Adams v. Prudential Ins. Co. of America, No. 3:02 CV 7391.

• Decision Date: 03 September 2003
• Docket Number: No. 3:02 CV 7391.
• Citation: 280 F.Supp.2d 731
• Parties: Samuel L. ADAMS, Plaintiff, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant.
• Court: U.S. District Court — Northern District of Ohio

280 F.Supp.2d 731

Samuel L. ADAMS, Plaintiff, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant.

No. 3:02 CV 7391.

United States District Court, N.D. Ohio, Western Division.

September 3, 2003.

Stephen D. Hartman, Richard M. Kerger, Kerger & Kerger, Toledo, OH, for Plaintiff.

Joyce D. Edelman, Porter, Wright, Morris & Arthur, Columbus, OH, for Defendant.

MEMORANDUM OPINION

KATZ, District Judge.

This matter is before the Court on Defendant's motion for summary judgment based on the Administrative Record (Doc. No. 11),¹ as to which Plaintiff has filed a response and cross-motion for judgment on the merits (Doc. No. 16) and Defendant has filed a reply and response (Doc. No. 17). Defendant has also filed supplemental authority (Doc. No. 19) as to which Plaintiff has filed a response (Doc. No. 20).

The Court has jurisdiction to decide this matter under 28 U.S.C. § 1331 and 29 U.S.C. § 1132(e)-(f). For the reasons stated below, Plaintiff's cross-motion for judgment on the merits is granted. Defendant's motion for summary judgment based on the Administrative Record is denied.

BACKGROUND

Plaintiff Samuel L. Adams ("Adams") appeals from Defendant The Prudential Insurance Company of America's ("Prudential") administrative denial of his claim for long-term disability benefits under an employer-sponsored plan governed by the Employee Retirement Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. Adams was an employee of Armstrong Heating and Air Conditioning who participated in a Prudential Group Plan (the "Plan") through Lennox International, Inc. that provided long-term disability benefits.

In 1994, Plaintiff severely fractured his left ankle as a result of a work-related injury. Then in 1999, Adams submitted a claim for long-term disability under the Plan, which Prudential approved for an initial period of twenty-four (24) months effective September 19, 1999. Adams has undergone four (4) surgeries on his injured ankle. Adams also fell on some ice and dislocated his left elbow in February 2000.

After the initial twenty-four (24) month period, Prudential conducted a review of Adams' medical records and requested that Plaintiff undergo an independent medical examination (IME). Professional Appointment Services, Inc. scheduled the IME, which was performed by Dr. M.C. Bernhard. He found that Adams could perform sedentary work for most of a day with certain limitations. As a consequence, Defendant determined that Plaintiff no longer met the Plan's definition of "Total Disability," and denied further benefits. On June 27, 2001, Prudential notified Adams that the termination of benefits was effective September 20, 2001. Plaintiff filed an appeal of Defendant's decision to terminate his long-term disability benefits. Adams indicated that he was unable to work due to chronic pain, dependence on narcotic pain medication and its impact on his inability to get to work. Prudential also performed an employability assessment, and identified five (5) types of jobs for which Adams was qualified and could physically perform. On December 7, 2001, Defendant denied Plaintiff's appeal, finding that he was able to obtain gainful employment in a sedentary job, and the ability to travel to work was not a material and substantial occupational duty under the Plan.

On January 23, 2002, Adams filed a second appeal, again arguing that his ability to travel to and from a job should be considered a material and substantial occupational duty, and contesting the suitability of the types of jobs Defendant had identified. Then on February 14, 2002, Prudential again denied Plaintiff's appeal. Adams appealed Defendant's decision for a third, and final time, on March 14, 2002. Defendant again reviewed the entire claim and medical file. Prudential also forwarded the medical file to Dr. Martin Hoffman for his review. Dr. Hoffman determined that Plaintiff could tolerate sedentary work, again with certain restrictions. As a result, Prudential again affirmed its decision to deny long-term disability benefits. Adams then brought the instant action alleging that Prudential has wrongfully denied his long-term disability benefits in violation of 29 U.S.C. § 1001 et seq. Plaintiff seeks damages in the amount of wrongfully denied benefits plus interest, reinstatement under the Plan, and costs and attorney's fees.

DISCUSSION

A. WRONGFUL DENIAL OF ERISA BENEFITS

1. Applicable Standard of Review

Adams alleges that Prudential violated ERISA by wrongfully denying long-term disability benefits to which he is entitled under the Plan and seeks an order reinstating his benefits along with actual damages for missed benefits since September 20, 2001. "The standards of review for determining ERISA denial-of-benefits claims are well-established." Wilkins, 150 F.3d at 616. "With respect to review of . . . [a] plan administrator's denial of benefits, . . . [a] district court . . . review[s] de novo the plan administrator's denial of ERISA benefits, unless the benefit plan gives the plan administrator discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Id. (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989)). The de novo standard applies to factual determinations and legal conclusions of a plan's administrator. See id. Under de novo review, the Court "must take a `fresh look' at the administrative record but may not consider new evidence or look beyond the record that was before the plan administrator." Id. When a plan administrator has discretionary authority to determine benefits or construe the terms of a benefits plan, a court is to "review a decision to deny benefits under `the highly deferential arbitrary and capricious standard of review.'" Sanford v. Harvard Indus., 262 F.3d 590, 595 (6th Cir.2001) (quoting Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376, 380 (6th Cir.1996)).

In the instant case, the Plan states:

"Total Disability" exists when Prudential determines that all of these conditions are met:

(1) Due to sickness or accidental injury, both of these are true:

(a) You are not able to perform, for wage or profit, the material and substantial duties of your occupation.

(b) After the Initial Duration of a period of Total Disability, you are not able to perform for wage or profit the material and substantial duties of any job for which you are reasonably fitted by your education, training or experience. The Initial Duration is shown in the Schedule of Benefits.

(2) You are not working at any job for wage or profit.

(3) You are under the regular care of a Doctor.

(AR SA/PRU-0029).

Defendant argues that the arbitrary and capricious standard of review applies to the case sub judice because the aforementioned language affords it discretionary authority to determine Adams' eligibility for long-term disability benefits as defined under the Plan. Prudential directs the Court to McDonald v. Western-Southern Life Ins. Co., No C2-98-414, 2001 WL 1678793 (S.D.Ohio Dec. 14, 2001) (unreported). (Doc. No. 11, Ex. 1).

In McDonald, the court asserted that no "magic words" were needed to confer discretionary authority in a plan administrator, only that the grant of discretionary authority be "`clear' in order to trigger the arbitrary and capricious standard of review." McDonald, 2001 WL 1678793 at *4 (citing Perez v. Aetna Life Ins. Co., 150 F.3d 550, 555 (6th Cir.1998) (en banc)). See also Hoover v. Provident Life and Accident Ins. Co., 290 F.3d 801, 807 (6th Cir.2002); Wulf v. Quantum Chem. Corp., 26 F.3d 1368, 1373 (6th Cir.1994); Johnson v. Eaton Corp., 970 F.2d 1569, 1572 n. 2 (6th Cir.1992).

On the other hand, Adams directs the Court to Deal v. Prudential Ins. Co. of Am., 222 F.Supp.2d 1067, 1069 (N.D.Ill. 2002). In Deal, the court examined a Prudential policy containing the same language and found the appropriate standard of review to be de novo. Id. at 1069-70. In so doing, the Deal court stated:

Several other district courts examining identical Prudential policy language have determined that the policy does not clearly indicate that discretion has been retained in the Plan administrators (and administrator decisions are therefore subject to plenary review). See Ehrman v. Henkel Corp., 194 F.Supp.2d 813, 818 (C.D.Ill.2002) (citing Herzberger v. Standard Ins. Co., 205 F.3d 327 (7th Cir.2000)); McDonald v. Timberland Co. Group Long Term Disability Coverage Program, No. CIV 98-686-M, 2002 WL 122382, at *3 (D.N.H. Jan. 23, 2002) (citing Herzberger); Rothstein v. Prudential Life Ins. Co., No. CV0011329SVWAIJX, 2001 WL 793130, at *2-3 (C.D.Cal. July 10, 2001); O'Sullivan v. Prudential Ins. Co., No. 00 Civ. 7915(KNF), 2001 WL 727033, at *3-4 (S.D.N.Y. June 28, 2001) (citing Herzberger).

Prudential mistakenly contends that Adams reliance on Deal is misplaced because the Seventh Circuit has set forth "safe harbor" language which, if included in a plan, ensures that administrators retain discretion and their decisions subject to arbitrary and capricious review. See Herzberger, 205 F.3d at 331; Deal 222 F.Supp.2d at 1068. The Herzberger court made clear that "we forbear to make our `safe harbor' language mandatory, its absence compelling the conclusion that the plan administrator has no discretion." Herzberger, 205 F.3d at 331.

The Court observes, however, that Deal and all of the cases cited therein, are from outside the Sixth Circuit. Moreover, many of them rely on Herzberger, which also held that language "to the effect that benefits shall be paid when the plan administrator upon proof (satisfactory proof) determines that the applicant is entitled to them" does not confer discretionary authority on plan administrator. Id. at 332. The Herzberger court stated:

We hold that the mere fact that a plan requires a determination of eligibility or entitlement by the administrator, or requires proof or satisfactory proof of the applicant's claim,...