Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_14-cv-02524/USCOURTS-cand-5_14-cv-02524-0/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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Case No.: 5:14-cv-02524-EJD

ORDER GRANTING IN PART MOTIONS FOR SUMMARY JUDGMENT AND 

REMANDING FOR FURTHER PROCEEDINGS

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

OLGA GORBACHEVA,

Plaintiff,

v.

ABBOTT LABORATORIES EXTENDED 

DISABILITY PLAN, et al.,

Defendants.

Case No. 5:14-cv-02524-EJD 

ORDER GRANTING IN PART 

MOTIONS FOR SUMMARY 

JUDGMENT AND REMANDING FOR 

FURTHER PROCEEDINGS

Re: Dkt. Nos. 46, 49

In this action under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 

U.S.C. § 1132, Plaintiff Olga Gorbacheva (“Plaintiff”) seeks long-term disability (“LTD”) 

payments from Defendant Abbott Laboratories Extended Disability Plan (“the Plan”) after her 

request for benefits was denied. Plaintiff also seeks retirement benefits under ERISA from 

Defendants Abbott Laboratories Annuity Retirement Plan and the Abbott Laboratories Retiree 

Health Plan (“the Retirement Plans”). Finally, Plaintiff seeks statutory penalties against 

Defendants James Sipes (“Sipes”) and Abbott Laboratories, Inc. (“ALI”) for failing to comply 

with Plaintiff’s requests for information.

Presently before the court are motions by Plaintiff and Defendants the Plan, the Retirement 

Plans, Sipes, and ALI (collectively, “Defendants”) for summary judgment. See Dkt Nos. 46, 49. 

Having carefully considered the parties’ arguments and evidence, the Court finds that Plaintiff has 

satisfied her burden on her first cause of action. Defendants, meanwhile, have done the same for 

Plaintiff’s second, third, and fourth claims. Both motions are GRANTED IN PART, as set forth 

below.

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I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff and Defendants have each filed a statement of undisputed facts. See Dkt Nos. 47, 

50. As befits this contentious case, each side has raised a number of objections to its opponent’s 

statement. See Dkt. Nos. 54, 56. The Court summarizes the genuinely undisputed facts from 

these statements here, as well as any disputed facts that are material to the Court’s analysis.

A. The Plan

Plaintiff was a participant in the Plan, which entitled her to benefit payments if she was 

“Disabled” within the meaning of the Plan. The Plan would pay benefits for 24 months so long as 

Plaintiff was “completely prevented from performing all the duties required to be performed in 

[her] own occupation or employment.” AR 0006; AR 0039. Afterwards, the Plan would pay 

benefits if she was “completely prevented from performing any occupation or employment for 

which [Plaintiff was] qualified or [could] reasonably become qualified, based on . . . her training, 

education, or experience.” Id. The Plan provided for LTD benefits if and when Plaintiff’s 

disability continued for at least 26 weeks and she received short-term disability benefits during 

that time. AR 0011-12; AR 0044-45.

The Plan Administrator, identified in the Plan as the Divisional President, Compensation 

and Benefits, at Abbott Laboratories (“Abbott”), delegated the duties of making initial claims 

determinations and deciding initial appeals to a third party, Matrix Absence Management, Inc. 

(“Matrix”). The Plan also provided for second-level appeals, which were heard by Sipes, an 

Abbott employee.

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 No part of Sipes’ performance evaluation or compensation was affected by the 

number of claims he granted or denied, and in deciding second-level appeals he did not consider 

the amount of benefits that would be paid or the financial impact to Abbott.

B. Plaintiff’s Application for Benefits

Plaintiff was employed by Abbott as a Clinical Research Associate II. Her job involved 

 

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Plaintiff disputes whether Sipes was properly delegated authority to hear these appeals. The 

Court addresses this argument below. Plaintiff does not dispute that Sipes did in fact decide 

second-level appeals at all times relevant here.

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monitoring clinical trials for new products, product improvements, and product process changes. 

It required her to do a variety of tasks on the computer and on the telephone, including writing in 

connection with clinical trials and sites. The job also required her to travel to some extent, though 

the record is ambiguous as to how much. A job analysis worksheet indicates that Plaintiff was 

traveling 15% of the time by automobile or plane, though she did not have to drive a company car. 

Dkt. No. 48 (“AR”) at 0266. However, in a later functional capacity test Plaintiff told the 

examiner that she traveled to conferences twice a year and rarely visited clinical trial sites. AR 

0597.

Plaintiff suffers from a number of issues with her lumbar spine, including degenerative 

disc disease, spondylosis, and scoliosis. She also has a history of knee problems, such as 

osteoarthritis and tears of her meniscus and posterior cruciate ligament. In 2011, Plaintiff applied 

for short-term disability benefits, citing continuous pain in her lower back and right leg resulting 

from these issues.

On September 7, 2011, Matrix informed Plaintiff that it had approved her application for 

short-term disability benefits from August 22, 2011 through October 18, 2011, with an expected

return-to-work date of October 19, 2011. Plaintiff was unable to return to work on the expected 

date. On January 2, 2012, Plaintiff applied for LTD benefits under the Plan. As part of its review, 

Matrix sought and reviewed updated medical records from Plaintiff’s treating physicians and 

found that Plaintiff was restricted to a less than sedentary work status at the time and that she 

would participate in a comprehensive treatment plan to relieve her symptoms. Matrix approved 

Plaintiff for LTD benefits from February 20, 2012, the first day Plaintiff was eligible for LTD 

benefits, through May 20, 2012, but Matrix advised Plaintiff that further benefits would be 

contingent on the receipt of updated medical records. On May 24, 2012, after Plaintiff had 

submitted records from her doctor, the claims administrator extended the benefits through June 10, 

2012. However, because Plaintiff’s nurse case manager (“NCM”) was “concerned” about 

Plaintiff’s “sporatic [sic] treatment” for her symptoms, AR 1157, the NCM commissioned an 

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independent medical examination (“IME”) of Plaintiff.

L. Neena Madireddi, M.D. (“Dr. Madireddi”) conducted the IME on July 11, 2012. Dr. 

Madireddi reviewed Plaintiff’s medical records and job description and performed a physical 

examination. Dr. Madireddi concluded that Plaintiff did have medical conditions that resulted in 

certain limitations, but that Plaintiff was able to perform her job because her job description was 

sedentary. On the basis of the IME, and having received and reviewed Plaintiff’s medical records, 

Matrix denied Plaintiff LTD benefits beyond July 31, 2012.

On January 31, 2013, Plaintiff, through her counsel, timely appealed the denial of LTD 

benefits. Plaintiff argued that medical records she submitted supported her claim of disability and 

that the IME was unreliable. On March 25, 2013, Plaintiff also informed Matrix that Plaintiff had 

been approved for Social Security benefits, although Plaintiff did not submit a copy of the 

favorable Social Security Disability Insurance (“SSDI”) opinion. Matrix commissioned a peer 

review of Plaintiff’s file by an orthopedic surgeon, who concluded that Plaintiff was limited to 

sedentary work. Because the surgeon also found that Plaintiff’s job was a sedentary capacity job, 

the surgeon concluded that Plaintiff was capable of performing her job. A vocational 

rehabilitation consultant agreed that Plaintiff was able to perform her own occupation. Therefore, 

Matrix denied the appeal on May 15, 2013.

On November 8, 2013, Plaintiff requested a second-level appeal by letter. In the letter, 

Plaintiff stated that she had recently undergone a functional capacity evaluation (“FCE”) and 

requested that the deadline for review of the appeal be tolled until the results of the FCE were 

available. Matrix responded on November 11, 2013, and agreed to toll the deadline. Over the 

following months, Plaintiff sought and obtained several further extensions of the review deadline 

in order for Plaintiff to submit further medical records and a release allowing the file reviewer to 

speak to Plaintiff’s medical providers. On January 16, 2014, Matrix informed Plaintiff’s counsel 

that it would proceed with the second-level review based on the information received to date.

As part of the second-level review, the Plan had Plaintiff’s records peer reviewed by a 

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second set of doctors, including another orthopedic surgeon. The surgeon did not dispute that 

Plaintiff suffered from some functional impairments, but the surgeon concluded that Plaintiff was 

capable of performing sedentary work full-time. Sipes denied Plaintiff’s second-level appeal on 

February 27, 2014.

On March 4, 2014, Plaintiff’s counsel responded by letter and disputed the denial of 

Plaintiff’s second-level appeal. Plaintiff’s counsel argued that the Plan had failed to consider 

various documents, including Plaintiff’s favorable SSDI opinion and a report from a new doctor, 

both of which Plaintiff’s counsel attached to the letter. Plaintiff had not submitted these 

documents before, but Plaintiff’s counsel claimed that the previous appeal submission had not 

been final and that the March 4 letter and its enclosures were Plaintiff’s final submission. 

Plaintiff’s counsel contended that the second-level appeal should be reviewed again in light of this 

additional information. However, deciding that the appeal process had been completed and that 

the Plan did not provide for a reconsideration of a second-level appeal, Sipes took no further 

action regarding Plaintiff’s claim.

On April 17, 2014, Plaintiff, through her counsel, wrote to Sipes to request certain 

documents related to her claim for benefits. Among other things, the letter sought all documents 

governing the Plan. Ted V. Parker (“Parker”) responded on April 18, 2014 and provided a copy of 

the relevant Plan documents. Parker did not provide the contract between Matrix and Abbott or a 

copy of the document delegating authority to Sipes to hear second-level appeals.

The Retirement Plans are separate benefit plans from the Plan. Plaintiff did not file any 

separate claim for benefits from the Retirement Plans. However, Plaintiff contends that she did 

not need to file a separate claim because benefits due under the Retirement Plans are automatically 

provided to any participant eligible for disability benefits under the Plan.

C. Plaintiff’s Medical History

Plaintiff’s medical history is the subject of some dispute between the parties, and it bears 

further elaboration here. Prior to March 2012, the parties agree that Plaintiff was disabled. On 

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March 22, 2012, Matrix’s nurse case manager reviewed Plaintiff’s medical records to that point 

and found that they “contain objective medical evidence that support [her] restrictions/limitations 

of a less than sedentary work status at this time.” AR 0331. A doctor seeing Plaintiff to help her 

manage her pain had suggested a course of treatment including medication changes, epidural 

steroid injections, physical therapy, and an evaluation by a pain psychologist. AR 0368. The 

nurse case manager recommended extending Plaintiff’s benefits for several weeks while she 

pursued this course of treatment. Id. Accordingly, Plaintiff was eventually awarded LTD benefits 

from February 20, 2012 through July 31, 2012. AR 0372-74; AR 0432-37.

In a subsequent review, however, the nurse case manager noted that Plaintiff did not 

appear to be participating in the treatment plan and suggested that her “sporadic” treatment might 

mean that her symptoms were not as significant. AR 1148-49. On May 11, Matrix received 

updated records from Plaintiff’s treating physician, Duc M. Nguyen, M.D. (“Dr. Nguyen”), that 

indicated that Plaintiff did not follow the course because she was not sure it was helpful; Dr. 

Nguyen recommended conservative treatment instead. AR 0381-83. Dr. Nguyen also estimated 

that Plaintiff could return to work on August 10. AR 0378. Around the same time, Plaintiff 

submitted a report from a different doctor, Dean F. Weinberg, D.C. (“Dr. Weinberg”), in which 

Dr. Weinberg estimated that she could return to work on July 2 and could still improve given 

further treatment. AR 0400.

There is no record that any of Plaintiff’s treating physicians, including Dr. Nguyen, 

evaluated her after May 2012. See AR 0928-30 (last visit with Dr. Nguyen on May 10, 2012, 

indicating that she could return to work after three months); AR 0991-92 (last visit with Gerald P. 

Keane, M.D., on November 11, 2011, recommending that she be off work for two months); AR 

0921 (last visit with Dr. Weinberg on May 18, 2012, indicating a “guarded” prognosis and 

recommending follow up in one month); AR 0965-66 (last recorded visit with Arthur J. Ting, 

M.D., on February 23, 2012, indicating that Plaintiff was unable to return to work until April 20). 

Only Dr. Nguyen’s evaluation supported work restrictions continuing after July 2, 2012, and he 

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estimated that Plaintiff could return to work in early August. AR 0930. Also, on June 29, Dr. 

Nguyen issued another report finding that Plaintiff could not work at all, although it does not 

appear that he had examined her in person within the previous month. AR 0411-14.

Meanwhile, on June 28, 2012, Matrix informed Plaintiff that it had scheduled an IME with 

Dr. Madireddi for July 11. AR 0410. After conducting the IME, Dr. Madireddi concluded that 

Plaintiff could perform a sedentary job. AR 0882-95. Plaintiff attests that the examination was 

“cursory” and lasted only ten minutes. AR 0482-82. However, Dr. Madireddi’s report describes a 

more thorough examination. AR 0890-92. After the IME, Matrix issued a determination that 

Plaintiff’s benefits would end effective July 31, 2012. AR 0865. In addition to the IME, Matrix 

stated that it had “received and reviewed [Plaintiff’s] medical records” and observed that her 

treatment had been “sporadic.” AR 0865-66.

During her first-level appeal, as indicated above, Matrix asked an orthopedic surgeon, 

William Andrews, M.D., C.I.M.E. (“Dr. Andrews”), to review Plaintiff’s file. Dr. Andrews 

reviewed Plaintiff’s medical records, including the IME by Dr. Madireddi. AR 0524-25. Dr. 

Andrews found that Plaintiff’s “complaints of pain from her degenerative disc disease are 

consistent with the objective clinical findings” and that her “pain [was] impacting her ability to 

function.” AR 0527. However, Dr. Andrews also said that he “d[id] not see any findings of a 

significant motor defect or other objective findings, which would preclude sedentary work” and 

that he did not believe Plaintiff was “completely incapacitated.” AR 0529.

Later on, while Plaintiff was preparing a second-level appeal, she underwent an FCE by 

Alan Nelson and Dr. Diana Bubanja. AR 0579-0601. During the FCE, Plaintiff complained of 

continuous pain and fatigue and reported that she could sit for no more than 15 minutes at a time. 

AR 0582-84. The FCE also involved a keyboard tolerance test, during which Plaintiff was able to 

type for 14 minutes before asking to stop and lie down on the floor for 20 minutes. AR 0591. 

Plaintiff later said that the most difficult activity she had to do during the FCE was the typing test. 

AR 0594. The evaluation found that Plaintiff could not “perform any functional level of work, 

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including sedentary employment,” in part because she could not sit for continuous periods or use 

her upper extremities repetitively. AR 0595. Specifically, the FCE found that Plaintiff could not 

perform her previous job at Abbott or any similar job due to her restrictions. AR 0600. On 

November 27, 2013, Plaintiff submitted the results of her FCE to Matrix to support her secondlevel appeal. AR 0577-78. 

For the second-level appeal, the Plan asked another orthopedic surgeon, Joanne R. Werntz, 

M.D. (“Dr. Werntz”), to conduct a peer review of Plaintiff’s medical history. AR 0670-81. In her 

report, Dr. Werntz summarized Plaintiff’s medical records, including the reports from her treating 

physicians, the IME, and the FCE. AR 0675-79. Dr. Werntz found that Plaintiff had “functional 

impairment” from her knee and back issues, but that she still could “work full time with 

restrictions and limitations.” AR 0679-80. Dr. Werntz found “no objective documentation . . . 

that would limit the claimant from performing” all of the activities associated with her job. AR 

0680. Other than summarizing the findings of the FCE, Dr. Werntz did not address them in any 

detail. AR 0679. In his letter denying the second-level appeal, Sipes said that he had received and 

reviewed the FCE, but he adopted Dr. Werntz’s conclusions. AR 1111-15.

D. Procedural History

On June 2, 2014, Plaintiff filed this suit. See Dkt. No. 1 (“Compl.”). Her complaint raises 

four causes of action: (1) a claim for disability benefits against the Plan pursuant to ERISA 

§ 502(a)(1)(B); (2) and (3) claims for benefits against the Retirement Plans pursuant to the same 

section of ERISA; and (4) a claim for statutory penalties against Sipes and ALI for failing to hand 

over the Plan’s annual report and certain other documents under ERISA § 502(c)(1). Id., ¶¶s 45-

64. Plaintiff asks the Court to order the Plan to pay Plaintiff benefits starting from July 31, 2012, 

in addition to several other forms of relief. Id. at 11-12.

In May 2015, both sides moved for summary judgment on all claims. See Dkt. Nos. 46, 

49. Each side filed written opposition to its opponent’s motion. See Dkt Nos. 53, 55. This matter 

was found suitable for decision without oral argument pursuant to Civil Local Rule 7-1(b). See

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Dkt. No. 60.

II. LEGAL STANDARD

A. Standard of Review in ERISA Cases

ERISA allows a beneficiary or plan participant to sue in federal court “to recover benefits 

due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to 

clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B); see 

also CIGNA Corp. v. Amara, 563 U.S. 421, 425 (2011); Aetna Health Inc. v. Davila, 542 U.S. 

200, 210 (2004). A claim of denial of benefits in an ERISA case “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); Montour v. Hartford Life & Accident Ins. Co., 588 F.3d 

623, 629 (9th Cir. 2009).

If the plan confers such discretion, then the denial is reviewed for an abuse of discretion. 

Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 110-11 (2008). This grant of discretion must be 

unambiguous. Pac. Shores Hosp. v. United Behavioral Health, 764 F.3d 1030, 1039 (9th Cir. 

2014) (quoting Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 963 (9th Cir. 2006) (en 

banc)). The plan administrator bears the burden of proving that it is entitled to abuse of discretion 

review. Kearney v. Standard Ins. Co., 175 F.3d 1084, 1089 (9th Cir. 1999) (en banc). In deciding 

whether the plan administrator has delegated its authority, the district court should focus on 

whether the plan at issue contemplated the possibility of a transfer of discretionary authority and 

whether there is evidence establishing such a delegation. See Shane v. Albertson’s Inc., 504 F.3d 

1166, 1171 (9th Cir. 2007) (citing Hensley v. Nw. Permanente P.C. Ret. Plan, 258 F.3d 986, 998 

(9th Cir. 2001), overruled on other grounds by Abatie, 458 F.3d at 966). 

“Under this deferential standard, a plan administrator’s decision ‘will not be disturbed if 

reasonable.’” Stephan v. Unum Life Ins. Co. of Am., 697 F.3d 917, 929 (9th Cir. 2012) (quoting 

Conkright v. Frommert, 559 U.S. 506, 512 (2010)). The Court “may review only the 

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administrative record when considering whether the plan administrator abused its discretion.” 

Abatie, 458 F.3d at 970. However, unless explicitly required by the terms of the plan at issue, a 

claimant need not have presented every legal theory or issue to the plan administrator before 

raising it in this Court. See Vaught v. Scottsdale Healthcare Corp. Health Plan, 546 F.3d 620, 

629-33 (9th Cir. 2008).

A plan administrator’s decision was unreasonable if it was “(1) illogical, (2) implausible, 

or (3) without support in inferences that may be drawn from the facts of the record.” Salomaa v. 

Honda Long Term Disability Plan, 642 F.3d 666, 676 (9th Cir. 2011) (quoting United States v. 

Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc)). The Court should consider factors such 

as the quality and quantity of the medical evidence, whether the plan administrator commissioned 

an in-person medical review or simply relied on the claimant’s existing medical records, whether 

the administrator provided its independent experts with all relevant evidence, and whether the 

administrator considered a contrary disability determination by the Social Security Administration. 

Montour, 588 F.3d at 630 (citing Glenn, 554 U.S. at 118).

A plan administrator’s conflict of interest, such as where the claim fiduciary is also the 

funding source for the plan, is another factor that the Court should weigh when reviewing the 

administrator’s decisions for abuse of discretion. Glenn, 554 U.S. at 111-12. However, such a 

conflict does not lead to a less deferential standard of review; rather, like most procedural 

violations, the conflict is merely one additional factor to be considered in determining whether a 

fiduciary abused its discretion. Id. The Court may find an abuse of discretion only if, after 

weighing all of these factors, it is “left with a definite and firm conviction that a mistake has been 

committed.” Salomaa, 642 F.3d at 676 (quoting Hinkson, 585 F.3d at 1262).

B. Summary Judgment Standard

Ordinarily, a motion for summary judgment should be granted if “there is no genuine 

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. 

Civ. P. 56(a); Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). The moving party 

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bears the initial burden of informing the court of the basis for the motion and identifying the 

portions of the pleadings, depositions, answers to interrogatories, admissions, or affidavits that 

demonstrate the absence of a triable issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 

323 (1986). If the moving party meets this initial burden, the burden then shifts to the non-moving 

party to go beyond the pleadings and designate specific materials in the record to show that there 

is a genuinely disputed fact. Fed. R. Civ. P. 56(c); Celotex, 477 U.S. at 324. The court must draw 

all reasonable inferences in favor of the party against whom summary judgment is sought. 

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

If the abuse of discretion standard governs an ERISA case, however, “‘a motion for 

summary judgment is,’ in most respects, ‘merely the conduit to bring the legal question before the 

court.’” Stephan, 697 F.3d at 930 (quoting Nolan v. Heald Coll., 551 F.3d 1148, 1154 (9th Cir. 

2009)). As a result, “the usual tests of summary judgment, such as whether a genuine dispute of 

material fact exists, do not apply.” Id. (quoting Nolan, 551 F.3d at 1154).2 However, when the 

Court considers evidence outside the administrative record to evaluate a potential conflict of 

interest, the Court must view the evidence in the light most favorable to the non-moving party and 

assess whether there is a genuine issue of material fact. Id. (quoting Nolan, 551 F.3d at 1154).

III. DISCUSSION

A. Claim for Disability Benefits

i. Standard of Review

Plaintiff contends that the applicable standard of review is de novo because Sipes was 

never properly delegated discretion to decide claims and appeals under the Plan. The Plan 

documents vest the “Plan Administrator” with “sole discretion . . . to decide all questions 

concerning the Plan and the eligibility of any person to participate in the Plan,” as well as a 

number of other issues. AR 0019. The Plan Administrator could also “delegate his or her 

 

2 Defendant contends that the Ninth Circuit would hold differently today. See Dkt. No. 53 at 4-5. 

Unless and until it does so, however, this Court is bound by Nolan and Stephan.

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fiduciary responsibilities” “by written instrument.” AR 0020.

On April 17, 2006, the Plan Administrator executed such a written instrument delegating to 

“the Divisional Vice President, Benefits” all of the Administrator’s discretionary authority. AR 

0707. Plaintiff observes that Sipes’ job title was, in fact, “Divisional Vice President, Benefits and 

Wellness.” AR 1115; see Dkt. No. 46-4, Ex. 39 at 5:25-6:3. Meanwhile, a different employee 

held the title “Divisional Vice President, Compensation and Benefits.” AR 0037.

In response, Defendants have submitted a declaration from Parker, an Abbott employee 

familiar with the Plan. Dkt. No. 55-2. Parker attests that the title of “Divisional Vice President, 

Benefits” was changed to “Divisional Vice President, Benefits and Wellness” sometime after the 

2006 delegation. Id., ¶ 6. In other words, the plan administrator delegated authority to the 

employee in the role that Sipes later filled. Plaintiff contends that the Court may not consider the 

declaration at this stage, but the cases that Plaintiff cites discuss the separate question of whether a 

plan unambiguously confers discretion, which is not at issue here. In fact, the Ninth Circuit has 

relied on such extrinsic evidence to establish that a delegation has occurred. See Hensley, 258 

F.3d at 998. The delegation was explicitly permitted by the Plan documents, and the declaration 

clarifies that the authority was delegated to Sipes.3 Therefore, the Court will review the decision 

for an abuse of discretion.

ii. Denial of Benefits

Plaintiff contends that Defendants committed several abuses of discretion in denying 

Plaintiff’s claim for LTD benefits: (1) Sipes failed to review the entire record; (2) the Plan 

Administrator had no justification for finding that her long-term disability ended on July 31, 2012

or for finding that her occupation was sedentary and not light duty; and (3) the Plan Administrator 

ignored the decision awarding Plaintiff SSDI benefits. Plaintiff also asks the Court to weigh the 

 

3

Plaintiff also contends that the delegation was unenforceable because a later amendment to the 

Plan documents changed the allocation of authorities and responsibilities under the Plan. Plaintiff 

does not explain why a reallocation of duties would nullify a previous delegation, and she cites no 

authority in support of her contention. The Court finds that the delegation remained valid even 

after the amendment.

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conflict of interest inherent in having Sipes, an Abbott employee, decide the outcomes of secondlevel appeals. The Court considers each argument in turn.

As an initial matter, Defendants contend that Plaintiff may not rely on arguments that she 

did not raise during her appeals. Defendants point out that Plaintiff submitted only a one-page 

letter requesting a second-level appeal. However, ERISA claimants are not required to exhaust 

issues or theories in their appeals. See Vaught, 546 F.3d at 633. In this circuit, plaintiffs in 

ERISA cases “may introduce new theories in court that were not presented to the plan 

administrator.” Caldwell v. Facet Retiree Med. Plan, No. 13-cv-0385-WHA, 2014 WL 1340631, 

at *3 (N.D. Cal. Apr. 3, 2014) (citing Vaught, 546 F.3d at 633). Plaintiff is entitled to do so here.

Plaintiff contends that Sipes did not review the entirety of what is now the administrative 

record. The only relevant documents that Plaintiff cites are two initial determinations by the 

claims administrator that Plaintiff’s job was a light duty occupation, which run contrary to Sipes’ 

conclusion that hers was a sedentary position. AR 0504-05. However, the same claims 

administrator later double-checked her job requirements and said that it was sedentary. AR 0536; 

see also AR 0426; AR 0523; AR 0529; AR 1157 (describing her occupation as sedentary). 

Plaintiff has not shown that considering these documents would have changed the outcome of the 

second-level appeal, and Plaintiff thus has not established an abuse of discretion.

Plaintiff also claims that Sipes did not in fact review the documents he claimed to have 

reviewed. However, the fact that he could not remember a specific document at his deposition 

does not mean that he did not review the document at all in the first instance. Plaintiff again has 

failed to show an abuse of discretion.

Plaintiff next contends that the Plan Administrator’s decision overestimated Plaintiff’s 

physical condition. On March 22, 2012, a Matrix nurse found that Plaintiff’s medical records 

“contain objective medical evidence that support [her] restrictions/limitations of a less than 

sedentary work status at this time.” AR 0331. Accordingly, Plaintiff was awarded LTD benefits 

from February 20, 2012 through July 31, 2012. AR 0372-74; AR 0432-37. In denying the 

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second-level appeal, however, Sipes claimed that the medical records failed to support any 

interference with her job performance “beyond July 31, 2012.” AR 1114. In essence, Plaintiff 

argues that the Plan Administrator did not establish that anything in Plaintiff’s medical condition 

changed on July 31, 2012, so choosing that end date for her LTD benefits was arbitrary. More 

broadly, Plaintiff argues that the Plan Administrator acted arbitrarily in “refus[ing] to credit 

[Plaintiff’s] reliable evidence, including the opinions of a treating physician,” without full 

explanation. Black & Decker Disability Plan v. Nord, 538 U.S. 822, 834 (2005).

However, the record contains a great deal of evidence that supports the decision. As 

summarized above, none of Plaintiff’s treating physicians appear to have evaluated her in person 

after May 2012. Meanwhile, Dr. Madireddi did conduct an in-person IME in July 2012. Plaintiff 

assails Dr. Madireddi’s report as conclusory, but she ignores the detail that Dr. Madireddi 

provided about the results of her tests. AR 0890-92.

Thus, the evidence before the Plan Administrator was ambiguous. On one hand, Plaintiff’s 

treating physicians indicated that she was disabled, but the most recent medical records were by 

then months old. On the other hand, Dr. Madireddi had conducted the IME more recently and 

found that Plaintiff could do sedentary work. Moreover, the record indicates that Plaintiff’s 

treatment was sporadic. Considering all of the evidence before it, the Plan Administrator initially 

concluded that Plaintiff was not disabled beyond July 31, 2012. In his peer review for the firstlevel appeal, Dr. Andrews considered all of the available medical evidence and agreed that 

Plaintiff was not disabled. Matrix relied on his assessment, as well as its own review of the 

medical records, in denying the first-level appeal as well. Given the conflicting medical evidence, 

these conclusions were reasonable and did not constitute an abuse of discretion.

Plaintiff’s objections about Dr. Werntz’s review, which she undertook as part of the 

second-level appeal, are better founded. In particular, Plaintiff observes that Dr. Werntz 

concluded that Plaintiff was capable of full-time sedentary work, but Dr. Werntz did not explain 

why she reached a different conclusion from the FCE. Defendants respond that Dr. Werntz 

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weighed competing evidence in making her assessment. For example, the IME found that 

Plaintiff could sit for eight hours cumulatively in a work day, AR 0678, but Dr. Werntz found that 

Plaintiff could only sit for six hours. AR 0680. However, this only highlights the fact that Dr. 

Werntz offered no explanation for her conclusions, and in particular her decision to discredit the 

FCE almost entirely. Sipes’ decision suffers from the same defect.

Defendants contend that Dr. Werntz was entitled to use her expertise to evaluate the 

conflicting evidence. That may be true, but she was not entitled to “arbitrarily refuse to credit

[Plaintiff’s] reliable evidence,” such as the FCE. Nord, 538 U.S. at 834. In other words, although 

the existence of a conflicting FCE does not establish an abuse of discretion in itself, the Plan 

Administrator should have offered some explanation for why it believed that the FCE results were 

implausible. Instead, neither Dr. Werntz nor Sipes made “any serious effort to discredit” the 

results of Plaintiff’s FCE. Stout v. Hartford Life & Accident Ins. Co., 58 F. Supp. 3d 1020, 1030 

(N.D. Cal. 2013); see also Caplan v. CNA Fin. Corp., 544 F. Supp. 2d 984, 989, 992 (N.D. Cal. 

2008) (criticizing a defendant for “discount[ing] . . . the results of [an] FCE” while adopting a 

reviewing physician’s opinion). Defendants are correct that, unlike the defendants in Stout and 

Caplan, the Plan Administrator did commission an in-person IME by Dr. Madireddi. But Dr. 

Werntz only conducted a paper review of Plaintiff’s medical records, and neither she nor the Plan 

Administrator clarified why they placed greater weight on the relatively brief IME in July 2012 

than on the much more involved FCE from October and November of 2013. Cf. Burke v. Pitney 

Bowes Inc. Long Term Disability Plan, 640 F. Supp. 2d 1160, 1173-74 (N.D. Cal. 2009) (finding 

that a plan administrator acted reasonably in ordering a second IME because the previous IME 

was ten months old and contradicted by a later FCE). The Plan Administrator’s failure to respond 

to the FCE’s findings suggests an abuse of discretion.

Plaintiff also objects to the Plan Administrator’s characterization of the requirements of 

Plaintiff’s job. All of the people who reviewed Plaintiff’s application for LTD benefits reviewed a 

document called a Job Analysis Worksheet, which said that Plaintiff’s job required her to travel 

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15% of the time by automobile or plane. AR 0266. Plaintiff contends that travel to this extent 

was inconsistent with a sedentary work load. Plaintiff also points out that at some point during the 

review process, a Matrix employee wrote that Plaintiff’s occupation was a light duty occupation. 

AR 0504-05.

However, the evidence supports the Plan Administrator’s finding that her position was 

sedentary. The Department of Labor defines “sedentary employment” as work that involves 

“exerting up to 10 pounds of force occasionally and/or a negligible amount of force frequently to 

. . . move objects.” AR 0535. This type of work “involves sitting most of the time, but may 

involve walking or standing for brief periods of time.” Id. “Jobs are sedentary if walking and 

standing are required only occasionally and all other sedentary criteria are met.” Id. Almost all of 

Plaintiff’s essential job functions involved using a computer or a telephone at her desk, and her job 

did not require her to stand, squat, or drive. AR 0266-69. Contrary to the Job Analysis 

Worksheet, Plaintiff stated during her FCE that she traveled to conferences no more than twice a 

year. AR 0597. Moreover, even if Plaintiff in fact did travel 15% of the year, there is no 

indication that she was required to drive herself, meaning that her job was still sedentary. AR 

0266. Plaintiff cites Polnicky v. Liberty Life Assurance Co. of Boston, No. 13-cv-1478-SI, 2014 

WL 6680725, at *9 (N.D. Cal. Nov. 25, 2014), for the proposition that a job requiring travel could 

not be a sedentary position, but the position in that case involved “substantial out-of-office travel,” 

“thirty minutes to three hours per day” of walking, and “the ability to drive motor vehicles.” Id. at 

*8. By contrast, Plaintiff’s position did not require any of these. The Plan Administrator’s 

decision to consider her position sedentary was not an abuse of discretion.

Finally, Plaintiff argues that the Plan Administrator erred by failing to consider the 

decision awarding Plaintiff SSDI benefits. “Evidence of a Social Security award of disability 

benefits is of sufficient significance that failure to address it offers support that the plan 

administrator’s denial was arbitrary, an abuse of discretion.” Salomaa, 642 F.3d at 679 (citing 

Montour, 588 F.3d at 635). “Weighty evidence may ultimately be unpersuasive, but it cannot be 

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ignored.” Id. Defendants blame Plaintiff for failing to submit the award letter despite receiving 

several extensions for filing documents in connection with the second-level appeal. AR 0564; AR 

0603; AR 0620. Moreover, Plaintiff had agreed to provide Matrix “with copies of all 

communications with Social Security . . . within 15 days of receipt.” AR 1066. Nevertheless, 

because Plaintiff did not submit the SSDI determination until after Sipes decided on her secondlevel appeal, that determination is not in the administrative record. Defendants contend that the 

Court may not consider it now.

However, the administrative record reflects that Plaintiff notified the claims administrator 

of the SSDI decision well before Sipes undertook his review. AR 0511; AR 0854. Neither Sipes 

nor anyone else requested the decision letter or told Plaintiff that it “would facilitate [their] 

review.” Montour, 588 F.3d at 637; see also Saffon v. Wells Fargo & Co. Long Term Disability 

Plan, 522 F.3d 863, 871 (9th Cir. 2008) (holding that a claims administrator must request 

additional information while the claimant still “ha[s] a fair chance to present evidence”). Nor did 

Defendants make any attempt to obtain the SSDI determination on their own. Cf. Robertson v. 

Standard Ins. Co., 139 F. Supp. 3d 1190, 1206-07 (D. Or. 2015) (citing Sterio v. HM Life, 369 F. 

App’x 801, 804 (9th Cir. 2010)) (“Defendant’s failure to procure the SSA file or ask Plaintiff to do 

so weighs in favor of a finding that Defendant abused its discretion in denying Plaintiff benefits.”). 

Instead, it appears that Defendants ignored the SSDI determination completely; Sipes did not 

mention it at all in his decision on the second-level appeal. These failures weigh in favor of an 

abuse of discretion.

The Court must view the potential abuses of discretion above - namely, the failures to 

account for the FCE or the SSDI determination - in light of the “structural conflict of interest” 

inherent in having “the same entity that funds an ERISA benefits plan also evaluate[] claims.” 

Montour, 588 F.3d at 630. This conflict of interest may prove important “where circumstances 

suggest a higher likelihood that it affected the benefits decision.” Glenn, 554 U.S. at 117. It 

looms larger when an “administrator has a history of biased claims administration,” but less so if 

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“the administrator has taken active steps to reduce potential bias and to promote accuracy.” Id. In 

assessing a conflict of interest, the Court may rely on evidence outside the administrative record. 

See Stephan, 697 F.3d at 930.

Here, Plaintiff observes that the Plan closed 120 claims and over $2 million in benefit 

liabilities in 2013 alone, when Sipes was the Divisional Vice President, Benefits and Wellness. 

Dkt. No. 49-2, Ex. A; Dkt. No. 46-4, Ex. 39 at 6:2-5. Defendants respond that, in fact, much of 

this decrease occurred because of a corporate reorganization in which thousands of employees, 

and their associated benefits claims, were transferred to a new company called AbbVie. See Dkt. 

No. 58-1, ¶ 3. Meanwhile, Sipes received no personal benefit, in terms of his performance 

evaluation or compensation, for denying claims, and he attests that he did not consider the amount 

of benefits to be paid or the resulting financial impact to Abbott. Dkt. No. 49-9, ¶¶s 10-12. Still, 

when Sipes was designated to consider second-level appeals, he reviewed six appeals and granted 

only one. Dkt. No. 49-2, ¶ 5.

Plaintiff has failed to identify any evidence of “malice” or “self-dealing.” Abatie, 458 F.3d 

at 968. However, “[a] court may weigh a conflict more heavily if . . . the administrator . . . fails 

adequately to investigate a claim or ask the plaintiff for necessary evidence,” or if it “fails to credit 

a claimant’s reliable evidence.” Id. (citing Booton v. Lockheed Med. Benefit Plan, 110 F.3d 1461, 

1463-64 (9th Cir. 1997); Nord, 538 U.S. at 834). Because those factors are present here, the Court 

accords moderate weight to the structural conflict of interest. Considering the conflict of interest 

and all of the circumstances discussed above, the Court finds that the Plan Administrator abused 

its discretion in denying Plaintiff’s claim for benefits.

iii. Remedy

The Ninth Circuit has held that “[w]here an administrator’s initial denial of benefits is 

premised on a failure to apply plan provisions properly, [the court should] remand to the 

administrator to apply the terms correctly in the first instance.” Pannebecker v. Liberty Life 

Assurance Co. of Boston, 542 F.3d 1213, 1221 (9th Cir. 2008) (citing Saffle v. Sierra Pac. Power 

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Co. Bargaining Unit Long Term Disability Income Plan, 85 F.3d 455, 460-61 (9th Cir. 1996)). 

However, “if an administrator terminates continuing benefits as a result of arbitrary and capricious 

conduct, the claimant should continue receiving benefits until the administrator properly applies 

the plan’s provisions.” Id. (citing Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 

1163 (9th Cir. 2001)).

Here, the Plan Administrator approved Plaintiff’s initial application for LTD benefits only 

through July 31, 2012. Although Plaintiff seeks to characterize the denial otherwise, it was not a 

termination of ongoing benefits. Instead, the Plan Administrator only failed to apply the proper 

standard to Plaintiff’s application for benefits past July 31, 2012. “Where, as here, the benefits 

[were] limited in duration, retroactive benefits are not warranted.” Cox v. Allin Corp. Plan, No. 

12-cv-5880-SBA, 2015 WL 1737764, at *6 (N.D. Cal. Apr. 14, 2015); see also Creer v. AT&T 

Umbrella Benefit Plan No. 1, No. 09-cv-2210-MCE, 2012 WL 397717, at *6 (E.D. Cal. Feb. 7, 

2012) (denying a request to reinstate benefits where the court could not “say on the record before 

[it] whether Plaintiff would have continued to receive benefits or not”); Langston v. N. Am. Asset 

Dev. Corp., No. 08-cv-2560, 2009 WL 941763, at *9 (N.D. Cal. Apr. 6, 2009) (declining to 

reinstate benefits because the plan “ha[d] failed to make adequate findings” and because the 

plaintiff had only begun to receive benefits “on a temporary basis”). The Court will remand to the 

Plan Administrator to make an initial determination of Plaintiff’s claim in light of all of the 

evidence that it should have considered in the first instance. However, no reinstatement of 

benefits is appropriate here.

B. Claims for Retirement Benefits

Plaintiff admits that she has filed no claim under the Retirement Plans, but Plaintiff argues 

that benefits under the Retirement Plans are awarded automatically once she is awarded LTD 

benefits under the Plan. Even assuming that this is true, because the Court has remanded for the 

Plan Administrator to decide whether Plaintiff is entitled to LTD benefits, it is premature for the 

Court to consider whether she may also receive benefits under the Retirement Plans. The Court 

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will grant summary judgment on these claims to the Retirement Plans.

C. Claim for Statutory Penalties

Plaintiff seeks statutory penalties against ALI and Sipes for depriving her of two 

documents: the contract between Matrix and Abbott and the document delegating authority to 

decide second-level appeals. ERISA provides that a plan administrator “who fails or refuses to 

comply with a request for any information which such administrator is required . . . to furnish to a 

participant or beneficiary . . . within 30 days after such request” can, at the Court’s discretion, be 

liable for statutory penalties of up to $100 per day from the date of the failure or refusal. 29 

U.S.C. § 1132(c)(1). 29 U.S.C. § 1002(16)(A) defines a plan “administrator” as “the person 

specifically so designated by the terms of the instrument under which the plan is operated [or,] if 

an administrator is not so designated, the plan sponsor.” The Ninth Circuit has held that only the 

plan administrator may be held liable under § 1132(c)(1). See Sgro v. Danone Waters of N. Am., 

Inc., 532 F.3d 940, 945 (9th Cir. 2008).

Plaintiff concedes that neither ALI nor Sipes is the plan administrator. However, Plaintiff 

contends that ALI should be liable because the Plan does not identify a specific administrator, so 

that the Plan sponsor is liable by operation of law. See 29 U.S.C. § 1002(16)(A). But the Plan 

specifically designates Abbott’s Divisional Vice President, Compensation and Benefits as the Plan 

Administrator. AR 0009; AR 0042; see also AR 0080; AR 0102; AR 0124; AR 0146. In any 

case, ALI is not the Plan sponsor; Abbott is.4 ALI is not a valid defendant for this claim.

As for Sipes, Plaintiff contends that he was the de facto administrator of the Plan. 

Although other circuits may have held a de facto plan administrator liable under § 1132(c)(1), the 

Ninth Circuit has been clear that this provision only permits a plaintiff to pursue the plan’s 

administrator and not a third party making a benefit determination. Sgro, 532 F.3d at 945. Other 

 

4

Plaintiff argues that she intended to sue Abbott and that the Court should treat her complaint 

accordingly. Though Abbott and ALI may have similar names, they are distinct as a legal matter. 

Plaintiff has made no attempt to amend the complaint to name the correct party. Nevertheless, 

because the claim fails for several other reasons, granting leave to amend at this stage would be 

futile. 

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courts in this circuit have cited Sgro in rejecting the de facto administrator doctrine. See, e.g., 

McCollum v. Blue Shield of Cal. Life & Health Ins. Co., No. 12-cv-1560-PSG, 2012 WL 

5389711, at *4 (N.D. Cal. Nov. 2, 2012); Talbot v. Reliance Standard Life Ins. Co., No. 14-cv0231-DJH, 2015 WL 4134548, at *2 (D. Ariz. June 18, 2015). In this circuit, Sipes cannot be 

liable as a de facto administrator under § 1132(c)(1).

Moreover, Plaintiff does not dispute that she never specifically requested the documents at 

issue. Plaintiff contends that she should have received them in response to her request for “[a]ll 

documents governing the Plan, including . . . any other instruments under which the Plan is 

established or operated.” AR 0440; AR 0557; AR 1136. The Court finds that the documents 

Plaintiff now seeks are not “instruments under which the Plan is . . . operated.” See Dkt. No. 49-2, 

¶ 8; Dkt. No. 55-2, ¶¶s 14-15. At the very least, Defendants did not act wrongfully by interpreting 

the request to exclude these documents. In any case, Plaintiff has identified no meaningful 

prejudice from the failure; the delegation document is in the administrative record, AR 0707, and 

the agreement with Matrix appears to bear no relevance to Plaintiff’s claims. See Dkt. No. 55-2, 

¶¶s 14-15. The Court will grant summary judgment on this claim to Defendants.

IV. ORDER

Plaintiff’s motion for summary judgment is GRANTED IN PART, only as to her claim 

that the Plan Administrator abused its discretion in denying her request for LTD benefits. 

Defendants’ motion for summary judgment is GRANTED IN PART as to Plaintiff’s second, third, 

and fourth causes of action. The Court remands this matter to the Plan Administrator for a 

determination of Plaintiff’s request consistent with this Order.

The Court will retain jurisdiction of this action while the matter is on remand. See Frei v. 

Hartford Life Ins. Co., No. 05-cv-1191-EDL, 2006 WL 1409360, at *5 (N.D. Cal. May 23, 2006); 

Lancaster v. U.S. Shoe Corp., 934 F. Supp. 1137, 1170 (N.D. Cal. 1996). The clerk shall 

ADMINISTRATIVELY CLOSE this file. Plaintiff and Defendants shall submit a brief Joint 

Status Report apprising the Court of the status of Plaintiff’s LTD benefits determination on 

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September 15, 2016, and continuing every three months thereafter.

IT IS SO ORDERED.

Dated: June 30, 2016

______________________________________

EDWARD J. DAVILA

United States District Judge

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