Tsagari v. Pitney Bowes, Inc. Long-Term Disability

• Decision Date: 09 February 2007
• Docket Number: Civil Action No. 3:04cv662 (SRU).
• Citation: 473 F.Supp.2d 334
• Court: U.S. District Court — District of Connecticut
• Parties: Dawn TSAGARI, Plaintiff, v. PITNEY BOWES, INC. LONG-TERM DISABILITY PLAN, Defendant.

Page 334

473 F.Supp.2d 334

Dawn TSAGARI, Plaintiff, v. PITNEY BOWES, INC. LONG-TERM DISABILITY PLAN, Defendant.

Civil Action No. 3:04cv662 (SRU).

United States District Court, D. Connecticut.

February 9, 2007.

Richard L. Jacobs, Jacobs, Jacobs & Shannon, PC, New Haven, CT, for Plaintiff.

Andrew C. Sullivan, Joanne M. Krakora, Nicole A. Diller, Morgan Lewis & Bockius LLP, San Francisco, CA, Theodore J. Theci, Robinson & Cole, Hartford, CT, for Defendant.

JUDGMENT ON THE ADMINISTRATIVE RECORD

UNDERHILL, District Judge.

Dawn Tsagari was a participant in the long-term disability plan of the defendant, Pitney Bowes Inc. Long-Term Disability Plan (the "Plan"). Tsagari brings this action pursuant to 29 U.S.C. § 1132, the Employee Retirement Income Security Act ("ERISA"), seeking de novo review of the Plan's denial of her benefits, reinstatement of benefits, retroactive to December 10, 2002, and costs and attorneys' fees. Tsagari argues that she is entitled to a de novo standard of review of the Plan's decision, because the Plan did not comply with timing requirements under ERISA, and that under either a de novo or arbitrary and capricious standard of review, the Plan's decision was improper. The Plan argues that it substantially complied with the timing requirements, and that the Plan's decision was properly supported by the evidence in the record.

The parties have filed cross trial briefs, asking me to decide both the standard of review and the merits. I held oral argument on January 4, 2006. Based on the reasons that follow, I conclude that the proper standard of review is the arbitrary and capricious standard: Applying that standard to the evidence in the record, the Plan's decision was not arbitrary and capricious.

I. Factual Background

Tsagari worked as a retirement benefits counselor for Pitney Bowes, Inc. Tsagari contends that she has continually suffered from respiratory ailments, including bronchitis, asthma, and possibly fibromyalgia, resulting in scattered periods of disability. In February and April 2002, Tsagari was disabled from work on a short-term basis. She applied for and was granted long-term disability on October 1, 2002. It is the Plan's policy to place an individual on long-term disability temporarily, pending a review of the claim. On December 10, 2002, Tsagari was notified that her long-term disability would be terminated on December 31, 2002, because a physician reviewed Tsagari's records and concluded that she was not totally disabled from her occupation. On December 12, 2002, Tsagari appealed that decision. On April 21, 2003, the Plan considered her appeal and informed her on May 6, 2003 of the decision to deny her appeal.

II. Discussion

Both parties seek judgment based on the administrative record.¹ My findings of fact and conclusions of law are set forth below. Muller v. First Unum Life Insurance Co., 341 F.3d 119, 124-25 (2d Cir. 2003) (holding that a ruling on a motion for judgment on the administrative record is akin to a bench trial "on the papers"); Fed.R.Civ.P. 52(a).

A. Standard of Review

At oral argument, Tsagari conceded that the Plan is discretionary, and that therefore the arbitrary and capricious standard of review would generally apply. In this case, however, Tsagari argues that a timeliness exception applies to make the standard de novo rather than arbitrary and capricious. Tsagari conceded at oral argument that, in light of recent applicable case law, the conflict-of-interest exception does not apply.

The burden of proving that the arbitrary and capricious standard is the Proper standard of review falls on the Plan. Sharkey v. Ultramar Energy Ltd., 70 F.3d 226, 229 (2d Cir.1995) ("The party claiming deferential review should prove the predicate that justifies it.").

Courts must review a challenge to a denial of benefits, pursuant to 29 U.S.C. § 1132(a)(1)(B), under a de novo standard 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 and Rubber Co. v. Bruck, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); Pagan v. NYNEX Pension Plan, 52 F.3d 438, 441 (2d Cir.1995). In clarifying the standard of review, the Court explicitly ruled that there was no need to consider the type of plan or the motives of the plan administrator. Firestone Tire, 489 U.S. at 115, 109 S.Ct. 948. "If an express delegation of discretionary authority is included within the benefit plan, courts are instructed to review an authorized fiduciary's determination with deference, not disturbing the determination unless it is arbitrary and capricious." Rubio v. Chock Full O'Nuts Corp., 254 F.Supp.2d 413, 421 (S.D.N.Y.2003); Pagan, 52 F.3d at 441. Plan language that confers "discretionary authority," or even "responsibility for implementing, administering and interpreting the provisions of the policy" constitutes a grant of discretionary authority. Rubio, 254 F.Supp.2d at 421.

In this case, the Plan conferred discretionary authority on the Employee Benefits Committee ("Committee"). The Plan defines the Committee as the "plan administrator" in section 7.6 of the written plan. Administrative Record at 27. Specifically, the amended plan, effective January 1, 2000, provides: "The Employee Benefits Committee shall have discretion in exercising the following powers and duties concerning the Plan .. . ." Administrative Record at 26, 33-34. In particular, the Plan gives the Committee the discretion to "interpret and construe the terms and provisions of the Plan, to apply such terms and provisions as the Committee may exclusively determine, to determine questions of eligibility and of the status and rights of Participants . . . ." Administrative Record at 26. Therefore, the arbitrary and capricious standard of review applies, because the Plan gave the Committee, which is the Plan Administrator, discretionary authority to implement, administer, and interpret the terms of the Plan. See Firestone Tire, 489 U.S. at 115, 109 S.Ct. 948; Pagan, 52 F.3d at 441.

1. Potential Untimeliness

Tsagari agrees with that analysis, but argues that there is an exception to the application of the arbitrary and capricious standard, even though the Plan includes a grant of discretionary authority to the Plan Administrator. Specifically, Tsagari claims that when the Committee's benefit determination is untimely, the de novo standard of review should apply. The Plan argues that the benefits determination was not untimely, and the time for responding was tolled during the period when the Committee was waiting for Tsagari to submit additional information needed to make a decision.

The Second Circuit has held that "absent substantial compliance with regulatory deadlines," a claim is deemed denied and subjected to de novo, not arbitrary and capricious review. Nichols v. Prudential Ins. Co. of America, 406 F.3d 98, 109 (2d Cir.2005). The Second Circuit did not carve out the parameters of the "substantial compliance" doctrine; however, it suggested that if a final decision is ultimately made but falls outside the regulatory deadline, the equitable tolling provisions of 29 C.F.R. § 2560.503-1(f)(4) may apply. See id. at 109-10.

The terms of the Plan provide that the Employee Benefits Committee will provide the claimant with a written response within 45 days of receipt of the appeal and may take an additional 45 days to decide an appeal if the circumstances warrant.² Administrative Record at 35 (Amendment No. 1 to the Pitney Bowes Long-Term Disability Plan § 5(e)).

The Plan also provides that, if the Committee needs additional information from the claimant in order to decide the appeal, "the time period for making a benefit determination shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.. .." Administrative Record at 35 (Amendment No. 1 to the Pitney Bowes Long-Term Disability Plan § 5(e)). In addition, 29 C.F.R. § 2560.503-1(f)(4) also provides for tolling of the decision-making deadline during the time that the claimant is responding to the Plan's request for additional information. The regulation provides:

[T]he period for making the benefit determination shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.

See also Administrative Record at 77 (notifying Tsagari of Plan's timing provisions).

Tsagari notified the Plan of her intent to appeal on December 16, 2002. Administrative Record at 78. In that letter, she told the Plan that she wanted it to evaluate her appeal in light of her fibromyalgia diagnosis, which had not been a factor in her' original determination of benefits. Administrative Record at 78 ("The fact that ... I have Fibromyalgia ... must be given considerable weight in any decision."). At that point, the parties conducted a back-and-forth exchange of information. Administrative Record at 77-93. Specifically, on January 2, 2003, the Plan asked Tsagari for medical records (from Dr. Vietoritz and Dr. Jose) documenting her fibromyalgia condition, so that it could consider them on her appeal. Tsagari had specifically requested that the Plan obtain the records of those two doctors and consider them before making a decision on her appeal. Administrative Record at 78. In the January 2, 2003 letter, Barbara Bianco, the case manager for Tsagari's claim, reminded Tsagari that it was her responsibility to make sure the Committee received the necessary physicians' records. Administrative Record at 79. Tsagari replied on January 7, 2003, but her reply did not include the requested medical records. Administrative Record at 80. On January 9, 2003, Bianco again requested the necessary medical records, indicating that Tsagari had...