Plaintiff is Entitled to a Description of Additional Material Necessary to Perfect the Claim

Case Name: Annina Puccio v. Standard Insurance Company

Court: U.S. District Court for the Northern District of California

Date of Decision: February 20, 2015

Type of Claim: Long Term Disability under the Employee Retirement Income Security Act (“ERISA”)

Insurance Company: Standard Insurance Company

Claimant’s Employer: NetApp Inc.

Claimant’s Occupation / Job Position: Senior Manager of Assessments and Certification

Disabilities: An unsuccessful gastric bypass surgery to treat bariatric issues. When her claim came under review towards the end of the initial 24 month period, Puccio then submitted additional records, which showed a recent diagnosis of fibromyalgia. The new records included an office visit report prepared by Puccio’s primary care physician that identified 15 “chronic conditions” afflicting Puccio ranging from asthma to bipolar disorder, esophageal dysmotility and osteoarthrosis in addition to fibromyalgia. Another set of medical records included a diagnosis of Addison’s disease.

Definition of Disability in the Plan/Policy: According to the plan, a person is disabled “if, as a result of Physical Disease, Injury, Pregnancy or Mental Disorder, you are unable to perform with reasonable continuity the Material Duties of your Own Occupation.” Puccio’s “Own Occupation” required sedentary material duties.

Benefits Paid? Standard disbursed full LTD benefits to Puccio under her plan for mental and musculoskeletal disorders, both of which were limited to 24-month payment periods. But Standard denied Puccio LTD benefits for disability attributable to other physical conditions, such as gastrointestinal issues and Addison’s disease, that are not subject to the 24-month limitation.

Key Physician Opinions: Dr. Fraback suggested that Standard obtain an in-person Functional Capacity Evaluation of Puccio, which was conducted by Physical Therapist Sandy Schall. Schall concluded that Puccio has “significant physical disability and impaired movement dysfunction, displayed by joint and spinal restrictions, generalized weakness, limited physical endurance, significant painful behavior which was consistent throughout the testing, and some impaired cognitive function.”

Issues: The Ninth Circuit has provided additional guidance by identifying a number of factors that should be considered in determining whether a plan administrator abused its discretion in denying a benefits claim: (1) the extent to which a conflict of interest appears to have motivated an administrator’s decision; (2) the quality and quantity of the medical evidence; (3) whether the plan administrator subjected the claimant to an in-person medical evaluation or relied instead on a paper review of the claimant’s existing medical records; (4) whether the administrator provided its independent experts with all relevant evidence; and (5) whether the administrator considered a contrary Social Security Administration (“SSA”) determination of disability. Montour, 588 F.3d at 630. If the facts and circumstances of the case show that the conflict of interest “may have tainted the entire administrative decision making process, the court should review the administrator’s stated bases for its decision with enhanced skepticism.” Id. at 631.

“There is no dispute that Puccio is disabled. She has multiple medical conditions that limit her ability to work. The only dispute is whether her disabilities are covered by the LTD policy or whether she has exhausted the maximum benefits allowed under the policy for her particular conditions.”

Holdings: The Court’s application of the Montour factors drive this conclusion. Specifically, factors 3 and 4 weigh against Standard. Standard should have conducted an in-person medical evaluation to assess the disability impact of Puccio’s Addison’s disease, gastrointestinal problems and other issues. While in-person exams are by no means mandatory, the complexity of Puccio’s health conditions, and the volume of her medical records, and their lack of clarity, all should have alerted Standard to the value of an in-person evaluation and the evidence that it would provide. None of Standard’s medical experts ever examined plaintiff for any condition pertinent to evaluating her claim. In fact, Standard’s team never even spoke with any of Puccio’s treating physicians about her records or status. Instead, Standard limited itself purely to a paper review of her medical records at the cost of ascertaining all the facts from an in-person exam. That alone “raise[s] questions about the thoroughness and accuracy of the benefits determination.” Montour, 588 F.3d at 634 (quotations and citation omitted). As the Supreme Court has noted, it also calls into question the impartiality of Standard’s consulting physicians because the record indicates those experts lacked access to “all of the relevant evidence.” Metro. Life Ins., 554 U.S. at 106-07.

Factor 5 also weighs heavily against Standard. Standard made no effort to obtain, let alone consider and meaningfully distinguish, the SSA’s award of disability benefits to Puccio. Standard knew the SSA had awarded her benefits and even sought to seize a portion of them for itself. Standard also decreased Puccio’s future LTD monthly payment by the amount of her Social Security payments. Id. And yet, the August 16, 2013 letter denying Puccio’s claim and the May 7, 2014 letter denying her appeal fail to mention the SSA determination at all. Standard never asked for the SSA’s findings or differentiated those findings from Standard’s determination to deny benefits.

The question here is whether Standard properly advised Puccio of the additional information it considered useful to review her claim. It did not. In the letter affirming the denial of benefits, Standard faulted Puccio because she “did not explain how any of the information in the claim file supports that, in the absence of her psychiatric and musculoskeletal and connective tissue disorders, Ms. Puccio’s Addison’s disease alone would prevent her from performing sedentary level work.” The Ninth Circuit has emphasized that ERISA regulations call for a “meaningful dialogue” between a claims administrator and plan beneficiary. Saffon v. Wells Fargo & Co. Long Term Disability Plan, 522 F.3d 863, 873 (9th Cir. 2008). A beneficiary is entitled to a “description of any additional material or information that was necessary for her to perfect the claim, and to do so in a manner calculated to be understood by the claimant.” Id. (quotations and citation omitted). Standard never informed Puccio that it needed information specifically stating that her Addison’s disease or gastrointestinal issues would prevent her from performing sedentary level work, separate and apart from the other conditions. Plaintiff was entitled to a description of this information, as well as an explanation of why the documents she did submit were insufficient and what specific documentation would be sufficient. Id. Instead, without engaging in any dialogue or asking for any additional records, Standard denied benefits. If Standard required specific information to evaluate Puccio’s claim, Standard needed to ask for it. Booton v. Lockheed Med. Benefit Plan, 110 F.3d 1461, 1463 (9th Cir. 1997).

Noteworthy Court Comments: Significantly, the office visit report also noted that Puccio’s “Social Security” claim “went through.”

Summary: Based on the undisputed facts in the administrative record and governing Ninth Circuit law, the Court finds that Standard abused its discretion when it denied plaintiff LTD benefits beyond the mental health and musculoskeletal coverage.