Kaus v. Standard Ins. Co.

• Decision Date: 13 November 1997
• Docket Number: Civil Action No. 97-4048-DES.
• Parties: Paul KAUS, Plaintiff, v. STANDARD INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Kansas

985 F.Supp. 1277

Paul KAUS, Plaintiff, v. STANDARD INSURANCE COMPANY, Defendant.

Civil Action No. 97-4048-DES.

United States District Court, D. Kansas.

November 13, 1997.

Norman R. Kelly, Salina, KS, for Plaintiff.

Terry L. Unruh, Wichita, KS, for Defendant.

MEMORANDUM AND ORDER

SAFFELS, Senior District Judge.

This matter is before the court on defendant's Motion for Summary Judgment (Doc 20) on plaintiff's action pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), to recover benefits under a group health plan issued by defendant. Also before the court is plaintiff's Motion to Vacate (Doc. 11) the May 1, 1997, scheduling order entered by United States Magistrate Judge Ronald C. Newman. For the reasons set forth below, defendant's Motion for Summary Judgment is granted and plaintiff's Motion to Vacate is denied as moot.

I. BACKGROUND

The following facts are uncontroverted or, where controverted, construed in a manner most favorable to the plaintiff as the non-moving party.

Galichia Medical Group, P.A established and maintained a welfare benefit plan (the "Plan"), offering long-term disability benefits for its employees. As an employee of Galichia, plaintiff Paul Kaus was a participant in the Plan. His coverage under the Plan became effective October 1, 1995.

The Plan was funded by an insurance policy issued by Standard Insurance Company ("Standard"). The Plan gives Standard "full and exclusive authority" to "interpret" and "resolve" all questions arising in the "administration, interpretation, and application" of the Plan. The Plan states:

Except for those functions which the Group Policy specifically reserves to the Policyowner, we have full and exclusive authority to control and manage the Group Policy, to administer claims, and to interpret the Group Policy and resolve all questions arising in the administration, interpretation, and application of the Group Policy.

Our authority includes, but is not limited to:

1. The right to resolve all matters when a review has been requested;

2. The right to establish and enforce rules and procedures for the administration of the Group Policy and any claim under it;

3. The right to determine:

a. Your eligibility for insurance;

b. Your entitlement to benefits;

c. The amount of benefits payable to you;

d. The sufficiency and the amount of information we may reasonably require to determine a., b., or c., above.

Subject to the review procedures of the Group Policy, any decision we make in the exercise of our authority is conclusive and binding.

Pursuant to the Plan, long-term disability benefits ("LTD benefits") are not payable for any: "[D]isability caused or contributed to by a Preexisting Condition or medical or surgical treatment of a Preexisting Condition." A Preexisting Condition is defined as a:

[M]ental or physical condition for which you have done any of the following at any time during the Preexisting Condition Period shown in the Coverage Features:

a. Consulted a Physician;

b. Received medical treatment or services; or

c. Taken prescribed drugs or medications.

The Preexisting Condition period is the "90-day period just before your insurance becomes effective."

On April 5, 1996, Mr. Kaus applied for LTD benefits under the Plan. Mr. Kaus maintained that he became unable to work as of February 20, 1996, due to "severe depression." He asserted that this condition prevented him from working at his occupation because he was "severely depressed due to job situation changes and surgeries with related open incision."¹

Mr. Kaus's medical records reflect problems with depression dating back to 1992, when he was treated by an associate of Dr Norris, Dr. Alan K. Wardel. Dr. Norris assumed care for plaintiff in July 1995. Mr. Kaus's medical records also indicate that he was experiencing on-going health problems related to Kallman's Syndrome, as well as health problems related to a penile implant that was not healing properly. As a result of various health problems resulting from Kallman's Syndrome, plaintiff has had penile implants in the past, at least one of which had been removed because of medical complications. On September 15, 1995, Dr. Norris prescribed Valium. On September 21, 1995, Dr. Norris reported that plaintiff's "depression continues to be somewhat of a problem."

On November 2, 1995, Dr. Norris reported that "the patient has experienced a lot of anxiety, and feels a depression. He has been taking Valium 5 mg po tid during the bad times, and is here today to discuss getting on some anti-inflammatory therapy." On November 17, 1995, Dr. Norris reported "his depression seems improved."

Standard denied Mr. Kaus's claim for LTD benefits on July 24, 1996, alleging his medical records reflected that his disability condition was caused or contributed to by a preexisting condition. On September 26, 1996, Mr. Kaus requested that Standard review its decision denying his claim for LTD benefits. In support of his request, Mr. Kaus offered a letter from Dr. Norris, dated October 17, 1996. In that letter, Dr. Norris confirmed that Mr. Kaus was prescribed Valium during September 1995, and that on September 21, 1995, he diagnosed Mr. Kaus with "depression" that continued to be "somewhat of a problem." Dr. Norris stated, however, that he prescribed Valium "in hopes that it would help him sleep and improve his healing." He also stated that in referring to "depression" he was referring to "situational depression surrounding his health problems at that time." He further stated that plaintiff's psychological symptoms changed in late October and early November 1995, and that he felt at that time plaintiff was suffering from "major depression."

Mr. Kaus's claim was forwarded to Standard's Quality Assurance Unit for review. By letter dated October 29, 1996, Mr. Kaus was again informed that he could submit additional information in support of his claim. Although Mr. Kaus's counsel sent a letter dated November 5, 1996, concerning Mr. Kaus's claim for benefits, no new information was provided to Standard. Standard's Quality Assurance Unit reviewed all of the available medical records in Mr. Kaus's claim file, including the letter by Dr. Norris dated October 17, 1996, and concluded that Standard's denial of Mr. Kaus's claim due to the existence of a preexisting condition was proper. On November 29, 1996, Mr. Kaus requested clarification of the review decision by the Quality Assurance Unit. Standard replied by letter of December 20, 1996, in which Standard's employee, Jane B. Beyer, identified the preexisting condition language of the policy and stated that the policy does not require that diagnosis of the disabling condition be made during the investigation period.

II. SUMMARY JUDGMENT STANDARD

A court shall render summary judgment upon a showing that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c). The rule provides that "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). The substantive law identifies which facts are material. Id. at 248, 106 S.Ct. at 2510. A dispute over a material fact is genuine when the evidence is such that a reasonable jury could find for the nonmovant. Id. "Only disputes over facts that might properly affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id.

The movant has the initial burden of showing the absence of a genuine issue of material fact. Shapolia v. Los Alamos Nat'l Lab., 992 F.2d 1033, 1036 (10th Cir.1993). The movant may discharge its burden "by `showing'—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case." Celotex Corp v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). The movant need not negate the nonmovant's claim. Id. at 323, 106 S.Ct. at 2552.

Once the movant makes a properly supported motion, the nonmovant must do more than merely show there is some metaphysical doubt as to the material facts. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986). The nonmovant must go beyond the pleadings and, by affidavits or depositions, answers to interrogatories, and admissions on file, designate specific facts showing there is a genuine issue for trial. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553 (interpreting Fed. R.Civ.P. 56(e)). Rule 56(c) requires the court to enter summary judgment against a nonmovant who fails to make a showing sufficient to establish the existence of an essential element to that party's case, and on which that party will bear the burden of proof. Id. at 322, 106 S.Ct. at 2551. Such a complete failure of proof on an essential element of the nonmovant's case renders all other facts immaterial. Id. at 323, 106 S.Ct. at 2552.

A court must view the facts in the light most favorable to the nonmovant and allow the nonmovant the benefit of all reasonable inferences to be drawn from the evidence. See, e.g., United States v. O'Block, 788 F.2d 1433, 1435 (10th Cir.1986) (stating that "[t]he court must consider factual inferences tending to show triable issues in the light most favorable to the existence of those issues"). The court's function is not to weigh the evidence, but merely to determine whether there is sufficient evidence favoring the nonmovant for a finder of fact to return a verdict in that party's favor. Anderson, 477 U.S. at 249, 106 S.Ct. at 2510. Essentially, the court performs the threshold inquiry of determining whether a trial is necessary. Id. at 250, 106 S.Ct. at 2510.

III. DISCUSSION

E...