Court: District Court, E.D. Michigan; February 16, 2015; Federal District Court
The court issued an opinion and order denying the defendant's motion for summary judgment and granting the plaintiff's motion for summary judgment in an ERISA case concerning long-term disability benefits. The plaintiff, who was employed as an audit manager, sued the defendant on February 19, 2013, claiming wrongful termination of her long-term disability benefits due to her conditions of orthostatic intolerance and irritable bowel syndrome. The relevant insurance policy prohibited benefits for pre-existing conditions, defined as any sickness or injury for which the policyholder received care or treatment in the three months before coverage began.
The plaintiff ceased working on April 27, 2009, after experiencing a loss of consciousness and other severe symptoms, leading to an emergency room visit where she was diagnosed with an acute upper gastrointestinal bleed and other issues. After this incident, she received short-term disability benefits from April 27, 2009, to October 26, 2009, and applied for long-term benefits on September 30, 2009, citing multiple disabling conditions. The defendant denied her application on November 3, 2009, citing a lack of sufficient medical information to substantiate her claim, despite allowing the plaintiff to submit additional records. On December 21, 2009, the defendant again denied the claim, asserting that the only documented disabling condition was migraine headaches, which were classified as pre-existing. The denial included the plaintiff's right to appeal within 180 days.
On January 25, 2010, Dr. O’Connor informed the defendant that the plaintiff's disability since April 27, 2009, was primarily due to fatigue, stomach issues, nausea, shortness of breath, and palpitations. On March 18, 2010, cardiologist Dr. Aman Chugh diagnosed her with potential orthostatic intolerance and/or chronic fatigue syndrome. Dr. O’Connor later confirmed this diagnosis on April 19, 2010. During a follow-up on May 6, 2010, Dr. Chugh noted that the plaintiff experienced varying episodes of her symptoms, correlating them with vasodepressor syncope.
The plaintiff appealed the denial of benefits on June 16, 2010, supported by an affidavit from Dr. Chugh, asserting her conditions prevented her from working. The defendant consulted Dr. Christine Lawless to assess continuous disability from April 27, 2009, to October 26, 2009, and beyond. Dr. Lawless confirmed continuous functional limitations due to anemia and migraines for the earlier period but expressed uncertainty for the later period, noting that anemia had resolved and migraines improved. She indicated that orthostatic intolerance and fatigue became significant around December 2009.
Dr. R. Kevin Smith also reviewed the plaintiff's records and found significant functional limitations from April 27, 2009, to May 27, 2009, none from May 27, 2009, to March 18, 2010, and then significant limitations again from March 18, 2010, onward. Dr. Lawless later clarified that the plaintiff was significantly limited from April 27, 2009, to August 19, 2009, due to anemia and peptic ulcers, with only minor restrictions from August 19 to December 2009.
On October 11, 2010, the defendant denied the claim again, citing that the plaintiff did not demonstrate disability for the period between May 27, 2009, and March 18, 2010, based on a conversation with Dr. Smith that indicated the plaintiff could manage her orthostatic intolerance with treatment. A Vocational Rehabilitation Consultant determined that the plaintiff was capable of performing her job from August 20, 2009, to November 30, 2009, but was disabled again starting December 1, 2009. The letter also indicated the plaintiff had 180 days to appeal the denial of her disability benefits.
On April 8, 2011, the plaintiff filed an appeal concerning her ability to work between August 20, 2009, and November 30, 2009, arguing that her intermittent disability would not be acceptable in a professional setting, such as for a CPA audit manager. On May 19, 2011, Dr. Mark Friedman, a cardiologist, reviewed her medical records and confirmed that her condition warranted ongoing physical limitations due to orthostatic intolerance, noting that she might need to sit or lie down when experiencing symptoms. Dr. Friedman attempted to consult with Dr. O'Connor and Dr. Chugh regarding the plaintiff's condition but faced communication issues. Dr. Chugh indicated that the plaintiff needed to lie down during the day if necessary. Despite additional documentation supporting her case, the defendant denied her appeal again on July 15, 2011, citing that a vocational review concluded she could fulfill her job duties, as she would be allowed to sit as needed. After further information was submitted, Dr. Friedman maintained that it would not alter his assessment, leading to a confirmed denial on September 8, 2011.
In terms of legal standards, the default review standard for ERISA benefit denials is de novo, unless the plan grants discretionary authority to the administrator, in which case the arbitrary and capricious standard applies. Under this standard, a decision is upheld if it follows a reasoned process and is supported by substantial evidence. The Summary Plan Description specifies that the Plan administrator has the authority to interpret the plan terms and determine eligibility for benefits, with any interpretations given considerable weight unless proven arbitrary and capricious.
SPDs are ERISA plan documents regulated under federal law by the Department of Labor. The plaintiff contends that Mich. Admin. Code R. 500.2202, effective July 1, 2007, prohibits the use of discretionary clauses in ERISA plans, stating that any policy containing such clauses is void. The Sixth Circuit has ruled that this Michigan rule is saved from ERISA's preemption. Insurers must submit a list of forms with discretionary clauses to the Michigan Commissioner, certifying its accuracy. The definition of "form" includes various insurance-related documents but explicitly excludes ERISA plans or SPDs from requiring Commissioner approval. The plaintiff argues that a letter from the Commissioner disapproving a statement regarding a discretionary clause in an SPD indicates that the clause is unenforceable. However, this interpretation is contradicted by the overall exchange between the defendant and the Commissioner, which did not directly address the SPD. The Commissioner objected to discretionary clauses in other submitted forms but did not find the SPD itself in violation. Consequently, the court will apply the arbitrary and capricious standard to the case, acknowledging the discretionary authority retained by the defendant in the SPD.
Defendant denied the plaintiff's application for long-term disability benefits four times, primarily focusing on denials based on Dr. Friedman’s reports. A valid explanation for a denial indicates that the decision is not arbitrary or capricious. The plaintiff's claim hinges on her orthostatic intolerance, as she did not assert irritable bowel syndrome as a basis for benefits, and it was established as a preexisting condition. The first three denials were justified: the November 3, 2009 denial was due to missing medical records; the December 21, 2009 denial found no evidence of orthostatic intolerance; and the October 11, 2010 denial relied on two doctors' assessments that the plaintiff was capable of working for a period. The core issue involves the July 15, 2011 denial, where the defendant's reliance on its Vocational Rehabilitation Consultant (VRC) certification—that the plaintiff only needed to sit to manage her condition—was questioned. The plaintiff argued that the defendant 'cherry-picked' data and neglected to consider her statements and the opinions of its own reviewers. Citing Spangler v. Lockheed Martin Energy Systems, the plaintiff contended that such selective use of information is impermissible and led to a biased assessment. The allegations against the defendant include failing to clarify Dr. Friedman’s ambiguous statements about the need to lie down and relying on a VRC assessment that overlooked critical medical opinions regarding the plaintiff's condition.
Defendant contends that the evidence shows plaintiff was not disabled between August 20, 2009, and November 30, 2009, supporting denials issued on July 15, 2011, and September 8, 2011. These denials relied on Dr. Friedman’s evaluation, which indicated ongoing physical functional limitations beyond April 27, 2009. However, the key finding was that plaintiff could perform her job, which allowed sitting as needed for symptoms of dizziness. This rationale does not justify the subsequent denials, as the defendant did not rely on prior evaluations in its decision-making.
Plaintiff argues that her need to lie down due to orthostatic intolerance was not accommodated, rendering the denial arbitrary and capricious. The July 15, 2011, denial lacked substantial evidence, as the medical evidence confirmed her substantial functional limitations since April 27, 2009, and the necessity for the potential accommodation of lying down. While defendant interpreted Dr. Friedman’s note about needing to sit or lie down as allowing only for sitting, Dr. Chugh clarified that lying down was essential if needed. The denial based solely on sitting as accommodation overlooks the critical medical advice that lying down may be required, constituting an arbitrary disregard of reliable medical evidence. There is no indication in the job description or administrative record that lying down was permissible, which should have prompted the defendant to address this accommodation need directly. The defendant misread Dr. Friedman’s assessment, failing to provide a justified reason for the denial based on the correct interpretation of the medical evidence.
Dr. Friedman indicated that the plaintiff might need to sit or lie down due to her substantial functional limitations. The defendant failed to evaluate how this potential need would impact the plaintiff's job performance, making its decision arbitrary and capricious. Consequently, the court denied the defendant's motion for summary judgment and granted the plaintiff's motion, ruling in her favor for ERISA benefits. The defendant is ordered to pay all unpaid long-term disability benefits, including prejudgment interest, and to continue paying benefits per the plan. Additionally, the plaintiff may seek reasonable attorney fees and costs.
The case primarily involves claims related to orthostatic intolerance, an autonomic disorder affecting heart rate and blood pressure regulation. The court will not address other medical issues from the Administrative Record. While the plaintiff contended that the plan required a medical examination instead of "paper reviews," she did not specify any provision mandating such an exam. The plan permits file reviews unless explicitly restricted, as confirmed by a referenced case. The denial letter indicated that two independent physicians reviewed the plaintiff's entire claim file, including various medical records.
