finding the defendant's denial arbitrary and capricious, in part, because it “failed to review the decision of the [SSA] to grant [the plaintiff] disability benefits”Summary of this case from DeCesare v. Aetna Life Ins. Co.
No. 00 CV 2013 (SJ).
December 8, 2004
LEGAL SERVICES FOR THE ELDERLY, New York, New York, Gary Steven Stone, Esq., Ann Pegg Biddle, Esq., Attorneys for Plaintiff.
WILSON, ELSER, MOSKOWITZ, EDELMAN DICKER LLP, New York, New York, Martin M. Ween, Esq., Attorneys for Defendants.
MEMORANDUM AND ORDER
Rosa Neely ("Plaintiff" or "Mrs. Neely") brings this action against Pension Trust Fund of the Pension, Hospitalization and Benefit Plan of the Electrical Industry and the Trustees of the Pension Trust Fund of the Pension, Hospitalization and Benefit Plan of the Electrical Industry ("Defendants" or "the Plan") under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"), challenging the termination of long-term disability benefits under her employer's benefit plan. Plaintiff brings the current motion for summary judgment pursuant to Federal Rule of Civil Procedure 56(c) ("Rule 56"). Defendants cross-move for summary judgment.
The issue is whether Mrs. Neely, who worked for nearly a decade as a secretary for L.K. Comstock Company, underwent total hip replacement surgery in 1991 and began receiving disability benefits in 1993, was properly deemed ineligible for the continuation of such benefits because she was no longer "prevent[ed] from securing gainful employment in the electrical industry or any other line of business" as defined by the Plan. The benefits sought are payments of $560.30 each month. For the following reasons, the Plaintiff's motion is GRANTED, Defendants' motion is DENIED, and the Plan is ordered to reinstate Mrs. Neely's benefits of $560.30 per month, effective February 1994.
FACTUAL AND PROCEDURAL BACKGROUND
Neely v. Pension Trust Fund of the Pension Hospitalization and Benefit Plan of the Electrical Industry, 2003 WL 21143087 (E.D.N.Y. Jan. 16, 2003) sets forth many of the relevant factual and procedural issues involved in this case but they are repeated herein for the sake of thoroughness and clarity.
Defendants are an employee benefit plan, established pursuant to the Labor Management Relations Act, 29 U.S.C. § 141 et seq. ("LMRA"), which manages the employee pension plan for L.K. Comstock Company ("Comstock").Id. at *1. Defendants manage the pension benefits plan via a Pension Committee ("the Committee" or "the Pension Committee"), comprised of ten Employer Trustees designated by the employers, ten Employee Trustees designated by the Union, and one ex-officio public member designated by the Joint Industry Board of Electrical Industry ("JIB"). Id. The JIB is the Plan Administrator. Id. As part of its management procedures, the Pension Committee relies on the work and recommendations of a subcommittee ("Pension Subcommittee"). Id. at n. 1. The Plan published a Summary Plan Description ("SPD") of the Pension Trust Fund in 1992 ("1992 SPD"). Id. at 1. Under a section entitled "Disability Pension," the 1992 SPD stated that "[t]he decision of the Pension Committee regarding whether or not a person is disabled is final and binding." Id.
Mrs. Neely was hired as a secretary by Comstock in 1981 and remained in Comstock's employ until sometime in 1991. Id. In 1989 Mrs. Neely began to suffer severe pain in her back and legs, and her orthopedic specialist, Dr. Charles N. Cornell ("Dr. Cornell"), subsequently diagnosed her with severe degenerative bilateral osteoarthritis in both hips. Id. In October 1991 Mrs. Neely underwent a complete replacement of her right hip. Id. She did not return to work after the surgery, and filed for and received short-term disability benefits. Id.
Plaintiff's Medical History before the Plan AdministratorAfter her short-term benefits were exhausted, Mrs. Neely applied for a disability pension from Defendants on May 20, 1992. Id. As part of the application, Dr. Cornell completed a "single-sheet medical disability form" on Plaintiff's behalf. Id.
Sometime after an August 26, 1992 meeting of the Pension Committee, in which her application was considered, Mrs. Neely was informed that her application had been denied. Id. at *2. On October 8, 1992 she appealed that denial and included in her appeal a more explicit report provided by Dr. Cornell. Id. Dr. Cornell's report noted in particular the pain Mrs. Neely experienced in both her right hip, on which he had performed a total hip replacement surgery in late 1991, as well as severe bilateral degenerative disease in her left hip. Id. Dr. Cornell further noted that Mrs. Neely was limited in her ability to walk distances "of more than 8-10 blocks," and that she was unable to "climb stairs or use public transportation on a daily basis."Id.
Based on this new information provided to the Pension Committee, the Plan granted Mrs. Neely temporary disability benefits in February of 1993, effective November 1992. Id. Mrs. Neely was also informed, in a letter from the Pension Director, that her pension would require her to be reevaluated in February 1994. Id. She was also notified in February 1993 that her application for disability insurance benefits to the Social Security Administration ("SSA") had been granted. Id.
Defendants' Termination of Benefits/Supplemental Administrative RecordIn late 1993, Mrs. Neely was informed that her disability pension was due for a reevaluation and she was subsequently examined by an independent physician at the request of the Pension Committee. Id. The Plan's medical director, Dr. Alex Maurillo ("Dr. Maurillo"), recommended to the Pension Committee that Plaintiff's benefits be terminated. Id. The exact and complete text of Dr. Maurillo's letter stated:
The above 51 year old female was seen in consultation by our Orthopedist for disability reevaluation. Patient is Status Post Left Hip Replacement. There is no evidence of loosening. There are some minor degenerative changes. The doctor agrees that there is some disability but not to the extent that she can no longer secure gainful employment in the Electrical Industry or in any other line of business.Id. Based on Dr. Maurillo's report, the Pension Committee notified Mrs. Neely, on February 24, 1994, that her benefits would cease that same month. Id. The exact and complete text of that notification stated:
The Pension Committee, at their regularly scheduled meeting, reviewed the Medical Director's report pertaining to your health.
The findings of the Medical Director indicate that you are not disabled to the extent that you can no longer secure gainful employment in the Electrical or other line of business.
In view of the above, the Committee sincerely regrets they were unable to grant you the continuance of the Disability Pension.
However, you may appeal this decision to the Trustees within sixty (60) days of this letter. If you should desire to appeal the decision, please submit a letter together with any medical documents which you feel would be pertinent to your case.
Should you desire additional information, please do not hesitate to contact this office. We will be happy to be of assistance.Id. at *2-3. Mrs. Neely filed her appeal on or about March 3, 1994 and included another letter from Dr. Cornell detailing her limited physical capacity similar to his October 7, 1992 letter, and a handwritten letter from her addressed to the Plan, requesting that her benefits be reinstated. Id. at *3.
Following her appeal Mrs. Neely was examined by another consultative physician, Dr. Robert Israel ("Dr. Israel"), at the request of Defendants. Id. Dr. Maurillo again recommended that the Pension Committee terminate Mrs. Neely's benefits. Id. The exact and complete text of Dr. Maurillo's recommendation stated:
The above 52 year old female was seen in consultation by our Orthopedic Specialist for a Disability Appeal. She is Status Post Hip Replacement with some disability but not to the extent that she can no longer secure gainful employment in the Electrical Industry or in any other line of business.Id. At a Pension Subcommittee meeting held on April 4, 1994, Mrs. Neely's appeal was rejected. Minutes from the Pension Subcommittee's meeting read as follows:
At the February 7, 1994 Sub-Committee Meeting, the Trustees reviewed the continuance of a Disability Pension for the above member.
Based on the Medical Director's report, the Sub-Committee denied the continuance of a Disability Pension. On February 23, 1994 the Pension Committee concurred with the Sub-Committee's recommendation of denial.
March 4, 1994 — Member appealed the Committee's decision producing additional medical information, which was forwarded to the Medical Department for review and re-evaluation.
Query: In view of the Medical Director's report, should a Disability Pension be granted to Ms. Neely?Id. The Pension Committee then concurred with the Pension Subcommittee's findings, and informed Mrs. Neely on April 28, 1994 that her appeal had been denied. Id.
On July 2, 1996, Mrs. Neely sent a letter to the Pension Committee requesting a second appeal of the Pension Committee's February 1994 decision. Id. Although the Plan does not provide for a second appeal, it granted her request. Id. After another medical examination, the Committee again rejected Mrs. Neely's request for continuation of benefits. Id.
Proceedings Before the District CourtOn April 3, 2000 Plaintiff filed a complaint pro se with the Clerk of the Court in the Eastern District of New York. Id. at *4. On May 11, 2001, she filed an amended complaint with the assistance of counsel. Id. On December 11, 2001, after parties had participated in discovery, the Plan filed a motion for summary judgment and Mrs. Neely cross-moved on January 29, 2002 ("Plaintiff's First Summ. J. Mot."). Id. In a decision dated January 16, 2003 ("January 16th Order"), this Court held that the Pension Committee's denial of Mrs. Neely's appeal was arbitrary and capricious because the Committee failed to conduct a full and fair review of Plaintiff's claims by rubber-stamping the recommendation of its medical director, a non-fiduciary, without considering the arguments of both sides and making its own assessments. Id. at *9-11. The matter was remanded to the Pension Committee for a full and fair reconsideration.
On April 14, 2003 the Plan filed a motion for stay pending appeal and clarification of this Court's January 16th Order. Mrs. Neely opposed the motion. In Neely v. Pension Trust Fund of the Pension, Hospitalization and Benefit Plan of the Electrical Industry, 2003 WL 21448872 (E.D.N.Y. June 4, 2003) ("June 4th Order"), this Court granted a temporary stay. This Court also clarified that the Pension Committee, upon reconsideration, was not bound by the "arbitrary and capricious" standard of review but must consider Mrs. Neely's application as if it were a new application for benefits. Id. at *3. This Court further explained that the Pension Committee's reconsideration was not restricted to the administrative record available to the district court. Id.
Upon Remand to the Pension CommitteeAt a Pension Committee meeting held on August 27, 2003, Mrs. Neely's application for long-term disability benefits was again rejected. Minutes from the Pension Committee's meeting read as follows:
The meeting was called to order at 3:00 p.m. by Monte Hurowitz. He noted that a quorum was not present and that Mr. Chanzis would have to poll an additional union Trustee in order for the actions taken at the meeting to be official. . . .
Vito Mundo [defense counsel] was called upon to report on the Rosa Neely matter. Mr. Mundo distributed a memorandum to the Trustees dated August 27, 2003 with attachments, a copy of which is annexed to these Minutes.
Mr. Mundo stated that this is an appeal from a disability pension that was denied on a re-evaluation He reviewed the memo that was distributed which sets forth the facts regarding this appeal as follows:
Rosa Neely was employed as a secretary in the field offices of Comstock.
She suffered from osteoarthritis.
In 1991, she had a right total hip replacement.
She did not return to work after the surgery.
In 1992, she applied for a disability pension.
At the August 1992 Trustee meeting, the Trustees found that Rosa Neely was " Not disabled to the extent that she can no longer secure gainful employment in the Electrical Industry or in any other line of business," therefore, the application was denied.
Rosa Neely appealed the denial and presented additional medical information.
At the February 1993 Trustee meeting, the Trustees granted her appeal and awarded her a disability pension subject to re-evaluation in one year.
In February 1993, Rosa Neely was granted Social Security Disability by the Social Security Administration.
Rosa Neely was examined by Dr. Robbins on January 14, 1994 and x-rays were reviewed on January 21, 1994.
In February 1994, the Pension Committee reviewed Rosa Neely's re-evaluation and found that she was no longer disabled to the extent that she could no longer secure gainful employment in the Electrical Industry or any other line of business.
On March 4, 1994 Rosa Neely appealed the discontinuance of her disability pension and later submitted a letter from her doctor, Dr. Charles Cornell, dated March 23, 1994.
On March 16, 1994, Rosa Neely was examined by Dr. Robert Israel.
At the April 1994 Trustee meeting, Rosa Neely's appeal was considered and denied.
Mr. Mundo went on to state that attached to this memo is a copy of Dr. Robbins' January 14, 1994 report, Dr. Robbins' January 21, 1994 report, Dr. Israel's March 16, 1994 report, Dr. Cornell's March 23, 1994 letter, Dr. Cornell's chart notes for November 20, 1992 through 1999. Mr. Mundo stated that Doctors Kandalaft and Robbins were in the building and could come up to answer any medical questions the Trustees may have.
Mr. Mundo stated that he had with him Rosa Neely's full pension file, as well as the decision of the Social Security Administration, which are available to be reviewed by the Trustees at this meeting.
The Trustees reviewed the medical reports before them. They noted in the January 21, 1994 report from Dr. Phillip Robbins that he did not believe that the patient was disabled at the present time for working in a secretarial job. They also reviewed Dr. Robert Israel's March 16, 1994 report in which he states, "It is unclear to me exactly what her job responsibilities are, but she should be able to perform less demanding labor without any difficulty." The Trustees reviewed Dr. Charles N. Cornell's March 23, 1994 report which states, "Ms. Neely cannot climb stairs and, therefore, cannot use public transportation. She is partially disabled in this respect." They then reviewed Dr. Cornell's office notes, specifically, the note regarding her visit on January 19, 1993 in which Dr. Cornell stated that she is 16 months following her total hip replacement on her right side and that, "She is doing quite well with the right hip and really has no symptoms whatsoever." He goes on to state, "Overall, she is doing quite well. She has been having some symptoms in her left hip. The left hip shows very similar arthritic changes . . . that hip shows good flexion with zero to one-hundred degrees with limited IR/ER . . . I do not think she is at any stage where we would consider arthoplasty. She will take Excedrin, try and get as much exercise as possible and see us then." At her April 7, 1994 visit with Dr. Cornell, his notes state, "Rosa is doing well with respect to her right hip. She has minimal pain and excellent range of motion . . . her left hip is beginning to show increasing signs of osteoarthritis, with increasing pain and decreasing walking ability . . . she remains partially disabled due to severe hip arthritis. I will have her follow-up in one year."
The Trustees noted that her next visit to her orthopedist, Dr. Charles Cornell, was on July 16, 1996 which was over two years after her prior visit. Dr. Cornell's notes for July 16, 1996 state, "Rosa is here for evaluation of her right hip. Her right THR (Total Hip Replacement) is doing well . . . the left side does show medial osteoarthritis very similar to the right side. These symptoms, however, are not quite as severe."
A discussion then ensued regarding the facts of Rosa Neely's condition and the medical reports that were available in 1994 when the Pension Committee stopped her disability pension on a re-evaluation. The criteria for a disability pension in 1994 was that the participant must be disabled to the extent that he/she can no longer secure gainful employment in the Electrical Industry or in any other line of business.
A motion was made, seconded and unanimously approved to deny the appeal. (Pl.'s Mot. for Summ. J. Ex.A). In a letter dated October 10, 2003, the Plan notified Mrs. Neely of their decision to deny her benefits and that its decision was final. (Pl.'s Mot. for Summ. J. Ex.D.) The letter stated:
Please be advised that the Board of Trustees (the "Trustees") considered your appeal of the denial of your claim for the reinstatement of a Disability Pension from the Pension, Hospitalization, and Benefit Plan of the Electrical Industry — Pension Trust Fund (the "Plan"). Upon careful consideration of all the information provided and upon application of the terms of the Plan to your claim, the Trustees determined that, under the rules of the Plan in effect in 1994, you do not meet the requirements for a Disability Pension benefit. Pursuant to the terms of the Plan in effect in 1994, in order to qualify for a disability pension, a participant had to be disabled to the extent he or she could no longer be gainfully employed in the electrical industry or any other line of work. The Trustees reviewed your medical reports from 1994, including reports submitted by Doctors Robbin and Cornell. Based upon the reports, your condition at that time did not prevent you from seeking and performing gainful employment. Accordingly, the Trustees have denied your appeal.
The provision in the Plan on which the denial of your appeal is based is found on page 16 of the enclosed Summary Plan Description ("SPD"). It states, "A participant is determined by the Pension Committee to be permanently incapacitated or disabled so that he can no longer be gainfully employed in the Electrical Industry or in any other line of work. . . .
The Trustees' decision is final. You have a right to file a lawsuit under Section 501(a) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(Id.) Mrs. Neely filed a Motion for Summary Judgment on December 15, 2003 and the Plan cross-moved. Plaintiff alleges: (1) that the Plan failed to comply with this Court's previous order to conduct a full and fair review of her application for long-term disability benefits; (2) that the contents of the Plan's letter informing her of their denial did not meet ERISA's minimum notice requirements, and; (3) that a second remand is inappropriate and therefore, this Court should order the Plan to reinstate her disability benefits. Defendants claim: (1) the Pension Committee's decision to deny Mrs. Neely's application for benefits was not arbitrary or capricious; (2) its denial letter to Mrs. Neely supplied her with adequate notice, and; (3) the only appropriate remedy available to Mrs. Neely would be a second remand to the Pension Committee with instructions as to what documents it must consider in order to make a determination that is not arbitrary or capricious.
DISCUSSIONI. Summary Judgment Standard
"[I]n an action brought under ERISA, the contours guiding the court's disposition of the summary judgment motion are necessarily shaped through the application of the substantive law of ERISA." Ludwig v. NYNEX Service Co., 838 F.Supp. 769, 780 (S.D.N.Y. 1993). Under Rule 56(c), summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). A dispute regarding a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)
The Court's responsibility in assessing the merits of a summary judgment motion is not to try the issues of fact, but rather to "`determine whether there are issues of fact to be tried.'"Sutera v. Schering Corp., 73 F.3d 13, 16 (2d Cir. 1995) (quoting Katz v. Goodyear Tire Rubber Co., 737 F.2d 238, 244 (2d Cir. 1984)). The Court must draw all reasonable inferences and resolve all ambiguities in the nonmoving party's favor, and construe the facts in the light most favorable to the nonmoving party. See Anderson, 477 U.S. at 255; see also Sutera, 73 F.3d at 16.
The same standard applies where, as here, the parties filed cross-motions for summary judgment. Morales v. Quintel Entertainment, Inc., 249 F.3d 115, 121 (2d Cir. 2001). Even when both parties move for summary judgment a court need not enter judgment for either party. Id. "Rather, each party's motion must be examined on its own merits, and in each case all reasonable inferences must be drawn against the party whose motion is under consideration." Id.
II. Standard and Scope of Review
In its January 16th Order, this Court found that it must review the Plan's denial of Mrs. Neely's claim under the "arbitrary and capricious" standard. Neely, 2003 WL 21143087 *7; see also Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989). A plan fiduciary's decision will be deemed arbitrary and capricious by a district court if it is "without reason, unsupported by substantial evidence or erroneous as a matter of law." Miller v. United Welfare Fund, 72 F.3d 1066, 1072 (2d Cir. 1995) (quoting Pagan v. NYNEX Pension Plan, 52 F.3d 438, 442 (2d Cir. 1995); see also Zervos v. Verizon New York, Inc., 277 F.3d 634, 646 (2d Cir. 2002); Jordan v. Ret. Committee of Rensselaer Polytechnic Inst., 46 F.3d 1264, 1271 (2d Cir. 1995) ("The question before a reviewing court under [the arbitrary and capricious] standard is `whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.'") (quoting Bowman Transp., Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 285 (1974) (internal citations omitted)). Substantial evidence is defined as "such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the [decisionmaker and] . . . requires more than a scintilla but less than a preponderance." Miller, 72 F.3d at 1072 (internal citations omitted). "[A] plan's decision will survive review under the arbitrary and capricious standard if it is reasonable, consistent with previous decisions, and uniformly applied to similarly situated individuals."Hedspeth v. Citicorp Individual Bank Retirement Plan, 1993 WL 204808 at *13 (S.D.N.Y. 1993).
II. Application of the Arbitrary and Capricious Standard
Notwithstanding the deferential nature of the "arbitrary and capricious" standard, courts have held that ERISA guarantees that the plan's administrator, the fiduciary, must provide a full and fair review of the decision to deny the claim. See 29 U.S.C. § 1133(2); see also Tholke v. Unisys Corp., 2002 WL 575650, at *3 (S.D.N.Y. Apr. 16, 2002), rev'd on other grounds, Tholke v. Unisys Corp, 2004 WL 960029 (2d Cir. 2004). "The fiduciary's failure to provide a full and fair review can constitute a decision that was arbitrary and capricious." Tholke, 2002 WL 575650, at *3; see also Crocco v. Xerox Corp., 956 F.Supp. 129, 138 (D. Conn. 1997), aff'd in relevant part, 137 F.3d 105, 108 (2d Cir. 1998) (applying the arbitrary and capricious standard, the court noted that the "central inquiry is whether or not [the plan fiduciary] fully and fairly reviewed [the plan administrator's] denial of Crocco's claim for benefits").
According to the Second Circuit, the full and fair review requirement under the arbitrary and capricious standard was best articulated in a Third Circuit case, Grossmuller v. Int'l Union, United Auto. Aerospace Agric. Implement Workers of Am., U.A.W., Local 813, 715 F.2d 853 (3d Cir. 1983). See Crocco, 956 F.Supp. at 138-39. Grossmuller noted that a proper full and fair review by a plan fiduciary should "protect a plan participant from arbitrary or unprincipled decision-making," Grossmuller, 715 F.2d at 857, with the following requirements:
The Court refers to the district court opinion in Crocco, but credits its reasoning to the Second Circuit, because the Second Circuit affirmed the holding in Crocco as to the district court's analysis of the full and fair review requirements. See Crocco, 137 F.3d at 108 ("For substantially the reasons stated by the district court in its Memorandum of Decision, . . . we affirm the district court's judgment that Nazemetz did not provide a `full and fair review' of APM's certification decision (and hence, that Nazemetz's ratification of APM's decision was arbitrary and capricious)."
[T]he plan's fiduciary must consider any and all pertinent information reasonably available to him. The decision must be supported by substantial evidence. The fiduciary must notify the participant promptly, in writing and in language likely to be understood by laymen, that the claim has been denied with the specific reasons therefor. The fiduciary must also inform the participant of what evidence he relied upon and provide him with an opportunity to examine that evidence and to submit written comments or rebuttal documentary evidence.Id. at 857-58 (emphasis added). The court further noted, in regard to the first criterion, that the "decision-maker [must] consider the evidence presented by both parties prior to reaching and rendering his decision." Id. at 858 n. 5.
A. Full and Fair Review under ERISA Requires Adequate Notice of Denial of Benefits
ERISA's full and fair review requirement also entails that an employee benefit plan must provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant. 29 U.S.C. § 1133. "The agency must articulate a rational connection between the facts found and the choice made."Hedspeth, 1993 WL 204808 at *14. The Second Circuit has endorsed the Eighth Circuit's reasoning that, "[t]he purpose of [the full and fair review] requirement is to provide claimants with enough information to prepare adequately for further administrative review or an appeal to the federal courts." Juliano v. The Health Maintenance Organization of New Jersey, Inc., 221 F.3d 279, 287 (2d Cir. 2000) (quoting DuMond v. Centex Corp., 172 F.3d 618, 622 (8th Cir. 1999). "When a plaintiff challenges the adequacy of notice, the court must ask: `was the beneficiary supplied with a statement of reasons that, under the circumstances of the case, permitted a sufficiently clear understanding of the administrator's position to permit effective review." Crocco, 956 F.Supp. at 142 (quoting Halpin v. W.W. Grainger, Inc., 962 F.2d 685, 689 (7th Cir. 1992).
III. The Merits
The issue before the court is whether, under the arbitrary and capricious standard, the Plan's final decision to terminate Mrs. Neely's disability benefits was an abuse of discretion as a matter of law. The court's review is limited to evidence that was before the Plan administrator at the time of the benefit denial.Zervos, 277 F.3d at 646 (citing Zuckerbrod v. Phoenix Mut. Life Ins. Co., 78 F.3d 46, 50 n. 2 (2d Cir. 1996)) (when reviewing a denial of benefits, the district court may consider only the administrative record that was before the plan administrator at the time of the decision, "unless the insured is instrumental in causing the information to be added to the record."); see also Omara v. Local 32B-32J Health Fund, No. 97 CV 7538, 1999 WL 184114, at *2 (E.D.N.Y. Mar. 30, 1999) (citing Miller, 72 F.3d at 1071). As explained more fully below, this Court finds that the Pension Committee's decision to discontinue Mrs. Neely's long-term disability benefits was erroneous as a matter of law because it was without reason and unsupported by substantial evidence.
At the outset, it is necessary to address the Plan's contention that "[t]his Court is required to make a procedural and not a factual determination on this issue [of whether the Pension Committee conducted a full and fair review of Plaintiff's application for benefits]." (Defs.' Cross Mot. for Summ. J. at 1.) Defendants mischaracterize both the nature and application of the arbitrary and capricious standard in the Second Circuit. Review under the arbitrary and capricious standard is both procedural and substantive. See, e.g., Zervos, 277 F.3d at 645-46 (holding that the plan administrator's appellate decision was procedurally and substantively arbitrary and capricious). "[A]lthough limited, review of a determination under the arbitrary and capricious standard is more than an [sic] perfunctory review of the factual record in order to determine whether that record could conceivably support the decision to terminate benefits. Rather, such a review must include a `searching and careful' determination as to whether the conclusion reached by the administrator in view of the facts before it was indeed rational and not arbitrary." Rizk, 862 F.Supp. at 789 (quoting Hedspeth, 1993 WL 204808 at *14).
A. Pension Committee Failed to Consider All of the Relevant Evidence
The first error underlying the denial of Mrs. Neely's benefits is the Pension Committee's failure to consider all of the pertinent information regarding her medical condition. This Court's memorandum and order dated June 4, 2003 made clear that the Pension Committee was not bound by the district court's administrative record, but rather that the Committee should consider Mrs. Neely's application as if it were a new one for benefits. It clarified that the Committee was at liberty to consider all of the relevant evidence. Neely, 2003 WL 21448872 at *3.
The Minutes from the Pension Committee's August 27, 2003 meeting reflect that defense counsel circulated a memo purporting to summarize the facts surrounding Mrs. Neely's application for benefits. The minutes note that, "attached to this memo is a copy of Dr. Robbins' January 14, 1994 report, Dr. Robbins' January 21, 1994 report, Dr. Israel's March 16, 1994 report, Dr. Cornell's March 23, 1994 letter, Dr. Cornell's chart notes for November 20, 1992 through 1999 . . . Mr. Mundo stated that he had with him Rosa Neely's full pension file, as well as the decision of the Social Security Administration, which are available to be reviewed by the Trustees at this meeting. The Trustees reviewed the medical reports before them." (emphasis added)
The Committee's mere access to documents that they fail, in fact, to consider, falls short of ERISA's requirement of full and fair review as a matter of law. As this Court has previously stated and as many courts in this Circuit have long recognized, "just having access to the full record, but relying on a summary report of the full record does not meet ERISA's requirements."Neely, 2003 WL 21143087 at *10; see also Miller, 72 F.3d at 1072 ("Reliance on [a three-sentence report] to deny the claim was arbitrary and capricious since it was not `based on a consideration of the relevant factors'.") (quoting Jordan 46 F.3d at 1271). Furthermore, the law in the Second Circuit requires that, "[T]he plan's fiduciary must consider any and all pertinent information reasonably available to him." Neely, 2003 WL 21143087 at *8 (internal citations omitted) (emphasis added).
The minutes from the August 27, 2003 meeting reveal that the Pension Committee failed to consider several pieces of evidence relevant to the determination of Plaintiff's eligibility for long-term disability benefits. Among the unreviewed documents were three pieces of evidence that seemed to provide the very basis of the Committee's February 1993 decision to grant Mrs. Neely disability benefits — specifically, two letters by Dr. Cornell written in 1992 and the favorable Social Security Administration decision. Dr. Cornell's letter dated October 7, 1992 stated:
The Court presumes this fact because the minutes omit any reference to certain documents whereas they do make specific reference to documents that the Committee did review.
The major disability that Mrs. Neely has at the present time is that she is unable to walk distances of more than 8-10 blocks and unable to climb stairs. She lives in a walk up apartment building and in order to get to work must use public transportation which involves climbing up and down subway stairs, climbing onto buses and so forth. In my opinion, it is impractical for her to be expected to use public transportation on a daily basis and it is contraindicated with respect to the total hip replacement which must be protected and last the rest of her lifetime. Her left hip is also quite painful and limits her ability and independence.
His December 23, 1992 letter was very similar to the October letter. The Committee ignored Mrs. Neely handwritten letter addressed to the Pension Committee dated March 3, 1994 in which she complained of the cursory examination performed by Dr. Robbins on January 14, 1994 and which, if considered, might have lead the Committee to accord less weight to his report and recommendation. The Committee, although it reviewed his July 1996 letter, did not consider Dr. Cornell's letter dated June 24, 1996 which began, "I have been asked by Mrs. Neely to update you as to her clinical condition and my estimation of her state of disability," and continued:
Following [Mrs. Neely's right total hip replacement], I recommended to her that she seek permanent disability because of the severe arthritis in the left hip, as well as the need for her to have a limited activity lifestyle to protect the right total hip replacement over the long term . . . The left hip has become severely symptomatic limiting her ability to ambulate to about one block . . . It is my professional opinion that Mrs. Neely remains disabled and unable to work in any capacity that requires her to leave her home for employment. She is severely disabled to ambulation now, unable to use public transportation and will very likely need major reconstructive surgery within the next six to nine months."
(Plaintiff's First Summ. J. Mot., Ex. H.)
Finally, the Pension Committee failed to review the decision of the Social Security Administration to grant Mrs. Neely disability benefits. The Administrative Law Judge ("ALJ") concluded that Mrs. Neely's subjective complaints of hip and back pain were credible and supported by medical evidence. (Id., Ex. C.) In addition, the ALJ found that, "[Mrs. Neely's] residual functional capacity for the full range of sedentary work is reduced by hip and back pain," that "[she] does not have any acquired work skills which are transferable to the skilled or semiskilled work activities of other work," and that "[c]onsidering [her] exertional limitations . . . there are not a significant number of jobs in the national economy which she could perform." (Id. at 3.)
While Defendants are correct that determinations of the Social Security Administration are non-binding and non-dispositive on the findings of the Pension Committee, Pagan, 846 F.Supp. at 20, the Committee nevertheless was required to review that decision because it was one piece of evidence in the administrative record. See Billinger v. Bell Atlantic, 240 F.Supp.2d 274, 285 (district court agreeing that the Social Security Administration's favorable decision is "one piece of evidence" of plaintiff's disability); see also Gaitan v. Pension Trust Fund of the Pension Hospitalization and Benefit Plan of the Electrical Indus., 2000 WL 290307, at *5 (S.D.N.Y. Mar. 20, 2000) ("[a]n ERISA plan's determination on a disability claim that differs from that of the Social Security Administration is not arbitrary and capricious so long as the plan's finding is reasonable and supported by substantial evidence." (emphasis added).
B. The Evidence that the Pension Committee Did Consider Was Inadequate to Support its Denial of Plaintiff's Long-Term Disability Benefits
The second error underlying the denial of Mrs. Neely's disability benefits is that the Pension Committee failed to give the same consideration to her position that it gave to the recommendations of the doctors selected by the Plan to examine Mrs. Neely and consequently, neglected to make a critical assessment about the nature and extent of her disability. The minutes from the Pension Committee's August 27, 2003 meeting note that the Committee only reviewed the medical reports before them, including Dr. Robbins' January 14, 1994 report, Dr. Robbins' January 21, 1994 report, Dr. Israel's March 16, 1994 report, Dr. Cornell's March 23, 1994 letter, Dr. Cornell's chart notes for November 20, 1992 through 1999. This court will examine each piece of evidence in turn.
The Committee's letter to Mrs. Neely informing her of its final decision to terminate her benefits states, "The Trustees reviewed your medical reports from 1994, including reports submitted by Doctors Robbins and Cornell."
Dr. Robbins' January 14, 1994 report reserved decision about Mrs. Neely's disability status until after he reviewed her x-rays. His January 21, 1994 report stated his position that, "I do not believe this patient is disabled at the present time from working [sic] secretary job." (emphasis added). Dr. Israel's March 16, 1994 report concluded, "It is unclear to me exactly what her job responsibilities are but she should be able to perform less demanding labor without any difficulty." Dr. Cornell's March 23, 1994 letter described Mrs. Neely as having severe degenerative arthritis in both hips and that her disability was an inability to climb stairs or use public transportation.
Both Dr. Robbins and Dr. Israel recommended that Mrs. Neely was not disabled essentially because her medical condition did not prevent her from fulfilling secretarial duties. This Court has no basis for finding that the Committee's denial of Mrs. Neely's application for benefits was based on anything other than the recommendation of its physicians, especially Dr. Robbins. However, had the Committee given the same consideration to Dr. Cornell's position that it gave to those of Drs. Robbins and Israel, it would have become aware of a conflict between how the issue of Mrs. Neely's disability was framed by the two sets of doctors and the need to resolve that conflict. Dr. Cornell diagnosed Mrs. Neely's disability as an inability to travel to and from work via public transportation on a daily basis, and the need for her to have a limited lifestyle in order to preserve the right hip replacement for the rest of her life and to protect the left hip from further deterioration. On the other hand, Drs. Robbins and Israel characterize the issue as whether Mrs. Neely she could perform her job responsibilities. In fact, the basis for the Committee's initial decision to grant Mrs. Neely temporary benefits was a finding that she was unable to travel to and from work on a daily basis. Therefore, since the reports of Drs. Robbins and Israel are inconclusive on this point, they are inadequate to justify the denial of Mrs. Neely's application for benefits. See Miller, 72 F.3d at 1072 (substantial evidence is defined as "such evidence that a reasonable mind might accept as adequate to support the conclusion reached"); see also Neely, 2003 WL 21143087, at *11 ("By failing to determine whether the various medical records which were submitted on Plaintiff's behalf raised questions `that should be clarified,' and by refusing to grant Plaintiff's articulated appeal the same consideration they gave to Dr. Maurillo's determination of Plaintiff's initial application, the Pension Committee failed to provide a full and fair review of Plaintiff's claim.").
The Court's conclusion is based on the Plan's statements in its October 10, 2003 letter to Mrs. Neely that, "The Trustees reviewed your medical reports from 1994, including reports submitted by Doctors Robbins and Cornell. Based upon the reports, your condition at that time did not prevent you from seeking and performing gainful employment. Accordingly, the Trustees have denied your appeal."
Having already determined that the Pension Committee's failure to consider all of the pertinent information and to accord the same weight to Plaintiff's position as to those of its own doctors constituted a less than full and fair review of Mrs. Neely's application for benefits, and led to a decision that was arbitrary and capricious, this Court finds it unnecessary to address the parties' remaining contentions. In particular, Plaintiff argues, "[p]erhaps the most obvious sign of a failure to make a full and fair review is the simple fact that the meeting was conducted without a quorum." (Pl.'s Mot. for Summ. J. at 10.) Defendants respond that "a quorum was in fact present at the Pension Committee meeting on August 27, 2003, although the minutes mistakenly indicate otherwise" but fail to provide any documentary or other support of that claim. In any event, whether a quorum was or was not present is irrelevant given this Court's finding that the decision to deny Mrs. Neely's application was substantively arbitrary and capricious.
In addition, Plaintiff cites Connors v. Connecticut General Life Insurance Co., 272 F.3d 127 (2d Cir. 2002), to support her argument that it was erroneous as a matter of law for the Committee to decide whether she remained disabled without also determining whether she had actually improved since February 1993, when it initially granted Mrs. Neely's application for temporary benefits. Mrs. Neely asserts, "an inquiry as to whether a person once found disabled is no longer disabled necessarily includes an inquiry as to whether that person has improved." (Pl.'s Reply to Defs. Cross-Mot. for Summ. J. at 3-4.) The Plan counters that since Mrs. Neely's initial disability benefits were granted subject to a reevaluation in February 1994, the Pension Committee's February 1994 decision was a new determination that rendered her prior medical condition irrelevant. They further respond that neither ERISA nor its surrounding case law requires a reconciliation of conflicting decisions. (Defs.' Cross Mot. for Summ. J. at 8-9.) The Plan also argues that, "[w]hether the Pension Committee found or did not find any medical improvement cannot be properly considered by this court, as such would constitute de novo review." (Id. at 10.) For the reasons stated above, this Court finds it unnecessary to address these arguments.
C. Adequacy of Notice
Full and fair review under ERISA requires an employee benefit plan to provide adequate written notice to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant. 29 U.S.C. § 1133. In its denial letter, "[t]he agency must articulate a rational connection between the facts found and the choice made." Hedspeth, 1993 WL 204808 at *14. In the present case, the October 10, 2003 letter to Mrs. Neely failed to satisfy these minimum requirements.
The Plan's letter to Mrs. Neely did nothing more than state in conclusory fashion that she did not meet the Plan's standard for eligibility. The denial is wholly lacking in explanation. The Pension Committee failed to articulate its specific reasons underlying its decision — i.e., why it rejected Dr. Cornell's reports and Mrs. Neely's subjective complaints of pain that it apparently had previously credited when granting temporary benefits in February 1993; an assessment of Dr. Cornell's expertise (compared to Drs. Robbins and Israel); Mrs. Neely's credibility; and, most significantly, any explanation of the reasons underlying the Committee's decision that her medical condition did not prevent her from securing gainful employment. Since the letter only informs Mrs. Neely of the Committee's choice without setting forth the facts found by the Committee, it fails to "articulate a rational connection between the facts found and the choice made." Hedspeth, 1993 WL 204808 at *14. Absent such information, Mrs. Neely is left without any knowledge of how "to prepare adequately for further administrative review or an appeal to the federal courts."Juliano, 221 F.3d at 287.
Defendants' argument that, "if Plaintiff was able to understand the notice of February 1994 that provided similar information as the October 10, 2003 letter issued by the Pension Committee, the Plaintiff cannot not [sic] disingenuously [sic] argue that the current letter is somehow defective, is wholly lacking in merit. (See Defs.' Cross Mot. for Summ. J. at 19.) Defendants appear to be asking this Court to review the adequacy of notice under a "totality of circumstances" standard of review. First of all, the deposition quoted by Defendants to support their novel claim concerns the February 1994 notice and has nothing at all to do with Mrs. Neely's challenge to the adequacy of the October 10, 2003 notice, which is based not on the Committee's statements about her procedural rights but rather, on the Committee's failure to explain the rationale underlying its decision to terminate her benefits. Furthermore, neither ERISA nor its surrounding case law sets forth a totality of the circumstances review of the adequacy of notice under the arbitrary and capricious standard. Indeed, Defendants do not cite any case law in support of this novel claim.
III. Disposition of the Case
Because no reexamination or further development of the record is necessary to a final determination of Mrs. Neely's entitlement to benefits, remand to the Pension Committee for reconsideration is inappropriate. See Miller, 72 F.3d at 1071 ("if upon review a district court concludes that the Trustees' decision was arbitrary and capricious, it must remand to the Trustees with instructions to consider additional evidence unless no new evidence could produce a reasonable conclusion permitting denial of the claim or remand would otherwise be a `useless formality.'" (emphasis added) (internal quotations omitted); Zuckerbrod v. Phoeniz Mut. Life Ins. Co., 78 F.3d 46, 51 n. 4 (remand of an ERISA action seeking benefits is inappropriate "where the difficulty is not that the administrative record is incomplete but that a denial of benefits based on the record was unreasonable"); Zervos, 277 F.3d at 648 ("Here the administrative record did not contain substantial evidence supporting a denial of benefits and in fact could only be read to support granting coverage. Therefore, remand was an inappropriate remedy, and the district court should have reversed the determination to deny benefits and directed Empire to provide the requested coverage.").
Having already had one opportunity to retool a defective system, the Pension Committee failed again to conduct a full and fair review of Mrs. Neely's application and to make a decision that was neither arbitrary nor capricious. In Neely, 2003 WL 21448872 at *3, this Court ordered Defendants to consider Mrs. Neely's claim as if it were a new application for benefits. Yet, the administrative record makes clear that the Pension Committee failed to follow this court's directive. See Defs.' Mot. for Summ. J. Ex. C. ("Mr. Mundo stated that this is an appeal from a disability pension that was denied on a re-evaluation.") (emphasis added); id. Ex. B (defense counsel's memo to the Pension Committee framing the issue as "[s]hould Rosa Neely's appeal of the Committee's 1994 decision denying her disability pension be granted?"). Consequently, this Court finds that a second remand would be no more than a "useless formality" and orders Defendants to reinstate Mrs. Neely's disability benefits of $560.30 per month, effective February 1994.
For the reasons stated above, Plaintiffs' motion for summary judgment is GRANTED and Defendants' motion for summary judgment is DENIED. Defendants are ordered to reinstate Plaintiff's disability benefits of $560.30 per month, effective February 1994.