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Kott v. Agilent Technologies, Inc.

United States District Court, N.D. California, San Jose Division

July 7, 2017



          BETH LAB SON FREEMAN United States District Judge

         Plaintiff Jennifer Kott (“Kott”) challenges the denial of her disability claim by Sedgwick Claims Management Services, Inc. (“Sedgwick”) under the Agilent Technologies, Inc. Disability Plan (the “Plan”), an employee benefits plan governed by ERISA.[1] Kott sought disability claims because of back pain and severe plantar fasciitis in her foot. Sedgwick, as the administrator of the Plan, initially granted 52 weeks of benefits under the “own occupation standard.” Ex. 2 to Pl. Mot. at 987. However, Sedgwick denied Kott's claims of disability under the “any occupation” standard so the benefits did not continue past February 2016 after 52 weeks. Ex. 7 to Pl. Mot at 321-23.

         The parties have filed cross motions for judgment pursuant to Federal Rule of Civil Procedure 52. Kott seeks a determination that she was disabled under the “any occupation” standard and Defendant seeks a contrary determination. The Court set a “Hearing on Dispositive Motions/Bench Trial” for June 15, 2017 and heard extensive oral argument of counsel on that date. For the reasons discussed below, the Court DENIES Kott's Rule 52 motion, issues Findings of Fact and Conclusions of Law under Rule 52, and GRANTS Defendant's motion.


         Federal Rule of Civil Procedure 52 provides that “[i]n an action tried on the facts without a jury . . . the court must find the facts specially and state its conclusions of law separately.” Fed.R.Civ.P. 52(a)(1). “In a Rule 52 motion, as opposed to a Rule 56 motion for summary judgment, the court does not determine whether there is an issue of material fact, but actually decides whether the plaintiff is [entitled to benefits] under the policy.” Prado v. Allied Domecq Spirits and Wine Group Disability Income Policy, 800 F.Supp.2d 1077, 1094 (N.D. Cal. 2011) (citing Kearney v. Standard Ins. Co., 175 F.3d 1084, 1095 (9th Cir. 1999)). In making that determination, the court must “evaluate the persuasiveness of conflicting testimony and decide which is more likely true” in order to make findings of fact that will be subject to review under a clearly erroneous standard if appealed. Kearney, 175 F.3d at 1095.

         Where an ERISA plan confers discretionary authority upon a plan administrator to determine eligibility for benefits, the administrator's decision to deny benefits is reviewed for abuse of discretion. Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Nolan v. Heald College, 551 F.3d 1148, 1153 (9th Cir. 2009). Under a straightforward application of the abuse of discretion standard, “the plan administrator's decision can be upheld if it is grounded in any reasonable basis.” Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623, 629 (9th Cir. 2009) (internal quotation marks and citation omitted) (emphasis in original).

         Here, the parties do not dispute that the Plan grants discretionary authority to decide claims and appeals to Sedgwick. Pl. Mot. (“Mot.”) 14, ECF 29; Def. Cross-Mot., Opp'n 10 (“Opp'n”), ECF 30. The Court thus will apply an abuse of discretion standard of review. See Firestone, 489 U.S. at 110-111. Under this standard of review, the plan administrator's decision will be upheld if it is reasonable, but the plan administrator should be found to have abused its discretion if its decision is “illogical, implausible, or without support in inferences that may be drawn from the facts in the record.” Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 676 (9th Cir. 2011).


         Kott submitted documents outside the administrative record, including Exhibits 13, 16, and 17 for the Court's consideration. Mot. 6, 13-14. The parties do not dispute that these exhibits are not in the administrative record and that they are dated in March 2017, far beyond the April 26, 2016 date of Sedgwick's denial of Kott's appeal. Mot. 6 n.2; Opp'n 10. However, Kott contends that that she is entitled to submit evidence outside of the record because of “procedural irregularity” that affected the administrative review. Mot.6 n.2; Reply 10 n.3. Defendant objects to the introduction of these exhibits because they were not before Sedgwick when it denied Kott's claims. Opp'n 10-13.

         With respect to Exhibit 13, this exhibit includes a letter from Dr. Justin Low and an event and appointment log, purportedly showing that Dr. Low has never had any communications with any care managers, lawyers or administrators regarding Kott's care or management, which is contrary to evidence relied on by Sedgwick in its final denial letter. Ex. 13 to Mot. Kott claims that this exhibit should be considered because Sedgwick relied on a conversation between Dr. Low and Dr. Mardy-Davis for the first time on appeal in the denial letter. Id.; Mot. 6 n.2. Defendant argues that regardless of whether the telephone call occurred, it had no impact on the rationale set forth in the denial letter. Id. at 11-12.

         “When determining whether the [plan administrator] abused its discretion, the Court's review is limited to the administrative record.” Cuevas v. Peace Officers Research Ass'n of Cal. Legal Def. Fund, No. 14-02540-BLF, 2016 WL 2754434, at *8 (N.D. Cal. May 12, 2016) (citing Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 970 (9th Cir. 2006)). “[I]n general, a district court may review only the administrative record when considering whether the plan administrator abused its discretion. . . .” Abatie, 458 F.3d at 970. The “administrative record consists of the papers the [plan administrator] had when it denied the claim.” Kearney, 175 F.3d at 1096. “The court may not consider information outside the administrative record, as it would be improper to find a claims administrator abused its discretion based on evidence not before it at the time the decision was made.” Thompson v. Ins. & Benefits Trust/Comm. Peace Officers Research Ass'n of California, 670 F.Supp.2d 1052, 1068 (E.D. Cal. 2009).

         Given that the Court is applying the abuse of discretion standard here, evidence extraneous to the record before Sedgwick, such as Exhibit 13, cannot be considered here. These exhibits were not before Sedgwick when it denied Kott's disability claim and are not part of the record. Relying on Abatie, Kott attempts to characterize Sedgwick's denial letter's reference of the phone call between Dr. Low and Dr. Mardy-Davis as a procedural error. Kott then argues that this procedural error supports consideration of evidence extraneous to the record. However, this mere reference in the denial letter is not the type of procedural error that warrants the introduction of outside evidence in accordance with the holding in Abatie. In Abatie, an insurer denied life insurance benefits to plaintiff because the decedent had not filed a waiver of premium application (based on disability) and had not paid his premiums, and coverage lapsed before the decedent died. Abatie, 458 F.3d at 960. In the initial denial, the denial of coverage was based on insufficient evidence showing a waiver. Id. at 961. When the subsequent appeal was denied, the insurer - for the first time on an administrative appeal - added a second reason: that “it was denying coverage because there was insufficient evidence in the record that [the decedent] had remained totally disabled from the time he left work until his death.” Id. The Ninth Circuit in Abatie noted that an “administrator's last minute reliance on a new ground for denial of benefits, [] afforded [the plaintiff] no opportunity to present relevant evidence in advance of the administrator's final decision.” Id. at 971. As such, the court held that under such circumstances, the trial court “may take additional evidence” because “the irregularities have prevented full development of the administrative record.” Id. at 973.

         Abatie is not analogous to the situation here. A review of the final denial letter reveals that the denial was based on the review of medical records and the summaries of all the independent reviewers and a vocational specialist. The mere mention of a teleconference between Dr. Mardy-Davis and Dr. Low does not present a novel ground in support of the denial. As such, Defendant's objection to Exhibit 13 is sustained.

         Similarly, the Court will not consider Exhibits 16 and 17 as they were not before Sedgwick when it denied her disability claim and are not part of the record. Exhibit 16 is another letter by Dr. Low, providing an update with regard to Kott's current functional status due to her back and foot conditions. Ex. 16 to Mot. Exhibit 17 includes a medical record pertaining Kott's current health status regarding diagnosis and treatment for breast cancer. Ex. 17 to Mot. Kott offers these exhibits as information that Sedwick must consider on remand. Mot. 13-14. For the same reason the Court sustains Defendant's objection to Exhibit 13, the objections to Exhibits 16 and 17 are also sustained.


         A. Background

         Kott worked as an Import Compliance Specialist at Agilent Technologies, Inc. up to the date of disability, February 11, 2015. AR 150, 570-74. Kott holds a Customhouse Broker's License, is certified as an export specialist, and has 8 or more years of “general education, college, seminars, and on the job training.” AR 148.

         At all relevant times, Kott was a participant in the Agilent Technologies, Inc. Disability Plan (the “Plan”), which is a self-funded disability plan (i.e. benefits are funded by Agilent Technologies, Inc. (“Agilent”), not through an insurer). ERISA § (1)(A), 29 U.S.C. § 1002(1)(A).

         Under the terms of the Plan, a participant qualifies as “Totally Disabled” if:

During the first fifty-two (52) weeks following the onset of the injury or sickness, the Member is continuously unable to perform each and every duty of ...

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