Magee
v. Life Insurance Company of
Plaintiff in this action
brought suit in state court against insurer of group long-term disability (LTD)
plan after they denied her benefits. Plaintiff
was diagnosed with fibromyalgia and chronic pain syndrome.
The insurer denied benefits asserting that the medical documentation
submitted on the Plaintiff’s behalf did not establish that she was unable to
perform her daily work activity on a full time level.
The Plaintiff brought a state claim, which was removed based on federal
question jurisdiction (state law claims were preempted by the Employee
Retirement Income Security Act of 1974 (ERISA)), and on diversity jurisdiction.
Life Insurance Company of North American (LINA) moved for summary
judgment asserting that the state law claims are preempted by ERISA and that
LINA did not abuse its discretion in denying Plaintiff’s benefits.
Plaintiff argued that the plan is not governed by ERISA because it met
the requirements of the safe harbor established by the Department of Labor.
(Plaintiff did not respond to preemption or abuse of discretion issues raised by
LINA.)
Standards of review:
(1) Summary judgment must be granted to the moving party where the
pleadings, depositions, answers to interrogatories, admissions on file, and
affidavits show that there is no genuine issue as to any material fact and that
the moving party is entitled to judgment as a matter of law. (2) Under ERISA,
insurer’s discretionary benefits decision was subject to modified abuse of
discretion review, which took into account conflict that was inherent in the
fact that the insurer was also the claims administrator.
Held:
LTD plan was covered by
ERISA, and did not fall within safe harbor provision.
The safe harbor provision excludes a plan from ERISA coverage if: “(1)
the employer does not contribute to the plan; (2)
participation is voluntary; (3) the
employer’s role is limited to collecting premiums and remitting them to the
insurer, and (4) the employer received
no profit from the plan.” Meredith
v. Time Ins. Co., 980 F.2d 352, 355 (5th Circuit).
The court held that the employer’s role was not limited to collecting
premiums and remitting to the insurer, in that evidence was presented to show
that: (1) the summary plan
description (SPD) included language
that endorsed (“[y]our employer is offering you the opportunity to purchase
this insurance to make your benefit program more comprehensive and responsive to
your needs”); (2) the SPD
contained a supplemental information section that informed participants of their
rights under ERISA; (3) Southland
had the authority “to control and manage the operation and administration of
the Plan” and to “terminate, suspend, withdraw or amend the Plan . . .”,
despite the fact that it was not determinative if Southdown employed a full-time
benefits administrator.
ERISA completely preempted
Plaintiff’s state law claims, in which she sought to recover under benefits
under plan.
Insurer did not abuse its
discretion when it denied Plaintiff’s claim for benefits.
The following medical evidence was in the administrative record, and used
by LINA to determine its denial of benefits: Plaintiff’s disability
questionnaire in which she admitted she was able to care for her personal needs,
including food shopping and clothing; Dr. Victor Lavis’ office notes
indicating treatment for hypercalcemia and symptoms of low energy, muscle aches
and pain, and some hair loss (no physical abilities assessment or work
restrictions provided); Dr. Friedman’s office notes indicating Plaintiff
experienced a sudden onset of pain and swelling in her legs, and later had
similar pain in her shoulders, extending to her fingers; Physical ability
assesment by Dr. P. Shane, a rheumatologist, found Plaintiff to be able to do
all of the following occasionally in an eight hour day:
lifting or carrying 10 pounds, standing, walking, climbing regular
stairs, stooping, kneeling, crouching, reaching, frequent sitting, continuous
fine manipulation, simple firm grasp; Dr. Grover’s, pain management
specialist, office notes indicate medication is controlling Plaintiff’s pain
and allowing her to function; Dr. Grover’s physical abilities assessment was
presented unsigned and contained ambiguous findings regarding Plaintiff’s
abilities, but concluded that Plaintiff was not capable of even sedentary work.
Dr. Farrukh Hamid, a physician board certified in physical medicine and
rehabilitation, conducted a peer review of the claim and concluded that without
formal functional capacity testing, neuropsych testing and comprehensive report
from at least one physician to indicate all treatable caueses for the
Plaintiff’s symptoms have been ruled out, there was no objective documentation
to support the disability claim. Based
on the foregoing record, this court held that LINA did not abuse its discretion
in denying Plaintiff’s claim, as there was sufficient evidence in the record
to deny the claim.
District Court Judge Atlas
issued the order on the summary judgment motion.