Jones v. Aetna U.S. Healthcare

Citations: 136 F. Supp. 2d 1122; 2001 WL 314627Docket: CV 00-08065 FMC (AIJx)

Court: District Court, C.D. California; April 16, 2001; Federal District Court

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Rosemary Jones filed a lawsuit against Aetna U.S. Healthcare and the Republic New York Corporation Employee Welfare Benefit Plan under the Employee Retirement Income Security Act (ERISA) for wrongful denial of long-term disability (LTD) benefits. The case was heard in the United States District Court for the Central District of California, with oral arguments presented on March 20, 2001, after both parties filed cross-motions for summary judgment.

Jones worked as an Assistant Treasurer for the Republic Bank of California from August 4, 1986, to May 4, 1998, earning an annual salary of $45,542. Her job involved significant computer work, customer relations, and occasional lifting of boxes weighing between 6 to 20 pounds. As part of her employment benefits, Jones was covered under the Republic New York Corporation Employee Welfare Benefit Plan, with Aetna providing and administering LTD coverage.

To qualify for LTD benefits, employees must meet specific eligibility criteria outlined in the Group LTD Policy, which allows Aetna discretion in determining benefit entitlement and interpreting policy terms. The policy mandates that disability benefits may end if an independent medical report does not confirm the disability. Jones could only access LTD benefits after a six-month waiting period following her disability certification, making her eligible on November 4, 1998. The policy defines disability in the first 24 months as the inability to perform the material duties of one’s own occupation, shifting to any reasonable occupation thereafter. Jones had a history of chronic fatigue stemming from injuries sustained in a car accident in the early 1990s.

Jones began experiencing back pain in August 1994, attributed to poor ergonomics at her workstation, and subsequently developed sleep disorders, chronic fatigue, and general aches. After contracting viral pneumonia in May 1998, her symptoms worsened, leading her to seek treatment from Dr. Daniel Wallace, who diagnosed her with Fibromyalgia Syndrome and bronchitis, certifying her as disabled effective May 21, 1998. Following this, Jones stopped working due to her symptoms and was approved for short-term disability benefits by Aetna.

In June 1998, Dr. Stuart Silverman, a rheumatologist, confirmed Dr. Wallace’s diagnosis of fibromyalgia and supported Jones' participation in a self-management program at Cedars Sinai Medical Center, extending her disability during rehabilitation. After completing a six-week pain management program with limited improvement, Jones was diagnosed with early Systemic Lupus Erythematosus (SLE) in October 1998. Aetna subsequently approved her for long-term disability benefits effective November 4, 1998.

Aetna conducted an Independent Medical Exam (IME) with Dr. Michael Lupo, who determined that Jones could return to full-time work with permanent physical restrictions, recommending regular rest breaks and indicating that her treatment was appropriate. Dr. Lupo noted that Jones could perform sedentary work, not exceeding ten pounds of lifting. Additionally, Dr. Kamran Hakimian provided a Functional Capacity Report stating that Jones could handle light duty work with adequate rest, reporting mild to moderate symptoms during activity and improvement with physical therapy. Aetna referred Jones to Vocational Rehabilitation to assist in her return to the workforce.

The Rehabilitation Plan from February 17, 1999, involved vocational specialist Debbie Curtis aiding Jones in finding suitable employment, defined as a job aligning with her physical restrictions and skills, earning at least 60% of her predisability income. Despite her refusal to sign the plan, Jones submitted job contact logs to Aetna. A Labor Market Survey from February 11, 1999, identified available jobs within her rehabilitation parameters but noted the difficulty employers would have accommodating her work restrictions due to the competitive Southern California job market. Curtis highlighted concerns regarding employers' willingness to allow frequent breaks. 

During a January 20, 1999 meeting, Curtis observed significant swelling in Jones' joints and noted her limited ability to perform physical tasks. Jones frequently requested the basis for Aetna's determination that she could work under restrictions, seeking access to her insurance policy and relevant medical reports under ERISA. Aetna declined to release this information while she was still receiving benefits, stating that such disclosures would only occur upon a claim denial. Jones reiterated her concerns about Aetna not considering her doctors' opinions and again requested the plan document.

In May 1999, Curtis reported that Jones was making 16-20 resume contacts weekly with few responses. On June 3, 1999, Dr. Dennis Ainbinder, an orthopaedic surgeon, assessed Jones, noting severe pain affecting her cervical spine and lower back, exacerbated by various movements. Although her physical examination showed a normal gait and no significant abnormalities in her wrists, Ainbinder diagnosed her with Overuse Syndrome and cervical and myofascial sprains, concluding that she remained temporarily totally disabled and should follow up in four weeks. He also referred her for further evaluation of Fibromyalgia.

On June 4, 1999, Dr. Salick confirmed that Jones suffers from Upper Extremity Overuse Syndrome and Chronic Back Pain due to cumulative work-related trauma, which led to a sleep disorder and progressed to Chronic Fatigue Syndrome and Fibromyalgia, diagnosed by rheumatologists Drs. Wallace and Silverman. Additionally, Jones was diagnosed with Systemic Lupus Erythematosus (SLE) two years prior. Despite normal laboratory tests, she exhibits a classic malar rash indicative of SLE and meets all criteria for Fibromyalgia. Jones is classified as temporarily and totally disabled due to her conditions and requires various medications.

On July 1, 1999, Dr. Lupo conducted a follow-up examination and concluded that while Jones suffers from Fibromyalgia, depression, and mild SLE, she could return to work on a full-time basis with permanent restrictions limiting her to sedentary or light work, prohibiting climbing, crawling, or stooping, and requiring regular breaks.

Aetna terminated Jones' benefits effective July 2, 1999, initially notifying her by phone and requesting a written request for the Independent Medical Examination (IME) report. On August 4, 1999, Aetna formally denied her claim, stating that the IME indicated she could return to her previous sedentary work. They invited her to submit additional medical information or a narrative report for reconsideration and informed her of her right to appeal.

Jones appealed the denial on September 2, 1999, including a letter from Dr. Silverman and reports from Drs. Ainbinder and Salick.

Jones expressed dissatisfaction with Aetna's management of her case, particularly regarding the denial of her requests for information, which she asserts is her contractual right. She referenced Aetna's "Approved Rehabilitation Program" and described her significant efforts over the past 5½ months to find work, emphasizing that Aetna did not consider the stress it caused to her health. Jones highlighted instructions from Aetna's vocational counselors that prevented her from disclosing her need for frequent breaks and her disability status to potential employers, negatively impacting her employment prospects. She contested Aetna's claim that she could return to a sedentary job with hourly breaks, noting that her previous job did not accommodate such conditions, leading to her termination.

On September 3, 1999, Dr. Silverman contested the termination of Jones' disability benefits, asserting she was unable to perform her former job due to severe pain and functional limitations that hindered her daily activities. He described her physical challenges and concluded that her fibromyalgia rendered her incapable of maintaining a regular work schedule.

Aetna later submitted updated medical records and surveillance footage of Jones from April 1999 to Dr. Lupo for evaluation. On December 6, 1999, Dr. Lupo reviewed the surveillance, which showed Jones engaging in various activities, including shopping and socializing, without apparent signs of distress or change in her appearance. The video indicated she was able to perform certain movements, such as getting in and out of a car and bending over, while maintaining a normal gait.

Dr. Lupo reviewed multiple reports regarding Jones, including those from Drs. Ainbinder, Salick, and Silverman, and concluded that Jones' self-reported deficits did not align with activities observed on a videotape. He previously opined that Jones could return to work at a sedentary or light level, supporting this with the videotape evidence. Although he recommended regular rest breaks due to endurance limitations, he noted that the tape did not show significant changes in her activity or appearance, suggesting she may not need breaks as frequently as previously advised. 

On December 14, 1999, Aetna obtained a physical demands analysis of Jones' former job, which indicated that she occasionally lifted up to 20 pounds. Aetna issued a final denial of Jones' claim on January 19, 2000, characterizing her former position as light duty involving computer work, phone calls, and using office equipment. Aetna's denial letter stated that Dr. Robert Bonner, Aetna’s Medical Director, reviewed various medical reports, including Dr. Lupo's evaluations which indicated mild fibromyalgia symptoms but deemed Jones capable of returning to work full-time in a light capacity. The letter detailed surveillance results showing Jones was active over three days and highlighted Dr. Salick’s normal examination findings compared to Dr. Ainbinder's subjective assessment of disability. Aetna concluded that Jones was functionally capable of performing her previous job duties.

Summary judgment is appropriate when the evidence, including pleadings, depositions, and affidavits, demonstrates no material fact disputes, entitling the moving party to judgment as a matter of law, per FED. R. CIV. P. 56(c). The moving party must initially show the absence of any genuine issue of material fact, and if successful, the opposing party must present specific facts demonstrating such an issue exists, as outlined in FED. R. CIV. P. 56(e). Summary judgment may be granted if the nonmoving party fails to adequately demonstrate an essential element of their case.

Under ERISA § 502(a)(1)(B), participants have the right to recover benefits due under their plan, but the statute does not specify a review standard for courts in benefits disputes. The Supreme Court established in Firestone Tire & Rubber Co. v. Bruch that the review standard hinges on whether the plan grants discretionary authority to the administrator regarding benefits eligibility. If such discretion is granted, courts apply a deferential abuse of discretion standard rather than a de novo review.

In situations where a plan administrator, like Aetna, has a dual role as both funder and administrator, an inherent conflict of interest arises. This conflict must be considered as a factor in determining potential abuse of discretion. If an actual conflict is proven, the review remains under the abuse of discretion standard but is conducted with heightened scrutiny, making it less deferential.

The burden of proof regarding an actual conflict of interest falls on the affected beneficiary, who must present material evidence showing that the fiduciary’s self-interest led to a breach of fiduciary duties. If this burden is not met, a standard abuse of discretion review is applied. Conversely, if the beneficiary successfully demonstrates a conflict, the court must scrutinize the administrator's discretion more closely. The review of a plan administrator’s decision must be based solely on the Administrative Record at the time the benefits claim was made, preventing the introduction of additional evidence that was not considered at that time, as this would undermine ERISA's goal of resolving disputes efficiently. Both parties in the case sought to introduce evidence outside the Administrative Record, which the court declined to consider. Under the abuse of discretion standard, the administrator's decisions will not be disturbed if they are reasonable, but they must be supported by a reasonable basis and substantial evidence. The court emphasizes that an ERISA administrator's decision should not lack explanation or conflict with the plan’s language, and heightened scrutiny applies when the administrator also serves as the funding source.

Jones must provide evidence showing that Aetna's self-interest led to a breach of fiduciary duty regarding her disability claim. Aetna's retained medical examiner, Dr. Lupo, acknowledged Jones' fibromyalgia, depression, and mild SLE but concluded she could work with restrictions, including needing ten minutes of rest per hour and not lifting over ten pounds. Aetna determined that Jones was not disabled under the Plan, arguing she could perform the 'material duties' of her job, which included lifting boxes up to 25 pounds occasionally, defined as up to 33% of the workday. However, there was no evidence regarding how much time Jones actually spent lifting heavy items or whether her job could be performed without that lifting, given her restrictions.

Jones countered with evidence indicating her inability to fulfill her job duties due to Aetna's imposed restrictions. A Labor Market Report from 1999 suggested that most employers in Southern California could not accommodate her work limitations. A vocational specialist confirmed the unlikelihood of employers tolerating her restrictions, and Jones reported that she was advised not to disclose her need for breaks to potential employers. Additionally, she attempted to find work by sending out 16-20 resumes weekly without success, and her appeal letter noted that her restrictions led to her termination from a job held for over twelve years, a fact Aetna did not contest.

The court questioned the validity of Aetna's reliance on the opinion of its 'independent' medical examiner for terminating benefits, especially since all of Jones' treating physicians had concluded she was disabled. Dr. Silverman stated she couldn't return to her former occupation, while Dr. Salick attributed her condition to cumulative trauma from her work. Although Dr. Bonner, Aetna's Medical Director, reviewed the case and supported the return to work with restrictions, he did not examine Jones himself. Generally, the opinions of treating physicians hold more weight than those of non-treating physicians in ERISA disability cases. The provision allowing a non-treating physician to have complete authority raises concerns about its validity and may be scrutinized negatively in judicial reviews of Aetna's decisions.

Jones claims Aetna neglected her requests for relevant documents related to her case, violating ERISA regulations that mandate a structured appeal process for denied benefits. ERISA Section 503(2) and 29 C.F.R. 2560.503-1 require that claimants or their representatives have a reasonable opportunity to appeal denials, review pertinent documents, and submit written comments. Additionally, Section 1024(b)(4) of Title 9 U.S. Code obligates Aetna to provide plan documents upon request. Although procedural violations generally do not lead to an award of benefits, they can indicate an abuse of discretion in benefit decisions. The court recognizes that while Aetna’s procedural failures are not grounds for benefit entitlement, they contribute to evidence of Aetna's conflict of interest and breach of fiduciary duty. The court scrutinized Aetna's decision-making, ultimately finding it unreasonable. Consequently, Aetna's motion for summary judgment was denied, and Jones' motion was granted, reversing Aetna's denial of her disability benefits for the two-year "own-occupation" provision. The court did not address Aetna's obligations regarding the "any occupation" provision. Aetna holds discretionary authority under the Plan to determine benefits entitlement but must avoid acting arbitrarily or capriciously.