Pisek v. Kindred Healthcare, Inc. Disability Ins.

• Decision Date: 17 July 2007
• Docket Number: No. 1:06-cv-372-RLY-TAB.,1:06-cv-372-RLY-TAB.
• Citation: Pisek v. Kindred Healthcare, Inc. Disability Ins., 633 F.Supp.2d 659 (S.D. Ind. 2007)
• Parties: Peter PISEK, Plaintiff, v. KINDRED HEALTHCARE, INC. DISABILITY INSURANCE PLAN, Metropolitan Life Insurance Company, and Kindred Healthcare, Inc., Defendants.
• Court: U.S. District Court — Southern District of Indiana

633 F.Supp.2d 659

Peter PISEK, Plaintiff, v. KINDRED HEALTHCARE, INC. DISABILITY INSURANCE PLAN, Metropolitan Life Insurance Company, and Kindred Healthcare, Inc., Defendants.

No. 1:06-cv-372-RLY-TAB.

United States District Court, S.D. Indiana, Indianapolis Division.

July 17, 2007.

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Andrew Dutkanych, III, Biesecker & Dutkanych LLC, Evansville, IN, for Plaintiff.

Edward E. Hollis, Philip John Gutwein, II, Baker & Daniels, Indianapolis, IN, for Defendants.

ENTRY ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

RICHARD L. YOUNG, District Judge.

I. Introduction

This matter is before the court on cross motions for summary judgment filed by Plaintiff, Peter Pisek ("Plaintiff"), and Defendants, Kindred Healthcare, Inc. Disability Insurance Plan ("Plan"), Metropolitan Life Insurance Company ("MetLife"), and Kindred Healthcare, Inc. ("Kindred") (collectively "Defendants"). Plaintiff filed the present lawsuit against Defendants for alleged violations of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. The issues before the court on summary judgment are: (1) whether Plaintiff is entitled to penalties under 29 U.S.C. § 1132(c) for Defendants' failure to provide Plaintiff requested information under 29 U.S.C. § 1024 and § 1133; (2) whether Plaintiff's monthly benefits are to include a cost-of-living increase under the Plan; and (3) whether Plaintiff is entitled to attorney's fees under 29 U.S.C. § 1132(g). For the reasons set forth below, the court GRANTS in part and DENIES in part Plaintiff's motion for summary judgment and GRANTS in part and DENIES in part Defendants' motion for summary judgment.

II. Statement of Facts

Background

1. Kindred maintains and sponsors an "employee welfare benefit plan," as defined in 29 U.S.C. § 1002(1), for its employees. (Answer ¶ 9, Docket # 22). The Plan is an ERISA-governed long-term disability plan. (Administrative Record ("AR") at 87, 89, Docket # 24).

2. Kindred is the "plan sponsor" and "plan administrator" pursuant to 29 U.S.C. § 1002(16)(A), (B). (Answer ¶¶ 3, 4). The Summary Plan Description ("SPD") designates Kindred as the plan sponsor and administrator. (AR at 87).

3. Kindred designated its discretionary authority to determine claims eligibility to MetLife. (Answer ¶ 5).

4. Plaintiff is a "participant", as defined in 29 U.S.C. § 1002(7), in the Plan. (Answer ¶ 11).

5. As a non-exempt employee of Kindred, Plaintiff purchased a higher amount of optional long-term disability coverage ("LTD Buy-Up coverage") under the Plan. (Affidavit of Peter Pisek ("Pisek Aff.") at ¶ 1, Docket # 27). He began contributing toward the premium amount for the LTD Buy-Up coverage in January 2003 and paid the premiums until July 2004, when they were waived under the Plan. (Pisek Aff. at ¶ 1).

6. Plaintiff began receiving long-term disability benefits on July 1, 2004, due to displacement, lumbar intervertebral. (Answer ¶ 15).

7. Since that time, Defendants have paid Plaintiff disability benefits every month, although Plaintiff did not receive his monthly check for July 2006 until August 1, 2006. (Supplemental Affidavit of Peter Pisek ("Pisek Supp. Aff.") at ¶ 16, Exhibit to Plaintiff's Reply in Support of Motion for Summary Judgment).

Plan Details and Definitions

8. Under the Plan, the maximum period of disability that the Plan will consider for disabilities due to soft tissue disorders is 24 months from the date the disability starts. (Plaintiff's Documents ("PD") at 1, Docket # 27).¹ However, the 24-month limit does not apply to soft tissue disorders where there is objective evidence of radiculopathies. (PD at 1).

9. Under the caption "Your Long-Term Disability (LTD) Benefits, What is my LTD coverage amount?", the SPD sets forth the monthly benefit calculation: "LTD Buy-Up coverage pays an additional 20%, for a total of 60% of the first $16,667 in monthly pre-disability earnings, reduced by any other income benefits you may receive due to your disability. The maximum monthly benefit is $10,000 (before any reductions for other income benefits)." (AR at 73).

10. Under the same sub-heading, the term "pre-disability earnings" is defined in the SPD as:

Pre-disability earnings means your base monthly salary or wages as of the last day before you became disabled. Pre-disability earnings include any amounts that were deducted from your pay on a pre-tax basis for the 401(k) savings plan, flexible spending accounts, executive deferred compensation arrangements or similar benefits.

Pre-disability earnings do not include commissions, bonuses, shift differentials, overtime pay, company contributions on your behalf to any savings or retirement plan, or any other compensation. (AR at 73).

11. Under the same heading in the SPD, "Your Long-Term Disability (LTD) Benefits," but under the subheading, "When do LTD benefits start?", the term "indexed pre-disability earnings" is explained:

Indexed pre-disability earnings is a measure that takes into account inflation and normal growth in salary that would be expected to occur from year to year. The pre-disability earnings used in calculating your benefit payments will be increased by the annual consumer price index or 7% (whichever is less), starting on the 13th monthly LTD payment and on the anniversary of that payment for each year afterward if you continue to be disabled. (AR at 74).

12. Next to that definition, in the left margin of the page of the SPD, the following is written in bold writing: "If you receive disability payments for more than a year, the pre-disability earnings figure used to calculate your benefits will be increased to account for inflation and typical pay increases." (AR at 74).

13. In the SPD, the term "indexed pre-disability earnings" is used directly above this definition in the Plan's definition of disability, which is defined as being unable to earn a percentage of one's indexed pre-disability earnings working either at one's own or any occupation. (AR at 74).

14. "Indexed pre-disability earnings" is also used in the SPD to describe the work incentive benefit under the sub-heading, "What is the work incentive benefit?" (AR at 76). Specifically, the text reads:

However, following your elimination period, then during the next 24 months of your disability, your monthly LTD benefit will be reduced so that the total amount you receive from this plan, other income benefits and your work earnings will not exceed your pre-disability earnings or indexed pre-disability earnings.

During the next 24 months of your disability, your monthly benefit will be reduced by 50 percent of the amount you earn from working while disabled. In addition, your monthly LTD benefit will be further reduced so that the total amount you receive from this plan, other income benefits and your work earnings will not exceed your indexed pre-disability earnings. (AR at 76) (emphasis added).

15. The Plan, as opposed to the SPD, uses the term "indexed pre-disability earnings" in the same contexts. (AR at 25, 27). However, the definition of "indexed pre-disability earnings" is worded differently. The Plan states:

Indexed Predisability Earnings mean your Predisability Earnings Increased by the lesser of:

1. the annual rate of increase in the Consumer Price Index (CPI-W) for the prior calendar year; or

2. 7%.

The first increase will take place on the date the 13th Monthly Benefit is payable. Subsequent increases will take effect on each anniversary of the first increase. You must have been continually receiving Monthly Benefits under This Plan. (AR at 29).

16. The Plan is a Kentucky contract and designates that its terms should be interpreted under the laws of that jurisdiction. (PD at 66).

17. The SPD states that the claims administrator will respond to the appeal of a denied claim within 45 days, or if needed, the claims administrator may take an additional 45 days. (AR at 86). However, if additional time is needed, the claimant will be notified within the initial 45-day time period. (AR at 86).

18. The Plan and the SPD specify that the Plan administrators and Plan fiduciaries have discretionary authority to interpret the Plan and determine entitlement to the Plan's benefits. (AR at 60, 87). Such interpretations will remain in effect absent a showing that the determination was arbitrary and capricious. (AR at 60, 87).

Correspondence between Plaintiff and MetLife and Kindred

19. On May 16, 2005, MetLife sent Plaintiff a letter stating that he would only receive disability benefits until June 30, 2006, because his disability, displacement, lumbar intervertebral, did not qualify for an exception to the 24-month benefit period. (PD at 2).

20. In response, Plaintiff wrote a letter to MetLife dated July 19, 2005, stating that his doctors' notes indicated that radiculopathy was part of his diagnosis and asking MetLife to make a correction in its records. (PD at 3).

21. Also in July 2005, Plaintiff received his thirteenth monthly LTD check, but there was no upward adjustment to reflect a cost-of-living increase. (Pisek Aff. at ¶ 4). Pisek sent MetLife a letter dated August 4, 2005, asking it to adjust his monthly benefit accordingly. (PD at 4).

22. By September 2005, Plaintiff had not received a response from MetLife regarding his disability determination or the cost-of-living increase. (Pisek Aff. at ¶ 5). On September 1, 2005, Plaintiff sent MetLife a letter asking it to respond with its position on both the 24-month limit to Plaintiff's disability benefits and the increase in his monthly benefits for cost of living. (PD at 5).

23. MetLife responded to Plaintiff's requests by letter dated September 13, 2005. (PD at 6). The letter reiterated the types of disabilities under the Plan that are not limited to 24 monthly benefit payments, including radiculopathies. (PD at 6). However, with respect to Plaintiff's...