Viti v. Guardian Life Ins. Co. of America

Citations: 817 F. Supp. 2d 214; 2011 U.S. Dist. LEXIS 100475; 2011 WL 4005292Docket: 10 Civ. 2908 (CM)(MHD)

Court: District Court, S.D. New York; August 31, 2011; Federal District Court

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Joseph Viti filed a lawsuit against The Guardian Life Insurance Company of America under 29 U.S.C. § 1132(a)(1)(B) of ERISA, contesting Guardian's denial of his disability benefits claim due to post-traumatic stress disorder resulting from witnessing the 9/11 attacks. Guardian denied the claim, citing Viti’s mental illness as the basis for the decision. The insurance policy required that any appeal be submitted in writing within six months of the denial, but Viti failed to appeal until more than seven months later. His wife requested an extension due to his mental condition, which Guardian denied. After receiving Social Security disability benefits in 2009, Viti sought reconsideration of the appeal timeframe, but Guardian again declined. Viti subsequently filed this action in April 2010, seeking a court directive for Guardian to review his claim as mandated by ERISA.

Guardian moved to dismiss the complaint, arguing it was barred by the plan’s three-year statute of limitations and Viti's failure to exhaust administrative remedies. They also sought summary judgment, asserting that their claim determination was not arbitrary. Viti cross-moved for summary judgment based on submitted evidence. The court granted Guardian's motion to dismiss the Third and Fourth Causes of Action and denied Viti's cross-motion for summary judgment on those counts. The decision highlighted the unresolved issue in the Circuit regarding the applicability of equitable tolling to contractually established limitations periods.

Two statutes of limitations apply in this case: a six-month period for filing an administrative appeal from an adverse ruling and a three-year period from the initial claim filing to commence any related lawsuit. Without equitable tolling, Guardian would be entitled to dismiss the first two Causes of Action for being time-barred, as the lawsuit was not filed within three years after the plaintiff's benefits claim submission. However, if equitable tolling is applicable, the plaintiff may have a minimal basis to argue that the lawsuit is timely, contingent upon further factual development. 

Should the lawsuit be deemed timely, a separate issue arises regarding whether the six-month limitation for exhausting administrative remedies prevents the plaintiff from pursuing claims that suggest he needed more time for such exhaustion. The Second Circuit has refrained from resolving this significant issue, which remains unaddressed in this court unless equitable estoppel is established to make the lawsuit timely. Consequently, all motions regarding the First and Second Causes of Action are denied without prejudice, and the matter is referred to Magistrate Judge Michael A. Dolinger for a hearing on equitable estoppel. Following this hearing, motions should be resubmitted, focusing on the relevant legal issues if a toll of at least 205 days is granted.

The Plan in question is maintained by Sterling for its employees, funded by a Group Policy from Guardian, which administers the Plan and has authority over claim determinations. "Disability" is defined within the Plan as being unable to perform full-time job duties or earn above a specified income due to a current sickness or injury. Specific exclusions apply if the covered person works for wage or profit during certain periods.

Viti's condition began in January 2005, leading to reduced work attendance, and worsened until he was incapacitated in October 2005, resulting in a prolonged period of severe illness.

Viti's Complaint alleges a decline in his self-care and interest in activities, culminating in a diagnosis of General Anxiety Disorder by psychiatrist Dr. Formento in February 2006. Treatment involved counseling and medication, leading to some initial improvement allowing Viti to work part-time. However, his condition worsened, preventing him from maintaining a work schedule. Dissatisfied with Dr. Formento's treatment, Viti switched to Dr. Staniazek in July 2007, although he continued to experience severe panic attacks and agoraphobia.

In support of his disability claim, Viti submitted an Attending Physician Statement from Dr. Formento dated June 10, 2006, indicating his first date of disability symptoms as October 5, 2005, and noting that his first evaluation occurred on February 22, 2006. Guardian, responding on August 3, 2006, requested additional medical certification for Viti's claimed disability beginning from when he first became unable to work, since he had not been treated until February 2006. Though Viti's response was slightly delayed, he provided the requested tax documents and an additional Attending Physician Statement dated August 19, 2006. Ultimately, Guardian denied Viti's claim on November 3, 2006, citing insufficient medical certification of a disability as of the date he stopped full-time work.

Guardian's correspondence indicated that Viti claimed to have ceased full-time work on October 1, 2005, but could not provide an exact date. His attending physician, Dr. Juan Formento, began treating him for Generalized Anxiety Disorder on February 22, 2006, and released him to return to work on May 30, 2006. However, since Dr. Formento did not treat Viti for his condition until months after his claimed disability began, he could not backdate the certification. Consequently, Guardian denied Viti's claim for long-term disability coverage, stating a lack of physician certification and documentation of his last full-time work date. Along with the denial, Guardian provided Viti with instructions for appealing the decision, requiring a written request within 180 days. Viti did not appeal by the May 3, 2007, deadline, as he had hidden the denial letter and only his wife discovered it later. She requested an extension for the appeal before June 26, 2007, which Guardian denied. Viti subsequently applied for Social Security disability benefits on August 15, 2007, citing a disability starting October 2, 2005. Administrative Law Judge Hillegas found Viti entitled to benefits but noted his ability to perform some job tasks despite his condition. Over a year later, Viti's counsel requested Guardian reconsider their denial of the appeal extension, arguing that Viti's mental condition hindered his participation in the appeals process.

Counsel for Viti submitted a letter accompanied by ALJ Hillegas' decision granting Viti Social Security disability benefits, signed statements from Viti and his therapists, Dr. Formento and Dr. Staniazek, asserting Viti's inability to participate in the appeal process due to his mental condition. On November 2, 2009, Guardian denied a request to extend the appeal period based on Viti's non-compliance with established procedures. Viti filed an original Complaint on April 5, 2010, followed by an Amended Complaint in August 2010, which includes five Causes of Action. 

In the First Cause of Action, Viti claims his mental condition should have allowed him to appeal past the May 1, 2007 deadline, arguing that Guardian’s adherence to the deadline violated his rights under 29 U.S.C. § 1133. The Second Cause of Action alleges Guardian breached its fiduciary duty under ERISA, 29 U.S.C. § 1104(a)(1), by failing to review his claim due to his inability to meet the deadline. The Third and Fourth Causes of Action assert wrongful withholding of Viti's claims file and related documents in violation of ERISA, seeking a penalty of $100 per day for non-compliance. The Fifth Cause of Action contends Guardian violated its fiduciary duty by accepting premium payments from Viti since October 2005 while he was disabled.

Guardian has filed motions to dismiss the complaint, arguing it is time-barred and that Viti failed to exhaust administrative remedies. Alternatively, Guardian claims its decision was not arbitrary and capricious, justifying summary judgment. Viti has cross-moved for summary judgment on the first four Causes of Action, with no motions filed regarding the Fifth Cause of Action. The standard for a complaint to survive a motion to dismiss requires sufficient factual matter to plausibly state a claim for relief.

On a motion to dismiss under Rule 12(b)(6), a plaintiff's factual allegations are accepted as true, with reasonable inferences drawn in their favor. Facial plausibility requires factual content that allows for a reasonable inference of the defendant's liability, moving beyond mere labels or formulaic recitations of legal elements. The assessment of a complaint's plausibility is context-specific, relying on judicial experience and common sense. A district court's review is limited to the allegations within the complaint but can consider attached documents or those incorporated by reference. If external matters are presented and not excluded, the motion must be treated as one for summary judgment, with the court having discretion on whether to accept such materials.

Guardian's Motion to Dismiss is based on two grounds: first, that Viti's First and Second Claims are time-barred due to a failure to exhaust administrative procedures; second, that Guardian is not a proper defendant for the Third and Fourth Causes of Action. Regarding statutes of limitations, ERISA lacks a federal statute, leading courts to apply the most analogous state limitations statute. In New York, a six-year statute applies to ERISA denial of benefits claims; however, parties can agree to a shorter limitations period. This Plan specifies a three-year limitation for legal actions, starting 60 days after filing proof of loss, overriding the default six-year period.

The Second Circuit has upheld the enforceability of short limitations periods that commence before a plaintiff can file a suit, specifically in the context of filing proof of loss. In Burke v. PriceWaterHouseCoopers LLP, it was established that the limitations period begins when proof of loss is filed, which is considered complete when the file is ready for adjudication. In Viti's case, the three-year limitations period began on September 14, 2006, when his claim was complete, meaning he had until September 14, 2009, to file a lawsuit. Viti filed his lawsuit on April 5, 2010, which is 205 days beyond the deadline. 

Viti argues that his lawsuit is not an appeal of a denial of benefits but rather a request for Guardian to consider his appeal and address ERISA violations. He cites Terry v. Unum Life Insurance Company, where the limitations period did not apply because it involved a policy rescission rather than a denial of benefits. However, the court distinguishes Viti’s situation, noting that he is indeed seeking benefits after a denial, which falls squarely within the contractual limitations framework. The court emphasizes that Viti's claim cannot be recharacterized to circumvent the expired limitations period. The essence of the ruling is that absent equitable tolling, Viti cannot revive his time-barred claim by framing it as something other than a denial of benefits.

Viti's claims in the First and Second Causes of Action hinge on his filing of a Proof of Loss, which places them outside the scope defined by the case Terry. He contends that he seeks an order for Guardian to hear his appeal rather than to overturn Guardian's denial of benefits. However, his appeal is a late attempt to contest the original denial, which Guardian refused to entertain due to its untimeliness. The Second Circuit's interpretation in Terry indicates that Guardian's decision not to accept this late appeal is integral to the benefits determination, thus the contractual limitations period applies to Guardian's refusal. If otherwise, the statute of limitations for ERISA claims could be circumvented by simply reclassifying late applications.

Viti also argues for an extension of the limitations period under CPLR § 208, which permits tolling for individuals deemed "insane" at the time the cause of action accrues. He claims he was "insane" when Guardian denied his claim and that this status continues to toll the statute. However, Guardian counters that the statutory tolling cannot modify the Plan's explicit three-year limitations period, which lacks any tolling provisions. While Viti cites the Second Circuit's acknowledgment of applying CPLR § 208 in ERISA cases, Guardian argues that this case should not rely on Viti's equitable toll request, as it overlooks the Plan's terms. Viti's assertion that state law governs the statute of limitations is also noted, establishing a basis for his argument regarding tolling.

The statute of limitations in this case is defined by contract rather than state law, as established by the Second Circuit in Burke. Consequently, CPLR § 208 does not apply, and the argument that it tolls the limitations period from September 14, 2006, to the present under its "insanity" provision is rejected. While CPLR's limitations and tolling provisions are not relevant to insurance contracts, the doctrine of equitable tolling must still be considered. 

Equitable tolling allows courts to extend a statute of limitations if inequity would otherwise result. To qualify, a petitioner must show diligence in pursuing rights and that extraordinary circumstances hindered timely filing. Such circumstances may include medical conditions or mental impairments. A district court must assess whether the petitioner acted with reasonable diligence and if the circumstances justify tolling. 

The Second Circuit has not definitively ruled that equitable tolling applies to ERISA plan time limits, despite acknowledging its relevance in Social Security contexts and Equal Employment Opportunity cases. There is a notable distinction in that the administrative remedies in those cases are statutory, whereas this case involves a private contract. The court suggests that the Second Circuit might permit equitable tolling for ERISA plan limits if adequately justified, given its general openness to tolling under appropriate circumstances, albeit with a high threshold for plaintiffs.

The Circuit generally leans against interpreting equitable tolling of contractual limitations periods as a "rewriting" of contracts, in contrast to other circuits. Various district courts within this Circuit have accepted that periods for exhausting administrative remedies defined in plan documents can be equitably tolled, as seen in cases like Tiger v. AT&T Techs. Plan and Barnett v. IBM Corp. Courts may consider equitable factors when deciding whether to dismiss claims based on failure to exhaust these remedies. While the Circuit has cautioned against rewriting clear contract terms, equitable tolling functions similarly to suspending statutes of limitations rather than altering contractual obligations. The distinction lies in the nature of ERISA benefits plans, which are often imposed rather than negotiated, possibly leading the Court of Appeals to view them more like statutes than commercial contracts. Nonetheless, the court need not resolve this complex issue if the plaintiff cannot demonstrate entitlement to equitable tolling based on the case's facts. Establishing eligibility for tolling is challenging; the plaintiff must show "reasonable diligence" during the tolling period. The assessment of mental disability justifying tolling is case-specific, requiring detailed evidence of how the condition impaired the plaintiff's ability to pursue rights. If the claimant establishes any period of incapacitation, it may support their case for equitable tolling.

The district court assesses whether equitable tolling applies based on the specific circumstances of a case, emphasizing that it is not automatically granted even if a plaintiff experiences incapacity. A plaintiff with chronic mental illness must prove actual impairment during the relevant period. Courts have consistently denied equitable tolling when a plaintiff has shown the ability to pursue legal rights during that time. In this instance, the court found that Viti, who sought disability benefits under his ERISA policy starting in 2006, was actively engaged in protecting his rights, evidenced by his timely submissions of medical and employment documents and his application for Social Security disability benefits in 2007. Although Viti was ultimately deemed unable to work, this did not equate to an inability to protect his legal rights. The Administrative Law Judge's findings indicated Viti could understand and follow moderately complex instructions despite experiencing panic attacks, contradicting his claim for equitable tolling. After receiving Social Security benefits in 2009, Viti sought to reopen his claim with Guardian, which was denied, and he subsequently filed this lawsuit five months later. Overall, the evidence did not support Viti's assertion that his mental illness prevented him from protecting his legal rights during the applicable limitations period from September 14, 2006, to September 14, 2009.

The court acknowledges Viti's mental illness and inability to work but emphasizes that these factors do not justify equitable tolling. The critical issue is whether Viti was so disabled that he could not protect his legal rights. Since Viti actively pursued his rights, including applying for Social Security disability benefits with assistance, he is not entitled to equitable tolling. The court references established cases where actions taken by plaintiffs, despite mental illness, indicated competence to pursue legal rights. Additionally, although an Administrative Law Judge deemed Viti "disabled" under the Social Security Act from October 2005, this standard does not equate to being incapable of protecting one's interests. The ALJ's findings do not support the notion that Viti was completely incapacitated. The court notes Viti’s severe behavior in the first months after ceasing work, as described in his wife's affidavit, but highlights that this period ended in June 2006, prior to the three-year limit for filing the lawsuit that began in September 2006. Consequently, the evidence does not adequately establish a timeline that would allow for equitable tolling.

The duration and ongoing nature of Viti's condition remain unclear, particularly regarding its impact on his ability to act during the limitations period. Testimony indicates that Viti became housebound after October 2005, raising questions about his capacity to communicate with the plaintiff concerning disability benefits. Despite some periods of communication, such as his pursuit of Social Security Disability Insurance (SSDI) beginning in 2007 and efforts to address a long-closed ERISA case in late 2009, Viti has not sufficiently linked his inaction to an inability to act during specific timeframes, placing the burden of proof on him. A notable incident cited is Viti's act of hiding the denial letter in a drawer, which raises questions about his mental capacity to protect his rights at that time. The relevant timeframe for potential tolling of the limitations period spans from November 6, 2006, when Viti received the denial letter, to late May 2007, when it was discovered by his wife. While Viti’s mental health issues, including agoraphobia and anxiety, may have persisted during this period, there is insufficient specific evidence detailing his behavior. The court acknowledges precedents that support tolling under similar circumstances and finds sufficient grounds to refer the case to a United States Magistrate Judge for a hearing. The Magistrate will assess whether a temporary toll on the statute of limitations is warranted and determine the appropriate end date for such tolling.

The excerpt outlines the procedure mandated by the Second Circuit in Chapman, focusing on the doctrine of equitable tolling, which requires a plaintiff to demonstrate reasonable diligence. The court found no evidence that the plaintiff was unable to protect his interests after discovering a relevant letter. Following this discovery, the plaintiff engaged with Guardian regarding an appeal and applied for Social Security Disability Insurance (SSDI) benefits, which he received. However, the delay in hiring an attorney and the choice to address Guardian's denial only in late 2009 indicate a lack of reasonable diligence in pursuing the lawsuit. The plaintiff’s moving papers fail to justify why the Guardian issue could not have been raised during the 2007-2008 period while SSDI benefits were being sought. Additionally, the plaintiff's attorney delayed filing the action by five months after receiving a response from Guardian regarding a hearing request. The court emphasizes that a lack of diligence on the attorney's part does not excuse the plaintiff from the statute of limitations. 

The excerpt also discusses the separate six-month contractual limitations period for filing an appeal from a denial of benefits, which the plaintiff missed (from November 3, 2006, to May 3, 2007). The court lacks jurisdiction to hear the case unless the plaintiff can establish grounds for equitable tolling of this period. Guardian argues for dismissal based on the plaintiff's failure to file a timely appeal and exhaust administrative remedies, noting that the opportunity for a timely appeal coincided with the letter being hidden. After the letter was found, the plaintiff attempted a late appeal, which Guardian refused to accept. The court invites Magistrate Judge Dolinger to consider whether the plaintiff's failure to act diligently in relation to Guardian's denial impacts the possibility of equitable tolling. Parties will have the opportunity to object to the Magistrate Judge's report once filed.

Guardian has denied the plaintiff the benefit of equitable tolling regarding the six-month appellate limitations period, asserting that the plaintiff's medical condition does not warrant such tolling. The court finds this issue complex but prefers not to address it unless necessary, indicating that it will revisit this point after Magistrate Judge Dolinger's hearing and report. Guardian's Motion to Dismiss Viti's Third and Fourth Causes of Action is granted. These causes allege violations of ERISA 29 U.S.C. 1132(c)(1)(B) for failing to provide Viti with his claims file and related documents. The Third Cause of Action seeks a court order for compliance, while the Fourth seeks sanctions for non-compliance. Unlike the First and Second Causes of Action, these claims do not hinge on a Proof of Claim and thus avoid statute of limitations issues.

Guardian argues that the claims are improperly directed against them as the claims administrator, rather than the plan administrator as required by law. The court agrees, noting that under ERISA, sanctions for non-compliance with disclosure requests can only be imposed on the designated plan administrator, which is not Guardian, but rather the insurer and claims administrator. Citing case law, the court emphasizes that ERISA's disclosure obligations rest solely with the designated plan administrator, thus Guardian cannot be held liable under the statute.

ERISA mandates that participants be informed about the financial obligations to fund plans, designating the "administrator" as responsible for this disclosure, rather than all fiduciaries. Under ERISA, the "administrator" is defined as either the person specifically designated in the plan's governing document or, if not designated, the plan sponsor. In this case, the plan sponsor is Sterling, and since no administrator is designated in the Plan document, the duty of disclosure falls to Sterling. Consequently, Viti's requests for documentation from Guardian, as well as for statutory damages under 29 U.S.C. 1132(c)(1), are deemed without merit, leading to the dismissal of the Third and Fourth Causes of Action. Furthermore, even if the plan administrator fails to produce requested documents, they are not subject to penalties under 29 U.S.C. 1132(c)(1). The Second Circuit has clarified that the documents administrators must disclose are limited to those formally governing the plan, which does not encompass the types of documents Viti requested. Viti's failure to counter Guardian's arguments suggests concession to their validity. The court grants Guardian's motion to dismiss the claims and denies Viti's motion for summary judgment on those counts. No separate judgment will be entered, and all motions related to the First and Second Causes of Action are denied without prejudice. The case is referred to Judge Michael Dolinger for further proceedings on equitable tolling. The court notes Viti's lack of specificity regarding event dates.

The letter submitted as part of Viti's motion, dated "6-07," does not specify whether it was sent on June 1, June 30, or any date in between, placing the burden on the plaintiff to establish relevant dates. A failure to do so may hinder the claim for equitable tolling. Viti's motion lacks specific dates regarding his return to work, only noting it occurred in May 2006. The Court has attempted to deduce relevant dates from the documentary evidence due to this lack of specificity. The administrative record includes statements from Viti, his wife, and a signed letter from social worker Marisa L. Montalvo, but no statement from psychiatrist Dr. Alina Staniazek has been found in the record. 

If CPLR 208 were applicable, the plaintiff would face a stringent burden of proof regarding the statutory toll, as New York courts define "insanity" narrowly, applying it only to individuals unable to protect their legal rights due to a complete inability to function. The Court references precedent indicating that conditions like apathy, depression, or psychological trauma do not suffice to invoke tolling under CPLR 208; rather, the plaintiff must be totally unable to function due to a severe disability. As CPLR 208 does not apply in this case, the Court does not assess whether the evidence meets this high standard. 

The denial of benefits letter, dated November 3, 2006, is presumed to have been received three days later, initiating any temporary toll on or about November 5, 2006. The Court clarifies that it has not pre-determined the applicability of equitable tolling in private contracts; without it, the lawsuit is deemed untimely and should be closed.