Figueiredo v. Life Insurance Co. of North America

Citations: 709 F. Supp. 2d 144; 2010 U.S. Dist. LEXIS 56086; 2010 WL 2346652Docket: C.A. 09-165ML

Court: District Court, D. Rhode Island; June 8, 2010; Federal District Court

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Dora Figueiredo filed a lawsuit against Life Insurance Company of North America (LINA) challenging the termination of her long-term disability (LTD) benefits under an employee welfare plan. The case was removed to federal court under the Employee Retirement Income Security Act of 1974 (ERISA). LINA sought summary judgment, while Figueiredo countered with her own cross motion. The court determined that LINA's decision to terminate benefits would not receive deferential review and would be evaluated de novo. Following a thorough review of the administrative record and supplemental memoranda from both parties, the court denied LINA's motion for summary judgment and granted Figueiredo's motion.

Figueiredo, a 57-year-old employee of Osram Sylvania since 1988, participated in the company's LTD Plan, established under Group Policy No. LK 030043 with LINA effective January 1, 1999. The Policy required satisfactory proof of disability at the employee's expense and stipulated that benefits would cease when LINA determined the employee was no longer disabled. Benefits would automatically end at age 65 for Figueiredo. The Policy defined "Disability" in two stages: initially as the inability to perform all material duties of her regular occupation or earn more than 80% of indexed earnings, and subsequently, after 12 months, as the inability to perform any occupation for which she may be qualified.

Figueiredo's position as an Inspector involved physically demanding tasks, including lifting and moving inventory, with job requirements classified as "light" according to the Dictionary of Occupational Titles. Evaluations indicated that the role could require lifting up to 40 lbs. occasionally.

On September 24, 2001, Figueiredo consulted her general physician, Dr. Belarmino A. Nunes, for pain in her left knee and leg. An MRI conducted on October 11, 2001, revealed an undersurface tear of the lateral meniscus, leading to an arthroscopic partial lateral meniscectomy performed by Dr. Robert J. Fortuna on December 13, 2001. Figueiredo underwent physical therapy from January to April 2002 but discontinued after experiencing significant pain. As a Rhode Island resident, she initially received state temporary disability benefits and filed for long-term disability (LTD) benefits with LINA on March 1, 2002. Her claim was approved by Cigna Group Insurance on April 30, 2002, with payments beginning on March 24, 2002.

On April 1, 2002, Figueiredo had diagnostic imaging of her right shoulder, which showed no significant issues. Prior to her knee surgery, she had sought treatment for right shoulder and left upper back pain since January 24, 2000, receiving prescriptions for Naproxen and physical therapy. A follow-up MRI on June 1, 2002, indicated a new tear in her lateral meniscus. Dr. Fortuna noted Figueiredo's uncertainty about further surgery, and a second opinion from Dr. Hirsch suggested that additional surgery could worsen her condition.

Over the next three years, Figueiredo visited Dr. Fortuna approximately 30 times for knee issues and other complaints, including severe neck and arm pain. On May 22, 2002, Cigna informed her of the requirement to apply for Social Security Disability Insurance (SSDI), warning that failure to do so would lead to a reduction in her LTD benefits. Figueiredo was awarded SSDI on July 25, 2002, with her disability date recorded as September 24, 2001, and her first benefit month being March 2002.

Further imaging on November 25, 2002, revealed a degenerated C6-7 disc in her spine, with moderate narrowing and associated issues. A Physical Ability Assessment Form from Dr. Fortuna indicated limited capabilities in lifting and carrying. By December 30, 2002, Figueiredo reported worsening neck and right arm pain, with a physical exam showing significant difficulty in neck movement and numbness in her right hand.

Figueiredo's medical condition includes degenerative disc disease at C6-C7 and central disc herniation at C5-C6, accompanied by foraminal stenosis. An MRI from January 9, 2003, indicated mild degenerative changes and stenosis in the cervical spine. Dr. Fortuna prescribed physical therapy and pain medications, including Vicodin and Celebrex. Concurrently, Figueiredo consulted Dr. Nunes for persistent headaches, knee issues, neck pain, and arm pain. Dr. Fortuna confirmed a diagnosis of cervical radiculopathy with severe neck and arm pain on January 2, 2003, and Figueiredo was scheduled for further MRI evaluation.

Despite physical therapy, Figueiredo reported ongoing significant radicular symptoms down her right arm by February 6, 2003. On February 20, she consulted neurologist Dr. Levin, who noted intermittent right arm pain and numbness, but was unable to complete an EMG study. Dr. Levin suggested a history consistent with cervical radiculopathy, yet found no clear evidence of neuropathy.

Figueiredo engaged in additional physical therapy sessions in early 2003, experiencing reduced grip strength and numbness. LINA notified her on April 11, 2003, that benefits could not be considered without updated medical information. After Dr. Fortuna submitted the requested updates, LINA resumed benefits but continued to seek periodic medical assessments.

On December 10, 2003, Dr. Fortuna reported Figueiredo's severe functional limitations, indicating she could only perform sedentary work. An August 2005 PAA Form from Dr. Fortuna indicated Figueiredo could perform certain tasks continuously for significant portions of the day, while Dr. Nunes assessed her physical abilities as lower.

Figueiredo's August 22, 2005 PAA Form indicated that she had limited physical capabilities, being able to frequently perform simple or firm grasp with her left hand but only occasionally able to stand, walk, reach, or perform other tasks. Dr. Nunes deemed "Sitting" not applicable to her diagnosis and was unable to assess her ability for fine manipulation with her left hand. An MRI on November 9, 2005 showed no frank disk herniation but indicated lumbar discogenic changes, disc bulges, mild central stenosis, and neural foraminal narrowing. On February 14, 2006, physical therapist Stevan Simon evaluated Figueiredo and reported chronic low back pain with sciatic pain, limited movement, and severe guarding, recommending short-term therapy with a guarded prognosis due to the chronicity of her condition. Figueiredo participated in about four weeks of therapy, noting continued pain despite some mobility improvement. LINA notified her by letter on January 17, 2006, that her LTD benefits were terminated as of December 23, 2005, asserting she had the functional capacity to work and encouraging her to appeal with additional medical evidence. Figueiredo, through her attorney, appealed on April 11, 2006, providing medical reports. Following LINA's further review, it upheld the termination. Dr. Fortuna performed knee surgery on May 24, 2006, to address a meniscal cyst. An independent physician, Dr. Maria Hatam, reviewed Figueiredo's medical records and found she had sedentary level impairments but not light level due to knee issues. LINA then conducted a Transferable Skills Analysis (TSA), concluding that Figueiredo could perform jobs such as dowel inspector, nut sorter, tablet tester, or table worker, given her limitations and transferable skills.

Four occupations identified for Figueiredo are classified as "sedentary," requiring repetitive work, decision-making, data comparison, and adherence to specific standards, though the extent of physical manipulation needed is unspecified. LINA's records indicate ongoing back pain radiating to the right leg and a prior knee surgery on May 27, 2006, for a meniscal tear, occurring five months after her disability benefits ended. LINA, referencing Dr. Hatam's evaluation that Figueiredo was capable of sedentary work but not light work, upheld its denial of her claim in a June 20, 2006 letter, stating that the surgery did not substantiate continuous disability from December 23, 2005.

Figueiredo appealed the decision on July 18, 2006, promising additional medical evidence but later traveled abroad for two months. After submitting a letter from Dr. Fortuna in February 2007, claiming continuous disability since December 23, 2005, LINA, despite the appeal being late, accepted it and reviewed the case. On April 5, 2007, LINA reaffirmed the termination of her long-term disability benefits, citing insufficient clinical evidence of functional deficits from December 24, 2005, onward. LINA noted that while Figueiredo could not perform her job during her May 2006 surgery, the documentation did not indicate ongoing functional impairments preventing her from any occupation during the relevant period.

Additionally, Figueiredo's medical reports highlighted issues such as weakness in her left hand and severe cervical spine pain. In the month following the denial, identical affidavits from Dr. Fortuna and Dr. Nunes reiterated her continuous disability since December 23, 2005, with Dr. Nunes also asserting her total disability due to a degenerated C6-7 disc in a May 2, 2007 letter.

Dr. Nunes' examination on April 24, 2006, indicated cervical spine pain for Figueiredo, who later reported additional back and shoulder pain on November 27, 2006. LINA reviewed her medical documentation and issued a final denial on June 6, 2007, citing a lack of evidence of functional deficits from clinically measurable testing. The denial letters, including the June letter, informed Figueiredo of her right to pursue legal action under ERISA section 502(a). Subsequently, on December 18, 2008, Figueiredo filed her claim for long-term disability (LTD) benefits in Rhode Island Superior Court, which LINA removed based on ERISA preemption.

A hearing on cross motions for summary judgment was held on December 29, 2009, prompting the Court to direct the parties to submit memoranda on the appropriate standard of review. The Court found that LINA did not possess discretionary authority due to insufficient language in the Plan regarding the proof of disability, leading to a de novo review of LINA's decision on March 1, 2010. The Court instructed the parties to address whether LINA's termination of Figueiredo's benefits was in error and what remedies could be ordered if it was.

The Court determined that the de novo standard of review applies, requiring an independent assessment of the administrative record to establish if Figueiredo meets the Plan's definition of disability. In this context, the Court does not defer to LINA's conclusions and evaluates the issue from the perspective of the administrator. In summary judgment motions related to ERISA, the burden rests on the plaintiff to prove their disability as defined by the Plan, which necessitates demonstrating an inability to perform the material duties of any occupation for which they may be qualified based on their education and experience.

LINA contends that Figueiredo must provide satisfactory proof of being unable to perform any occupation solely due to her left knee injury. However, the Plan does not impose such a limitation. Figueiredo can qualify for continuing benefits if she demonstrates another disabling condition arose while she was deemed disabled under the Plan. The extensive medical records reveal that prior to her October 2001 knee surgery, Figueiredo experienced pain in her right shoulder and upper back. Following a second meniscal tear within six months of her initial surgery, she opted against further surgery based on a second opinion. Despite ongoing issues with her left knee, she underwent a second surgery in May 2006. Throughout her treatment, she consistently reported severe pain and difficulties with movement, particularly in her shoulders and back, leading to a diagnosis of cervical radiculopathy. She consulted Dr. Fortuna approximately 30 times and Dr. Nunes over a dozen times, and underwent multiple imaging studies that confirmed degenerative changes. Despite her other health issues, the predominant concerns were her neck and arm pain, often severe enough to prevent complete diagnostic testing. Figueiredo was prescribed strong pain medications and engaged in extensive physical therapy. Medical imaging supported her claims of pain, showing degenerative changes in her cervical spine, despite being described as "mild." LINA acknowledged her neck and arm pain but primarily focused on her knee injury in its assessments.

LINA's identification of four potential jobs for Figueiredo, which were categorized as "sedentary," lacks specific movement requirements and does not account for her difficulties with grasping and arm weakness. LINA acknowledged that following Figueiredo’s knee surgery in May 2006, she was unable to perform her job, yet claimed she did not provide evidence of ongoing functional deficits from December 23, 2005, to her surgery. LINA argued that the surgery did not demonstrate continuous disability from the earlier date. However, records indicate that Figueiredo suffered a meniscal tear and persistent pain in her left leg, alongside documented degenerative changes in her cervical spine. Dr. Nunes noted severe neck and arm pain during examinations, and physical therapy notes from February 2006 highlighted limitations in her range of motion and pain complaints. The evidence suggests Figueiredo's condition did not improve between December 2005 and May 2006, contradicting LINA's conclusion of no disability. The First Circuit has established that SSA disability determinations are not binding on disability insurers, although they may be relevant. LINA had initially approved Figueiredo’s long-term disability benefits but later deemed her not disabled based on perceived functional capacity for sedentary work. Although Dr. Nunes reported her as "totally disabled," there is no record of SSA confirmation of this status. Despite the lack of SSA determination, the Court finds sufficient evidence supporting Figueiredo's disability claim, noting her extensive consultations with healthcare professionals and ongoing severe pain from her conditions. The Court also retains considerable discretion in remedying any errors in terminating her benefits.

The court possesses "considerable discretion" in determining remedies for denied benefits, as established in Cook v. Liberty Life Assur. Co. of Boston. Typically, remedies include remanding the case for reevaluation or awarding retroactive benefits. Remand is appropriate if the insured's disability ended previously, as retroactive benefits could lead to an economic windfall. Conversely, if the insured would likely continue receiving benefits or there’s insufficient evidence for termination, retroactive reinstatement is warranted. 

In the case of Figueiredo, the court conducted a de novo review and concluded she was unjustly denied benefits under the Plan. Thus, retroactive benefits are awarded from December 23, 2005, onward, and will continue unless she fails to prove her ongoing disability. It is noted that Figueiredo’s condition is unlikely to result in an economic windfall, with more than 90% of her disability payments sourced from the SSA, leaving LINA to contribute only the minimum of $100 monthly under the Plan. Following the restoration of her benefits, Figueiredo must demonstrate her disability status; failure to prove she cannot perform "any occupation" could lead LINA to terminate her benefits again.

The court denied LINA's motion for summary judgment and granted Figueiredo's, awarding her benefits retroactively and on an ongoing basis until her eligibility changes. Additional notes clarify that Figueiredo dismissed claims against Osram and Cigna and highlight ambiguities in medical evaluations regarding her ability to work. LINA's renewed argument focused on deferential review without contesting the potential remedies available.