McNeal v. Frontier AG, Inc. et al, No. 6:2012cv01284 - Document 45 (D. Kan. 2014)
Court Description: MEMORANDUM AND ORDER granting 36 Motion for Summary Judgment; granting 36 Motion in Limine. The court shall direct that judgment be entered in favor of USI and that Assurant, Inc. be dismissed with prejudice. The court shall not rule upon defe ndant Frontiers motion for summary judgment (Doc. No. 35). The court shall further direct that plaintiffs claims against Frontier be remanded to the state district court for Stevens County, Kansas. Signed by District Judge Richard D. Rogers on 2/10/2014. (meh)
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McNeal v. Frontier AG, Inc. et al Doc. 45 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS DALE MCNEAL, ) ) ) ) ) ) ) ) ) Plaintiff, v. FRONTIER AG, INC. et al Defendants. Case No.12-1284-RDR MEMORANDUM AND ORDER Plaintiff has brought an ERISA claim against defendant Union Security Insurance Company (“USI”) alleging the wrongful denial of disability benefits under a policy issued by USI. Plaintiff has also brought a state law breach of contract claim against defendant Frontier Ag, Inc. (“Frontier”), alleging that Frontier promised at the time of plaintiff’s employment but did not provide disability benefits coverage beginning 90 days after the start of employment. motions for summary This case is before the court upon judgment by these defendants. Another defendant, Assurant, Inc., has joined in defendant USI’s motion for summary judgment. All parties agree that Assurant, Inc. may be dismissed from this case. USI’s motion for summary judgment is combined with a motion in limine asking that the court’s review of the issues as to USI be confined to an administrative record. Dockets.Justia.com I. Defendant USI’s motion for summary judgment shall be granted because USI did not wrongfully deny plaintiff’s claim for disability benefits. A. Factual background Frontier group is an insurance agribusiness policy to cooperative. Frontier which USI issued qualifies employee welfare benefit plan as defined by ERISA. as a an The policy provides long-term disability benefits to Frontier employees. Eligibility for participation in the policy begins after 180 days of service with the company. at pp. 17, 19. plaintiff Administrative Record (“AR”) This policy was in effect in September 2009 when commenced his employment with Frontier. Plaintiff contends that his employment commenced on September 14, 2009. USI contends that plaintiff’s employment commenced on September 28, 2009 and that September 14, 2009 was when plaintiff was hired. But, this dispute does not appear material to the issues in this case. 2010 Plaintiff’s last day worked was September 24, and his last September 28, payroll 2010. check Plaintiff was for stopped the working period for ending Frontier because of physical disability. Under the group insurance policy, USI has the discretionary authority to pay and deny claims, determine eligibility for benefits, and interpret policy terms. Plaintiff made a claim under on the policy which was denied 2 the grounds that plaintiff’s condition. alleged disability resulted from a pre-existing Under the terms of the policy: A “pre-existing condition” means an injury, sickness, pregnancy, symptom or physical finding, or any related injury, sickness pregnancy, symptom or physical finding, for which you: • consulted with or received advice from a licensed medical or dental practitioner, or • received medical or dental care, treatment, or services, including taking drugs, medicine, insulin, or similar substances during the 3 months that end on the day before you became insured under the long term disability insurance policy. AR at 29. The policy further provides that benefits will not be paid “for any disability resulting, directly or indirectly, from a pre-existing condition . . .” USI contends that Id. plaintiff insurance policy on March 27, 2010. became insured under the The policy provided that eligibility for participation could not begin until 180 days after the commencement of employment, which, to reiterate, occurred either on September 14, 2009 or on September 28, 2009. According to USI, plaintiff had a “pre-existing condition” of bilateral leg and back pain for which plaintiff consulted with a licensed medical practitioner or received medical care, treatment or services during the 3-month period that ended on the March 27, 2010. Plaintiff does not deny that he and his doctors have reported that plaintiff suffered severe leg and 3 back pain starting October 4, 2010. in January 2010 and continuing through These symptoms were diagnosed initially as caused by peripheral artery disease. However, treatment for peripheral artery disease did not improve plaintiff’s condition in general. Later, in August 2010, a diagnosis of spinal or lumbar stenosis was made.1 Apparently this was the primary cause of plaintiff’s leg and back pain. treatment for spinal stenosis until Plaintiff did not receive after the diagnosis was made. Plaintiff’s claim for benefits was denied by USI initially and finally on the grounds that plaintiff’s disabling condition was a “pre-existing condition” under the terms of the policy. B. Summary judgment standards should not be applied to plaintiff’s claims against USI. Plaintiff contends that USI’s summary judgment motion should be denied because it may invite more than one review of the administrative record. in this district, that We recognize, as have other judges summary judgment standards under FED.R.CIV.P. 56 are not completely suited to the court’s review of the administrative record in an ERISA action. USI’s motion is not asking the court to determine whether there is a material issue of fact for trial, as much as to decide upon review of an administrative record whether plaintiff’s claim for disability 1 There was a diagnosis of possible arterial stenosis on April 28, 2010. There is no claim that this diagnosis was correct. 4 benefits was reasonably denied. The court’s job in this instance is to act “as an appellate court and evaluate[] the reasonableness of a plan administrator or fiduciary’s decision based on the evidence contained in the administrative record.” Panther v. Synthes (D.Kan. 2005)(citing (U.S.A.), 380 F.Supp.2d 1198, v. Commodity Credit Olenhouse 1207 n. Corp., 9 42 F.3d 1560, 1579 & n.31 (10th Cir. 1994)); see also, Hickman v. LSI Corp., 2012 WL 2505298 *1 (D.Kan. 6/28/2012)(when reviewing a denial of disability benefits upon cross-motions for summary judgment, “the court acts as an appellate court”). Although there is something in general to plaintiff’s challenge to the propriety of summary judgment in this context, we reject it as grounds to deny judgment in this case. notes, many similar cases have been decided upon As USI summary judgment motions, even if summary judgment standards have not been applied. Upon review, we do not think that considering USI’s judgment summary motion will be adverse to judicial economy or fairness in this situation. C. The court shall apply an arbitrary standard of review to the administrative record. Since the insurance plan in this and case capricious gives the administrator discretionary authority to determine eligibility for benefits, we apply an arbitrary and capricious standard and try to determine whether the interpretation of the plan was 5 reasonable and in good faith. Eugene S. v. Horizon Blue Cross Blue Shield of New Jersey, 663 F.3d 1124, 1130 (10th Cir. 2011). Nevertheless, because USI determines eligibility for benefits and pays benefits under the policy, the court will consider that conflict as a factor in determining whether discretion in denying benefits in this case. Ins. Co. v. Glenn, 554 U.S. 105, 108 (2008). USI abused its Metropolitan Life Its weight as a factor depends on the seriousness of the conflict. Foster v. PPG Industries, Inc., 693 F.3d 1226, 1232 (10th Cir. 2012). It is given great weight where circumstances suggest a likelihood that it affected the benefits decision; it is less important or even unimportant where steps were taken to reduce potential bias and promote accuracy. Id. Normally, “[o]ur review is ‘limited to the administrative record – the materials compiled by the administrator in the course of making his decision.’” Holcomb v. UNUM Life Ins. Co. of America, 578 F.3d 1187, 1192 (10th Cir. 2009)(quoting Fought v. UNUM Life Ins. Co. of Am., 379 F.3d 997, 1003 (10th Cir. 2004)). “The party moving to supplement the record or engage in extra-record propriety.” discovery bears the burden of showing its Murphy v. Deloitte & Touche Group Ins. Plan, 619 F.3d 1151, 1163 (10th Cir. 2010). “[I]t is the unusual case in which the district court should allow supplementation of the record.” Hall v. UNUM Life Ins. Co. of Am., 300 F.3d 1197, 1203 6 (10th Cir. 2002). Examples of such “exceptional circumstances,” include where evidence outside the administrative record may be admitted regarding issues such as conflict of interest or when there is evidence that a claimant could not have presented in the administrative process. Id. In this instance, plaintiff has not shown that exceptional circumstances exist to supplement the record. The evidence plaintiff seeks the court to consider is not related to the alleged conflict of interest, nor has plaintiff shown that he could not have presented the material during the administrative process.2 Regardless, the court has examined the material and determined that it would not have changed the outcome of our review had we considered it with the administrative record. Lack of substantial evidence, mistake of law and bad faith are considered decisions. Income Prot. indications of arbitrary and capricious Finley v. Hewlett-Packard Co. Emp. Benefits Org. Plan, 379 F.3d 1168, 1176 (10th Cir. 2004). “Substantial evidence is such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the decision maker.” F.3d 1276, 1282 (10th Caldwell v. Life Ins. Co. of N. Am., 287 Cir. 2002)(interior quotation omitted). The decision to deny benefits in this case must be upheld unless 2 Plaintiff contends that the administrative process did not lend an ample opportunity to participate in depositions, but plaintiff does not show that the information he seeks to present from a deposition could not have been presented in some other form during the administrative process. 7 it is not grounded on any reasonable basis. Finley, 379 F.3d at 1179 (quoting Kimber v. Thiokol, 196 F.3d 1092, 1098 (10th Cir. 1999)). Plaintiff benefits. 1155-66 bears the burden of proving eligibility for Hancock v. Metropolitan Life Ins. Co., 590 F.3d 1141, (10th Cir. 2009). USI does not bear the proving “facts supporting an exclusion of coverage.” 578 F.3d at 1193 n.5. abuse of discretion. burden of Holcomb, Plaintiff has the burden of showing an McClenahan v. Metropolitan Life Ins. Co., 416 Fed.Appx. 693, 697 (10th Cir. 3/21/2011). D. The denial of arbitrary or capricious. plaintiff’s claim by USI was not The court has reviewed the administrative record and finds that the decision to deny plaintiff’s claim was not arbitrary or capricious. The insurance policy provided that benefits would not be paid for a “disability resulting, directly or indirectly, from a pre-existing condition.” The term “pre-existing condition” is defined to include injuries, symptoms or physical findings for which medical care, treatment or advice is received during the three-month period that ended on the day before the insured became eligible for disability insurance policy. coverage under the long-term The administrative record shows that plaintiff reported symptoms of bilateral leg and back pain (among other non-disabling conditions) in January, February and 8 early March 2010. This falls in the three-month period ending before plaintiff became insured, regardless of whether plaintiff was employed on September 14 or 28, 2009. continued month employment. by month through the a end of plaintiff’s This leg and back pain was initially considered a symptom of peripheral vascular disease. 2010, The same symptoms diagnosis of spinal stenosis By August or September was considered. This diagnosis was more or less confirmed in early October 2010. It is the condition which plaintiff claims has disabled him from work. Plaintiff argues that the diagnosis of spinal stenosis did not arise until after he was eligible for long-term disability benefits. This is plaintiff’s true. argument But, conflates we agree “diagnosis” with with USI that “symptoms.” Under the terms of the policy a “pre-existing condition” is defined to include “symptoms” or “physical findings” which cause disability. The “symptoms” in this case were the bilateral leg and back pain which were regularly documented in medical records from January (medical 2010 record through dated September October 4, 2010. 2010 E.g., AR referencing at 514 10-month history of lower back and bilateral leg pain with numbness); AR at 399 (examination notes of Dr. Younger dated 1/11/2010 referencing backache, back pain (when walking) and calf pain (when walking)); AR at 426 (statement 9 of Dr. Poticha dated 3/4/2010 referencing plaintiff’s difficulty walking because of calf cramps and foot cramps). Claim documents filed in this matter also referred to plaintiff’s disabling condition stemming back to January 2010. AR at 516, 518. It may be argued that the symptoms in January and March 2010 were consistent with vascular disease not spinal disease, as noted in Dr. Poticha’s letter dated May 16, 2011 (AR at 263), and that plaintiff suffered a sudden onset of back pain in July 2010, which was the first symptom of spinal stenosis. 375. of AR at These arguments were not accepted by the separate reviews medical records Gregory Frey. conducted by Dr. Craig Heligman and Dr. Dr. Heligman concluded that the tests done for vascular disease (which did not indicate a significant case) and the treatments given for vascular disease (which did not reduce plaintiff’s symptoms) meant that the symptoms of leg pain originally identified as the result of vascular disease were related to low back and lumbar spine disease. AR at 117-118. Dr. Frey concluded that plaintiff’s bilateral lower leg cramps (claudication) were “primarily neurogenic claudication from lumbar spinal stenosis and distantly secondarily from vascular claudication,” and that these symptoms were treated during the three-month period prior to plaintiff’s eligibility under the insurance policy. AR at 149. 10 Dr. Charles Gordon wrote a short letter stating his belief that plaintiff’s “lumbar spinal stenosis was not symptomatic until late summer 2010” and that plaintiff’s “real problem” is spinal stenosis, not vascular problems. AR at 301. This letter does not substantially detract from the weight of the evidence supporting the denial of coverage. Dr. Gordon’s letter does not indicate a review of plaintiff’s medical history in the early months of 2010 or explain why the symptoms in late summer 2010 were substantially different from the symptoms reviewed by several doctors during the previous months of the year. In supports summary, the the decision court to finds deny that benefits. substantial Plaintiff evidence has not demonstrated circumstances showing that by reason of a conflict of interest or any other cause, the court should find that the decision to capricious. reject plaintiff’s claim was arbitrary or Therefore, judgment shall be entered in favor of USI upon its motion. In addition, defendant Assurant, Inc. shall be dismissed with prejudice. II. The court shall decline to exercise supplemental jurisdiction over plaintiff’s breach of contract claim against Frontier. This case was removed to this court from the state district court of Stevens County, Kansas. According to the notice of removal, plaintiff is an individual residing in the State of Kansas and defendant Frontier is a corporation duly organized 11 and existing under the laws of the State of Kansas with its principal place of business in Oakley, Kansas. Doc. No. 1. Plaintiff’s remaining claim in this case is a state-law breach of contract claim against Frontier. jurisdiction over this claim. The court has supplemental Under 28 U.S.C. § 1367(c)(3), the court may decline to exercise supplemental jurisdiction over a claim when it has dismissed original jurisdiction. all claims over which it has In Carnegie-Mellon University v. Cohill, 484 U.S. 343, 357 (1988), the court held that a district court, in deciding whether to remand, should weigh considerations of economy, convenience, fairness, and comity. The Tenth Circuit has stated that a district court “usually should” decline to exercise jurisdiction over remaining federal claims have been dismissed. state claims when all Smith v. City of Enid ex rel. Enid City Comm’n, 149 F.3d 1151, 1156 (10th Cir. 1998). In this case, the court has no reason to believe that economy or fairness will be impinged by remanding the state law claim. The same paperwork related to the motion may be considered by the state court. summary judgment Although this case is at a later stage in that a final pretrial order has been completed, this factor by itself is not decisive. See Koch v. City of Del City, 660 F.3d 1228, 1248-49 (10th Cir. 2011) cert. denied, 133 S.Ct. 211 (2012)(affirming claims at the later stages of a case). 12 remand of state law The state court may be a more convenient forum for plaintiff and not appreciably less convenient for Frontier. Finally, the principles of comity support having the state court decide a state law breach of contract claim. While Frontier has raised a defense of ERISA preemption which is a question of federal law, state courts have concurrent jurisdiction over many ERISA claims and have the authority to decide preemption questions. In summary, after due consideration, the court shall decline to exercise supplemental jurisdiction over plaintiff’s breach of contract claim against Frontier. III. Conclusion. The court shall grant the motion for summary judgment (Doc. No. 36) filed on behalf of defendant USI and defendant Assurant, Inc. The court shall direct that judgment be entered in favor of USI and that Assurant, Inc. be dismissed with prejudice. The court for shall not rule upon defendant summary judgment (Doc. No. 35). that plaintiff’s claims against Frontier’s motion The court shall further direct Frontier be remanded to the state district court for Stevens County, Kansas. IT IS SO ORDERED. Dated this 10th day of February, 2014, at Topeka, Kansas. s/ Richard D. Rogers Richard D. Rogers United States District Judge 13
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