Opinion
No. 01 Civ. 11413 (TPG)(MDF).
March 31, 2005
Opinion
Plaintiff Anthony DiMaria claims that defendant First Unum Life Insurance Company wrongfully denied his claim for disability benefits. Defendant moves for an order confirming its administrative determination that plaintiff is not entitled to disability benefits, and dismissing plaintiff's complaint. Plaintiff cross-moves for summary judgment, or in the alternative, for a determination that he is entitled to discovery and trial. Plaintiff also requests attorney's fees and prejudgment interest.
Defendant's motion for Judgment on the Administrative Record is granted.
Plaintiff's cross-motion for summary judgement or to engage in trial and discovery is denied.
FACTS
The following facts are taken largely from the Administrative Record, developed by defendant, and citations to that record will be designated as "AR___."
A. BACKGROUND
Plaintiff is a physician who was formerly a sole practitioner specializing in internal medicine. Plaintiff employed one medical assistant in his practice.
Defendant's business involves the issuance of group insurance policies. Defendant administers its policies through a form of internal trust.
Plaintiff signed a form entitled "Application for Participation in the Select Group Insurance Trust" on April 15, 1994. There is also an unintelligible signature for the "Agent or Broker." The application contained the following provisions:
By this application, the Employer/Applicant:
1. Agrees and accepts the terms of the Trust Agreement (including all amendments to the Trust Agreement) for the Insurance Trust named above for so long as it elects to participate in the Trust;
2. Agrees to remit regularly the required premium payments; and
3. Elects coverage as shown in the Summary of Benefits and agrees that only those provisions which appear in the Summary of Benefits provided to the Employer/Applicant apply to its insurance coverage.
The Trust Agreement States:
Each Plan Administrator shall maintain records for all employees in its Plan, in connection with their participation in Policies issued, and shall be solely responsible for complying with any provision of the Employee Retirement Income Security Act (ERISA) as it may be amended from time to time which may apply to their participation in this Trust Agreement.
The application's Summary of Benefits section shows what coverage has been elected. Election of coverage appears to have been completed through selections made on a "Mini-Plan Screening Checklist."
Three alternative forms of benefits were available: long-term disability, short-term disability, and life. Long-term disability was selected and there is an indication next to the remaining two alternatives that they are not applicable.
The checklist listed plaintiff's medical practice as a sole proprietorship and plaintiff as the "Plan Administrator."
Defendant sent plaintiff, as plan administrator, materials which were, in effect, the Policy. The Policy provided for long-term disability benefits for plaintiff and all full-time employees who worked a minimum number of hours each week. Plaintiff was counted as an employee of the sole proprietorship for this purpose, even though he was the employer. And, as stated, plaintiff employed one full-time medical assistant.
Plaintiff underwent bypass heart surgery on July 11, 2000 (AR 92). From May 1992 up to the time of his surgery, plaintiff had been working as the part-time Medical Director of the Jamaica Hospital Nursing Home, (AR 244-245) in addition to carrying on his private practice as an internist (AR 127-28). After his discharge from the hospital on July 17, 2000 following surgery, plaintiff recovered satisfactorily (AR 271). Plaintiff's cardiac surgeon, Scott L. Schubach, M.D., released plaintiff to return to full activity without restriction effective August 14, 2000 (AR 245). Proof of this diagnosis is illustrated in the administrative record by an August 14, 2000 letter to another of plaintiff's physicians, Dr. Anthony Gambino, in which Dr. Schubach stated:
Since the time of the discharge, [plaintiff] has done remarkably well and is increasing his activity as anticipated without any evidence of recurrent angina.
Physical examination reveals the sternum to be well healed and stable. Lungs are clear. Heart has regular rate and rhythm. Saphenous vein graft harvest site is healing appropriately. Chest X-ray reveals normal postoperative changes without any evidence of congestive failure.
Overall, I am quite pleased with Dr. DiMaria's course. He may return to full activity without restriction from the surgical standpoint.
(AR 271). Also, a report of an objective cardiac test, dated September 2000 (about two months post-surgery and submitted to Defendant by plaintiff) establishes that plaintiff had good exercise tolerance, normal blood pressure response, and no arrhythmias (AR 7; AR 101). Plaintiff achieved 10 METS of activity on that test. Id.
"METS" is a metabolic equivalency scale that is used, along with oxygen consumption and heart beat rate, as both a target parameter and a measure of results in exercise stress tests for cardiac patients. Generally, a person exhibits capacity for office work by achieving 7 METS on a stress test.
On or about October 1, 2000, plaintiff resumed his position as Medical Director of the nursing home, now on a full-time basis, and accepted the role of Acting Medical Director of the Jamaica Hospital Medical Center (AR 128-29; AR 245). However, he closed his private practice (AR 244-245; AR 129).
As of October 1, 2000, plaintiff was earning an annual salary of $250,000 and is still doing so. The salary consists of $150,000 as Medical Director of the Nursing Home and $100,000 as Medical Director of the Medical Center (AR 130, AR 245). Prior to his surgery, plaintiff was earning $105,000 as the part-time (25 hours per week) medical director and just under $100,000 in his private practice (40+ hours per week), for a total of $203,045 annually. B. PERTINENT POLICY PROVISIONS
The $203,045 figure is computed from plaintiff's earnings (as defined by the Policy (AR 11)) from his practice, as reported on his 1997, 1998 and 1999 federal income tax form 1040 schedule C's and his 1997-1999 W-2 forms (AR 284-95; AR 205), plus plaintiff's average earnings from the nursing home, as shown on plaintiff's W-2 forms for 1997, 1998 and 1999 (AR 215-18; AR 229-30; AR 205; (see also AR 183-185).
The Policy provides that the benefits become payable after the end of the "elimination period" when defendant receives proof that the claimant is disabled due to sickness or injury and requires the regular attendance of a physician; that benefits continue as long as the claimant remains disabled and requires the regular attendance of a physician; and that the claimant must give defendant proof of these facts, at the claimant's own expense, when defendant asks for it (AR 15). An insured is deemed "disabled" under the Policy when, because of injury or sickness the insured cannot perform each of the material duties of his regular occupation (AR 41). The Policy defines "elimination period" as "a period of consecutive days of disability for which no benefit is payable." The period begins on the "first day of disability" (AR 12). The Policy's elimination period is "90 days" (AR 40).
The Policy provides that benefits will cease as provided below:
Disability benefits will cease on the earliest of:
1. The date you are no longer disabled; or
* * *
2. The date your current earnings exceed 80% of your indexed pre-disability earnings
(AR 18).
Under the Policy, disability benefits may be payable for partial disability when defendant receives proof that the claimant is partially disabled within 31 days of the end of a period during which the claimant received disability benefits, provided the partial disability results from the injury or sickness that caused disability (AR 15). An insured is deemed "partially disabled" when:
because of injury of sickness the insured, while unable to perform all the material duties of his regular occupation on a full-time basis, is:
a. performing at least one of the material duties of his regular occupation or another occupation on a part-time or full-time basis; and
b. currently earning at least 20% less per month than his indexed pre-disability earnings due to that same injury or sickness (AR 41).
The Policy also defines "indexed pre-disability earnings" as the insured's basic monthly earnings in effect just prior to the date his disability began adjusted on the first anniversary of benefit payments and each following anniversary (AR 12).
The "basic monthly earnings" of a sole proprietor, as plaintiff was in his medical practice, are computed as follows:
Annual net profit averaged over:
a. the three most recent years; or
b. the period that you have been a sole proprietor, if you have been a sole proprietor for less than 3 years,
Then divided by 12.
Annual net profit is figured on form 1040 Schedule C as the gross income less total deductions minus depreciation (AR 11).
The "basic monthly earnings" of an employee, as plaintiff was in his nursing home job, is his average monthly earnings as figured "from the W-2 form (from the box which reflects wages, tips and other compensation) received from the employer for the calendar year just prior to the date disability begins" (AR 11).
C. PLAINTIFF'S CLAIM AND DEFENDANT'S INVESTIGATION OF THE CLAIM
On or about November 20, 2000, plaintiff alleged that he was unable to perform his duties as an internist and made a claim to defendant for total disability benefits.
Plaintiff had an interview with First Unum representative Mark Lippel on or about January 29, 2001. Plaintiff provided a written statement regarding this interview to defendant on or about February 28, 2001.
Defendant investigated and denied plaintiff's claim by letter dated March 29, 2001. In this letter defendant also notified plaintiff that if he disagreed and wished to appeal the claim decision, he should submit "a written appeal, including any new information, within 90 days of the date of this letter" (AR 184). The March 29 letter set forth the grounds for denial of the total disability claim, namely that because plaintiff continued to work as a medical director at a nursing home and had not shown an inability to perform each of the material duties of his regular occupation (AR 41), plaintiff was ineligible for total disability benefits. The letter also explained that partial disability benefits would be denied as well, since within three months after his surgery, plaintiff had returned to work and did not suffer a loss of earnings of at least 20 per cent, as required under the Policy for partial disability benefits. Rather, plaintiff was earning some $50,000 per year more than he did before the claimed disability. Therefore, plaintiff could not qualify for either total or partial disability benefits.
D. PLAINTIFF'S ADMINISTRATIVE APPEAL
By an April 6, 2001 letter, plaintiff's counsel asked defendant to clarify its position and requested that defendant state in writing whether it had made a determination on plaintiff's claim for total disability benefits (AR 196). In an April 19, 2001 response letter, defendant repeated its decision as to plaintiff's ineligible status for total and partial disability benefits (AR 187-188).
Plaintiff requested that defendant conduct an administrative appeal by letter dated July 2, 2001 (AR 76-85). With this letter, plaintiff included documents he wished defendant to consider during the review (AR 86-143). Defendant acknowledged receipt of plaintiff's appeal by letters dated July 6, 2001 (AR 193) and July 16, 2001 (AR 150).
By letter dated July 19, 2001 defendant informed plaintiff's attorneys that it had upheld the denial, citing Policy provisions and information from plaintiff's submissions (AR 147-149). Defendant noted, among other things, that, even if plaintiff had qualified for and received disability benefits, which he had not, benefits would have terminated once plaintiff's earnings exceeded 80% of his pre-disability earnings.
E. THE PRESENT ACTION
Plaintiff filed this action alleging common law breach of contract in Supreme Court, New York County. Defendant removed the action to this Court because the claim for disability benefits was made under an employee welfare benefit plan governed by ERISA, 29 U.S.C. § 1001 et seq. Plaintiff's subsequent motion to remand this case was rejected by this Court, holding that ERISA governed the claim. DiMaria v. First Unum Life Ins. Co., 2003 WL 21018819, at *4 (S.D.N.Y. 2003).
Defendant has filed the current motion requesting that this Court confirm its administrative determination that plaintiff is not entitled to disability benefits; and asking that the complaint be dismissed.
Plaintiff has filed a cross-motion for summary judgment claiming, first, that plaintiff himself is the Plan Administrator. Plaintiff has reviewed his own appeal and has determined that he is disabled as defined in his Policy with defendant. Second, plaintiff claims that no precedent or authority exists under any statutory scheme or the Federal Rules of Civil Procedure to permit a party in an ERISA claim involving a de novo review to obtain "judgment on the administrative record," as defendant now seeks. Instead, the plaintiffs ask this Court to treat defendant's application as a motion for summary judgment and deny it.
DISCUSSION
I. Standard of Judgment
In an ERISA case such as the present one, the Court is required to perform a "limited de novo review" of the administrator's determination and to issue findings of fact and conclusions of law. Muller v. First Unum Life Ins. Co., 341 F.3d 119, 124-125 (2d Cir. 2003). A motion for judgment on the administrative record is akin to a bench trial on papers under Fed.R.Civ.P. 52. Id. at 124. The Second Circuit has described the district court's role in reviewing an ERISA claim determination as a "limited de novo review." DeFelice v. American Int'l Life Assurance Co., 112 F.3d 61, 66 (2d Cir. 1997). In other words, the de novo standard of review implies that the Court stands in the shoes of the original decisionmaker, and therefore, the Court should review those records which that same decisionmaker reviewed in its denial of coverage. Moore v. INA Life Insurance Co. Of New York, 66 F. Supp. 2d 378, 384 (E.D.N.Y. 1999).
II. Plaintiff's Entitlement to Benefits Under the Policy
Plaintiff made a claim for total disability benefits. Defendant evaluated his case to determine whether he was eligible for total or partial disability benefits. Defendant denied coverage for both.
Plaintiff bears the burden of proving entitlement to disability benefits. Juliano v. Health Maint. Org. of N.J., 221 F.3d 279, 287 (2d Cir. 2000); George v. First Unum Life Ins. Co., 1996 WL 701018 (S.D.N.Y. 1996).
The relevant Policy, as described in detail above, provides that benefits are not payable unless an insured, because of injury or sickness, has proven an inability to perform each of the material duties of his regular occupation, and then only so long as an insured, due to an injury or sickness, earns less than 80% of his pre-disability earnings. The Policy also provides that an insured is disabled if he cannot perform each of the material duties of his regular occupation (AR 41). An insured is deemed "partially disabled" when, because of injury or sickness, while unable to perform all the material duties of his regular occupation on a full-time basis, the insured is performing at least one of the material duties of his regular occupation or another occupation on a part or full-time basis and is currently earning at least 20% less per month than his indexed pre-disability earnings due to that same injury or illness.
Plaintiff sought total disability benefits. (AR 147-149). Since plaintiff advised defendant that he returned to work as the Medical Director at Jamaica Hospital Nursing Home (AR 148), he was therefore "not unable to perform each of the material duties of his occupation," and was therefore not "disabled." (AR 147-148). Plaintiff claims that in this case "regular occupation" means "internist," and "material duties" means "clinical care." However, as the defense points out, plaintiff may not ignore the terms of his Policy by selectively describing his occupation.Knistler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 252 (2d Cir. 1999). In Knistler, the Second Circuit defined "regular occupation" as "a position of the same general character as the insured's previous job, requiring similar skills and training, and involving comparable duties."Knistler, 181 F.3d at 253.
Plaintiff was also denied coverage for total disability benefits because benefits terminate as soon as the insured's "current earnings exceed 80% of" pre-disability earnings (AR 18). Plaintiff's pre-disability earnings averaged $203,045 per year. (AR 205). Plaintiff admitted to post-disability earnings of $250,000 per year, commencing as of October 1, 2000 (AR 130; AR 245), or some $50,000 more than his pre-disability earnings.
Defendant also evaluated and subsequently denied entitlement to "partial disability" benefits. It has been established that plaintiff returned to work, or performed "at least one" of the duties of his pre-disability occupation as Medical Director of the nursing home. Based on the numeric figures presented above, plaintiff cannot claim that he was earning less than 20% per month of his pre-disability earnings. Instead, plaintiff was earning 125% of his prior earnings. Therefore, plaintiff was not entitled to partial disability benefits.
The administrative record amply supports defendant's actions.
III. Plaintiff's Cross-Motion for Summary Judgement: The Party to Review the Denial of Plaintiff's Claim
Plaintiff cross-moves for summary judgment asserting that he is the Plan Administrator, and as such, had the sole authority to review and make the ultimate determination on his denied claim.
The applicable section of the ERISA Regulation describes the "claims procedure" as including the administrative review process. 29 CFR § 2560.503-1. The Regulation also includes a separate section where different treatment is provided for plans in which benefits are funded and administered by insurers.
To the extent that benefits under an employee benefit plan are provided or administered by an insurance company . . . the claims procedure pertaining to such benefits may provide for filing of a claim for benefits and notice of a decision by such company.29 CFR § 2560.503-1(c)(1).
The Regulation provides that a claimant whose claim has been denied, shall have a "reasonable opportunity to appeal a denied claim to an appropriate named fiduciary or to a person designated by such fiduciary." 29 CFR § 2560.503-1(g)(1). In all other cases where the insurance company is not so designated, the appropriate named fiduciary "may be the plan administrator or any other person designated by the plan, provided that such plan administrator is set forth in the plan as the person who reviews and makes decision on claim denials." Id.
Defendant states that plaintiff established the employment welfare benefit plan by purchasing a group disability policy to cover himself and his employee, asking defendant to administer the claims made under it. Defendant communicated to plaintiff in its claim procedure that it was the party to review the denied claim. Pursuant to defendant's established review procedure, the defendant advised plaintiff of his right to appeal, advised plaintiff of the time limits in which he could appeal (AR 184), accepted and acknowledged plaintiff's request to review the adverse claim determination (AR 150, 193), and reviewed the adverse final claim decision (AR 147-149).
Since plaintiff designated defendant to act on his behalf when he made the claim and when he asked for review of the denial of his claim, he cannot now claim that the process was invalid.
In addition, it would be anomalous in the extreme to allow plaintiff to decide on his own claim for benefits to be paid by defendant.
Plaintiff's cross-motion for summary judgment is denied.
The above rulings also require denial of plaintiff's applications for discovery, trial, and attorney's fees and judgment interest.
CONCLUSION
The Court grants defendant's motion to confirm its administrative determination that plaintiff is not entitled to disability benefits. The complaint is dismissed. The Court denies plaintiff's cross-motion for summary judgment and the alternative motions for discovery and trial. The Court also denies plaintiff's application for attorney's fees and prejudgment interest.
SO ORDERED.