Case Name: Cheryl Gailey v. Life Insurance Company of North America
Court: United States District Court for the Middle District of Pennsylvania
Type of Claim: Long Term Disability
Insurance Company: Life Insurance Company of North America
Claimant’s Employer: LifeCare Management Services
Claimant’s Occupation / Job Position: Business Office Manager
Disabilities: Plaintiff suffered from major depressive disorder, generalized anxiety disorder, mood disorder, and psychosocial and environmental problems. Plaintiff suffered from emotional breakdowns and panic attacks as a result of her symptoms.
Definition of Disability: The Plan defines Disability for LTD purposes as:
“The Employee is considered Disabled if, solely because of Injury or Sickness, he or she is:
1. Unable to perform the material duties of his or her Regular Occupation;
and
2. Unable to earn 80% or more of his or her Indexed Earnings from working in his or her Regular Occupation.”
The Plan limits disability benefits for mental illnesses and related other conditions to 24 months of benefits.
Benefits Paid? Plaintiff applied and was approved for short term disability benefits. She applied for long term disability benefits under the Plan on July 29, 2013. Plaintiff’s claim was initially denied; however, on appeal, Life Insurance partially upheld and partially reversed its denial of Plaintiff’s claim. Life Insurance awarded Plaintiff long-term disability benefits from October 14, 2013, the date she was originally supposed to return to work after outpatient treatment at a facility, to November 26, 2013, the date of Plaintiff’s discharge from the inpatient program at the same facility. Plaintiff was subsequently denied any benefits after November 26, 2013.
Procedural history: Plaintiff applied for long-term disability benefits under the Plan on July 29, 2013, and was denied by Life Insurance on November 21, 2013. Plaintiff then appealed her denial of benefits, and on June 3, 2014, received a partially reversed and a partially upheld decision awarding her benefits from October 14, 2013, to November 26, 2013. Plaintiff then appealed Life Insurance’s June 3, 2014 decision on the argument that she was entitled to benefits beyond the cutoff date of November 26, 2013. On January 9, 2014, Life Insurance denied Plaintiff’s appeal based on its determination that Plaintiff was not disabled as defined by the Plan. Plaintiff initiated this lawsuit on March 20, 2015, alleging that Life Insurance violated ERISA on two different accounts stemming from its denial of Plaintiff’s claim. In sum, the Plaintiff exhausted her administrative appeals and filed an ERISA lawsuit.
Key Physician Opinions: By the time Life Assurance denied Plaintiff’s long-term disability claim, it had been provided with numerous medical records and physician opinions. Plaintiff regularly sought treatment from her therapist, Certified Registered Nurse Practitioner Sandra Abbey (“Abbey”). Abbey referred Plaintiff to an outpatient program at a mental health facility called Philhaven, where Plaintiff received treatment from August 6 to October 10, 2013. Plaintiff sought treatment from a therapist, Amy Loser (“Loser”), during the course of her treatment at Philhaven. Initially, Loser scheduled Plaintiff’s return to work date for September 1, but due to various sessions, she extended that date to October 14, 2013. In Plaintiff’s discharge paperwork, Loser diagnosed Plaintiff with generalized anxiety disorder, mood disorder, and psychosocial and environmental problems.
On October 18, 2013, Abbey opined that Plaintiff was unable to multitask, has a poor response to stress, and cannot work at present. Following the denial of her disability claim, Plaintiff was again admitted to Philhaven for inpatient treatment with diagnoses of major depressive disorder and generalized anxiety disorder. Plaintiff was discharged four days later with a prognosis that she “presented with an appropriate affect” and denied suicidal ideations. On December 4, 2013, Abbey opined that Plaintiff “is currently totally disabled due to her mental illness,” and that she “is unable and will never again be able to perform the duties of her regular occupation as Office Manager at New Life Care Management, LLC.” Abbey went further to say that Plaintiff is “totally disabled from performing any duties for any occupation which she is or could reasonably become qualified based on her education and expertise.”
Following Plaintiff’s appeal, Life Insurance submitted her claim to a peer review board-certified psychiatrist, Dr. Fred Moss, to evaluate her medical records and render a medical opinion concerning her symptoms. Dr. Moss opined that:
“[t]here are no objective findings from a psychiatric standpoint that indicates the claimant is mentally, cognitively, and/or behaviorally impaired as of 11/26/2013 and continuing. While notes reflect the claimant has subjective complaints that support diagnosis of Major Depressive disorder, the mental status examination findings indicate the claimant is psychiatrically stable and there are no impairments behaviorally, mentally, or cognitively. As a result, there are no work activity restrictions that are medically required due to a psychiatric condition.”
Issues: The Court addressed several issues within Life Insurance’s determination that the Court found did not meet the required arbitrary and capricious standard. (1) Whether Life Insurance wrongly withheld long term disability benefits from Plaintiff in violation of ERISA. (2) Whether Life Insurance violated the procedural guidelines of ERISA in administering its denial of Plaintiff’s claim 60 days after its filing, in violation of the Plan’s 45-day deadline.
Holdings: The Court granted Defendant’s Motion for Summary Judgment and subsequently affirmed Defendant’s denial of long-term disability benefits to Plaintiff. The Court held the record supported Life Insurance’s contention that Plaintiff was no longer entitled to LTD benefits because she failed to meet the definition of “Disability” as defined by the Policy, and Life Insurance’s decision to do so was neither arbitrary or capricious.
(1)“Considering the structural conflict of interest at play, all of the evidence considered by Life Insurance in deciding [Plaintiff]’s claim for benefits, the Social Security Administration’s determination that [Plaintiff] is disabled, and the relevant terms and policies, we find that Life Insurance’s denial of [Plaintiff]’s claim was not arbitrary or capricious.”
The Court noted that Life Insurance has referred to a multitude of evidence that it considered in denying Plaintiff’s claim and rendering her not disabled. Further, the Court held that Life Insurance offered “reasonable reasons for not deferring to these opinions in its denial of benefits such that we cannot find that the decision was arbitrary and capricious.” The Court accepted Life Insurance’s contention that it did not defer to Abbey’s conclusion rendering Plaintiff disabled, based on Life Insurance’s determination that Abbey is a Certified Nurse Practitioner, rather than a board-certified psychiatrist. In conclusion, the Court held, “Life Insurance was not bound to defer to [Plaintiff]’s treating physician, and has offered a reasonable explanation for why it chose not to.” The Court found that Life Insurance’s decision to deny benefits was not “without reason, unsupported by substantial evidence or erroneous as a matter of law.”
(2) In regards to Plaintiff’s second claim that Life Insurance violated Section 503 of ERISA , the Plaintiff based her argument on the fact that Life Insurance issued its denial of Plaintiff’s appeal 60 days after filing, in violation of the Plan’s 45-day deadline. In assessing Section 503, the Court held that the section does not provide a private right of action to individuals such as Plaintiff, and the only exception to this rule is if the Plaintiff is able to show “egregious circumstances.” The Court held that: “[Plaintiff] has not even tried to show how her appeals and lawsuit are linked to a fifteen-day delay in the issuance of her denial such that the violation would be ‘egregious’. To be sure, [Plaintiff]’s entire argument regarding Count II is found within just a few conclusory paragraphs. Finding that [Plaintiff] does not have a private right of action under Section 503, we shall grant Life Insurance’s Motion and deny [Plaintiff]’s Motion with respect to Count II.”
Summary: The Court granted Defendant Life Insurance’s Motion for Summary Judgment and denied Plaintiff’s Motion for Summary Judgment. “The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment.” Layshock ex rel. Layshock v. Hermitage Sch. Dist., 650 F.3d 205, 2011 (3d Cir. 2011). The Court held that Life Insurance considered all relevant information, including Abbey’s treatment notes, treatment notes from Plaintiff’s treaters at Philhaven, and the notes from the board-certified psychiatrist based on his peer review of Plaintiff’s medical records. The Court concluded that in light of the foregoing thorough review and subsequent basis for its denial, Life Insurance’s decision to deny long-term disability benefits to Plaintiff was not without reason, and did not meet the required arbitrary and capricious standard. The Court further held that Life Insurance did not engage in any action in violation of Section 503 of ERISA, and that Plaintiff did not have a separate, private cause of action for attorney’s fees and litigation costs.