Opinion
No. 1:03-cv-00592-LJM-WTL.
June 25, 2004
ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
This cause is before the Court on the defendant's, United Parcel Service Flexible Benefits Plan(the "Plan"), Motion for Summary Judgment on the claim brought against it by the plaintiff, Charles Paterson ("Paterson"), that he was improperly denied disability benefits by the Plan. Federal question jurisdiction is proper because the Plan's decisions are regulated by the Employee Retirement Income Security Act of 1974, ("ERISA"), 29 U.S.C. § 1001 et. seq.
Specifically, Paterson alleges that the Plan acted arbitrarily and capriciously in rejecting the diagnoses of his doctors that his return to work would impair his health and threaten the safety of others. The Plan contends that it acted reasonably in denying Paterson's claim after three doctors reviewed Paterson's submitted medical records and concluded that the documents did not establish his inability to work.
The Court agrees with the parties that there are no issues of material fact. For the following reasons, the Court finds that Plan's denial was arbitrary and capricious and therefore DENIES the Plan's motion for summary judgment. To the extent that Paterson also requested summary judgment in his brief in opposition, Paterson's motion is GRANTED and the case is remanded to the insurer for a full and fair review of his eligibility for disability benefits.
I. BACKGROUND
Prior to Sept. 2, 2002, Paterson was working for United Parcel Service ("UPS") as a PC support specialist. Def.'s Ans. to Am. Compl. at ¶ 2. As an employee participating in the Plan, he was provided short term disability coverage that would take effect if he was "unable to perform the material and substantial duties of [his] regular occupation because of an illness or injury." Id. at ¶ 3; Am. Compl., Summ. Plan Desc. at 105. The material and substantial duties of Paterson's job, as noted by the Plan, included motor and cognitive skills, a work day of eight hours or more, and the ability to "work cooperatively in a diverse work environment." Brum Aff., Exh. B, Attach. 1. That September, Paterson filed a claim for short term disability. Def.'s Mem. In Supp. of Mot. at 2.
Over the next four months, the Plan denied Paterson's claim and two subsequent appeals. Each time, a psychologist or psychiatrist employed or retained by the Plan reviewed Paterson's file and determined that the medical findings failed to support an impairment that precluded Paterson's return to work. Def.'s Mem. In Supp. of Mot., Stmt. of Facts ¶¶ 3-18. The record is lengthy but bears review.
Paterson's initial claim was based on the findings of Dr. Judith Monroe, ("Dr. Monroe"), his family physician, and Dr. Tom Barbera, ("Dr. Barbera"), a clinical psychologist whom he had been seeing since May 2000. In a "Behavior Health Clinician Statement," dated Sept. 4, 2002, and submitted as part of Paterson's claim, the doctors recommended that Paterson stay home from work through Nov. 1, 2002. Paterson Aff., Ex. A. They said Paterson was depressed, experiencing problems falling asleep, and worried about losing his temper at work. Id. The report also noted that Patterson had struck objects at home and that he had limited impulse control, especially under the influence of alcohol. Id. As to why Paterson should stay home, they provided this explanation: "Anger control need for counseling medication. Severe depression needing psychotherapy." Id.
On or about September 26, 2002, the Plan employee assigned to Paterson's case concluded that the documentation did support Paterson's claim for a short term disability so the employee submitted the records to Dr. Lawrence Burstein, ("Dr. Burstein"), a psychologist, for review. Brum Aff., Ex. B., Attach. 11. Id. Dr. Burstein came to the same conclusion. Brum Aff., Ex. B, Attach. 2. In a report signed October 8, 2002, he noted, "While Mr. Patterson may require counseling and medication in order to help him deal with his ability to control his anger, there were no indications that he would be unable to perform at his occupation while doing so." Id.
The plan informed Paterson in October 2002, that he could appeal the denial but would need to document how his psychological problems were impairing his ability to work. Brum Aff., Ex. B, Attach. 3. Paterson appealed not once but twice. He supplied additional documentation but still failed to convince the Plan's reviewers that his mental health issues prevented him from working.
For his first appeal, Paterson submitted an additional evaluation by Dr. Barbera, which was summarized in an October 22, 2002, letter to the plan. Brum Aff., Ex. B, Attach. 4. The psychologist reported that, on the basis of additional testing and revelations in therapy, Paterson suffered from post traumatic stress disorder. Id. Dr. Barbera acknowledged that a source of Paterson's problems was his drinking, but the psychologist attributed this issue to Paterson's inability to handle the "demands" of his job. Id. Dr. Barbera indicated that Paterson had difficulty working with others. Id. "In prior jobs he has typically had less supervision, with less potential for conflict and frustration. His low frustration tolerance, impulsivity, short temper, and potential for violence (secondary to combat training and PTSD) currently make him a poor candidate to return to his position at UPS." Id. The evaluation concluded that Paterson could begin working at home but more medical and psychological treatment were needed before he could return to UPS. Id.
Dr. Barry M. Glassman, ("Dr. Glassman"), a psychiatrist, conducted the second review. Brum Aff., Ex. B, Attach. 6. In addition to previously submitted information and Dr. Barbera's October 22, 2002, letter, Glassman also had before him an October 17, 2002, letter from social worker David Sutton, noting that Paterson had been seen at the St. Vincent Stress Center, ("Stress Center) four times since a September 16, 2002, assessment. Id. A discharge statement dated October 22, 2002, also showed that Paterson had been briefly admitted to the Stress Center on that date. Id.
Dr. Glassman reached the same decision as the first reviewer, Dr. Burstein. Dr. Glassman concluded that the additional testing and evaluation, while helpful in providing a diagnosis, still did not explain why Paterson was unable to perform his job. Id. "It's not at all clear why medicine and psychotherapy can't continue to be given to help this person to function in his position." Id.
On Dec. 10, 2002, before the Plan's third and final review of his claim, Paterson drank about a half-bottle of wine at home and then slashed his left wrist with a pocket knife. Brum Aff., Ex. B, Attach. 13. He was taken to Wishard Memorial Hospital where he told staff that he had been denied disability benefits. Id. A Marion County law enforcement officer filled out a detention form, noting that Paterson "wants to kill himself, was denied short-term disability at work." Id. Later, while still at the hospital, Paterson said he no longer wanted to kill himself. Id. The record quotes him as saying, "I made a dumb decision." Id. The hospital released him that same day with the notation, "Safety plan in place — Family members to be with him at all times until he is seen by his psychiatrist." Id.
The third reviewer, Dr. Robert Dawes, ("Dr. Dawes"), a psychologist, again reviewed Paterson's file. Brum Aff., Ex. B, Attach. 14. The additional information before him included records pertaining to Paterson's alleged suicide attempt, as well as additional records from the Stress Center and Dr. Barbera. Id. These records provided considerably more information about the scope and intensity of Paterson's mental health.
The Stress Center's "Initial Assessment" form, dated Sept. 16, 2002, noted that Paterson had been referred there by the Marion County Probation Department following an arrest for what appears to be an alcohol-related offense. Paterson Aff., Ex. B. The form listed "diagnostic impressions" of alcohol abuse and major depression. Id. Also noted was a history of assaultive or violent destructive behavior and self-mutilation. Id.
On November 27, 2002, Dr. Barbera noted that Paterson had tried to check himself into the stress center two to three weeks before but had been released with a recommendation of "intensive outpatient therapy." Brum Aff., Ex. B, Attach. 13. He further noted, among other observations, that Paterson was mildly distressed but otherwise alert and goal directed, and he had given Paterson homework and instructions to return in two weeks. Id.
On December 13, 2002, in a memorandum written at Paterson's request, Dr. Barbera noted that he had seen Paterson nine times since May 29, 2002. Id. He had initially treated Paterson for depression and anger, but in October he had become aware of and additional diagnosed issues of alcohol abuse and post traumatic stress disorder. Id. He wrote that Paterson's symptoms had "significantly interfered with his occupational and social functioning." Id.
Finally, in a January 14, 2003, memorandum, Dr. Barbera reviewed his findings from additional testing on Jan. 7, 2003. Id. Results showed Patterson was within the normal range of mental functioning although his score was poor on two memory tests. Id. He scored in the "severe depression" range on a test known as the Zung Self-Rating Depression Scale. Id. He also tested in the severe range on a test aimed at diagnosing post traumatic stress disorder. Id. Dr. Barbera declared that Paterson's work environment had become "intolerable." Id. Paterson's symptoms included social withdrawal, hostility, and self-destructive behavior. Id. Dr. Barbera concluded that a return to work would exacerbate Paterson's symptoms and "increase his risk of harm to self or others." Id.
Dr. Dawes, a psychologist, reviewed each of these records on behalf of the Plan, as well as previously submitted documents and reviews. Brum Aff., Ex. B, Attach. 14. Dr. Dawes concluded that the documents overall did not support a finding that Paterson's "impulse control" problems were "continuously compromised" to prevent his return to work. Id. He also concluded that the documents did not support Dr. Barbera's finding that Paterson's return to work would exacerbate his symptoms. Id. Dawes signed his report on March 20, 2003. Id.
The Plan notified Paterson of its final denial in a letter dated April 9, 2003, from the Claims Review Committee. Brum Aff., Ex. C. Paterson subsequently filed this lawsuit.
II. SUMMARY JUDGMENT STANDARD
Summary judgment is "an integral part of the federal rules" that promotes the efficient and just determination of actions. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). A party may request summary judgment when seeking a declaratory judgment "upon all or any part thereof." Fed.R.Civ.P. 56(a). Summary judgment is appropriate "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 judgment as a matter of law." Celotex, 477 U.S. at 322. In evaluating a motion for summary judgment, the Court draws all reasonable inferences from undisputed facts in favor of the non-moving party. See Estate of Cole v. Fromm, 94 F.3d 254, 257 (7th Cir. 1996).
III. DISCUSSION A. STANDARD OF REVIEW
Both parties agree that the standard of review for this case is a highly deferential one. When a benefit plan governed by ERISA gives the administrator discretionary authority to determine eligibility for benefits or construe the terms of the plan, the reviewing court need determine only if the administrator's decision was reasonable and not an abuse of discretion. Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). This level of review is sometimes labeled the "arbitrary and capricious" standard.
The Seventh Circuit has held that this standard applies only to ERISA cases in which the grant of discretionary authority to the plan is unequivocal. Herzberger v. Johnson, 205 F.3d 327, 331 (7th Cir. 2000). It is not sufficient to state that the administrator determines when benefits are due. See id. The plan must place employees on notice that their right to benefits depends on the discretion of the administrator. See id. The Seventh Circuit has even recommended model "safe harbor" language by which plan administrators can be assured that they have provided such notice.
The recommended wording is: "Benefits under this plan will be paid only if the plan administrator decides in his discretion that the applicant is entitled to them." Herzberger, 205 F.3d at 331.
In this case, the Plan has used language meeting the Seventh Circuit's concerns that plan administrators provide employees sufficient warning. The plan document states that the administrative committee or its designated agents "shall have the exclusive right and discretion to interpret the terms and conditions." Pl.'s Compl. Ex. 1, 14. Moreover, the summary plan description provides that the Plan shall have "the exclusive right and discretion to interpret the terms and conditions" and "to decide all matters arising in its administration and operation, including questions of fact and issues pertaining to eligibility for, and the amount of, benefits to be paid. . . ." Pl.'s Am. Compl., Ex. 1, 125. While not identical to the Seventh Circuit's suggested wording, the language clearly warns employees that their entitlement to benefits is less than certain. Paterson agrees that the arbitrary and capricious standard applies. Pl.'s Answer Br. at 1.
B. REASONABLENESS OF THE DECISION
As the Plan notes, the Seventh Circuit has set out five factors for evaluating the reasonableness of an administrator's benefit decision under the arbitrary and capricious standard. The factors are the impartiality of the decision-making, the complexity of the issues, the process afforded the parties, the extent of involvement by experts when needed, and "the soundness of the fiduciary's ratiocination." Chalmers v. Quaker Oats Co., 61 F.3d 1340, 1344 (7th Cir. 1995).
Only the first and last factors are much in issue. First, Paterson alleges that the two psychologists and psychiatrist who independently reviewed his medical records were hired guns who were not objective. "It did not matter to the Defendant how detailed or thorough the documentation was that they received from Mr. Paterson. . . . [T]he Defendant was going to keep hiring people to say `that's not good enough.'" Pl.'s Ans. Br. at 15. Secondly, Paterson argues that the soundness of the Plan's decision-making was flawed, primarily because the Plan did not defer to the judgment of the only medical providers who personally evaluated and treated Paterson. Id. at 20.
1. Impartiality
The first argument fails for lack of evidence. The fact that the reviewers were hired by the Plan and not by Paterson does not, by itself, establish a lack of impartiality. In Chalmers v. Quaker Oats Co., 61 F.3d 1340 (7th Cir. 1995), the Seventh Circuit held that a potential for a conflict of interest was not enough to question a decision-maker's impartiality. That case concerned a vice president's claim for $240,000.00 in severance benefits. The fired officer contended that the administrators of the company-run plan had an automatic bias against him because severance benefits would be paid out of company earnings and because the decision-makers were subordinate to or influenced by the officer who recommended the officer's termination. The court held, that in the absence of evidence showing actual bias, "potential conflict is not enough." Id. at 1344-45.
The court reasoned that a $6-billion-a-year corporation would be unlikely "to flinch at paying out $240,000." Chalmers, 61 F.3d at 1344. Size may not be a guarantee against parsimony when corporate offices impose drastic budget goals on individual operating units. However, the Seventh Circuit's decision stands for the holding that partiality must be shown by evidence, not allegations of conflicts of interest that may or may not exist.
Paterson's contention that the Plan's reviewers were not objective rests on his conclusion that an unbiased person could not reach the reviewers' conclusions, which is the issue before this Court. Such circular reasoning is not enough. Paterson has not provided any evidence that the Plan's decision was motivated by financial concerns. See Perlman v. Swiss Bank Corp. Comprehensive Protection Plan, 195 F.3d 975, 981 (7th Cir. 1999) (noting that some insurer-run plans may be restrospectively rated so that an insurer has no direct financial incentive in a benefits decision). Nor has Paterson provided any showing of animosity on the part of the reviewers. Paterson's allegation of partiality is only another wrapping of his primary contention that the Plan's reasoning was unsound.
2. "Soundness of the Fiduciary's Ratiocination"
Paterson's second argument that attacks the soundness of the Plan's reasoning succeeds, although not precisely along the lines that Paterson offers. His argument distills to two points. First, Paterson claims that the Plan's denial was clearly unreasonable because its medical reviewers failed to evaluate him personally in making their disability assessment. Second, Paterson implies that his attempted suicide, coupled with the evaluations of his treating doctors, plainly showed that he was a threat to himself or to others and thereby entitled to disability benefits.
The first argument is clearly off the mark. ERISA does not require a plan administrator to obtain an independent evaluation of an applicant before rejecting a disability claim. Likewise, the Supreme Court has held that ERISA does not require plan administrators to defer to the opinions of treating physicians. Black Decker Disability Plan v. Nord, 538 U.S. 822, 829; 123 S. Ct. 1965, 1969 (2003). Nor does ERISA impose "a heightened burden of explanation on administrators when they reject a treating physician's opinion." Id. A plan administrator could find, simply on the basis of the records presented, that the applicant had not made a sufficient showing of a disability.
Indeed, that is what the Plan alleges here, and if Paterson's appeal had gone no further than the circumstances presented to the first two medical reviewers, this Court would find in favor of the Plan under the arbitrary and capricious standard. The Plan's records indicate, for example, that the first review was based solely on Dr. Monroe's and Dr. Barbera's September 4, 2002, report. Neither of these doctors explained in this report how Paterson's problems affected his ability to work. See Paterson Aff., Ex. A. Moreover, their psychotherapy treatment plan called for only once-a-month outpatient sessions, hardly an indication to the Plan that the doctors considered his condition to be life-threatening or severely disruptive. Id.
The second review added little. The most significant document was Dr. Barbera's evaluation that Paterson suffered from Post-Traumatic Stress Disorder. However, even this finding, summarized in the October 22, 2002, letter, was couched in ambiguous terms. Brum Aff., Ex. B, Attach. 4. Dr. Barbera talked about Paterson's "difficulty functioning," and his diminished "coping ability." Id. He said that Paterson's low frustration tolerance, impulse control problems and potential for violence made him a "poor candidate" to return to work. Id. These were not definitive judgments. At most, the evaluation was a back-handed prediction that Paterson's return to work could lead to an episode of workplace violence.
Paterson's appeal did not end there, however, which brings the Court to Paterson's second point. The third reviewer, Dr. Dawes, had a considerably expanded record before him. The Plan now had to consider documents indicating a history of violent destructive behavior, records of a reported suicide attempt and test results showing "severe depression" and some memory difficulties. Brum Aff., Ex. B., Attach. 14. Moreover, Dr. Barbera's assessment had become more definite. The treating psychologist declared that Paterson could not tolerate his work environment and that a return to work would exacerbate his symptoms and increase the risk harm to others and himself. Brum Aff., Ex. B., Attach. 13. The degree of additional information before Dr. Dawes makes the first two reviews irrelevant to whether there was a reasonable basis for denial.
At least on the surface, the additional documents presented substantial evidence supporting Barbera's assessment of Paterson's inability to work. While ERISA does not impose a treating physician's presumption, it does not allow plan administrators to act arbitrarily or unreasonably in rejecting any reliable evidence such as the treating physician's opinions. An administrator's decision may be arbitrary and capricious if "the decision maker overlooked something important or seriously erred in appreciating the significance of evidence." Patterson v. Caterpillar, Inc., 70 F.3d 503, 505 (7th Cir. 1995). In relying on Dr. Dawes' review to rebut the documentation about Paterson's severe depression, his memory problems, his attempted suicide and the risk of violence, the Plan did just that. Either the Plan overlooked the extent of Paterson's latest evidence or it failed to appreciate the significance.
In his review, Dr. Dawes noted that Paterson's cognitive abilities were within the normal range. However, the crux of Paterson's disability claim is not an impairment of his cognitive skills. His ability to work with others is. Moreover, "work cooperatively with others" is cited as one of the essential job functions that a person in Paterson's position "must" be able to perform. Paterson Aff., Ex. D. Yet Dr. Dawes addresses this issue indirectly at best. Stripped to its essence, Dr. Dawes' dismissal of Paterson's claimed inability to work with others is based on documents showing that Paterson's mood is fine in therapeutic settings and that Paterson has denied or recanted wishes to kill himself. Both observations are miss the point of Paterson's claim.
This is not the only shortcoming. Intentionally or not, Dr. Dawes mischaracterizes Paterson's attempted suicide as a "cut to his hand" even though the medical records clearly stated that Paterson had cut his wrist in a way requiring stitches. Brum Aff., Ex. B., Attach. 14. Dr. Dawes acknowledges later in the same report that Paterson had injured himself, recanted a wish to die and admitted to making a bad decision. Id. However, Dr. Dawes concludes from this, and from Paterson's failure to voice "ideations of aggression and/or hostility towards himself or others," that Paterson's impulse control was therefore not "continuously compromised preventing him from returning to a work environment." Id.
Requiring that a person's impulse control be "continuously compromised" before the ability to work with others is impaired is unreasonable. Requiring persons to proclaim their desire to kill themselves or others before acknowledging that a threat of suicide might exist is also unreasonable. The frequency of Paterson's outbursts and lack of voiced threats are relevant. However, such evidence goes to degree, and Dr. Dawes had no evidence of his own on either issue. He has merely pointed out that Paterson's outbursts are not constant and that the risk of violence is not overt.
Dr. Dawes ignored the questions that a reasonable plan administrator would ask. How often does the employee have emotional outbursts and to what degree? Can these outbursts be constrained by medication? What is the risk to co-employees? Paterson has made a prima facie showing that he is unable to perform at least one of the substantial duties of his position — the ability to work with others. He has offered as evidence a treating physician's assessment of his disability substantiated by other medical records. The issue is not whether there is a treating physician's presumption but the manner in which that physician's evaluation must be considered.
The Plan appraises Dr. Barbera's evaluation as it would one of its reviewers — as a decision that must be supported by the medical record. Thus, Dr. Dawes refers to "Dr. Barbera's prediction" regarding the effect of a return to work upon Paterson. However, Dr. Barbera's evaluation is not a reviewer's decision. It is evidence, of weight to be determined, that the Plan must confront. It could do this, perhaps, by reviewing the raw materials, the notes and test results if available, that Dr. Barbera used in forming his assessment and directly challenging Dr. Barbera's conclusions. Or it could choose an expert of its own to evaluate Paterson. But it cannot deny Paterson's evidence merely by pointing to discrepancies in his medical record. If that were the case, no court would likely ever find a violation of the arbitrary and capricious standard, at least when the claimant has a substantial medical record. The arbitrary and capricious standard is not an invitation to rubber-stamp an administrator's decision. Swaback v. Am. Info. Tech. Corp., 103 F.3d 535, 540 (7th Cir. 1996).
In summary, the Court finds that the Plan's denial of short term disability benefits to Paterson on his third appeal was arbitrary and capricious. The Plan's motion for summary judgment should be DENIED and Paterson's cross motion for summary judgment should be GRANTED. Because the Court is without information to fashion the appropriate remedy, Paterson shall file his motion for an award of benefits within thirty days of the date of this Order. The Plan shall filed its brief in opposition thirty days thereafter and Paterson shall have fifteen days thereafter to file his reply.
IV. CONCLUSION
For the reasons stated herein, the Court DENIES the defendant's, United Parcel Service Flexible Benefits Plan, Motion for Summary Judgment. There is no issue of fact, however, and the plaintiff, Charles Paterson, is entitled to summary judgment in his favor. Summary judgment is hereby GRANTED in favor of the plaintiff. The Court is without information to fashion the appropriate remedy. Therefore, the plaintiff, Charles Paterson, shall file his motion for an award of benefits within thirty days of the date of this Order; defendant, United Parcel Service Flexible Benefits Plan, shall have thirty days thereafter to respond; plaintiff, Charles Paterson shall have fifteen days thereafter to reply.