Epolito v. Prudential Ins. Co. of America

• Decision Date: 10 October 2007
• Docket Number: No. 3:06-cv-628-J-16MCR.,3:06-cv-628-J-16MCR.
• Citation: 523 F.Supp.2d 1329
• Parties: Patricia EPOLITO, Plaintiff, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant.
• Court: U.S. District Court — Middle District of Florida

523 F.Supp.2d 1329

Patricia EPOLITO, Plaintiff, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant.

No. 3:06-cv-628-J-16MCR.

United States District Court, M.D. Florida, Jacksonville Division.

October 10, 2007.

John V. Tucker, for Plaintiff.

Clifford L. Rosin, for Defendant.

ORDER

JOHN H. MOORE, District Judge.

This cause is before the Court for consideration of the parties' Motions for Summary Judgement. Plaintiff, Ms. Patricia Epolito filed two separate Motions for Summary Judgment, one dispositive. ("Plaintiffs Motion") (Dkt.41) and one partial (the "Partial Motion") (Dkt.26) (collectively "Plaintiffs Motions"). Defendant, the Prudential Insurance Company of America filed the other one. (Dkt.31). Plaintiff filed a response to Defendant's Motion for Summary Judgment (Dkt.42) and Defendant filed a single comprehensive response to Plaintiffs Motions (Dkt.43).

By their cross-motions, the parties each seek summary judgment as to Plaintiffs Complaint (Dkt.1) for the recovery of benefits, enforcement of rights and clarification of rights to future benefits under a plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA" or the "Act"), 29 U.S.C. §§ 1001-1381.

For the reasons that follow, Plaintiffs Motion (Dkt.41) is GRANTED; the Partial Motion (Dkt.26) is DENIED; and, Defendant's Motion for Summary Judgment (Dkt.31) is DENIED.

I. Factual History¹

The undisputed facts establish that Plaintiff was employed beginning on January 1, 2003, by Human Resources of Kemper Auto and Home, a Unitran Company ("Kemper Independence/Unitrin") as a Regional Operations Managerk.² As an employee of Kemper Independence/Unitran, Plaintiff was provided with the Kemper Independence/Unitran Long Term Disability ("LTD") Plan (the "LTD Plan"). The LTD Plan is a welfare benefit plan covered by ERISA, which is funded through an insurance policy issued by Defendant to Unitran, Inc.

Plaintiff was previously employed by Kemper Independence/Unitrin's predecessor, Kemper Insurance Companies ("Kemper") from February 7, 1977 until December 31, 2002.³ While employed at Kemper, Plaintiff enrolled in a pension plan named the "Kemper Retirement Plan."

On February 3, 2003, Plaintiff left her job as Regional Operations Manager due to among other things Graves' Disease resulting in thyroid ophthalmopathy,⁴ diplopia,⁵ dry eyes, nuclear sclerotic cataracts and decreased eyesight. Plaintiffs chief and recurring complaint is that she cannot focus on written words after a short period of time because diplopia or double vision occurs. (A.R.379, 384). As Regional Operations Manager, Plaintiff was required to spend over 90% of her day reading papers and reports in order to prepare manuals and ensure quality compliance. (A.R.352, 375, 379).

Plaintiff filed a claim for disability insurance benefits pursuant to the LTD Plan. The parties do not dispute that Plaintiff's claim is based on the conditions listed above. Defendant paid Plaintiff shortterm disability ("STD") benefits, and approved LTD benefits, in the amount of $3,891.97 per month for the period from August 2, 2003 through August 31, 2005. At Defendant's request, Plaintiff also filed an application with the Social Security Administration ("SSA") for social security disability benefits ("SSDB") for the conditions listed above and depression. Plaintiffs SSDB application was denied initially and again on appeal.

Through a letter dated July 26, 2005 (the "Denial Letter") (A.R.66-68), Defendant advised Plaintiff that her benefits would be terminated as of August 1, 2005.⁶ Defendant explained that it determined Plaintiff was not totally disabled as defined under the LTD Plan. The Denial Letter also informed Plaintiff that she had the right to appeal Defendant's decision. Plaintiff appealed.

On March 14, 2006, Defendant advised Plaintiff that it had completed review of her claim and denied her appeal for a continuation of benefits. (A.R.69-71). By this letter, Defendant also advised Plaintiff that she had the option of filing a second appeal or filing a civil action under ERISA. Plaintiff filed this ERISA action.

On July 10, 2006, Plaintiff filed her Complaint (Dkt.1) with this Court pursuant to section 502(a) of ERISA, 29 U.S.C. § 1132(a) (1)(B). Plaintiff argues that Defendant wrongfully terminated her LTD claim. Plaintiff seeks to be placed back in benefit. Plaintiff also seeks all past due benefits from September 1, 2005, forward in the amount of $3,596.16 per month, pre-judgment interest and attorney's fees and costs.

Plaintiff argues in the Partial Motion that the LTD Plan does not require her to offset any benefits potentially received by retirement pension benefits from. Plaintiffs former employer, Kemper⁷ Plaintiff makes this final argument in response to Defendant's Answer. (Dkt.9). In the Answer, Defendant set out its affirmative defenses. Through its Third and Fifth Affirmative Defenses Defendant claims that it is entitled to certain offsets under the LTD Plan if an award of benefits is appropriate in this case. Plaintiff seeks summary judgment as to Defendant's Third and Fifth Affirmative Defenses, to "include a ruling that [Defendant] may not reduce her LTD benefits by the amount of her pension from Kemper." (Dkt. 26 at p. 2). Plaintiff also claims that the Court can consider evidence from outside of the claims file or administrative record when considering her offset argument.

Defendant filed a cross-motion for summary judgment (Dkt.31) and a response to Plaintiffs Motions. (Dkt.43). Through these pleadings, Defendant argues that its decision to terminate Plaintiff's LTD benefits was legally correct. Defendant further argues that even if the decision was not correct, it was reasonable and should stand under an arbitrary and capricious standard of review or heightened arbitrary and capricious standard. Defendant also seeks an award of attorney's fees and costs.

In response to the Partial Motion, Defendant claims that if the Court determines Plaintiff is entitled to LTD benefits, remand of Plaintiff's LTD claim is appropriate. Defendant states that it was never allowed an opportunity to make a determination about offsets to Plaintiff's LTD benefits. Defendant further claims that prior to the filing of this suit, Plaintiff never advised Defendant that she was contemporaneously receiving pension benefits while also receiving LTD benefits under the LTD Plan. Finally, Defendant claims that under Eleventh Circuit precedent Plaintiff cannot improperly supplement the administrative record with documents and evidence not considered by Defendant during the administration of Plaintiff's LTD claim.

II. Standard of Review

In an ERISA case, the Court does not take evidence. Instead its role is to evaluate the reasonableness of the administrative determination in light of the record compiled before the plan fiduciary. Curran v. Kemper Nat. Serv., Inc., Abbott Labs. Extended Disability Plan, 2005 WL 894840 (11th Cir. Mar.16, 2005) ("In an ERISA benefit denial case ... the district court sits more as an appellate tribunal than as a trial court.").

Because ERISA "does not contain a body of contract law to govern the interpretation and enforcement of employee benefit plans," disputes over benefits are governed by "federal common law" on the many matters not addressed by the statute. Hauser v. Life Gen. Sec. Ins. Co., 56 F.3d 1330, 1333 (11th Cir.1995). Under the federal common law of ERISA, a court adjudicating an action for benefits will apply one of three standards of review: (1) de novo where the claim administrator lacks discretionary authority to decide claims for benefits; (2) arbitrary and capricious where the plan terms grant such discretion to the administrator; or (3) "heightened" arbitrary and capricious where the administrator has discretion but also has a conflict of interest because it is the entity paying the claims that it decides. See Williams v. BellSouth Telecommuns., Inc., 373 F.3d 1132, 1134-35 (11th Cir. 2004).

In Williams, this Court summarized these standards, and offered guidance regarding how to determine which one to apply, by providing the following multistage analysis for ERISA benefits cases:

1. Apply the de novo standard to determine whether the claim administrator's benefits-denial decision is "wrong" (i.e., the court disagrees with the administrator's decision); if it is not, then end the inquiry and affirm the decision.

2. If the administrator's decision is in fact "de novo wrong," then determine whether the administrator was vested with discretion in reviewing claims; if not, end judicial inquiry and reverse the decision.

3. If the administrator's decision is "de novo wrong" and it was vested with discretion in reviewing claims, then determine whether "reasonable" grounds supported the decision (hence, review the decision under the more deferential arbitrary and capricious standard).

4. If no reasonable grounds exist, then end the inquiry and reverse the administrator's decision; if reasonable grounds exist, then determine if the administrator had a conflict of interest.

5. If there is no conflict, then end the inquiry and affirm the decision.

6. If there is a conflict, then apply heightened arbitrary and capricious review to the decision to affirm or deny it.

Id. at 1137-38.

It is undisputed here that Defendant had discretion to decide claims for benefits under the applicable insurance policy. It also had a conflict of interest, as defined by the Eleventh Circuit, because it was responsible for paying claims, as well as deciding them. Accordingly, the proper standard of review in this case is the "heightened arbitrary and capricious standard." See Williams, 373 F.3d at 1134-35.

Under the heightened arbitrary and capricious standard, the court's initial threshold inquiry is to perform a de novo⁸ review to determine if the administrator's benefits decision was "wrong." Id. at 1138-39.⁹ If the initial de novo review...