Kent v. United of Omaha Life Ins. Co.

• Decision Date: 20 September 1996
• Docket Number: No. 95-3608,95-3608
• Parties: Phyllis A. KENT, Plaintiff-Appellant, v. UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 803

96 F.3d 803

Phyllis A. KENT, Plaintiff-Appellant, v. UNITED OF OMAHA LIFE INSURANCE COMPANY, Defendant-Appellee.

No. 95-3608.

United States Court of Appeals Sixth Circuit.

Argued July 30, 1996.

Decided Sept. 20, 1996.

Before RYAN and SUHRHEINRICH, Circuit Judges; ENSLEN, Chief District Judge. ^*

John E. Duda, Julianne E. Hood (argued and briefed), Cleveland, OH, for Plaintiff-Appellant.

Gregory V. Mersol (argued and briefed), Arter & Hadden, Cleveland, OH, for Defendant-Appellee.

ENSLEN, Chief District Judge.

This appeal concerns an action for benefits under an employee benefit plan subject to the provisions of the Employee Retirement Income Security Act (E.R.I.S.A.), 29 U.S.C. § 1001 et seq. Plaintiff-Appellant Phyllis Kent contends that the trial court erred in making its determination that the defendant had complied with E.R.I.S.A.'s procedural requirements in denying her continued disability insurance benefits. We affirm.

I.

Phyllis Kent began work for Zurich Insurance Company ("Zurich") in October of 1985. There she participated in Zurich's long-term disability program, which was underwritten by defendant-appellee United of Omaha Life Insurance Company ("United").

United's disability plan provided two definitions of disability depending on the length of disability. During the first 24 months of a claimed disability, an employee is disabled if he/she "cannot perform each of the material duties of his [or her] regular occupation." After 24 months of benefits have been paid, the plan defines disability to include conditions which make the employee unable to perform "each of the material duties of any gainful occupation for which he [or she] is reasonably fitted by training, education or experience." Record at 28. Further, according to this plan, United had broad authority to determine questions of eligibility and the payment of benefits. Id. at 20.

On January 6, 1989, Kent sustained a back injury due to a fall on ice. Beginning in January 1991, Kent missed work due to the back injury and made a claim for disability benefits with United. At the time, Kent's orthopaedic surgeon as well as her chiropractor opined that she suffered from a temporary disability due to "recurrent fibromyositis, associated with muscle spasm and spinal-related headaches."

United initially approved Kent for disability payments beginning in April 1991. Following this, Kent and United began a long string of correspondence, which typically involved Kent obtaining additional opinions from her chiropractor that her return to work date should be further extended and United granting such requests. Her chiropractor extended her return to work date some eleven times.

United, concerned about these continual extensions, scheduled Kent for independent medical examinations by an orthopaedic surgeon and a neurologist and for a battery of objective tests. Following the tests and exams, both doctors concluded that there was no objective evidence of a disabling injury and that Kent could return to work with limitations.

In light of such opinions, United's agents explained to Kent that it was unlikely that United would continue benefits. To prepare Kent for this eventuality United hired a consultant to provide rehabilitation services. However, the consultant was unable to do so since he concluded that Kent was unwilling to work.

On February 6, 1992, United sent Kent a very short letter informing her that her benefits were being terminated because she was not disabled under the plan. According to United, its agents further explained the company's position to Kent by telephone calls on February 9, 1992 and afterwards.

Following her receipt of the letter, Kent retained counsel, to whom United provided the pertinent plan documents and medical records. Based on United's correspondence with counsel, it issued a second coverage determination dated September 3, 1993. This determination again denied benefits, but unlike the first letter, it cited the relevant plan language relating to disability, it informed her that the medical reports received did not support a finding of continued disability under the definition, and it informed her that she had a right to appeal the determination under the plan within 60 days of the date of that letter. ¹

Following this determination, Kent's attorney sent a letter appeal to United dated October 19, 1993 and accompanied by a report of Gerard Seltzer, M.D. This report indicated that Seltzer had examined Kent on July 12, 1993, had reviewed her medical file and that in Seltzer's opinion she was "totally and permanently disabled." Based on this correspondence, United agreed to schedule Kent for another neurological examination by a different neurologist. United's neurologist examined Kent on December 13, 1993. It was his conclusion based on the exam that Kent was not disabled and was able to return to work with minimal modifications to her workplace. About this same time, Kent's attorney had her chiropractor submit another letter to United stating that Kent was totally disabled until at least February 1, 1994.

However, Kent did not await further determinations from United. ² Rather, she filed suit in the Court of Common Pleas of Cuyahoga County, Ohio alleging breach of the disability insurance plan at issue because of the denial of benefits and because of violations of E.R.I.S.A. mandated procedure. This suit was removed to the Northern District of Ohio on February 15, 1994.

This case was later tried by the district court on April 12-13, 1995. Following trial, the district court concluded that United gave Kent adequate notice of the denial of claim (by its letter of September 3, 1993) and advised her of her right to appeal the decision and submit additional evidence (which was in fact submitted but which did not persuade the company of a disability). Further, in light of the evidence that Ms. Kent could in fact return to work, the trial judge concluded that denial of benefits was not "an abuse of discretion" and therefore the company was not required to revisit the issue of coverage. Kent filed her notice of appeal on May 25, 1995.

II.

This appeal asks the question of whether the disability claimant received the process required by E.R.I.S.A. (29 U.S.C. § 1133), and by the federal regulations enacted under E.R.I.S.A. (29 C.F.R. § 2560.503-1), as interpreted by the Sixth Circuit Court of Appeals in Vanderklok v. Provident Life & Acc. Ins. Co., 956 F.2d 610, 615-616 (6th Cir.1992). Because the plan in question gave the fiduciary broad discretion to determine claims, the denial of the coverage decision itself is reviewed by the courts to determine if it was arbitrary and capricious. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), Leahy v. Trans Jones, Inc., 996 F.2d 136, 139-140 (6th Cir.1993); Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 983 (6th Cir.1991). However, the question of whether the procedure employed by the fiduciary in denying the claim meets the requirements of Section 1133 is a legal question which the Court must review de novo. Bartling v. Fruehauf Corp., 29 F.3d 1062, 1069 (6th Cir.1994).

Title 29 United States Code Section 1133 provides:

In accordance with regulations of the Secretary, every employee benefit plan shall--

(1) provide adequate notice in writing to any participant or beneficiary whose claims for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and

(2) afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.

29 U.S.C. § 1133. The meaning of this Section is further explained in regulations codified at Title 29 Code of Federal Regulations Section 2560.503-1. These regulations specify that a fiduciary shall establish a claim procedure which informs a claimant of a denial of a claim within 90 days of receipt of the claim. The regulations further specify that the procedure should inform the claimant of the specific reasons for denial of the claim including pertinent plan provisions relating to the denial, and should inform the claimant of his or her right to seek review of the claim decision. Further, these regulations require the fiduciary to establish a claim review procedure under which the claimant has at least 60 days to request review of the claim. Upon the request, review of the claim must ordinarily be completed within 60 days and, in exceptional circumstances, no later than 120 days from receipt of the request.

With these provisions in mind, the Sixth Circuit Court of Appeals in Vanderklok v. Provident Life & Accident Ins. Co., 956 F.2d 610, 615 (6th Cir.1992), held that a procedural notice was inadequate under Section 1133 because

it fails to provide the specific reason or reasons for denial and the specific reference to pertinent plan provisions on which the denial is based. Furthermore, although it states that Provident will review additional medical information, it does not contain...