Richards v. Johnson & Johnson

• Decision Date: 08 February 2010
• Docket Number: Case No. 2:08-cv-279.
• Citation: 688 F. Supp.2d 754
• Parties: Penny A. RICHARDS, Plaintiff, v. JOHNSON & JOHNSON, et al., Defendants.
• Court: U.S. District Court — Eastern District of Tennessee

688 F.Supp.2d 754

Penny A. RICHARDS, Plaintiff, v. JOHNSON & JOHNSON, et al., Defendants.

Case No. 2:08-cv-279.

United States District Court, E.D. Tennessee, at Greeneville.

February 8, 2010.

Eric W. Reecher, Elliott Lawson & Minor, PC, Bristol, VA, for Plaintiff.

William S. Rutchow, Ogletree, Deakins, Nash, Smoak & Stewart, Nashville, TN, Vance E. Drawdy, Ogletree, Deakins, Nash, Smoak & Stewart, Greenville, SC, for Defendants.

MEMORANDUM AND ORDER

HARRY S. MATTICE, JR., District Judge.

Plaintiff Penny Richards brought this action against Johnson & Johnson ("J & J"), Reed Group, Ltd. ("Reed Group"), Janssen Pharmaceutica, Inc. ("Janssen"), the Pension Committee of Johnson & Johnson ("Pension Committee"), and the Long Term Disability Income Plan for Choices Eligible Employees of Johnson & Johnson and Affiliated Companies ("LTD Plan" or "Plan").¹ Plaintiff alleges a cause of action under 29 U.S.C. § 1132(a)(1)(B). Court Doc. 1, Compl. The Complaint seeks judicial review of a termination of long-term disability ("LTD") insurance benefits under the Plan, which took effect as of January 10, 2007.

Before the Court are Plaintiff's motion for judgment on the pleadings (essentially a motion for judgment on the administrative record) Court Doc. 30, and Plaintiff's motion to strike a portion of the administrative record Court Doc. 29. Pursuant to 28 U.S.C. § 636(b)(1), the Court referred this matter to United States Magistrate Judge Susan K. Lee for a Report and Recommendation ("R & R") on the above motions. Magistrate Judge Lee entered her R & R Court Doc. 36 on September 30, 2009. Magistrate Judge Lee construed Defendants' response to Plaintiff's Motion to Strike Administrative Record as a cross-motion to strike the record and recommended that both motions to strike be denied. Magistrate Judge Lee further recommended that the termination of Plaintiff's benefits be reversed and that the matter be remanded to Defendant. Finally, Magistrate Judge Lee recommended that Defendant's motion for judgment on its counterclaim be denied. Both Plaintiff and Defendants filed timely objections and responses to those objections. Court Docs. 37-40.

For the reasons stated below, the Court ACCEPTS AND ADOPTS Magistrate Judge Lee's Report and Recommendation.

I. STANDARD OF REVIEW

The Court must conduct a de novo review of those portions of the R & R to which an objection is made and may accept reject, or modify, in whole or in part, the Magistrate Judge's findings or recommendations. 28 U.S.C. § 636(b)(1)(C). For those portions of the R & R to which objections have been filed, the Court will directly review the decision-making process underlying the Defendant's denial of benefits.

A claim under 29 U.S.C. § 1132(a)(1)(B) for denial benefits is to be reviewed "under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). If the administrator or fiduciary is afforded discretion by the plan, the decision is reviewed under the arbitrary and capricious standard. Evans v. UnumProvident Corp., 434 F.3d 866, 875 (6th Cir.2006). The Plan documents here assert that the Pension Committee has discretion to interpret Plan terms. (Administrative Record ("AR") at 489.) This Court will therefore conduct its review under the arbitrary and capricious standard.

Under 29 U.S.C. § 1132(a)(1)(B), a court's review is limited to the administrative record as it existed when the plan administrator made its final decision. Moon v. Unum Provident Corp., 405 F.3d 373, 378-79 (6th Cir.2005). Arbitrary and capricious is one of the least demanding forms of review. McDonald v. Western-Southern Life Ins. Co., 347 F.3d 161, 172 (6th Cir.2003). "Nevertheless, merely because our review must be deferential does not mean our review must also be inconsequential." Id. A court must "review the quantity and quality of the medical evidence and the opinions on both sides of the issues." Id. at 172. If the administrative record does not show that the administrator offered a "reasoned explanation" based on substantial evidence, the decision is arbitrary or capricious. Moon, 405 F.3d at 379. Substantial evidence means "much more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." McDonald, 347 F.3d at 171.

II. FACTS

The report and recommendation outlined the applicable facts at length. The parties have not objected to the facts statement contained in Magistrate Judge Lee's R & R. The Court finds no error in Magistrate Judge Lee's findings of fact. Accordingly, the Court hereby ADOPTS BY REFERENCE the entire background section of the R & R. (Court Doc. 36, R & R at 772-76.)

III. ANALYSIS

A. Competing Motions to Strike

Plaintiff objects to Magistrate Judge Lee's recommendation that her Motion to Strike parts of the administrative record be denied. (Court Doc. 37, Pl.'s Objs. at 1.) To create the administrative record, Defendants filed the Plan document and Summary Plan Descriptions ("SPDs") for years 2004, 2005, 2006, 2007, and 2008. (AR at 465-494, 31-464.) Plaintiff argues in her Motion to Strike that she was only provided with the SPDs for years 2004 and 2005 prior to this litigation; therefore, the Plan document and SPDs for all other years should be stricken from the administrative record. (Court Doc. 29, Pl.'s Mot. to Strike at 2-3.) Specifically, Plaintiff contends that Defendants failed to comply with various ERISA statutes when they failed to provide her with plan documents and SPDs for other years, especially if any of the documents related to the appeals process Plaintiff followed before commencing this action. (Id.) Furthermore, Plaintiff requests that the "track changes" versions of the 2004 and 2005 SPDs currently in the administrative record be replaced with the "clean" copies of these documents that were provided to Plaintiff. (Id. at 4.)

Defendants' pleading in response was construed by Magistrate Judge Lee as a competing Motion to Strike. (R & R at 777 n. 6.) Defendants asserted that the Plan document, included in the page numbers that Plaintiff seeks to strike, must remain part of the record because it was considered in the decision to terminate Plaintiff's benefits. (Court Doc. 32, Def.s' Resp. to Mot. to Strike at 3, 5-7.) Defendants conceded that Plaintiff's request to strike SPDs from years 2006, 2007, and 2008 was proper because those documents were not used in the decision-making process. (Id. at 3-4, 8.) Defendants argued, however, that the SPDs from years 2004 and 2005 should also be stricken from the record, as no SPD was used or considered when deciding to terminate Plaintiff's LTD benefits. (Id. at 7-8.) Magistrate Judge Lee found that all of the documents filed as part of the administrative record comprised the facts available to the plan administrator when the decision was made to terminate Plaintiff's benefits. (R & R at 777.) Magistrate Judge Lee concluded, therefore, that the Court could properly review all of the submitted documents in evaluating Plaintiff's claim, and recommended that both Motions to Strike be denied. (Id.)

The Court notes that Plaintiff's objection offers no additional support for her Motion to Strike and simply refers to her previously filed memoranda. (Pl.'s Objs. at 1-2.) After reviewing the report and recommendation and the record in this case, the Court agrees with Magistrate Judge Lee's conclusion that all of the documents filed should remain part of the administrative record. The Court further notes that the overall record in this case has both the "track changes" and clean copies of SPDs for 2004 and 2005, and the Court has reviewed the "clean" copy when necessary; however, the Court sees no cogent purpose in disturbing the numbered administrative record to officially replace these documents. Therefore, Plaintiff's objections are OVERRULED and the Court ACCEPTS and ADOPTS Magistrate Judge Lee's recommendation to deny both Motions to Strike.

B. Statute of Limitations

Neither party objected to Magistrate Judge Lee's conclusion that Plaintiff's claim was timely because the limitations period in the Plan document did not apply. (R & R at 779-80.) Accordingly, the Court ACCEPTS and ADOPTS Magistrate Judge Lee's recommendation on this issue and adopts by reference that section of her R & R. (R & R at 777-81.)

C. Factors to Consider Under Arbitrary and Capricious Standard

1. Conflicts of Interest

Plaintiff objects to Magistrate Judge Lee's finding that there was no structural conflict of interest or bias that affected her claim for LTD benefits. (Pl.'s Objs. at 2.) Magistrate Judge Lee reviewed the structure of the LTD payments and determined that the Pension Committee, not Johnson & Johnson, reviewed claims for benefits, and that all LTD benefits were paid out of a trust funded only by employee contributions. (R & R at 782-83.) Therefore, because Johnson & Johnson neither made the eligibility decisions nor paid benefits from an account that contained employer contributions, Magistrate Judge Lee found that there was no structural conflict of interest. (Id.) Magistrate Judge Lee also reviewed Plaintiff's assertion that a conflict of interest existed based on Defendants' knowledge that Plaintiff's claim would cost Johnson & Johnson almost one million dollars. Magistrate Judge Lee found that this evidence was insufficient because Defendants' knowledge of the cost of Plaintiff's claim could not alone establish bias. (Id. at 782-83.)

Plaintiff did not assert any new argument or evidence in her objection to these findings and instead simply referred the Court to her earlier memoranda. (Pl.'s Objs. at 2.) In an ERISA case, there is a conflict of interest "where it is the employer that both funds the plan and...