Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_05-cv-00781/USCOURTS-caed-1_05-cv-00781-2/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.-Employee Benefits

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

CAL FIKTER, )

)

)

)

Plaintiff, )

)

vs. )

)

)

LIBERTY LIFE ASSURANCE )

COMPANY OF BOSTON, )

)

)

Defendant. )

)

)

No. CV-F-05-781 REC/SMS

ORDER DENYING PLAINTIFF'S

MOTION FOR PARTIAL SUMMARY

JUDGMENT (Doc. 16) AND

GRANTING DEFENDANT'S MOTION

FOR PARTIAL SUMMARY JUDGMENT 

(Doc. 17)

On December 19, 2005, the court heard the parties’ crossmotions for partial summary judgment.

Upon due consideration of the record and the arguments of

the parties, the court denies plaintiff’s motion and grants

defendant’s motion for the reasons set forth herein.

Plaintiff Cal Fikter has filed a Complaint for Long Term

Disability Benefits pursuant to ERISA. The Complaint alleges

that plaintiff was employed by Aera Energy Services and was a

participant in Aera’s long-term disability plan, which is a

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employee welfare benefit plan within the meaning of Title I of

ERISA. The Complaint alleges that the Plan is administered and

insured by defendant Liberty Life Assurance Company of Boston

(hereinafter referred to as Liberty). The Complaint alleges that

plaintiff became disabled, that Liberty provided long-term

disability benefits under the Plan until June, 2004, that

plaintiff received notification from Liberty that Liberty was

“unilaterally cancelling such benefits”, that following the

appeal process, plaintiff retained counsel and commenced this

action, and that the decision to deny benefits was “wrongful,

unreasonable, irrational, sorely contrary to the evidence [and

c]ontrary to the terms of the Plan and contrary to law.” The

Complaint prays for a declaration that plaintiff is disabled as

defined in the Plan from June of 2004 to the present, for an

award of benefits in the amount not paid to plaintiff from June

2004 to the present with interest, and for attorneys’ fees

incurred in this action.

Plaintiff and Liberty have filed cross-motions for partial

summary judgment. In support of its motion, Liberty submitted a

Statement of Undisputed Material Facts. Plaintiff does not

dispute those facts although plaintiff contests certain

inferences drawn from the undisputed facts. The issue in these

cross-motions is the appropriate standard of review to be

utilized by this court in resolving plaintiff’s Complaint. 

Plaintiff contends that the standard of review is “de novo” while

Liberty argues that the standard of review is “abuse of

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discretion.”

A denial of benefits challenged under 29 U.S.C. §

1132(a)(1)(B) “is to be reviewed 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 & Rubber Co.

v. Bruch, 489 U.S. 101, 115 (1989). If the plan does grant such

discretion, the court applies the abuse of discretion standard of

review. Lamantia v. Voluntary Plan Administrators, 401 F.3d

1114, 1122 (9 Cir. 2005). th

Liberty bears the initial burden to show that the Plan gives

it discretionary authority in order to get any judicial deference

to its decision. Kearney v. Standard Ins. Co., 175 F.3d 1084,

1089 (9 Cir.), cert. denied, 528 U.S. 964 (1999). “[U]nless th

plan documents unambiguously say in sum or substance that the

Plan Administrator has authority, power, or discretion to

determine eligibility or to construe the terms of the Plan, the

standard of review will be de novo.” Sandy v. Reliance Standard

Life Ins. Co., 222 F.3d 1202, 1207 (9 Cir. 2000). th

Liberty has carried this burden. The Ninth Circuit held in

McDaniel v. Chevron Corp., 203 F.3d 1099, 1107 (9 Cir. 2000) th

that a plan which gave the administrator “sole discretion to

interpret the terms of the Plan” and whose interpretation “shall

be conclusive and binding” conferred discretion sufficient to

overcome the presumption in favor of de novo review. In Bendixen

v. Standard Ins. Co., 185 F.3d 939, 943 & n.1 (9 Cir. 1999), th

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the Ninth Circuit held that Plan language that “we have full and

exclusive authority to ... interpret the Group Policy and resolve

all questions arising in the ... interpretation and application

of the Group Policy” along with a provision that “any decision we

make in the exercise of our authority is conclusive and binding”

clearly conferred discretion on the plan administrator to

determine whether a claimant is disabled. See also Abatie v.

Alta Health & Life Ins. Co., 421 F.3d 1053, 1059-1060 (9 Cir. th

2005)(holding plan provisions granting to the administrator

exclusive “responsibility for full and final” “determinations of

eligibility for benefits; interpretation of terms; determination

of claims; and appeals of claims” conferred discretion); Bergt v.

Ret. Plan for Pilots Employed by MarkAir, Inc., 293 F.3d 1139,

1142 (9 Cir. 2002); see also Sabatino v. Liberty Life Assurance th

Co. of Boston, 286 F.Supp.2d 1222, 1229 (N.D.Cal. 2003)(construed

the identical Plan provisions as granting Liberty the discretion

to interpret the policy and determine eligibility for benefits).

In arguing that the language in the Plan does not overcome

the presumption of de novo review, plaintiff relies on Kearney v.

Standard Ins. Co., supra. In Kearney, the plan provision upon

which the administrator relied in arguing that the plan conferred

discretion was the word “satisfactory” in the requirement in the

insuring clause that a claimant provide “satisfactory written

proof” of disability. The relevant plan provision stated:

Part 6. LONG TERM DISABILITY INSURING CLAUSE

Subject to all the terms of the GROUP POLICY,

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STANDARD will pay the LTD BENEFIT described

in Part 8 upon receipt of satisfactory

written proof that you have become DISABLED

while insured under the GROUP POLICY.

The Ninth Circuit ruled that the phrase “will pay the LTD BENEFIT

described in Part 8 upon written receipt of satisfactory written

proof that you have become DISABLED” is ambiguous, holding in

pertinent part:

... We cannot conclude that Standard

‘unambiguously retained’ discretion by means

of the phrase ‘satisfactory written proof

that you have become disabled,’ because the

phrase is subject to at least two reasonable

constructions to the contrary. Thus we

conclude that the district court was correct

in its determination that Mr. Kearney’s claim

should be reviewed de novo.

175 F.3d at 1090.

Plaintiff argues that the language in Section 4 of the Plan

(“When Liberty receives proof that a Covered Person is Disabled

due to Injury or Sickness and requires the regular attendance of

a Physician, Liberty will pay the Covered Person a Monthly

Benefit after the end of the Elimination Period”), is similar to

the language in Kearney and should be found to be ambiguous by

this court. Plaintiff argues that the language in Section 7 of

the Plan (“Liberty shall possess the authority, in its sole

discretion, to construe the terms of this policy and to determine

benefit eligibility hereunder. Liberty’s decisions regarding

construction of the terms of this policy and benefit eligibility

shall be conclusive and binding”), is “contradictory to the plain

language of the earlier section, with such ambiguity to be

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resolved against Liberty.”

Plaintiff’s reliance on Kearney is without merit. The plan

involved in Kearney did not contain any language remotely similar

to that in Section 7 of the Plan before the court. As noted

above, there are a number of decisions from the Ninth Circuit

ruling that language similar to that set forth in Section 7 of

Liberty’s plan suffices to overcome the presumption of de novo

review. 

Plaintiff further argues that a “less deferential” abuse of

discretion standard should be applied because an apparent

conflict of interest is present because Liberty both issued and

administered the Plan.

In Firestone, supra, 489 U.S. at 115, the Supreme Court

stated that “if a benefit plan gives discretion to an

administrator or fiduciary who is operating under a conflict of

interest, that conflict must be weighed as a factor in

determining whether there is an abuse of discretion.” In Atwood

v. Newmont Gold Co., Inc., 45 F.3d 1317 (9 Cir. 1995), the th

Ninth Circuit explained that the statement in Firestone has been

interpreted “to mean that we apply ‘heightened scrutiny’ where

the plan administrator has a conflict of interest by virtue of

its economic stake in the benefit decisions which it makes.” Id.

at 1322. Atwood further explained:

The ‘less deferential’ standard under which

we review apparently conflicted fiduciaries

has two steps. First, we must determine

whether the affected beneficiary has provided

material, probative evidence, beyond the mere

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fact of the apparent conflict, tending to

show that the fiduciary’s self-interest

caused a breach of the administrator’s

fiduciary obligations to the beneficiary. If

not, we apply our traditional abuse of

discretion review. On the other hand, if the

beneficiary has made the required showing,

the principles of trust law require us to act

very skeptically in deferring to the

discretion of an administrator who appears to

have created a breach of fiduciary duty ....

Under the common law of trusts, any action

taken by a trustee in violation of a

fiduciary obligation is presumptively void

... Where the affected beneficiary has come

forward with material evidence of a violation

of the administrator’s fiduciary obligation,

we should not defer to the administrator’s

presumptively void decision. In that

circumstance, the plan bears the burden of

producing evidence to show that the conflict

of interest did not affect the decision to

deny benefits. If the plan cannot carry that

burden, we will review the decision de novo,

without deference to the administrator’s

tainted exercise of discretion.

45 F.3d at 1323. As explained in Firestone v. Acuson Corporation

Long Term Disability Plan, 326 F.Supp.2d 1040, 1052 (N.D.Cal.

2004):

The Ninth Circuit has never explicitly

defined the parameters or contours of what

might suffice to constitute a breach of

fiduciary duty in this context. However,

when evaluating the possibility of such a

breach, that court has appeared to focus upon

procedural irregularities or structural

inconsistencies within the plan

administrator’s decision-making process,

rather than the substantive accuracy of the

administrator’s decision-making. Although it

does not claim to be offering an exclusive

list of possibilities, the Ninth Circuit has

stated that ‘material, probative evidence [of

a breach of fiduciary duty] may consist of

inconsistencies in the plan administrator’s

reasons, insufficiency of those reasons, or

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procedural irregularities in the processing

of the beneficiaries’ claims.’ Nord v. Black

& Decker Disability Plan, 356 F.3d 1008, 1010

(9 Cir. 2004) ...; see also Lang, 125 F.3d th

at 977 (insurance company assumed

inconsistent positions regarding showing

beneficiary must make in order to qualify for

benefits); Tremain, 196 F.3d at 977

(insurance company applied varying and

inconsistent definitions of disability and

failed to justify its determination);

Friedrich v. Intel Corp., 181 F.3d 1105, 1110

(9 Cir. 1999)(plan administrator ‘failed to th

follow its internal procedure;’ ‘provided

Friedrich with insufficient notice of the

denial of his claim, an unfair review

procedure and inadequate dialogue regarding

his claim;’ ‘administered Friedrich’s claim

as an adversary;’ and ‘failed to provide a

“full and fair” appeals procedure’). 

326 F.Supp.2d at 1052.

The court concludes from the record in this action that

plaintiff has not provided material, probative evidence tending

to show that Liberty’s self-interest caused a breach of Liberty’s

fiduciary duty. Plaintiff relies on Brown v. Blue Cross and Blue

Shield of Alabama, Inc., 898 F.2d 1556 (11 Cir. 1990), cert. th

denied, 498 U.S. 1040 (1991), wherein the Eleventh Circuit ruled

that the beneficiary had demonstrated a conflict of interest when

Blue Cross, after initially denying the claim for benefits,

reversed that denial after the beneficiary pursued a review. The

Eleventh Circuit stated:

The reversal of the denial of its claim for

the first period of hospitalization was based

on nothing more that the medical records from

that time. Those records should have been

part of a good faith determination at the

outset. That Blue Cross would reach opposing

conclusions on the basis of the same evidence

seriously challenges the assumptions upon

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which deference is accorded to Blue Cross’

interpretation of the plan.

898 F.2d at 1569. Relying on Brown, plaintiff contends:

In this case, it is undisputed that Liberty

provided long-term disability benefits to the

Plaintiff from April of 2000 until June of

2004. The only significant event in the

intervening period was Liberty’s election, in

April of 2004, to have the case reviewed for

a ‘MD consult’, in which the Liberty

consulting physician suddenly determined that

‘in spite of multiple orthopedic procedures’,

plaintiff could sit or stand for various

lengths of time and could intermittently type

for ten minutes at a time, followed by ten

minute breaks (or for ‘four hours per day’). 

As a result, in June of 2004, the benefits

were cancelled. 

Plaintiff further argues that the “decision to request an FCE is

the fulcrum point of the defendant’s subsequent decision to deny

benefits” and that “[a]ll of the defendant’s subsequent acts, now

for the first time, seem to focus on establishing plaintiff’s

ability to work ....” While plaintiff concedes that the medical

reports and findings of his treating physicians are not entitled

to a “treating physician rule”, plaintiff argues that the

“underlying facts and circumstances of the defendant’s sudden

change of heart, in September of 2003, and the subsequent series

of generated evaluations, gives rise to an unexplained shift in

the ‘dynamics of the decision making process’, which must be

considered by this Court in determining whether a serious

conflict exists.”

Plaintiff’s reliance on Brown to support his assertion that

he has satisfied the Atwood test is unavailing. The record in

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this action demonstrates that Liberty’s decision to request an

FCE and to have all of plaintiff’s medical reports and records

evaluated by a consulting physician came after Liberty received

reports and records not available to it when it made its

decisions to grant benefits under the Plan which were inclusive

or suggested that plaintiff was not disabled and unable to work

in “any occupation.” Liberty’s decision to deny benefits was not

based, as was the case in Brown, on the same records and reports. 

As Liberty argues in support of its motion and in opposition to

plaintiff’s motion, Liberty caused the review of all of

plaintiff’s various reports and records, sought input from

plaintiff, and properly followed all procedural requirements of

the Plan. Therefore, for the reasons argued by Liberty, the

court concludes that plaintiff is not entitled to de novo review

based on a conflict of interest.

ACCORDINGLY:

1. Plaintiff’s Motion for Partial Summary Judgment is

denied.

2. Defendant’s Motion for Partial Summary Judgment is

granted.

IT IS SO ORDERED.

Dated: December 29, 2005 /s/ Robert E. Coyle 

668554 UNITED STATES DISTRICT JUDGE

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