Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-04284/USCOURTS-cand-3_05-cv-04284-4/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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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

BRUCE KAISER,

Plaintiff,

 v.

STANDARD INSURANCE COMPANY, and 

THE E-BAY, INC. LONG TERM

DISABILITY PLAN,

Defendants. 

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No. C-05-4284 SC

ORDER DENYING

PLAINTIFF'S MOTION

AND GRANTING

DEFENDANTS' CROSSMOTION FOR SUMMARY

JUDGMENT 

I. INTRODUCTION

Plaintiff Bruce Kaiser ("Plaintiff" or "Kaiser") brought this

action against the Standard Insurance Company ("Standard") and The

E-Bay, Inc. Long Term Disability Plan (the "Plan") alleging a

failure to extend disability benefits in accordance with Plan and

ERISA regulations, 28 U.S.C. § 1001, et seq. 

Presently before the Court are cross-motions for summary

judgment. For the reasons stated herein, the Court hereby DENIES

Plaintiff's Motion for Summary Judgment and GRANTS Defendants'

Cross-Motion for Summary Judgment.

 

II. BACKGROUND

Kaiser, currently aged 48, worked as the Vice President/

Director of Wine for Bonham & Butterfield, owned by E-Bay Inc.,

for approximately 14 years. Administrative Record ("AR") at 43. 

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He is a beneficiary of the E-Bay Inc., Plan. See e.g., AR at 368-

69. Kaiser has a history of back pain of longer than 10 years,

including several surgeries. AR at 237. 

In 2002, Kaiser stopped working and sought long term

disability benefits for "severe incapacitating pain, inability to

sit/stand/walk for longer than 10 minutes." AR at 47. Kaiser's

claim was processed by Innovative Care Systems, Inc. ("ICS"), a

service hired by Standard Insurance. Id. Kaiser began receiving

benefits in September of 2002, though the ICS Disability Claims

Administrator stated that benefits would be subject to a limited

pay period of 12 months. AR at 368-69. According to the Plan,

pay periods for certain disabilities are limited, including

"diseases or disorders of the cervical thoracic, or lumbosacral

back and its surrounding soft tissue." AR at 9. However,

benefits for "radiculopathies that are documented by

electromyogram" are not subject to limitations. AR at 8.

In August of 2003, before the 12 month period expired, ICS

had Dr. Mark Shih review Kaiser's records to determine whether

sufficient evidence existed to support limitations or restrictions

from light level work. AR at 133-35. Dr. Shih noted that he

could not make "a firm determination of [Kaiser's] ability to work

full-time in a light level occupation at the present time" because

there was no recent physical exam on file. AR at 133. He wrote

that an Independent Medical Examination ("IME") would be necessary

to resolve the issue. Id.

In September of 2003, Dr. Aubrey Swartz performed the IME and

sent a written report to ICS. AR at 141-52. Dr. Swartz reviewed

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Kaiser's medical records, performed a physical examination, and

spoke with Kaiser about his health and medications. Id. Dr.

Swartz concluded: 

Mr. Kaiser is capable of working an 8-hour day. There do not

appear to be medical or physical restrictions to gainful

employment within the physical capacities that I have noted. 

AR at 144. As a result, ICS rejected Kaiser's claim on October

14, 2003. AR at 396-97. The letter stated that the IME indicated

Kaiser could "no longer meet the definition of disability per the

Employer's LTD Policy." AR at 397. 

Kaiser appealed Standard's decision to terminate benefits and

provided additional evidence of his physical condition. AR at

660-59, 541-42, 531-35. Dr. Shih reviewed Kaiser's appeal and

concluded that he could return to work. AR at 308-11. Standard

upheld its decision on March 3, 2005 and forwarded Kaiser's file

to Standard's Quality Assurance Unit for an independent review. 

AR at 670-73. This portion of the appeal included a file review

by Dr. Elias Dickerman. AR at 324-27. On May 5, 2005, Standard

concluded its review and maintained its decision to terminate

benefits. AR at 677-86. Plaintiff filed the present action on

October 21, 2005. Docket No. 1.

 

III. LEGAL STANDARD

The Ninth Circuit recently clarified the available standards

of review in ERISA cases. "When a plan confers discretion, abuse

of discretion review applies; when it does not, de novo review

applies." Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955,

965 (9th Cir. 2006). While there are "no 'magic' words that

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conjure up discretion on the part of the plan administrator . . .

[t]he Supreme Court has suggested that a plan grants discretion if

the administrator has the 'power to construe disputed or doubtful

terms' in the plan." Id. at 963, quoting Firestone Tire and

Rubber Co. v. Bruch, 489 U.S. 101, 111 (1989). The Ninth Circuit

stated that "plan wording-granting the power to interpret plan

terms and to make final benefits determinations-confers discretion

on the plan administrator." Id. Specifically, a plan giving the

administrator "the full, final, conclusive and binding power to

construe and interpret the policy under the plan . . . [and] to

make claims determinations" grants discretion. Grosz-Salomon v.

Paul Revere Life Ins. Co., 237 F.3d 1154, 1159 (9th Cir. 2001). 

Defendant's disability policy contains the following clause

under the heading "Allocation of Authority":

Except for those functions which the Group Policy

specifically reserves to the Policyowner or Employer, we have

full and exclusive authority to control and manage the Group

Policy, to administer claims, and to interpret the Group

Policy and resolve all questions arising in the

administration, interpretation, and application of the Group

Policy. 

AR at 6. Importantly, the Ninth Circuit has held that this

same plan language meets the criteria for the abuse of discretion

standard of review. Bendixen v. Standard Ins. Co., 185 F.3d 939,

943 (9th Cir. 1999). Thus, the Court's review will be "informed

by the nature, extent, and effect on the decision-making process

of any conflict of interest that may appear in the record." 

Abatie, 458 F.3d at 967. This is appropriate because the "plan

administrator both administers the plan and funds it." Id.

Though this standard of review entitles an ERISA

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administrator to substantial deference, that administrator "must

have some reasonable basis for its decision denying benefits." 

Zavora v. Paul Revere Life Ins. Co., 145 F.3d 1118, 1123 (9th Cir.

1988). An ERISA administrator abuses its discretion if it renders

a decision without explanation, construes provisions of the plan

in a way that conflicts with the plain language of the plan, or

relies on clearly erroneous findings of fact. Bendixen, 185 F.3d

at 944. The district court should uphold the decision of an ERISA

plan administrator "if it is based upon a reasonable

interpretation of the plan's terms and was made in good faith." 

Boyd v. Bert Bell/Pete Rozelle NFL Players Retirement Plan, 410

F.3d 1173, 1178 (9th Cir. 2005) (internal quotations and citations

omitted). The court may not substitute its judgment for that of

the plan administrator unless the latter's decision was clearly

erroneous in light of the available record, or there was no

reasonable basis for it. Bendixen, 185 F.3d at 944; Taft v.

Equitable Life Assurance Soc'y, 9 F.3d 1469, 1473 (9th Cir. 1993). 

IV. DISCUSSION

Plaintiff asserts that Defendants abused their discretion by:

(1) using the wrong definitions of "Own Occupation" and

"Disability" under the Plan; (2) refusing to credit the treating

physician's conclusions, (3) failing to demonstrate the

credibility of Dr. Swartz, the independent medical examiner; and

(4) committing procedural errors regarding the selection of

consulting physicians and the provision of information to

Plaintiff. Pl.'s Mot. at 10-17; Pl.'s Reply at 1-9.

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A. The Plan Definition of Own Occupation and Disability

Plaintiff argues that Defendants incorrectly handled his

claim by applying the wrong definition of "Own Occupation" and

"Disability" under the Plan. The applicable section states:

Definition of Disability

During the Benefit Waiting Period and the Own Occupation 

Period you are required to be Disabled only from your Own

Occupation.

You are Disabled from your Own Occupation if, as a result of

Physical Disease, Injury, Pregnancy or Mental disorder:

1. You are unable to perform with reasonable continuity

the Material Duties of your Own Occupation; and

2. You suffer a loss of at least 20% in your Indexed

Predisability Earnings when working in your Own

Occupation.

Own Occupation means any employment, business, trade,

profession, calling or vocation that involves Material Duties

of the same general character as the occupation you are

regularly performing for your Employer when Disability

begins. In determining your Own Occupation, we are not

limited to looking at the way you perform your job for your

Employer, but we may also look at the way the occupation is

generally performed in the national economy. . . 

Material Duties means the essential tasks, functions and

operations, and the skills, abilities, knowledge, training

and experience, generally required by employers from those

engaged in a particular occupation that cannot be reasonably

modified or omitted. In no event will we consider working an

average of more than 40 hours per week to be a Material Duty. 

 AR at 17-18. Contrary to Plaintiff's assertions, Defendants

properly evaluated Kaiser's "Own Occupation" in their

determination of whether he was "Disabled." Under the plain

language of the Plan, Plaintiff's "Own Occupation" is defined as

"any employment . . . that involves Material Duties of the same

general character as the occupation you are regularly performing

for your Employer." AR at 18. As a result, Defendants were only

required to evaluate Plaintiff's ability to perform jobs of the

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same general character involving the same Material Duties as his

own. The consulting physicians went further than required on this

issue by identifying Kaiser's specific job as a wine appraiser and

buyer. In this regard, all three reviewing physicians provided

accurate descriptions of Plaintiff's occupation. Dr. Shih wrote,

"Mr. Kaiser is a 47-year-old appraiser/buyer with a long-standing

history of back pain. " AR at 311. Dr. Swartz's discussion with

Kaiser revealed that "he was a department director for

Butterfield's, and his occupation required appraising and selling

wine." AR at 152. Dr. Dickerman wrote that "He is a 47-year-old

wine appraiser/buyer." AR at 327. Furthermore, in their reports

all the evaluating physicians opined that Kaiser's condition would

not prevent him from working at his "Own Occupation," which only

required light capacity physical activity. See AR at 144-45, 308-

09, 325. Thus, Defendants properly considered Plaintiff's "Own

Occupation" in their evaluation.

Plaintiff contends that the consulting physicians did not

address whether he was unable to work "with reasonable

continuity." AR at 18. On the contrary, the physicians opined

that Kaiser could return to "working an 8-hour day" (AR at 144),

"full time work at a light level" (AR at 309) or "light capacity

activities" (AR at 325), which includes the ability to work on a

consistent basis. Defendants' use of the physicians' reports

constitutes a reasonable basis for the finding that Plaintiff

could perform the material duties of his job with reasonable

continuity.

Plaintiff also complains that Defendants failed to consider

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that a qualification for his job was the "ability to travel

approximately 25% of the time." AR at 341. Even though the

ability to travel was not specifically addressed in each of the

physicians' reports, that does not render Defendants' decision

arbitrary or capricious. Dr. Shih indicated that in his opinion,

Kaiser was capable of "sitting 6 hours, standing 3 hours, and

walking 2 hours per day." AR at 309. Dr. Dickerman wrote that 

"some limitation in the amount of walking or standing may be

appropriate if he tires. No other specific restrictions are

appropriate." AR at 325. Kaiser informed Dr. Swartz that during

the day he "drives a motor vehicle," after which Dr. Swartz opined

that "Mr. Kaiser is capable of working an 8-hour day," including

the ability to "frequently operate a motor vehicle." AR at 144-

45. Based on the three medical opinions, Defendants had a

reasonable basis for the determination that Plaintiff had the

ability to travel and was not disabled under the Plan.

In analyzing Kaiser's capabilities and whether he met the

definition of Disability, Defendants were entitled to rely on the

consulting physicians' reports. The Ninth Circuit has held that

"a decision grounded on any reasonable basis is not arbitrary or

capricious, and that in order to be subject to reversal, an

administrator's factual findings that a claimant is not totally

disabled must be clearly erroneous." Jordan v. Northrop Grumman

Corp. Welfare Benefit Plan, 370 F.3d 869, 875 (9th Cir. 2004)

(quotations omitted). The doctors' reports and opinions

constitute the reasonable basis for Defendants' decision which was

not clearly erroneous. 

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B. Consideration of Plaintiff's Reliable Evidence

Plaintiff further asserts that Defendants failed to credit

his reliable evidence, predominantly the medical reports and

conclusions of Dr. Moskowitz, Kaiser's treating physician. On

this topic, the Supreme Court has stated:

Nothing in the Act itself . . . suggests that plan

administrators must accord special deference to the opinions

of treating physicians. Nor does the Act impose a heightened

burden of explanation on administrators when they reject a

treating physician's opinion. 

Black & Decker Disability v. Nord, 538 U.S. 822, 831 (2003). 

While Dr. Moskowitz's report from July of 2004 gives a

comprehensive history of Plaintiff's condition, Defendants were

nonetheless entitled to rely on the findings of the three

consulting physicians, all of whom concluded that Plaintiff was

not disabled despite his lower back pain. AR at 144-52, 255-61,

308-11, 324-27. 

C. Dr. Swartz's Objectivity

Plaintiff asserts that Defendants abused their discretion by

using Dr. Swartz for the IME. Plaintiff bases his argument on a

Ninth Circuit case, involving an IME by Dr. Swartz, which affirmed

the District Court's decision to deny the insurer's motion for

judgment as a matter of law. Hangarter v. Provident Life and

Accident Ins. Co., 373 F.3d 998, 1011 (9th Cir. 2004). In

Hangarter, as one part of its finding of administrator bias, the

jury apparently credited testimony that the insurer "exhibited

bias in selecting and retaining Dr. Swartz as the IME." Id. The

jury heard testimony that Provident had retained Dr. Swartz

nineteen times during a five year period and Dr. Swartz rejected

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the insured's claim in all thirteen cases involving total

disability. Id. 

Contrary to Plaintiff's assertion, the Hangarter decision

does not demonstrate that Dr. Swartz is biased in favor of

Standard. Hangarter involved a different insurance company,

Provident, and there was evidence before the court that Provident

had used Dr. Swartz repeatedly during a five-year period. See id.

Plaintiff has not presented any evidence showing a similar

relationship between Dr. Swartz and Standard. For the basis of

his opinion, Dr. Swartz used the reports of treating and

consulting physicians, statements made by Kaiser during the IME,

and the results of a physical examination performed by Dr. Swartz. 

AR at 144-52. Thus, it was reasonable for Defendants to utilize

the results of the IME, in addition to the reports of various

other physicians, in their benefits determination. Plaintiff has

failed to demonstrate that Standard's decision to rely on the

findings of Dr. Swartz was clearly erroneous in light of the

record or lacked a reasonable factual basis. 

D. Potential Procedural Violations

Plaintiff also asserts that Defendants engaged in procedural

violations under ERISA and Plan regulations. Plaintiff first

argues that Defendants improperly used Dr. Shih both during the

initial evaluation and during appeal. Pl.'s Mot. at 17. 

Defendants counter that the review by Dr. Dickerman satisfies the

regulations. Defs.' Response at 11. The pertinent regulations

state that the administrators have not provided a full and fair

review unless they:

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(iii) Provide that, in deciding an appeal of any adverse

benefit determination that is based in whole or in part on a

medical judgment, including determinations with regard to

whether a particular treatment, drug, or other item is

experimental, investigational, or not medically necessary or

appropriate, the appropriate named fiduciary shall consult

with a health care professional who has appropriate training

and experience in the field of medicine involved in the

medical judgment;

(v) Provide that the health care professional engaged for

purposes of a consultation under paragraph (h)(3)(iii) of

this section shall be an individual who is neither an

individual who was consulted in connection with the adverse

benefit determination that is the subject of the appeal, nor

the subordinate of any such individual; 

29 C.F.R. § 2560.503-1(h)(3)(iii) and (v).

During the initial evaluation in August of 2003, Dr. Shih

reviewed Kaiser's file and concluded that he could not make a firm

determination of Kaiser's ability to work full-time and that an

IME "may be necessary to firmly determine this issue at the

present time." AR at 133. Dr. Swartz then conducted the IME. AR

at 144-52. During the appeal in February of 2005, Dr. Shih again

reviewed Kaiser's file. AR at 308-11. In April of 2005, Standard

conducted an additional review using Dr. Dickerman who opined that

Kaiser was capable of working. AR at 324-27. The Court finds

that the review by Dr. Dickerman is sufficient to satisfy the

regulations for an appeal by an independent medical professional.

Plaintiff also argues that during the appeal process,

Defendants failed to describe what information was necessary to

perfect the claim as required by 29 C.F.R. § 2560.503-1(g)iii). 

Pl.'s Mot. at 17; Pl.'s Reply at 8. Plaintiff's argument on this

point is without merit. When Defendants denied Plaintiff's claim

they indicated that it was because Kaiser did not meet the

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definition of "Disability" under the Plan, they did not state that

Kaiser had failed to perfect his claim. AR at 375-76. In any

event, Standard's August 18, 2004 letter stated "we would expect

to be provided with any documentation which supports that he has

remained continuously precluded from performing his Own

Occupation, as that occupation is performed in the general

economy, since he initially ceased working." AR at 542. The

problem with Plaintiff's claim was not that he had failed to

submit a key document to qualify for coverage or appeal, it was

that he did not have sufficient evidence to convince Standard that

he was disabled and could not return to work. Though Plaintiff

and his treating physician said otherwise, Standard found that

Kaiser was not disabled based on reports from various physicians

and Kaiser's own statements that his condition was improving and

need for medication was declining. See AR at 677-86. 

V. CONCLUSION

For the reasons described herein, the Court DENIES

Plaintiff's Motion for Summary Judgment and GRANTS Defendants'

Cross-Motion for Summary Judgment.

IT IS SO ORDERED.

Dated: January 10, 2007

 

UNITED STATES DISTRICT JUDGE

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