Caldwell v. Life Ins. Co. of North America

• Decision Date: 16 December 1998
• Docket Number: No. Civ.A. 93-2550-GTV.,Civ.A. 93-2550-GTV.
• Citation: 37 F.Supp.2d 1254
• Parties: Rufus A. CALDWELL, III, Plaintiff, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant.
• Court: U.S. District Court — District of Kansas

37 F.Supp.2d 1254

Rufus A. CALDWELL, III, Plaintiff, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant.

No. Civ.A. 93-2550-GTV.

United States District Court, D. Kansas.

December 16, 1998.

COPYRIGHT MATERIAL OMITTED

William P. Ronan, Cloon, Bennett & Ronan, Overland Park, KS, for Rufus A Caldwell, III, plaintiff.

Richard N. Bien, James A. Durbin, Swanson, Midgley, Gangwere, Kitchin & McLarney, LLC, Kansas City, MO, Craig T. Kenworthy, Swanson, Midgley, Gangwere, Kitchin & McLarney, LLC, Overland Park, KS, for Life Insurance Company of North America, defendant.

MEMORANDUM ORDER

VANBEBBER, District Judge.

Plaintiff Rufus Caldwell filed this suit seeking review of the denial of his claim for disability benefits by defendant Life Insurance Company of North America ("LINA") pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. The case is before the court on the parties' cross-motions for summary judgment (Docs. 120 & 126).

After examining the parties' summary judgment papers and the record before the plan administrator ("administrative record"), the court reverses defendant's determination that plaintiff was not entitled to benefits for the period beginning January 31, 1989 and ending January 31, 1991, and affirms defendant's determination that plaintiff was not entitled to benefits after January 31, 1991.

I. Procedural Issues

A. Standard of Review

As the court previously determined in a Memorandum and Order dated March 7, 1997, the court will apply the "sliding scale" approach in reviewing defendant's decision to deny plaintiff long-term disability benefits. See Caldwell v. Life Ins. Co. of N. Am., 959 F.Supp. 1361, 1365-66 (D.Kan.1997). "Under this approach, the reviewing court will always apply an arbitrary and capricious standard, but the court must decrease the level of deference given to the conflicted administrator's decision in proportion to the seriousness of the conflict." Chambers v. Family Health Plan Corp., 100 F.3d 818, 825 (10th Cir. 1996). In this case, LINA's decision will be entitled to some deference, but the deference will be lessened to the degree necessary to neutralize any untoward influence resulting from the conflict. See id. at 826.

The court must determine whether defendant's denial of benefits was arbitrary and capricious. "Indicia of arbitrary and capricious actions include a lack of substantial evidence, a mistake of law, and bad faith." Buchanan v. Reliance Standard Life Ins. Co., 5 F.Supp.2d 1172, 1180 (D.Kan.1998) (citing Sandoval v. Aetna Life & Casualty Ins. Co., 967 F.2d 377, 380 n. 4 (10th Cir.1992)). A decision to deny benefits is not arbitrary and capricious if it is reached through a reasonable interpretation of the plan's terms. See McGraw v. Prudential Ins. Co. of Am., 137 F.3d 1253, 1259 (10th Cir.1998). Therefore, "[t]he touchstone of [the court's] inquiry is whether defendant's interpretation of its plan is reasonable." Semtner v. Group Health Serv. of Okla., Inc., 129 F.3d 1390, 1393 (10th Cir.1997).

B. Scope of Review

In its March 7, 1997 Memorandum and Order, the court determined that the evidence to be considered upon review is limited to the administrative record that was before the defendant when it made its decision to deny plaintiff's claim. See Caldwell, 959 F.Supp. at 1368 n. 3. Despite this ruling, plaintiff's summary judgment papers contained numerous references and citations to testimony contained in his November 20, 1991 deposition. This deposition was not produced by plaintiff and therefore, is not part of the administrative record. In response to plaintiff's attempt to expand the scope of admissible evidence before the court, defendant has filed a motion to renew the court's previous motion in limine (Doc. 136).

The court concludes that plaintiff's deposition should not be considered because plaintiff failed to include it in the administrative record reviewed by defendant. Plaintiff had ample opportunity to supplement the administrative record in response to the court's March 7, 1997 order remanding the case to defendant for further review. Accordingly, the court will not consider the November 20, 1991 deposition in determining whether defendant's denial of plaintiff's claim was arbitrary and capricious. See Sandoval, 967 F.2d at 380 ("In determining whether the plan administrator's decision was arbitrary and capricious, the district court generally may consider only the arguments and evidence before the administrator at the time it made that decision.") Defendant's motion is limine (Doc. 136) is granted.

C. Procedural Posture of the Case

Both parties have filed motions for summary judgment in this case. Although the United States Court of Appeals for the Tenth Circuit has resolved ERISA suits in a summary judgment posture in the past, this court concludes that traditional summary judgment standards are not the proper means by which to review an ERISA plan administrator's denial of benefits under an arbitrary and capricious standard of review. See Brooks v. Guardian Life Ins. Co., 995 F.Supp. 1174, 1176 (D.Kan.1998). In Olenhouse v. Commodity Credit Corp., the Tenth Circuit held that motions for summary judgment are inconsistent with the standards for judicial review of actions in which the court is confined to the administrative record in its analysis. 42 F.3d 1560, 1579-80 (10th Cir. 1994) (Kane, J., sitting by designation).

Although Olenhouse focused on the judicial review of administrative agency decisions, the court concludes that its reasoning is applicable to suits seeking review of the denial of ERISA benefits that are limited in their scope to the administrative record. Applying the Olenhouse analysis to ERISA cases with an arbitrary and capricious standard of review encourages courts to assess the record substantively and discourages them from relying on either the post hoc rationalizations of counsel or the court's own reasoning with a general disregard for the contents of the administrative record. See Olenhouse, 42 F.3d at 1580.

Because motions for summary judgment are inappropriate vehicles for resolving ERISA suits under an arbitrary and capricious standard, the court will not consider the traditional summary judgment standards and will treat the pending summary judgment motions as the briefs of the respective parties. In doing so, the court will base its conclusions on the standards governing this case and rely solely on the evidence contained in the administrative record.

II. Administrative Record Factual Findings

The following facts are based exclusively on the administrative record submitted by the parties. Arguments not made and documents not submitted in the administrative review process are omitted.

From November 3, 1975 until April 28, 1989, plaintiff was employed by Western Atlas International ("Western Atlas") as a customer service representative. Although plaintiff's title was "customer service representative," plaintiff's duties included public relations, selling, acting as a rig hand, and serving as a relief engineer. A rig hand employed by Western Atlas was required to lift a variety of objects ranging from a thirty-pound logging tool to his share of a 450-pound perforating gun. The duties of a relief engineer did not entail any significant manual labor.

As an employee of Western Atlas, plaintiff was covered by a group long-term disability insurance policy issued by LINA and sponsored by Western Atlas. Under the terms of the policy, LINA was required to pay total disability benefits to an employee for the first twenty-four months after sickness or injury if the employee is unable to "perform the essential duties of his occupation." After the initial twenty-four-month period, an employee's eligibility for total disability payments continues only if the employee is "unable to perform all the essential duties of any occupation for which he is or may reasonably become qualified based on his education, training or experience." The policy specifies that the monthly benefit is sixty percent of the employee's salary at the time of total disability offset by any other benefits received.

Under the policy, disability payments commence when LINA receives "due proof that: (1) the Employee [became] Totally Disabled while insured for this Long Term Disability Insurance; and (2) his Total Disability has continued for a period longer than the Benefit Waiting Period shown in the Schedule." The policy defines the benefit waiting period as ninety days of continuous total disability. Furthermore, the policy enumerates situations in which an employee's insurance coverage may terminate, including the earlier date of the following: the employee ceases to be an eligible employee or the employee ceases active service with the employer.

On January 31, 1989, during the course of his employment with Western Atlas, plaintiff suffered injuries when he tripped and fell to the ground while exiting his truck. Despite his injuries, plaintiff immediately returned to work, and remained employed by Western Atlas until he was laid off on April 28, 1989. On April 25, 1994, plaintiff submitted a claim to LINA seeking long-term disability benefits.¹ LINA denied this claim on July 25, 1995. After judicial review by this court, the case was remanded to LINA as the ERISA plan administrator to afford plaintiff a full and fair review of its denial of his disability claim.

Pursuant to the court's remand order, LINA instructed Ida Kung, a team leader at CIGNA/LINA, to seek additional information relevant to plaintiff's claim and to conduct a second review of plaintiff's case. According to her deposition, Kung accumulated approximately 850 additional pages of information, added these pages to the administrative record, and reviewed the entire 1,108-page record. Kung concluded that plaintiff was not totally disabled on either January 31, 1989, the date of his initial injury, or April 28, 1989, the...