Langlois v. Metropolitan Life Insurance Company, No. 5:2011cv03472 - Document 35 (N.D. Cal. 2011)
Court Description: ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY ADJUDICATION ON THE STANDARD OF REVIEW re 29 , 26 . Signed by Judge Ronald M. Whyte on December 16, 2011. (rmwlc2, COURT STAFF) (Filed on 12/16/2011)
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Langlois v. Metropolitan Life Insurance Company Doc. 35 1 2 3 4 E-FILED on 12/16/11 5 6 7 IN THE UNITED STATES DISTRICT COURT 9 FOR THE NORTHERN DISTRICT OF CALIFORNIA 10 United States District Court For the Northern District of California 8 SAN JOSE DIVISION 11 12 JOSEPH H. LANGLOIS, JR., 13 14 15 No. 11-cv-03472 RMW Plaintiff, v. METROPOLITAN LIFE INSURANCE COMPANY, 16 ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY ADJUDICATION ON THE STANDARD OF REVIEW [Re Docket Nos. 26, 29] Defendant. 17 18 19 This is an appeal from the denial of disability benefits allegedly owed to plaintiff Joseph H. 20 Langlois, Jr. ("plaintiff") by his employer, defendant Metropolitan Life Insurance Company 21 ("defendant" or "MetLife"). The parties have filed cross motions for summary judgment concerning 22 the standard of review this court should apply in determining whether such denial was proper. For 23 the reasons below, the court GRANTS plaintiff's motion for summary judgment and finds that the 24 denial of benefits in this case will be reviewed de novo. 25 26 27 I. BACKGROUND Plaintiff began working for defendant as a financial services representative in 1987. Dkt. No. 28 27, Decl. of Daniel Feinberg ("Feinberg Decl."), Ex. B ("Langlois Decl.") ¶ 3. In 1998, plaintiff ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY ADJUDICATION ON THE STANDARD OF REVIEW No. 11-cv-03472 RMW EDM Dockets.Justia.com 1 formed Langlois & Associates, an independent financial business operating within MetLife. Decl. of 2 Laura Sullivan, Ex. A (Administrative Record ("AR")) at 233-34. Through his association with 3 defendant, plaintiff was a participant in the MetLife Options and Choices insurance plan (the "Plan"). 4 Beginning in 2009, plaintiff started to exhibit symptoms of severe depression and anxiety. 5 Langlois Decl. ¶¶ 15-19. On October 20, 2009, he sought medical treatment, complaining of 6 shortness of breath, tightness in his chest, insomnia, and high stress levels at work. Id. ¶ 19; AR 2697 74. In December 2009, plaintiff began undergoing weekly treatment with Dr. Rodrigo Munoz, a 8 board certified psychiatrist and neurologist. Langlois Decl. ¶ 20; AR 603. On January 8, 2010, 9 plaintiff went to urgent care at Metro Comprehensive Medical Center after experiencing heart United States District Court For the Northern District of California 10 palpitations. Langlois Decl. ¶ 23; AR 149. Based on the severity of his condition, plaintiff stopped 11 working on January 15, 2010. Langlois Decl. ¶¶ 25-26. 12 Defendant subsequently approved plaintiff for short-term disability benefits, Individual 13 Disability Insurance, and Family and Medical Leave Act benefits. AR 1. On May 27, 2010, after the 14 expiration of his short-term disability benefits, plaintiff applied for long-term disability ("LTD") 15 benefits, which defendant denied by letter on September 29, 2010. Feinberg Decl. ¶ 5, Ex. C; AR 47, 16 457-59. According to the denial letter, "the information contained in [plaintiff's] file ... did not 17 support a level of impairment that would have prevented [him] from working in [his] occupation as a 18 Financial Services Representative." Feinberg Decl. ¶ 5, Ex. C. 19 Plaintiff appealed the denial of his claim for LTD benefits on March 4, 2011. Feinberg Decl. 20 ¶ 3, Ex. A; AR 160-177. Defendant acknowledged plaintiff's appeal in a letter dated March 18, 2011. 21 AR 139. On March 24, 2011, defendant requested an independent physician consultant ("IPC") 22 review of plaintiff's entire LTD claim file. AR 102. Defendant informed plaintiff in a letter dated 23 April 14, 2011 that it required additional time to resolve his appeal while it conducted an IPC review. 24 AR 134. 25 On May 4, 2011, defendant contacted plaintiff's counsel to request "any updated medical 26 documentation regarding [plaintiff's] medical condition that you would like included in the appeal 27 review." Feinberg Decl. ¶ 3, Ex. G. Plaintiff's counsel responded on May 9, 2011 that because 28 plaintiff was not seeking compensation for lost wages beyond March 4, 2011, "there is no need for ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY ADJUDICATION ON THE STANDARD OF REVIEW No. 11-cv-03472 RMW EDM 2 1 him to submit updated medical records." Id., Ex. H. On July 7, 2011, defendant sent plaintiff's 2 counsel a letter requesting the raw data from an independent medical examination commissioned by 3 defendant. AR 119. The letter further explained that defendant was continuing its review of 4 plaintiff's appeal and expected IPC reports by July 18, 2011. Id. Plaintiff's counsel responded on 5 July 11, 2011 that defendant had failed to render a timely determination of plaintiff's appeal. AR 114. 6 On July 15, 2011, plaintiff filed the instant lawsuit pursuant to the Employee Retirement Income 7 Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., seeking judicial review of defendant's denial 8 of benefits. 9 Defendant has yet to render a decision on plaintiff's administrative appeal. Feinberg Decl. ¶ 6. United States District Court For the Northern District of California 10 11 II. DISCUSSION 12 A. Whether the Plan vests defendant with discretionary authority 13 A challenge to an ERISA plan's denial of benefits is reviewed de novo "unless the benefit plan 14 gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to 15 construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). 16 While there are no "magic words" conferring discretion on the plan administrator, the Ninth Circuit 17 has found plan language granting the administrator the "power to interpret plan terms and to make 18 final benefits determinations" sufficient to establish discretionary authority. Abatie v. Alta Health & 19 Life Ins. Co., 458 F.3d 955, 963 (9th Cir. 2006) (en banc) (citing Bergt v. Ret. Plan for Pilots 20 Employed by Markair, Inc., 293 F.3d 1139, 1142 (9th Cir. 2002) and Grosz-Salomon v. Paul Revere 21 Life Ins. Co., 237 F.3d 1154, 1159 (9th Cir. 2001)). 22 Here, defendant submitted a copy of the Summary Plan Description ("SPD"), which states that 23 "the Claims Administrator has the discretionary authority to interpret the terms of the Plan and to 24 determine entitlement to Plan benefits in accordance with the terms of the Plan." AR 814; SPD at 19. 25 The SPD further provides that the Claims Administrator "has the final decision making authority on 26 whether or not to pay a claim." Id. Such language clearly "bestows on the administrator the 27 responsibility to interpret the terms of the plan and to determine eligibility for benefits." Abatie, 458 28 F.3d at 963. ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY ADJUDICATION ON THE STANDARD OF REVIEW No. 11-cv-03472 RMW EDM 3 1 Plaintiff argues that language in the SPD is insufficient to sustain a finding of discretionary 2 authority because the SPD is "not the plan document itself." Dkt. No. 30 at 3. Plaintiff relies on the 3 Supreme Court’s recent decision in CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011), which noted that 4 summary plan descriptions, "important as they are, provide communication with beneficiaries about 5 the plan, but … their statements do not themselves constitute the terms of the plan." Amara, 131 S. 6 Ct. at 1878 (emphasis in original). However, the court does not read Amara to preclude any reliance 7 on the SPD in determining whether the plan administrator has discretion to deny benefits. 8 The Amara Court considered whether a district court could enforce the terms of an SPD where 9 those terms conflicted with the terms in governing plan documents. Amara, 131 S. Ct. at 1876-78. In United States District Court For the Northern District of California 10 that context, the Court rejected the notion that terms in an SPD "necessarily may be enforced . . . as 11 the terms of the plan itself." Id. at 1877. The Tenth Circuit has interpreted the Amara decision to 12 present two "fairly simple propositions … (1) the terms of the SPD are not enforceable when they 13 conflict with governing plan documents, or (2) the SPD cannot create terms that are not also 14 authorized by, or reflected in, governing plan documents." Eugene S. v. Horizon Blue Cross Blue 15 Shield of N.J., No. 10-4225, 2011 U.S. App. LEXIS 22803, at *10 (10th Cir. Nov. 15, 2011). The 16 Eugene S. court further concluded that language in the SPD may demonstrate discretionary authority 17 where "the SPD is part of the Plan." Id. at *11 (holding that because the SPD at issue stated that it "is 18 made part of the Group Policy," its terms were sufficient to find that the Plan conferred discretion on 19 the plan administrator). 20 In this case, the SPD provides: "The Company intends that the terms of the Plan described in 21 this material, including those relating to coverage and benefits, are legally enforceable, and that the 22 Plan is maintained for the exclusive benefit of participants, as defined by law." AR 798; SPD at 3. 23 The SPD also notes that "official plan documents … will govern in every respect and instance." Id. 24 In the wake of Amara, the most reasonable construction of this language is that the terms of the SPD 25 are legally enforceable elements of the Plan to the extent that they do not conflict with the terms of 26 the Plan itself. See Bergt, 293 F.3d at 1143 ("The SPD is a plan document and should be considered 27 when interpreting an ERISA plan."). Plaintiff has not argued that there is any conflict between the 28 language in the SPD conferring discretion on the plan administrator and the terms of the Plan itself. ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY ADJUDICATION ON THE STANDARD OF REVIEW No. 11-cv-03472 RMW EDM 4 1 Compare Amara, 131 S. Ct. at 1876-78. Indeed, although plaintiff indicates he does not have a copy 2 of the Plan documents, he has not stated that he was denied access to such documents, or even that he 3 requested them during the administrative appeal process or during discovery. Nor did he ask the 4 court to delay ruling on the instant motions so that he could seek out any such documents. 5 Furthermore, at oral argument, defendant's counsel stated that while there may be other documents 6 associated with the Plan, defendant treats the SPD as the Plan. The court therefore finds that 7 defendant has met its initial burden to show that the Plan vests discretionary authority in the plan 8 administrator. 9 B. Whether "procedural irregularities" alter the standard of review in this case United States District Court For the Northern District of California 10 Even where the plan vests the claims administrator with discretionary authority, there are 11 "some situations in which procedural irregularities are so substantial as to alter the standard of 12 review." Abatie, 458 F.3d at 971. Procedural violations of ERISA may shift the standard of review 13 from abuse of discretion to de novo only where such violations are "so flagrant as to alter the 14 substantive relationship between the employer and employee, thereby causing the beneficiary 15 substantive harm." Gatti v. Reliance Std. Life Ins. Co., 415 F.3d 978, 985 (9th Cir. 2005). In 16 addition, the district court must review de novo a claim for benefits when an administrator "fails to 17 exercise discretion" at all. Abatie, 458 F.3d at 972. 18 1. Defendant’s failure to issue a decision on plaintiff’s appeal 19 In the instant action, plaintiff argues that defendant’s failure to issue a decision on plaintiff’s 20 appeal is a procedural violation sufficient to require application of de novo review. The SPD 21 provides that a decision regarding an appeal from a denial of benefits must be issued within 45 days. 22 See SPD at 23; AR 818. In addition, a 45 day extension is allowed if "deemed necessary" by the plan 23 administrator and notice is given to the plan participant. Id. These time limits are mirrored by 24 Department of Labor Regulations. See 29 C.F.R. § 2560.503-1. Thus, under both the Plan and 25 applicable regulations, an appeal from a denial of benefits must be resolved within a maximum of 90 26 days. The parties do not dispute that plaintiff filed his appeal on March 4, 2011, or that defendant 27 had yet to issue a decision at the time of the hearing on the instant motions, some 287 days later. The 28 question is whether defendant’s failure to issue a timely decision–or rather, failure to issue any ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY ADJUDICATION ON THE STANDARD OF REVIEW No. 11-cv-03472 RMW EDM 5 1 decision by time parties sought a determination of the appropriate standard of review—deprives 2 defendant of the deference to which it would otherwise be due. 3 In answering that question, plaintiff argues that the court should rely on Jebian v. Hewlett- 4 Packard Co. Emple. Benefits Org. Income Prot. Plan, 349 F.3d 1098, 1105 (9th Cir. 2003). In 5 Jebian, the plan at issue provided that if the administrator did not respond to the claimant's appeal 6 within sixty days, the claim would be "deemed denied" on review. Id. at 1102. The applicable 7 regulation at the time, 29 C.F.R. § 2560.503-1(h) (1998), also stated that if the appeal was not 8 decided within sixty days, the appeal was "deemed denied." Id. at 1103. The Ninth Circuit held that 9 where a claim is “deemed denied” after the expiration of a given time period "we will not defer United States District Court For the Northern District of California 10 [because the] decision is, under the Plan, necessarily the mechanical result of a time expiration rather 11 than an exercise of discretion … Deference to an exercise of discretion requires discretion actually to 12 have been exercised." Id. at 1103-05. Plaintiff contends that as in Jebian, defendant has “failed to 13 exercise its discretion at all by not rendering a written decision on his appeal,” and thus a de novo 14 standard should apply. Dkt. No. 26 at 7. 15 Defendant contends that the court should instead rely on the Ninth Circuit’s subsequent 16 decision in Gatti v. Reliance Std. Life Ins. Co., 415 F.3d 978 (9th Cir. 2005). As in Jebian, the plan 17 administrator in Gatti failed to issue a written decision within the regulatory time limit. However, the 18 plan itself included no time limit governing appeals. Thus, while the claim was "deemed denied" 19 under the applicable regulation, it triggered no similar provision under the plan. The Ninth Circuit 20 held that the plan administrator’s failure to issue decision within the regulatory time limit gave the 21 claimant the "final decision" necessary to sue in federal court, but did not alter the standard of review. 22 Defendant argues that Gatti "narrowed Jebian’s application to the particular circumstance where the 23 plan itself contains language deeming a claim denied if not timely determined on appeal." Dkt. No. 24 32 at 11. 25 The circumstances here fall somewhere between Jebian and Gatti. As in Jebian, defendant 26 clearly violated the time limits provided by both the regulations and the Plan itself. In fact, the violation 27 here is far more egregious because defendant has yet to issue a decision on plaintiff’s request for review, 28 while the defendants in both Jebian and Gatti denied the plaintiff’s appeal before the parties moved for ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY ADJUDICATION ON THE STANDARD OF REVIEW No. 11-cv-03472 RMW EDM 6 1 summary judgment. See Jebian, 349 F.3d at 1102; Gatti, 415 F.3d at 981. On the other hand, as in Gatti, 2 such a violation does not deem plaintiff’s claim "denied" under the terms of the Plan.1 Nor is plaintiff’s 3 claim "deemed denied" under the applicable regulation, which was amended in 2000 to instead provide 4 that in the event of a violation of the relevant time limits, "a claimant shall be deemed to have exhausted 5 the administrative remedies available under the plan." See 29 C.F.R. § 2560.503-1(l) (2000). Thus, it 6 cannot be said that the decision that will ultimately be the subject of review by this court is purely "the 7 mechanical result of a time expiration rather than an exercise of discretion." Jebian, 349 F.3d at 1105. 8 As might be expected given the lack of clear authority governing such a situation, other courts 9 in this circuit considering substantially similar circumstances have reached divergent conclusions. United States District Court For the Northern District of California 10 Compare Hinz v. Hewlett Packard Co. Disability Plan, No. 10-38644, 2011 U.S. Dist. LEXIS 38644 11 (N.D. Cal. Mar. 30, 2011) (abuse of discretion standard); Cushman v. Motor Car Dealers Services, Inc., 12 652 F. Supp. 2d 1122 (C.D. Cal. 2009) (abuse of discretion standard); Kowalski v. Farella, Braun & 13 Martel, LLP, No. C-06-3341, 2007 U.S. Dist. LEXIS 56005 (N.D. Cal. July 23, 2007) (de novo 14 standard); Roach v. Kaiser Permanente Long Term Disability Plan, No. 08-4746, 2009 U.S. Dist. LEXIS 15 40394 (C.D. Cal. May 12, 2009) (de novo standard). In an unpublished decision, the Ninth Circuit 16 summarily determined that where the insurer "never" rendered a final decision on the plaintiff’s 17 administrative appeal, de novo review was appropriate. See Capianco v. Long-Term Disability Plan of 18 Sponsor Uromed Corp., 247 Fed. Appx. 885, 886 (9th Cir. 2007) (citing Jebian, 349 F.3d at 1106 n.6). 19 This court finds that because the plan administrator failed without good cause to resolve 20 plaintiff’s administrative appeal by the time the appropriate standard of review was to be determined by 21 the district court, the de novo standard applies. As the Ninth Circuit has explained, "a plan 22 administrator's decision is entitled to deference only when the administrator exercises discretion that the 23 plan grants as a matter of contract." Abatie, 458 F.3d at 971; see also Firestone, 489 U.S. at 111 24 ("[W]hen trustees are in existence, and capable of acting, a court of equity will not interfere to control 25 them in the exercise of a discretion vested in them by the instrument under which they act.") (emphasis 26 in original) (citations omitted). The contract between plaintiff and defendant clearly contemplates the 27 1 28 The SPD does not indicate what impact, if any, a failure to comply with the 90-day time limit has on a participant's appeal. ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY ADJUDICATION ON THE STANDARD OF REVIEW No. 11-cv-03472 RMW EDM 7 1 availability of an appeal of an adverse benefits determination. Indeed, the abuse of discretion standard 2 assumes that an administrative appeal has been taken. See Barboza v. Cal. Ass'n of Prof'l Firefighters, 3 651 F.3d 1073, 1076 (9th Cir. 2011) (“As a general rule, an ERISA claimant must exhaust available 4 administrative remedies before bringing a claim in federal court.”). The administrative appeals process 5 provides an important "second look" at the plan administrator’s initial determination and justifies a more 6 deferential review by the district court. Thus, where the plan administrator fails to resolve an appeal–or 7 at least declines to issue a decision before the claimant has invested substantial time and resources 8 litigating in federal court–it is more than a “technical violation[] of ERISA's requirements.” Gatti, 415 9 F.3d at 985. In such an instance, the administrator has "has forfeited the privilege to apply his or her United States District Court For the Northern District of California 10 discretion." Abatie, 458 F.3d at 972 (citing Gritzer v. CBS, Inc., 275 F.3d 291, 296 (3d Cir. 2002)). 11 Moreover, there do not appear to be any special circumstances justifying defendant's substantial 12 delay in this case. The record indicates that the only actions defendant took between the filing of 13 plaintiff’s appeal and the expiration of the 90-day time period were: (1) request an independent physician 14 consultant (IPC) review of plaintiff’s file; and (2) send a letter to plaintiff’s attorney seeking updated 15 medical information which was ultimately deemed unnecessary. See Feinberg Decl., Exs. F, G. 16 Defendant has not argued that either action was unexpected, problematic or in any way obstructed by 17 plaintiff’s conduct. Compare Tabatabai v. Hewlett-Packard Co. Disability Plan, No. C-06-00695, 2006 18 U.S. Dist. LEXIS 66110, at *8 (N.D. Cal. Sept. 1, 2006) (untimely processing of an appeal was excusable 19 because the employer was "faced with a situation in which a claimant appealed and then disappeared."). 20 Nor have events since the running of the 90-day time limit explained why defendant has yet to issue a 21 decision. On July 7, 2011, more than a month after the time limit had passed, defendant contacted 22 plaintiff’s counsel to request "raw data" from a medical examination that had been commissioned by 23 defendant. See id., Ex. J. Plaintiff’s counsel has explained that such data was never in his possession, 24 and defendant concedes that the data was “ultimately … forwarded” directly to defendant’s consultants. 25 Dkt. No. 32 at 9. Apart from continuing to review its consultants’ reports, defendant appears to have 26 taken no further action since July 7, 2011. 27 Finally, the record of “good faith” communication between the parties regarding the status of 28 plaintiff’s appeal is insufficient to justify a more deferential standard of review. See Jebian, 349 F.3d ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY ADJUDICATION ON THE STANDARD OF REVIEW No. 11-cv-03472 RMW EDM 8 1 at 1107 (noting in dicta that “inconsequential violations of the deadlines . . . would not entitle the 2 claimant to de novo review … in the context of an ongoing, good faith exchange of information between 3 the administrator and the claimant.”) (citing Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 635 (10th 4 Cir. 2003). Defendant sent letters to plaintiff through counsel on March 18, 2011, April 14, 2011, May 5 4, 2011 and July 7, 2011. See Feinberg Decl., Exs. E, F, G, I. Only the letter of July 7, sent over a month 6 after the expiration of the 90-day window, gave any indication of when plaintiff might expect resolution 7 of his claim. Over sixty days of "radio silence," Gilbertson, 328 F.3d at 636, on either side of the appeal 8 deadline is "neither productive nor reasonably informative to the claimant." Jebian, 349 F.3d at 1107. 9 Accordingly, the court concludes that the de novo standard is appropriate in this case and GRANTS United States District Court For the Northern District of California 10 plaintiff’s motion for summary judgment on the standard of review.2 11 III. ORDER 12 For the foregoing reasons, the court GRANTS plaintiff's motion for summary judgment on the 13 14 standard of review and DENIES defendant's motion on the same issue. 15 16 17 DATED: 18 12/16/11 RONALD M. WHYTE United States District Judge 19 20 21 22 23 24 25 26 27 28 Because the court determines that defendant’s failure to resolve plaintiff’s appeal justifies the application of de novo review, it need not reach the issue of what impact defendant’s alleged conflict of interest–as the entity charged with both paying benefits and determining eligibility for them–would have under an abuse of discretion standard. See Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008) (finding that while a conflict of interest may be a "factor" in determining whether a plan administrator abused its discretion, it does not shift the standard of review). 2 ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY ADJUDICATION ON THE STANDARD OF REVIEW No. 11-cv-03472 RMW EDM 9
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