Goodman v. Guardian Life Ins. Co. of Am.

• Decision Date: 22 May 2018
• Docket Number: Civil Action No. 16-cv-03027-RM-MJW
• Citation: 611 F.Supp.3d 1149
• Parties: Philip Brian GOODMAN, Plaintiff, v. The GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, Defendant.
• Court: U.S. District Court — District of Colorado

611 F.Supp.3d 1149

Philip Brian GOODMAN, Plaintiff,

v.The GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, Defendant.

Civil Action No. 16-cv-03027-RM-MJW

United States District Court, D. Colorado.

Signed May 22, 2018

Carol Lynn Thomson, Paul E. Collins, Treece Alfrey Musat, P.C., Denver, CO, for Plaintiff.

James E. Dallner, Lorenzo Ekker Dallner, LLC, Denver, CO, for Defendant.

ORDER

RAYMOND P. MOORE, United States District Judge

I. INTRODUCTION

Plaintiff Philip Brian Goodman ("Plaintiff"), a participant in the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq. , welfare benefit plan issued to Four Winds Interactive, Inc. ("Four Winds"), Plaintiff's former employer, by defendant The Guardian Life Insurance Company of America ("Defendant"), who insures and administers the plan at issue in this matter, brought this action pursuant to 29 U.S.C. § 1132 challenging the propriety of Defendant's actions in denying Plaintiff long-term disability ("LTD") benefits.¹ (ECF Nos. 1-1, 15.)

On November 17, 2016, Plaintiff filed suit in the District Court, Denver County. (See ECF No. 1-1.) Thereafter, Defendant removed the matter to this Court. (ECF No. 1.) On December 22, 2016, Plaintiff filed an amended complaint (ECF No. 15), and Defendant subsequently answered (ECF No. 16). Presently before the Court is the parties' Joint Motion for a Determination (ECF No. 60), which consists of Plaintiff's opening brief in support (ECF No. 40), Defendant's response (ECF No. 56), and Plaintiff's reply (ECF No. 59). At this juncture, the motion for a determination has been fully briefed and stands ready for decision. Additionally pending is Defendant's Motion to Strike or in the Alternative for Leave to File Surreply (the "motion to strike"² ) (ECF No. 61), to which Plaintiff has responded (ECF No. 62).

II. STANDARD OF REVIEW

The parties quarrel over the appropriate standard to be applied by the Court in its review of Defendant's denial of LTD benefits. Plaintiff is of the opinion that a de novo review is required, whereas Defendant contends that the more deferential arbitrary and capricious standard must be applied. (See ECF No. 40 at 6-8; ECF No. 56 at 13-17.) The root of the parties' discord is Colo. Rev. Stat. § 10-3-1116(2) and whether it is preempted by ERISA. The pertinent portion of the statute states:

An insurance policy, insurance contract, or plan that is issued in this state that offers health or disability benefits shall not contain a provision purporting to reserve discretion to the insurer, plan administrator, or claim administrator to interpret the terms of the policy, contract, or plan or to determine eligibility for benefits.

Colo. Rev. Stat. § 10-3-1116(2) (2008). Here, the plan contains such a provision, which reads:

We have the discretionary authority to: (a) interpret the terms of this plan; and (b) determine a covered person's eligibility for: (i) coverage; and (ii) benefits under the plan. All such determinations are conclusive and binding, except that they may be modified or reversed by a court or regulatory agency with appropriate jurisdiction.

(ECF No. 29, Administrative Record ("AR"), at 100.³ )

The Supreme Court, in Firestone Tire & Rubber Co. v. Bruch , 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), explained that "a denial of benefits challenged under [ERISA] 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." 489 U.S. at 115, 109 S.Ct. 948. However, the matter of discretionary grants of authority has been rendered substantially thornier as states have enacted statutes – such as § 10-3-1116(2) – that essentially invalidate discretionary clauses. Thus, the question becomes one of preemption and whether § 10-3-1116(2) can stand in the face of ERISA's regulatory scheme.

"ERISA includes expansive pre-emption provisions ... to ensure that employee benefit plan regulation would be exclusively a federal concern." Aetna Health Inc. v. Davila , 542 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004) (citing 29 U.S.C. § 1144 ) (internal quotation marks omitted). "There are two aspects of ERISA preemption: (1) ‘conflict preemption’ and (2) remedial or ‘complete preemption.’ " David P. Coldesina, D.D.S. v. Estate of Simper , 407 F.3d 1126, 1135–36 (10th Cir. 2005) (citing 29 U.S.C. § 1144(a) ). The expansive scope of preemption is bookended by ERISA's saving clause. See Kentucky Ass'n of Health Plans, Inc. v. Miller , 538 U.S. 329, 341–42, 123 S.Ct. 1471, 155 L.Ed.2d 468 (2003) ; 29 U.S.C. § 1144(b)(2)(A) ("law[s] ... which regulat[e] insurance, banking, or securities" are saved from preemption). As explained by the Kentucky Ass'n of Health Plans, Inc . court,

for a state law to be deemed a ‘law ... which regulates insurance’ under § 1144(b)(2)(A), it must satisfy two requirements. First, the state law must be specifically directed toward entities engaged in insurance. Second, ... the state law must substantially affect the risk pooling arrangement between the insurer and the insured.

538 U.S. at 341–42, 123 S.Ct. 1471 (some alteration in original).

To date, the Tenth Circuit has not addressed the issue of preemption and ERISA's saving clause with respect to § 10-3-1116(2). That said, several courts in this district have broached the subject and concluded that § 10-3-1116(2) falls within ERISA's saving clause and "[i]s not preempted by ERISA due to a conflict because the abuse of discretion standard of review arises from contractual drafting, not from any ERISA provision, and therefore the state statute does not affect ERISA's statutory enforcement scheme." Arapahoe Surgery Ctr., LLC v. Cigna Healthcare, Inc. , 171 F. Supp. 3d 1092, 1108 (D. Colo. 2016) (footnote omitted) (discussing and adopting the holding of McClenahan v. Metro. Life Ins. Co. , 621 F. Supp. 2d 1135, 1140-42 (D. Colo. 2009), aff'd , 416 F. App'x 693 (10th Cir. 2011), and aff'd , 416 F. App'x 693 (10th Cir. 2011) ); see also Kohut v. Hartford Life and Acc. Ins. Co. , 710 F. Supp. 2d 1139, 1149 (D. Colo. 2008) (determining that " section 10–3–1116 is a law ‘regulat[ing] insurance’ within the meaning of section 1144(b)(2)(A), and that it is therefore saved from preemption by ERISA.").⁴

Defendant's argument in this instance is little more than a feeble attempt to swim against the current that is the consensus of district courts in this circuit. Defendant relies heavily on Conkright v. Frommert , 559 U.S. 506, 130 S.Ct. 1640, 176 L.Ed.2d 469 (2010) as illustrative of ERISA's intent to afford plan administrators the ability to endow themselves with deferential review via discretionary clauses. (See ECF No. 56 at 15-17.) While Conkright discusses discretionary review in ERISA cases at a superficial level, the crux of that case was whether the Second Circuit erred in stripping a plan administrator of its discretionary authority where the plan administrator's initial interpretation of the plan terms violated ERISA. See Conkright , 559 U.S. at 512-14, 130 S.Ct. 1640. Conkright is of little import to this Court's discussion of the viability of § 10-3-1116(2). Indeed, nowhere in Conkright is there any mention of preemption. Beyond its generalized support for the application of preemption and deferential review by this Court, Defendant fails to substantiate its position.

In light of the consensus reached by sister courts in this district and finding Defendant's position wholly unsupported, the Court finds § 10-3-1116(2) not to be preempted. See McClenahan , 621 F. Supp. 2d at 1140-42 (finding no preemption under ERISA for § 10-3-1116(2) ). Therefore, the appropriate standard of review in this instance is de novo.

III. BACKGROUND

A. The Plan

Under the plan's LTD subsection, disability

mean[s] that a current sickness or injury causes physical or mental impairment

to such a degree that the covered person is:

(1) During the elimination period and the own occupation period, not able to perform, on a full-time basis, the major duties of his or her own occupation.

(2) After the end of the own occupation period, not able to perform, on a full-time basis, the major duties of any gainful work.

(AR at 103) (emphasis in original). The elimination period is "[t]he period of time a covered person must be disabled , due to a covered disability , before th[e] plan's benefits are payable." (Id. at 103-04) (emphasis in original). The elimination period for disability due to sickness is 90 days, (id. at 13), and sickness is defined to be "[a]n illness or disease," (id. at 107). Own occupation

[m]eans the occupation: (a) the covered person is routinely performing immediately prior to disability ; (b) which is the covered person's primary source of income prior to disability ; and (c) for which he or she is insured under this plan. Occupation includes any employment, trade or profession that are related in terms of similar: (i) tasks; (ii) functions; (ii) skills; (iv) abilities; (v) knowledge; (vi) training; and (vii) experience; required by employers from those engaged in a particular occupation in the general labor market in the national economy. Occupation is not specific to a certain employer or a certain location.

(Id. at 106) (emphasis in original).

The plan does not afford coverage for any pre-existing condition, which

is an injury or sickness , whether diagnosed or misdiagnosed, and any symptoms thereof, for which, in the look back period, a covered person:

(a) receives advice or treatment from a doctor ;

(b) undergoes diagnostic procedures other than routine screening in the absence of symptoms or suspicion of disease process by a doctor ;

(c) is prescribed or takes prescription drugs; or

(d) receives other medical care or treatment, including consultation with a doctor.

The ‘look back period’ is the twelve months before the latest of: (a) the effective date of the covered person's insurance under this plan ; (b) the

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