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Perez v. Lincoln National Life Insurance Co.

United States District Court, C.D. California

September 25, 2019






         This case concerns the termination of plaintiff Alicia Perez’s benefits under the long term disability (“LTD”) and waiver without premium insurance (“WOP”) plans (collectively “Plans”) that defendant Lincoln National Life Insurance Company (“LNL”) administers pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”).

         Perez applied for LTD benefits on October 2, 2015. See Administrative Record (“AR”) 1633-34. LNL tentatively approved Perez’s claim on March 11, 2016, pending review of Perez’s medical records. AR1360. After that review, LNL denied Perez’s claims by letters dated November 25, 2016 (LTD plan) and November 28, 2016 (WOP plan). AR0978, AR2459. Perez appealed the withdrawal of benefits on May 1, 2017. AR0845. LNL denied Perez’s first appeal on August 27, 2017. AR0681. Perez filed a second appeal on February 19, 2018, AR0404, which LNL again denied on July 17, 2018, AR02102.

         Perez filed this action pursuant to ERISA, 29 U.S.C. § 1132(e)(2), on August 23, 2018. Complaint, ECF No. 1 (“Compl.”). The parties filed opening trial briefs on July 12, 2019. See Perez’s Opening Trial Br., ECF No. 18 (“Perez Tr. Br.”); LNL’s Opening Trial Br., ECF No. 19 (“LNL Tr. Br.”). The parties filed responsive trial briefs on August 2, 2019. See Perez’s Opposition to LNL’s Trial Br., ECF No. 26 (“Perez Opp.”); LNL’s Opposition to Perez’s Trial Br., ECF No. 28 (“LNL Opp.”). The parties subsequently submitted proposed memoranda of contentions of fact and law. See Perez’s Mem. of Contended Facts and Law, ECF No. 30 (“Perez’s MFL”); LNL’s Mem. of Contended Facts and Law, ECF No. 29 (“LNL’s MFL”).

         On September 17, 2019, the Court held a bench trial. The Court now finds and concludes as follows.


         A. Perez’s Employment, And The Operative LTD And WOP Policies

         Perez was hired by GEP Administrative Services (“GEP”) on September, 8, 1998. AR0001. Perez is a payroll analyst. In her role, she manages adjustments for each payroll department in each of GEP’s offices. Her job involves answering calls and emails involving payroll calculations, reviewing and preparing adjustments to correct errors in payroll calculations, and editing and verifying financial adjustments. The job description issued by her employer states that she is required to work in front of a computer for prolonged periods of time, including prolonged periods of sitting. AR1597. However, Perez’s supervisor reports that the tasks and functions generally required of the position could be accomplished sitting or standing. AR 1544-45.

         On May 1, 2012, LNL issued a group long-term disability policy to GEP. AR0124. As part of her employment with GEP, Perez enrolled the plan. The plan provides a monthly benefit to the extent the claimant is “Totally Disabled, ” under the Regular Care of a Physician, and submits proof of continued “Total Disability.” AR0145. The monthly benefit ceases on the date the claimant ceases to be “Totally Disabled.” Id.

         “Total Disability” means the claimant is unable to perform with reasonable continuity the “Substantial and Material Acts” necessary to pursue her “Own Occupation.” AR0134. “Own Occupation” means the employment, business, or profession the claimant was regularly performing when the Disability began, not the specific job the claimant was performing for her employer. AR0131. “Substantial and Material Acts” of one’s “Own Occupation” are the non-modifiable tasks generally required by employers. AR0133. In determining which acts are “Substantial and Material, ” the Plan requires LNL to consider whether a claimant can perform the specific job duties required by GEP, and, if not, determine whether any such tasks are customarily required of other employees engaged in plaintiff’s occupation. Id.

         In pertinent part, the LTD policy states as follows:

         TOTAL DISABILTY or TOTALLY DISABLED will be defined as follows.

         (1) During the Elimination Period and Own Occupation Period, it means that as a result of an Injury or Sickness the Insured Employee is unable to perform with reasonable continuity the Substantial and Material Acts necessary to pursue his or her Own Occupation and is not working, or if working, would not be Partially Disabled.

         SUBSTANTIAL AND MATERIAL ACTS means the important tasks, functions and operations:

(1) during the Elimination Period and Own Occupation Period, generally required by employers from those engaged in the Insured Employee’s Own Occupation
[. . .]
(3) that cannot be reasonably omitted or modified.

         OWN OCCUPATION or REGULAR OCCUPATION means any employment, business, trade or profession and the Substantial and Material Acts of the occupation the Insured Employee was regularly performing for the Employer when the Disability began. Own Occupation is not necessarily limited to the specific job the Insured Employee performed for the Employer.

         AR 0131-35.

         The WOP policy, meanwhile, provides that life insurance will be continued without payment of premiums for an insured who becomes “Totally Disabled.” The WOP policy defines “Totally Disabled” as follows:

         DEFINITION. For this benefit, Total Disability or Totally Disabled means an Insured Person: (1) is unable, due to sickness or injury, to engage in any employment or occupation for which such Insured Person is or becomes qualified by reason of education, training, or experience; and (2) is not engaging in any gainful employment or occupation.


         B. Perez’s Claim Process and Medical Review

         1. Perez Files Her Claim

         Perez submitted a claim for LTD disability benefits on October 2, 2015, which she resubmitted in December 2015 following a notice of administrative deficiency in her paperwork. AR1633-34. She had stopped working on April 15, 2015. In her handwritten application for benefits, Perez claimed she was unable to work due to “severe pain, unable to concentrate, ” and “dizziness.” AR1633-34.

         To support her claim, Perez submitted a physician statement from her general physician Dr. Paul Lee. Dr. Lee opined that Perez was unable to work because she required access to a bathroom at all times, experienced pain from sitting, and was in fact unable to sit, stand, or walk for no more than 1 hour each per day. AR 1635-37. Dr. Lee reported that Perez may be unable to concentrate effectively at work due to her discomfort, inability to sit or stand for more than one hour at a time, and her constant need to use the restroom, specifically to defecate. Perez’s medical records dating to 2011 confirm a history of abdominal pain, rectal bleeding, swelling and inflammation of the colon, colon polyps, and colitis. See, e.g., AR1659-92, AR1739-72. But scans and tests from 2011 through 2014 did not reveal any condition that led any doctor to instruct Perez to cease working. Id. Dr. Lee’s reports following physical examinations in April 2015, July 2015, and November 2015 provided the sole medical basis for Perez’s initial claim. Dr. Lee did not address the possibility that Perez’s condition prevented her from working until the November 2015 visit, at which time he concluded that she was unable to work. AR1510-13.

         In March 2016, LNL tentatively approved Perez’s claim in good faith, see AR1360, but requested medical records from her treating gastrointestinal specialist, Dr. John Kasher, and her treating hepatalogist, Dr. Edward Mena. AR1351-52, 1370-72, 1286-91.

         Records received from Dr. Kasher in August 2016 confirmed that Perez had registered several gastrointestinal complaints between 2011 and 2016-stomach pain, constipation, diarrhea, bleeding-but Dr. Kasher’s physical examinations, scans, and tests did not reveal any abnormalities that prevented Perez from working. AR 1272-78. After an exam taken in July 2015, Dr. Kasher ruled out irritable bowel disease, and attributed Perez’s discomfort to irritable bowel syndrome. AR1278. In notes from a visit on March 15, 2016, Dr. Kasher reported that Perez complained of constipation and “pressure as if” she needed to stool, but an inability to actually do so. AR1264. Dr. Kasher also stated in his notes that Perez reported “[n]o more diarrhea.” Id. At that same March 15, 2016 visit, Dr. Kasher conducted a physical examination, after which he formally assessed Perez’s condition as “Constipation - Stable” and “Crohn’s disease NOS – Stable.” AR1270.[1] Perez was instructed to continue treatment for constipation with Linzess, a prescribed medication. He did not conclude that Perez’s condition prevented her from working. Nor did he report that Perez was not working because she was impaired by any disabling condition. In fact, Dr. Kasher’s notes state that Perez “used to work for [a] payroll department” but was “laid off.” AR1264. The records show that Perez visited Dr. Kasher again on June 7, 2016. Dr. Kasher performed a colonoscopy and a biopsy, and the results were shared at a follow up appointment on August 2, 2016. The tests showed “no celiac or [C]rohn’s disease . . . but found there is still inflammation with erosions.” AR1220. Perez was instructed to continue with Linzess, and to return for a follow up appointment in November 2016. Id.

         The records received from Dr. Mena indicated that Perez was treated by Dr. Mena on February 20, 2015 and December 9, 2015. At the February 2015 visit, Dr. Mena assessed Perez with “biliary cirrhosis” and “fatty liver disease, ” but found that she “is doing great” and directed Perez to continue treatment with medications and return for an ultrasound. AR1336. The February 2015 notes do not address whether Perez’s liver conditions inhibit her from performing her ordinary work functions. In October 2015, Dr. Mena wrote that the results of Perez’s ultrasound were “unremarkable.” AR1337. At the December 2015 visit, Dr. Mena conducted a physical examination and wrote that “[p]atient is in her usual state of health.” AR1334. He directed Perez to continue with her current treatment, and to work on losing weight. Id. Perez treated with Dr. Mena again on September 16, 2016. At that visit, Dr. Mena conducted an exam and found that Perez was again “in her usual state of health.” AR1062. He wrote that Perez “states that she does not feel that she is capable of working.” AR1063. But Dr. Mena did not conclude that Perez’s liver conditions prevent her from working. Nor did he report that Perez was not working because she was impaired by any disabling condition. In fact, Dr. Mena’s notes from the December 2015 visit state that Perez was not working because she had “lost her job, ” not because she was disabled. Id.

         In addition to the record requests, LNL also sent “abilities” forms to both Dr. Kasher and Dr. Mena to complete.[2] AR1156 (Dr. Kasher); AR1051 (Dr. Mena). The forms request the doctors’ assessments as to whether and to what extent, if any, Perez could perform the functions of her occupation. Dr. Kasher did not complete the form and did not explain why. Dr. Mena returned the form, and opined that Perez only had “[m]oderate limitation of functional capacity” and was “capable of clerical/administrative (sedentary) activity.” AR1053. Notwithstanding these conclusions, he also circled “Yes” beneath the prompt asking “Is [Perez] ...

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