Kalish v. Liberty Mutual/Liberty Life

• Decision Date: 18 August 2005
• Docket Number: No. 04-1886.,04-1886.
• Citation: 419 F.3d 501
• Parties: Richard KALISH, Plaintiff-Appellant, v. LIBERTY MUTUAL/LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

419 F.3d 501

Richard KALISH, Plaintiff-Appellant, v. LIBERTY MUTUAL/LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, Defendant-Appellee.

No. 04-1886.

United States Court of Appeals, Sixth Circuit.

Argued: July 22, 2005.

Decided and Filed: August 18, 2005.

ARGUED:

David B. Grant, Grant, Busch & Kirschner, Southfield, Michigan, for Appellant. James P. Hollihan, Pittsburgh, Pennsylvania, for Appellee.

ON BRIEF:

David B. Grant, Grant, Busch & Kirschner, Southfield, Michigan, for Appellant. James P. Hollihan, Pittsburgh, Pennsylvania, for Appellee.

Before: KENNEDY, CLAY, and GILMAN, Circuit Judges.

OPINION

RONALD LEE GILMAN, Circuit Judge.

Richard Kalish, who suffers from a heart condition and depression, began receiving disability benefits under a group insurance plan (the Plan) issued to his employer by Liberty Mutual/Liberty Life Assurance Company of Boston. The benefits ended, however, when Liberty determined that Kalish was no longer disabled under the terms of the Plan. After exhausting his administrative appeals, Kalish brought this action to recover benefits from Liberty pursuant to 29 U.S.C. § 1132(a)(1)(B) of the Employee Retirement Income Security Act (ERISA). The district court granted judgment on the administrative record in favor of Liberty.

Kalish argues on appeal that the district court erred in holding that (1) the arbitrary and capricious standard of judicial review applies to this case despite Liberty's conflict of interest as both insurer and plan administrator, (2) Liberty could deny benefits because Kalish was capable of sedentary work, (3) Liberty's decision to deny benefits for Kalish's heart condition was not arbitrary and capricious, and (4) Liberty was not required to consider evidence of Kalish's alleged depression. For the reasons set forth below, we REVERSE the judgment of the district court affirming Liberty's denial of benefits and REMAND this case for entry of an order requiring Liberty to award benefits plus interest from the date on which Kalish's benefit payments ceased.

I. BACKGROUND

A. Factual background

Kalish worked for Deluxe Video Services, Inc., a company affiliated with Rank America, Inc., before his health problems began. As an employee, he was covered by Rank America's long-term disability insurance policy. Liberty is both the insurer and administrator of the Plan. Under the terms of the Plan, Kalish was to receive monthly disability benefits equal to two-thirds of his monthly income if he became "unable to perform all of the material and substantial duties of his occupation on an Active Employment basis because of an Injury or Sickness."

Kalish was the Director of National Transportation for Deluxe Video. He was responsible for ensuring that newly released video and DVD movies arrived at nationwide distribution centers on a same-day basis. According to the form that Kalish's supervisor at Deluxe Video completed and returned to Liberty, Kalish's job duties required him to "(1) direct all aspects [of] transportation operations, (2) handle all carrier negotiations, (3) travel to customer/carrier locations, [and] (4) direct [an] on-site staff of 50 employees." His supervisor further described Kalish's job as a "high stress position with many deadlines" and significant "vendor/customer contact." In addition to four hours of sitting, Kalish's position required him to spend one hour standing, one hour walking, and one hour reaching at shoulder level on a daily basis.

Kalish suffered two separate heart attacks in May and July of 2001. Immediately following the first heart attack, Kalish filed a claim with Liberty. He received short-term disability benefits for 180 days, the limit for such benefits under the Plan. Then, in December of 2001, Kalish filed another claim with Liberty, this time seeking long-term disability benefits.

In order to process this claim, Liberty requested additional documentation from Kalish's treating physicians. Among the physicians were Dr. Eisenberg, an internist, and Dr. Raminick, a gasteroenterologist, both of whom had been treating Kalish before his heart problems began and continued seeing him after his heart attacks. Drs. Eisenberg and Raminick provided Liberty with copies of their medical records, which document Kalish's problems with hepatitis, diabetes, hypertension, peptic ulcers, and sleep apnea.

The bulk of the medical reports considered by Liberty, however, were generated by Dr. Rasak, the cardiologist who treated Kalish for his heart condition. In addition to providing Liberty with copies of Kalish's medical records, Dr. Rasak sent Liberty a letter in January of 2002 that stated: "At this point, I do not see Mr. Kalish functioning well in a workplace and feel that he should be completely and totally disabled." Dr. Rasak also opined that "never can [Kalish] work an 8-hour day" on account of his "severe coronary artery disease." In support of this opinion, Dr. Rasak repeated that "Kalish is severely debilitated as a result of his extensive damage to his heart," and that, "[i]f it were not for the patient's hepatitis C, the patient may be a candidate for a cardiac transplant." Dr. Rasak further observed that Kalish suffered from "hypertension, diabetes, hepatitis C, peptic ulcer disease, sleep apnea and hypercholesterolemia."

As part of its review process, Liberty sent an investigator to Kalish's home in January of 2002 to conduct an in-person interview and obtain a tape-recorded statement from Kalish. Liberty's investigator observed that "the claimant appeared tired, but was very cooperative." He also reported that Kalish "appears to have a limited lifestyle, due to tiring easily." In reaching his final conclusion that Kalish was "highly credible," the Liberty investigator stated that Kalish "appears to try to keep his spirits up, but came across as missing his job."

A registered nurse employed by Liberty reviewed the medical reports provided by Kalish's treating physicians. In her evaluation, she noted what she considered to be inconsistencies between the statements provided by Dr. Rasak regarding Kalish's ability to work and the results of the medical tests performed on Kalish. She recommended that Kalish's file receive peer review from an independent physician specializing in cardiology.

Liberty then retained Peer Review Analysis, an independent company, to evaluate Kalish's file. The cardiologist conducting the review, Dr. Conrad, spoke with Dr. Rasak by telephone. During this discussion, Dr. Rasak expressed the opinion that "it would not be feasible for the patient to perform work involving any significant exertion," but he conceded that "it might be possible for the patient to perform work of a sedentary nature." On the other hand, Dr. Rasak noted that "depression in association with other medical problems might also impair the employee's ability to function effectively in his job."

Dr. Conrad, in performing his evaluation, examined Kalish's medical records. He concluded that Kalish had "moderate to severe impairment of left ventricular function," and that this "dysfunction is associated with an increased risk of recurrent congestive heart failure and increased mortality risk." But Dr. Conrad found that "there [wa]s no clear evidence. . . that work cessation would necessarily reduce the risk." He further observed that Kalish "has shown significant clinical improvement, . . . is able to exercise on a regular basis, . . . [and] testing has shown good functional capacity." Dr. Conrad concluded his review with a finding that the "records do not document a need for restrictions or limitations that would necessarily preclude the employee from performing the duties of his job."

Liberty forwarded a copy of Dr. Conrad's peer review to Dr. Rasak on February 27, 2002, along with a letter inviting him to respond to the findings of Dr. Conrad. Dr. Rasak was given one week to "detail the specific areas with which [he] disagree[d] and [to] provide medical documentation to support [his] position." Liberty cautioned that, "in the absence of a response, [it would] conclude that [he] agree[d] with the peer review." Dr. Rasak did not respond to this letter.

On March 15, 2002, Liberty denied Kalish's claim for long-term disability benefits as of October 25, 2001, the date of a stress test taken by Kalish that Dr. Conrad had relied upon in concluding that Kalish was no longer disabled. Liberty indicated that it would keep his claim open for an additional two weeks, until March 28, 2002, to permit Kalish to respond to the denial. No documents were received from Kalish or his physicians before the March 28 deadline. On May 3, 2002, however, Dr. Rasak sent Liberty a copy of a report, dated April 1, noting that Kalish was suffering from depression.

Kalish wrote a letter to Liberty on May 15, 2002, to formally appeal the denial of his claim. He also advised Liberty that he would be submitting additional medical reports from Dr. Rasak and from a clinical psychologist, Dr. Last. On May 28, Liberty received a letter from Dr. Last, stating that he had been treating Kalish for depression and anxiety on a weekly basis since April 25. Dr. Last expressed his opinion that "[d]ue to the depression and anxiety, and medical problems, [Kalish's] ability to work currently is significantly compromised."

Liberty wrote Kalish a letter on July 17, 2002, informing him that a "consulting physician" would be reviewing his "recently received medical information" and that the process could require several weeks. But Kalish's file was never reviewed by an independent physician. It was instead evaluated by a nurse employed by Liberty. She concluded that the "[n]ew medical records document no new objective or clinical change in his condition except for some symptoms of depression. However, the psychologist supplied no office notes and symptoms were not present or treated until 6 mos after the denial." Based upon this review, Liberty upheld its denial of benefits to...