Maher v. Massachusetts Gen. Hosp. Long Term Disability Plan

• Decision Date: 07 December 2011
• Docket Number: No. 10–1321.,10–1321.
• Parties: Deborah MAHER, Plaintiff, Appellant, v. MASSACHUSETTS GENERAL HOSPITAL LONG TERM DISABILITY PLAN, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

52 Employee Benefits Cas. 1211

665 F.3d 289

Deborah MAHER, Plaintiff, Appellant,

v.MASSACHUSETTS GENERAL HOSPITAL LONG TERM DISABILITY PLAN, Defendant, Appellee.

No. 10–1321.

United States Court of Appeals, First Circuit.

Heard Dec. 10, 2010.Decided Dec. 7, 2011.

Robert J. Rosati with whom ERISA Law Group was on brief for appellant.

Laurie F. Rubin with whom Prince, Lobel, Glovsky & Tye LLP was on brief for appellee.

Before BOUDIN, LIPEZ, and HOWARD, Circuit Judges.

BOUDIN, Circuit Judge.

Deborah Maher, a registered nurse, began work at Massachusetts General Hospital (“MGH”), in August 2001. Maher stopped working in November 2001 and, in February 2002, began receiving disability benefits through MGH's long-term disability plan due to chronic abdominal pain and related symptoms.¹ Her physicians—although never “entirely clear” on the cause—attributed her symptoms to chronic pancreatitis, chronic pain syndrome or fibromyalgia. Over time, joint pain added to her woes, and Maher received “impressive amounts of narcotics” to manage her pain, which caused some negative side effects.

In February 2007, Liberty Life Assurance Company of Boston (“Liberty”), the plan's claims processor, terminated Maher's benefits. After a June 2007 letter misquoted plan language, Liberty concluded in a corrected September 2007 letter that Maher was no longer “totally disabled,” defined in Section 2.10 of the “The Massachusetts General Hospital Long Term Disability Plan” (the “primary plan document”) as

such complete incapacity, resulting from a medically determinable physical or mental impairment, as prevents the Participant from performing any and every duty of any occupation or employment, for which he is reasonably qualified by education, training or experience.

This determination was based in part on medical assessments more fully described below but also on covert surveillance video showing Maher driving, walking, jogging, bending over, flying a kite, and lifting her three-year-old child. The most comprehensive assessment was by Dr. Robert Millstein, a medical consultant at Liberty, who based his judgment on review of Maher's medical file. He confirmed diagnoses by Maher's personal physicians of her fibromyalgia, osteoarthritis, and psoriasis but determined that none prevented Maher from working.

Maher pursued administrative appeals with Liberty and ultimately with Partners HealthCare System, Inc. (“Partners”), the plan's administrator. She submitted supporting materials, most notably March 2007 statements from her personal physician, Dr. Elizabeth Cuevas, and Dr. Wolfram Goessling, her gastroenterologist. Dr. Cuevas represented that Maher, despite her pain medications, “remains in significant disability, both from her chronic pain and from the side effects the pain medication cause, such as somnolence. She is unable to reliably perform duties because her pain can become so severe so quickly.” And Dr. Goessling stated that “I do not see any way that my patient would be able to sit or stand for prolonged period[s] of time let alone do physically or intellectually demanding work.”

During the ensuing appeals, new doctors independently reviewed Maher's files. Dr. Herbert Malinoff, conducting the independent assessment on Maher's appeal within Liberty, consulted with Dr. Cuevas and Dr. Goessling, but ultimately found Maher's symptoms “far out of proportion to any abnormality identified physically”; Dr. Dean Hashimoto, conducting the independent assessment on Maher's final appeal to Partners, agreed disability had not been established. Broadly speaking, both, along with Dr. Millstein, believed that the physical data did not explain the degree of pain or other symptoms claimed by Maher and found she had provided insufficient other evidence of completely debilitating pain.

Partners formally denied Maher's last appeal in January 2008. Maher sought review of her benefits termination in federal court under section 502 of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132(a)(1)(B) (2006). The district court, reviewing the plan administrator's decision under a deferential “arbitrary and capricious” standard, entered summary judgment for the MGH Plan and upheld the termination of benefits. Maher v. Mass. Gen. Hosp. Long Term Disability Plan, No. 08–10460 (D.Mass.Fed.23, 2010) (unpublished order). Maher has now appealed, challenging both the standard applied by the district court and the substantive decision.

The standard of review presents an issue of law which we review de novo, Smart v. Gillette Co. Long–Term Disability Plan, 70 F.3d 173, 178 (1st Cir.1995). The denial of benefits is itself subject to de novo review (albeit ordinarily on the administrative record) “unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan,” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), in which event the court applies a deferential “arbitrary and capricious” or “abuse of discretion” standard, Cusson v. Liberty Life Assurance Co., 592 F.3d 215, 224 (1st Cir.2010).

Here, section 6.1 of the primary plan document unequivocally reserves to “the Hospital” authority “to determine eligibility for benefits, construe the terms and conditions of the Plan, and resolve disputes as to the interpretation of the Plan documents”; and it explicitly precludes review unless the Hospital's action was “arbitrary and capricious or without rational basis.” The “Hospital” is defined only as “The General Hospital Corporation” (“GHC”), which is a Massachusetts charitable organization whose sole member is MGH, whose sole member, in turn, is Partners.²

Maher's argument in favor of de novo review is that the final decision in this case was made by Partners; no proper delegation of authority to determine benefits was ever made to Partners; and therefore Partners' decision to deny benefits is not protected by section 6.1's deferential standard of review. It is clear enough that, absent a proper delegation, the MGH Plan could not rely on section 6.1's standard to defend a denial by an independent entity. See Terry v. Bayer Corp., 145 F.3d 28, 37–38 (1st Cir.1998).

As it happens, GHC, MGH and Partners are in practice far from independent. Partners is a framework entity embracing MGH and Brigham—two of the major teaching hospitals in Boston—and includes smaller nonprofit hospitals as well; the boards of directors overlap; and Partners appears to operate in part as a coordinating body that performs various functions for the member hospitals including, at least so far as the MGH Plan is concerned, administrator of the plan in question on behalf of “the Hospital.” We say “appears” because the MGH Plan has chosen to defend the case as one of conventional delegation.

This choice of litigation strategy lends a certain air of unreality to the situation. The affiliation may explain why some aspects of the alleged delegation are not as clearly formalized as one might expect. In the end, viewed as a conventional delegation—the MGH Plan has not relied on affiliation or provided detailed information about it—the treatment of Partners as a proper inheritor of “the Hospital's” discretionary authority is justified, but perhaps only by a modest margin.

The double issue is whether the plan “expressly provide[s] for procedures” for GHC to designate Partners as a fiduciary with discretionary authority to administer the plan, 29 U.S.C. § 1105(c)(1); Terry, 145 F.3d at 36, and, if so, whether this had occurred. The courts have not been overly demanding in the search for express “procedures.” Wallace v. Johnson & Johnson, 585 F.3d 11, 15 (1st Cir.2009). The district court relied on section 6.3 of the primary plan document, which provides:

The Hospital may employ agents, including but not limited to, a Claims Processor, accountants, attorneys or actuaries to perform such services and duties in connection with the administration of the Plan as it may direct.... The Hospital shall be fully protected in acting upon the advice of any such agent, in whole or in part, and shall not be liable for any act or omission of any such agent, the Hospital's only duty being to use reasonable care in the selection of any such agent.

Maher argues that the focus of this language is primarily on ancillary duties to aid GHC in carrying out its own responsibilities. Nothing expressly identifies decisional authority to determine benefits as a power that can be delegated. If a separate identification were required, that might be the end of any delegation claim, but under the case law it is enough that the language can be taken to include that delegation. E.g., Pettaway v. Teachers Ins. & Annuity Assoc., 644 F.3d 427, 434–35 (D.C.Cir.2011).

Section 6.3 can be read quite broadly: the list of agents GHC may employ is non-exhaustive, nothing limits the services and duties GHC may direct its agents to perform, and the attempt to relieve GHC of liability is consistent with an allocation of responsibilities from one fiduciary to another. See 29 C.F.R. § 2509.75–8, FR–14. Lawyers are commonly charged with fiduciary duties, and ERISA may in some circumstances treat accountants and actuaries as fiduciaries as well, despite merely providing “advice.” See 29 C.F.R. § 2509.75–5, D–1.

Here, any uncertainty is resolved by looking to associated documents including the trust agreement and the summary plan description, 29 U.S.C. § 1024(b)(4), which we are entitled to consult. Pettaway, 644 F.3d at 433–34. The summary plan description clearly states that “Partners acts as the Plan Administrator” of MGH's long-term disability plan and “has the discretion to determine all matters relating to eligibility, coverage and benefits under each Plan provided.” ³ And, the plan's trust agreement contemplates certain actions being undertaken by GHC “or its delegate.”

Thus the...