Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_04-cv-00908/USCOURTS-azd-2_04-cv-00908-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

WILLIAM FARRETTA,

Plaintiff, 

v.

BURR-BROWN CORPORATE

DISABILITY INCOME PLAN; et al., 

Defendants. 

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No. CV-04-0908-PHX-SMM

FINDINGS OF FACT, CONCLUSIONS OF

LAW, AND ORDER

This case involves a claim for long term disability benefits under an employer

provided plan governed by the Employee Retirement Income Security Act of 1974, as

amended (“ERISA”), 29 U.S.C. § 1001- 1461. Mr. William Farretta ("Farretta") contends

that Aetna Life Insurance Company ("Aetna") improperly terminated his permanent disability

benefits. Aetna contends that Farretta was no longer permanently disabled under the

applicable Plan and that it properly terminated his benefits. The Court held a one-day bench

trial on January 5, 2006. Having reviewed the evidence de novo and listened to the

arguments of counsel, the Court now enters its Findings of Fact, Conclusions of Law, and

Order pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

FINDINGS OF FACT

Procedural Background

1. On April 30, 2004, Farretta filed a Complaint alleging the following three counts

against Aetna and the two other defendants: 1) Count I: Recovery of Plan Benefits

29 U.S.C. § 1132(a)(1)(B); 2) Count II: Breach of Fiduciary Duty under 29 U.S.C. 

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1 Counsel for Aetna, repeatedly stated on the Record that Aetna is the claims administrator and is the

legally responsible party in this case. Farretta's Counsel, while refusing to stipulate to this obvious position,

did not produce any evidence that contradicts Aetna's position. 

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§ 1104, 1105 and 1131(a)(3) and 3) Attorneys' Fees and Costs pursuant to 29 

U.S.C. § 1132(g)(1). 

2. On January 8, 2005, Count II was dismissed pursuant to the parties stipulation at

the pre-trial conference held on January 4, 2005.

3. Farretta brought suit against four different entities: Burr-Brown Corporate

Disability Income Plan, Aetna, Texas Instruments Tucson Corporation and Texas

Instruments Corporation. The Record, however, only contains evidence regarding

the potential liability of Aetna.1

 

Employment History and the Disability Plan

4. In 1991, Farretta was employed as a sales manager for Burr-Brown Corporation

(“Burr-Brown”). As a regional sales manager for Burr-Brown, Farretta oversaw

sales of technology products in 17 different states. Farretta's job frequently

required working 12-hour days and required extensive travel (approximately

100,000 miles per year) on little or no advance notice. On these trips, he was

required to carry all of his data books, supplies and luggage by himself. 

5. While the number of hours worked by Farretta per week is disputed by Aetna, it is

undisputed that Farretta's sales manager position at Burr-Brown was a full-time

position requiring at least 40 hours per week. 

6. As part of his employee benefits package, Farretta received long term disability

benefits. Burr-Brown purchased long term disability insurance from New York

Life Insurance Company to cover this employee benefit (“Plan”).

7. The Plan defines disability as follows: 

"Disability" and "Disabled" mean that because of injury or sickness:

1) The insured cannot perform each of the material duties of his regular 

occupation; OR

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2) The insured, while unable to perform all the material duties of his regular 

occupation on a full time basis is: a) performing at least one of the material duties 

of his regular occupation or another occupation on a full-time basis; and b) earning

currently at least 20% less per month than his indexed pre-disability earnings due 

to that same injury or sickness. (emphasis added).

8. The Plan also defines “indexed pre-disability earnings” as “your basic monthly

earnings in effect just prior to the date your disability began adjusted on the first

anniversary of benefit payments and each following anniversary. Each adjustment

will be based on the lesser of 10% or the current annual percentage increase in the

Consumer Price Index. The Consumer Price Index means the CPI-W as published

by the U.S. Department of Labor. We reserve the right to use some other similar

measurement if the U.S. Department of Labor changes or stops publishing the CPIW.”

Aetna's Review of Farretta's Disability Claims

9. In 1991, Farretta was involved in an automobile accident and he filed a claim for

total disability benefits under the Plan. 

10. Farretta’s claim was evaluated and he was found to be disabled in late 1991 due to

cervical spondylosis and carpal tunnel syndrome. As a result, Farretta began

receiving the basic monthly benefit of $2,520.00 and continued to receive the

benefit until his benefits were discontinued in December, 2002.

11. On February 27, 2001, Aetna sent Farretta a letter seeking additional information

in order for it to continue to evaluate his claim. Aetna asked for things such as

current medical information, a rehabilitation survey and financial information.

12. On April 8, 2001, Marsha Knapp, the disability specialist evaluating the claim,

requested Dr. Kelley’s (Farretta's treating physician) records, including the March

23, 2001 MRI. Aetna also requested records from Dr. Janet Mullins (another

independent Doctor who treated Farretta). 

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13. On May 8, 2001, Ms. Knapp concluded that Aetna needed surveillance of Farretta

to determine the level of his physical activities and to observe his daily level of

physical exertion.

14. The surveillance was requested for three days and took place on May 14-16, 2001. 

The surveillance report and video recorded during the surveillance was later

provided to Aetna for evaluation on or about May 21, 2001.

15. Based on the information developed, the claim was referred for a Site Medical

Assessment on June 6, 2001, and the medical examiner, Dr. Barry Gendron, was

asked to clarify the restrictions and limitations based on new medical information

and surveillance. He was also asked to opine on Farretta’s prognosis for

improvement.

16. After reviewing the medical records and surveillance, Dr. Gendron reported his

findings to Ms. Knapp in a July 5, 2001 memorandum.

17. Aetna notified Farretta by telephone and then in writing by a letter dated

November 14, 2001, that he would be required to undergo an independent medical

examination (“IME”) conducted by Dr. Ernest R. Griffith, M.D.

18. The IME occurred on December 4, 2001, and Dr. Griffith completed his report that

day.

19. Dr. Griffith believed a functional capacity examination ("FCE") would be

beneficial before he could opine on Farretta’s work capacity and the number of

hours he was capable of working. 

20. Accordingly, Ms. Knapp scheduled the FCE with Bruce Willoughby on January

29, 2002.

21. Upon receiving the IME, FCE and Dr. Griffith’s comments on the FCE, Ms.

Knapp then referred the matter back to Dr. Gendron for an on-site medical

assessment. 

22. After reviewing the IME, FCE, LMS, Farretta’s medical records, the surveillance

video and Dr. Kelley’s comments, Aetna concluded that Farretta no longer met the

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definition of disability defined in the Plan. An Aetna Claims Manager 

summarized Aetna's evaluation of Farretta's claim in a memo dated November 27,

2002, and recommended that the claim be terminated effective December 1, 2002. 

23. The Claim Manager's recommendation was approved and on December 28, 2002,

Aetna informed Farretta in writing that his benefits were being terminated based

on its conclusions that: 1) his medical condition was not considered severe enough

to meet the definition of Total Disability, as defined in the Group Long-Term

Disability Contract and 2) that he was capable of returning to full-time work and

performing each of the material duties of his own occupation.

24. Farretta appealed this decision on March 7, 2003.

25. On June 19, 2003, Maryanne Barry, an Aetna appeals analyst, informed Farretta’s

counsel that Aetna affirmed the decision to terminate benefits; Faretta then filed

suit in this Court.

Farretta's Medical Condition 

26. In 1991, Farretta was involved in an auto accident that resulted in the following

injuries: lumbosacral osteoarthritis, chronic cervical and lumbosacral radiculpathy,

bilateral distal median neuropathy secondary to bilateral carpal tunnel syndrome. 

27. On October 10, 1991, Farretta underwent left carpal tunnel surgery and on

November 21, 1991, Farretta underwent cervical fusion and discectomy and right

carpal tunnel surgery. 

28. In late 1991, Farretta’s claim was evaluated and he was found to be disabled due to

cervical spondylosis and carpal tunnel syndrome. 

29. In 1991, Farretta was also involved in a second automobile accident that

aggravated the his injuries in his neck and arm regions. 

30. In 1996, Dr. Kelley provided the following diagnosis to one of the insurers

administering the Plan before Aetna : “This gentleman is currently working at light

duty on his part time basis. I do not feel he will significantly change in the future. 

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I do not therefore feel that he will ever be able to do ‘any occupation’ on a full

time basis.”

31. An MRI in 1997, revealed: “There is evidence of disc degeneration at the L3-4,

L4-5, and L5-S1 levels with small tears of the outer annular fibers at L3-4 and L4-

5.” The MRI also reveals that the surgical fusion of the C5 and C6 vertebrae,

resulted in a mild reversal of the normal cervical lordosis.

32. On September 11, 1997, Farretta was involved in a third automobile accident that

aggravated his cervical and lumbar osteoarthritis. 

33. In 1998, the insurer administering the Plan (prior to Aetna) stated, “Medical

appears to support perm. part-time (20 hpw/ sed-light). All indications are

improvement to [full-time] unlikely.”

34. By 2001, Farretta was no longer able to take his regular pain medication because

of gastrointestinal maladies. In 2003, Farretta suffered from antral gastritis which

resulted in a recommendation that he refrain from taking "NSAID's" and "COX-2"

inhibitors including Celebrex. 

35. An MRI conducted in 2003 revealed “mild flattening of the ventral aspect of the

cervical cord at this level and mild cervical canal stenosis . . . mild posterior disk

bulging at C4-5, which briefly contacts the ventral aspect of the cervical cord” 

which means his vertebrae are still fused, and discs are still bulging and flattening

or at least touching his spinal cord in his neck.

36. The 1991 MRI showed only cervical spondylosis (dissolution or degeneration of

the vertebra) and foraminal stenosis (narrowing of a natural passage in the spinal

column), meaning that the MRI in 1991 did not reveal that his condition impinged

on his spinal cord, like the 2003 MRI did.

37. Farretta has a 29% AMA impairment rating which limits him to non-full time

employment at sedentary to light duty activity levels.

38. Farretta's disability currently limits his ability to sit, stand, walk, drive or perform

upper and lower extremity motion activities for extended periods. At this time,

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2

 There is no evidence in the record that the benefit plan gave the plan administrator discretion to

determine eligibility and the parties stipulated to a de novo standard of review of the Record.

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Farretta can only perform these activities for less than four hours per day or twenty

hours per week.

39. Since he began receiving benefits in 1991, Farretta has attempted to work as a

hearing office for John Ore, a justice of the peace, a tour guide and a sales

representative for Sol Healthcare. These attempts to re-enter the workforce failed

due to the limits imposed on Farretta by his physical disabilities. 

40. While the surveillance video contained some evidence that Farretta has some range

of motion on a temporary basis, the persuasive weight of the medical evidence

supports a finding that Farretta is disabled within the meaning of the Plan. 

41. The Court finds Farretta is disabled within the meaning of the Plan by a

preponderance of the evidence and that Faretta as sustained his burden of proof. 

CONCLUSIONS OF LAW

42. This Court has jurisdiction pursuant to the Employee Retirement Income Security

Act, 29 U.S.C. §§ 1001 et seq.

43. The proper standard of review of the record in this matter is de novo.

2

 Firestone

Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80

(1989); Gatti v. Reliance Standard Life Ins. Co., 415 F.3d 978, 981 (9th Cir. 2005)

(stating that "district courts review a decision to deny or terminate benefits under

an ERISA plan 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").

44. ERISA matters subject to de novo review are to be resolved by a bench trial upon

the administrative record. Kearney v. Standard Ins. Co., 175 F.3d 1084, 1095 (9th

Cir. 1999). 

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3

 Regula has been subsequently abrogated by the United States Supreme Court in Black & Decker

Disability Plan v. Nord, 538 U.S. 822 (2003) based on its endorsement of the treating physician rule.

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45. Farretta has the burden of proof to show that he was eligible for continued long

term disability benefits, based upon the terms and conditions of the ERISA Plan. 

46. Farretta contends that Aetna must offer evidence of a significant change in

Farretta's condition to justify the termination of benefits. The Ninth Circuit has not

addressed the issue of whether the burden of proof shifts when a plan administrator

decides to terminate benefits after initially finding the recipient eligible for

benefits. Accordingly, in support of his contention, Farretta relies on dicta in a

Ninth Circuit case and a holding from the Eighth Circuit. See Regula v. Delta

Family-Care Disability Survivorship Plan, 266 F.3d 1130, 1146 (9th Cir. 2001)3

(noting in dicta, that the "plan's sudden termination of Regula's benefits came

abruptly, with no evidence of a significant change in his condition."); McOsker v.

Paul Revere Life Ins., 279 F.3d 586, 589 (8th Cir. 2002) (stating that the previous

payment of benefits weighs against a decision to terminate benefits unless new

information significantly alters the initial decision). 

47. In a slip opinion, a District Court from the Eastern District of California, recently

held that ERISA does not require that an administrator prove that a recipient's

condition has changed since it last approved a decision to reward benefits. That

court further noted that the administrative record in that case was sufficient to

demonstrate that as of January 2004 the recipient was not totally disabled. Refkin

v. New York Life Ins., 2005 WL 2086073 (E.D. Cal. August 29, 2005). In Refkin,

that court cited Ellis v. Liberty Life Assuarance Co., 394 F.3d 262 (5th Cir. 2004)

for a more thorough discussion of this issue. In Ellis, that court found: "We have

found no statutory, regulatory, or jurisprudential authority...that would heighten

the level of proof needed for a plan fiduciary to determine entitlement or nonentitlement to LTD benefits simply because the fiduciary previously had approved

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entitlement and paid benefits to the employee in question." Id. at 274. The Fifth

Circuit also specifically held that the plan fiduciary is not required to obtain proof

of a substantial change in a recipient's medical condition after the initial

determination of eligibility. Id.

48. This Court, like the court in Refkin, is persuaded by the reasoning set forth in Ellis

and finds that the burden of proof remains with Farretta to establish that he is

currently disabled under the Plan. 

49. Farretta is unable to perform "all of the material duties of his 'regular occupation'

on a full-time basis." An individual's "regular occupation" is “a position of the

same general character as the insured’s previous job with similar duties and

training requirements.” Dionida v. Reliance Std. Ins. Co., 50 F.Supp.2d 934, 939

(N.D. Calif. 1994). 

50. Aetna contends that the Court should adopt the DOT definition of Sales Manager,

while Farretta argues that a more closely tailored definition that encompasses more

of the specific duties his prior position at Burr-Brown should be adopted. 

51. This case does not require the Court to choose between the parties' alternative

definitions to determine whether Farretta can perform each of the material duties

of his "regular occupation." 

52. The Court has found that Plaintiff is unable to sit at a desk, stand, engage in

substantial travel (either by car or airplane) or perform repetitive twisting or

bending movements of the upper torso for periods of time that exceed four hours a

day or twenty hours per week. 

53. The Court has also found that Farretta's "regular occupation" required him to

perform his material duties for at least 40 hours per week.

54. Under Aetna's proposed definition of "regular occupation" Farretta would be

required to: "coordinate sales distribution by establishing sales territories, quotas,

and goals and advises dealers, distributors, and clients concerning sales and

advertising techniques," "direct staffing, training, and performance evaluations to

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develop and control sales program" and "analyze sales statistics to formulate

policy and to assist dealers in promoting sales," in addition to approximately ten

other duties. 

55. Given Farretta's limited capacity for activities such as sitting at a computer or

standing at a counter for prolonged periods, the Court finds that he could not

perform many of the duties set forth in Aetna's proposed definition of "regular

occupation."

56. Accordingly, Farretta is disabled under the first definition of disability as he is

unable to perform each of the material duties of his "regular occupation," even

where such term encompasses only the duties set forth in Aetna's proposed

definition of "regular occupation."

57. Farretta is also disabled under the second definition of disability even if he can

perform at least one of his material duties on a part-time basis as the record

establishes that Farretta’s income is under the threshold set forth in the Plan.

58. The Court finds that Mr. Farretta is entitled to $2,520 per month in past due

benefits from January 1, 2003 to December 31, 2005 for a total of $90,720 in back

benefits as of December 31, 2005. 

59. Farretta has requested pre-judgment interest at the Arizona statutory rate of 10%. 

The Ninth Circuit, however, has a "strong policy in favor of the Treasury bill rate"

and "any departure from it must be accompanied by a reasoned justification." 

Blanton v. Anzalone, 813 F.2d 1574, 1576 (9th Cir. 1987). See also U.S. v.

Gordon, 393 F.3d 1044, 1058 n.12 (noting that "under federal law the rate of

prejudgment interest is the Treasury Bill rate as defined in 28 U.S.C. § 1961.") 

Farretta did not provide the Court evidence justifying a departure from the

Treasury Bill rate. 

60. The Court finds that an award of attorneys’ fees to Farretta is appropriate under 29

U.S.C. § 1132(g)(1). In exercising its discretion to award attorneys' fees under §

1132(g)(1), the Court considered the following factors: 

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(1) the degree of the opposing parties' culpability or bad faith;

(2) the ability of the opposing party to satisfy an award of

fees; (3) whether an award of fees against the opposing parties

would deter other from acting under similar circumstances;

(4) whether the parties requesting fees sought to benefit all

participants and beneficiaries of an ERISA plan or to resolve

a significant legal question regarding ERISA; and (5) the

relative merits of the parties' positions. 

Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir. 1980). 

61. The Court finds that the parties in this case litigated a closely contested issue in

good faith and therefore neither party acted in bad faith and both sides presented

meritorious positions. Although, the Court finds that the deterrent effect of

awarding fees would not be significant, it will have some deterrent value. While

the Court also finds that Farretta was not seeking to benefit all participants in the

Plan and that this case does not raise a significant legal question regarding ERISA,

Farretta's recovery of disability benefits owed to him under the Plan would be a

hollow victory if he was not awarded fees given the tremendous costs associated

with litigation of this magnitude. Aetna also has the ability to pay Farretta's legal

fees. Thus, the Court awards his attorneys' fees. 

62. Faretta shall make his application for fees pursuant to Local Rule of Civil

Procedure 54.2 after the appeal, if any, is concluded or after the time for filing an

appeal has expired and an appeal is not taken. 

CONCLUSION

Accordingly, for the reasons set forth above,

IT IS ORDERED that the Court finds in favor of Plaintiff William Farretta and

against Defendant Aetna.

IT IS FURTHER ORDERED that the Court enters judgment against Defendant

Aetna and in favor of Plaintiff William Farretta in the amount of $90,720 for benefits

accrued from January 1, 2003 to December 31, 2005.

IT IS FURTHER ORDERED that Farretta is entitled to pre-judgment interest at

the rate of interest paid on a 52-week Treasury Bill immediately in effect prior to the

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termination of Farretta's benefits in December of 2002 applied to each monthly disability

payment not received from January 1, 2003 to December 31, 2005. 

IT IS FURTHER ORDERED that Farretta's request for fees and costs under

Title 29 U.S.C. § 1132(g)(1) is GRANTED.

 IT IS FURTHER ORDERED that Aetna shall re-commence payment of

Farretta’s monthly benefits effective upon receipt of this order.

DATED this 24th day of January, 2006.

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