the ample record in this case. Therefore, the two printouts are not necessary for the court to consider in order to adequately conduct its de novo review and they will not be admitted or considered.

         (3) Printout describing the specialty of Dr. Federal

         Next, plaintiff has attached to his brief a website printout reflecting that one of his own doctors, Dr. William Federal, specializes in “Diagnostic Radiology.” (Doc. No. 30-2.) However, the record before the court already indicates that Dr. Federal is a medical doctor practicing at Valley MRI and Radiology, Inc. and that he reads MRIs and provides findings and conclusions based upon his review of those images. (AR at 258-63.) The online printout offered by plaintiff adds nothing to this record. Nor has plaintiff attempted to show any deficiency in the record before the court that this extrinsic evidence would address. The court therefore finds that the website printout regarding Dr. Federal's practice is not needed for the court to adequately conduct its de novo review of the plan administrator's decision and that extrinsic evidence will not be admitted or considered by the court.


         A. The Group Long Term Disability Policy

         Defendant issued Group Long Term Disability Insurance Policy number 647270-B to Rent-A-Center with an effective date of January 1, 2010. (AR at 890-932, 933-960.) The policy had a defined “Initial Rate Guarantee Period” of January 1, 2010 to January 1, 2014. (AR at 933, 937.) The policy states that it “may be renewed for successive renewal periods by the payment of the premiums set by us on each renewal date” and that the “length of each renewal period will be set by us, but will not be less than 12 months.” (AR at 933.) The policy was amended several times, including on January 1, 2012. (AR at 923-24, 926-27.)

         Under the policy, the eligibility for long term disability benefits changes depending on whether the individual has been collecting such benefits for more or less than twenty-four months. The “Own Occupation” period lasts for “[t]he first 24 months for which LTD Benefits are paid.” (AR at 936.) The “Any Occupation” period lasts “[f]rom the end of the Own Occupation Period to the end of the Maximum Benefit Period.” (Id.)

         In relevant part the “Own Occupation” provision of the policy defines a disability as follows:

During the Benefit Waiting Period and the Own Occupation Period, you are required to be Disabled only from your Own Occupation.
You are Disabled from your Own Occupation if, as a result of Physical Disease, Injury, Pregnancy or Mental Disorder:
1. You are unable to perform with reasonable continuity the Material Duties of your Own Occupation; and 2. You suffer a loss of at least 20% of your Indexed Predisability Earnings when working in your Own Occupation.
Own Occupation means the job you are regularly performing for your Employer when Disability begins.
During the Benefit Waiting Period and the Own Occupation Period, Material Duties means the essential tasks, functions and operations, and the skills, abilities, knowledge, training and experience, generally required by employers from those engaged in a particular occupation, that cannot be reasonably modified or omitted. In no event will we consider working an average of more than 40 hours per week, or if longer, the regularly scheduled hours for your Own Occupation, to be a Material Duty.

(AR at 943.)

         In contrast, the “Any Occupation” provision of the policy is more preclusive and in relevant part defines disability as follows:

During the Any Occupation Period you are required to be Disabled from all occupations.
You are Disabled from all occupations if, as a result of Physical Disease, Injury, Pregnancy or Mental Disorder, you are unable to perform with reasonable continuity the Material Duties of Any Occupation.
Any Occupation means any occupation or employment which you are able to perform, whether due to education, training, or experience, which is available at one or more locations in the national economy and in which you can be expected to earn at least 60% of your Indexed Predisability Earnings within twelve months following your ...

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