Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-01782/USCOURTS-cand-4_05-cv-01782-2/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 28:1441 Petition for Removal- Labor/Mgmnt. Relations

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United States District Court

For the Northern District of California

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In this Order, all references to "Defendants" refer to the

moving Defendants only. 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

NANCY HYDER,

Plaintiff,

v.

KEMPER NATIONAL SERVICES, INC.;

LUMBERMAN'S MUTUAL INSURANCE CO.;

BROADSPIRE SERVICES, INC.; VODAFONE

AMERICAS, INC.; VODAFONE AMERICAS,

INC., SHORT TERM DISABILITY PLAN;

VODAFONE AMERICAS, INC., LONG TERM

DISABILITY PLAN; VODAFONE EMPLOYEE

HEALTH PLAN; VODAFONE EMPLOYEE DENTAL

PLAN; VERIZON WIRELESS, INC.; and

DOES 1 TO 50, inclusive,

Defendants.

 /

No. C 05-1782 CW

ORDER

ADJUDICATING

PLAINTIFF'S ERISA

CLAIMS

Defendants Kemper National Services, Inc. (Kemper),

Lumberman's Mutual Insurance Co. (Lumberman's), Broadspire

Services, Inc. (Broadspire), Vodafone Americas, Inc., Long Term

Disability Plan (the LTD Plan), and Vodafone Americas, Inc., Short

Term Disability Plan (the STD Plan) (collectively, moving

Defendants1

) move pursuant to Federal Rule of Civil Procedure 56,

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or in the alternative Rule 52, for judgment on Plaintiff Nancy

Hyder's Employee Retirement Income Security Act (ERISA) claims

against them. Plaintiff opposes the motion and separately crossmoves for summary adjudication of her ERISA claims. Defendants

oppose the cross-motion. The matters were heard on January 13,

2006. 

Having considered all of the papers filed by the parties and

oral argument on the motions, the Court grants the motions in part

and denies them in part, as explained below.

BACKGROUND

The facts below are undisputed unless otherwise noted. 

According to her complaint, Plaintiff is a former employee of

non-moving Defendant Vodafone Americas, Inc. (Vodafone). The STD

Plan and the LTD Plan were established for Vodafone employees and

are employee welfare benefit plans as defined by ERISA, 29 U.S.C.

§ 1002. Both plans are administered by Kemper and its successorin-interest, Broadspire. The STD Plan is self-funded, but the LTD

Plan purchased insurance from Lumberman's. 

I. Plan Documents

According to the Plan Documents, which address both the STD

Plan and the LTD Plan, the STD Plan covers replacement of some or

all earnings of a Vodafone employee if he or she has a "qualifying

disability," defined as "any medically determinable physical or

mental condition arising from an illness, pregnancy, or injury that

prevents you from performing the essential duties of your job." 

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2

Unless otherwise noted, citations refer to the administrative

record attached to the First Penrose Declaration. 

3

P0416.2 "Documentation, including physician certification and

objective medical evidence," is required to support the claimed

disability. Id. No provision of the subsection pertaining to the

STD Plan specifically vests discretion in Kemper to interpret the

Plan or adjudicate claims. In order to file a STD claim,

applicants are instructed to,

[c]all the Claims Adminstrator (Kemper) at [number] no later

than your eighth calendar day of absence to initiate the

claims process. If you expect that your disability will last

more than seven days, call sooner. Be prepared to provide

your treating physician's name and telephone number, the date

of your first day of absence, the nature of your disability,

your regular work schedule, and your supervisor's name and

telephone number.

If you are unable to call, have a family member or your

attending physician call for you. Failure to call promptly

may disqualify you from receiving benefits.

P04020 (emphasis in the original). The Plan Documents further

provide that "STD benefits will be denied or end" if an applicant

fails to "[f]ile your claim by calling Kemper by your eighth

calendar day of absence." P0422. However, "[i]f Kemper and

Vodafone determine that your failure to meet these conditions was

due to reasonable cause, your benefits may be reinstated for any

period you were not in compliance." Id. 

The LTD Plan provides benefits equal to sixty percent of

earnings. P0424. Disability means 

that a significant change in your physical or mental condition

due to: 

1. Accidental bodily injury; 

2. Sickness; 

3. Mental Illness; 

4. Substance Abuse; or 

5. Pregnancy,

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began on or after your Coverage Effective Date and has caused

your inability to perform, during the Benefit Qualifying

Period and the following 24 months, the Essential Functions of

your Regular Occupation or of a Reasonable Employment Option

offered to you by the Company, and as a result you are unable

to earn more than 80% of your Pre-disability Monthly Income.

After that, you must be so prevented from performing the

Essential Functions of any Gainful Occupation that your

training, education and experience would allow you to perform.

Id. However, in the case of disabilities resulting from or caused

by "Self-Reported Conditions," defined as conditions which "can not

be verified and measured using generally accepted standard medical

procedures and practices," including "fatigue, loss of energy [and]

pain," benefits are limited to a total of twenty-four months. 

P0425. A subsection entitled "Benefit Qualifying Period" explains

that an employee may become qualified for benefits under the LTD

Plan after 180 days of disability, exhaustion of sick leave or

termination of salary continuation or STD benefits, whichever

occurs last. P0424. 

"Coverage" under the LTD Plan terminates on the date an

employee's employment terminates, or sooner if the company's

participation or the employee's eligibility changes. P0426. On

the other hand, benefits once received terminate only upon one of

ten conditions, e.g. "the date you are no longer disabled." Id. 

The Plan Documents instruct LTD applicants to "notify Kemper

or Kemper's authorized representative that you are unable to work

due to sickness or injury as soon as reasonably possible, but in no

event more than 30 days after the start of the period for which you

are filing a claim." Id. An applicant may then send Kemper

"written proof . . . of your claim" after fifteen days if Kemper

has not provided the applicant with forms. Id. 

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3

Natlsco, Inc., is an entity related to Kemper and is now also

known as Broadspire. 

5

A separate "Proof of Loss" subsection explains that "proof

that you are unable to work due to sickness or injury" must be

provided to Kemper "no later than 30 days prior to the end of the

Benefit Qualifying Period." P0427. However, "[i]f it was not

reasonably possible to provide proof that you were unable to work

due to sickness or injury within that time frame, it will not

affect the validity of your claim as long as you provide such proof

as soon as reasonably possible thereafter." Id. 

For the LTD Plan, Kemper "reserves full discretion and

authority to . . . administer claims, and interpret all policy

terms and conditions." P0433. A separate agreement between

Lumberman's and Natlsco, Inc.,3 grants the latter "discretionary

authority to interpret the terms of the Policy and to otherwise

determine a claimant's eligibility for benefits throughout the

claim process." LMB0004. 

The Plan Documents provide that a claimant may not start a

legal action until "60 days after proof of your claim has been

given" or "[m]ore than three years after the date when your proof

of claim was required." P0432. The parties dispute the meaning of

this contractual limitation clause. 

Benefit amounts "will be offset by the amounts of any other

benefits" which the recipient is entitled to receive as a result of

the same period of disability, and Kemper reserves the right to

collect overpayments. P0414, P0427. 

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4

Facts relating to Plaintiff's interactions with Vodafone are

drawn from the information she supplied to Kemper, and are assumed

to be true for the purpose of this motion only. 

6

II. Plaintiff's Disability and Application for Benefits

Plaintiff was initially diagnosed with mononucleosis in

December, 1999. HYD112. At that time, she worked for Vodafone as

an Assistant Treasurer in San Francisco. At the advice of her

doctor, she worked from home and only a few hours a day. When she

inquired about filing for short-term disability benefits, Plaintiff

later told Kemper, she was informed by Josh Lucas, a Vodafone Human

Resources Manger, 

that since I was a salaried employee, and not paid on an

hourly basis, any time I spent working from home on a

particular day was considered a normal workday. Therefore, it

was not necessary to file for short-term disability insurance,

since Vodafone would continue to pay me my normal salary as

long as I worked part-time from home.

HYD112.4 Plaintiff went back to work part-time in January and

full-time on March 31, 2000. Upon returning to full-time

employment, Plaintiff was assigned to work in England on a rotating

basis, necessitating a trans-Atlantic round-trip every three weeks. 

Plaintiff agreed to stay on this rotational assignment until April

1, 2001. 

On January 30, 2001, while working in England, Plaintiff

became sick with what she believed to be flu. She described her

condition as, 

totally exhausted, both physically and mentally. It was

virtually impossible for me to concentrate on any cognitive

exercise. I felt disoriented and dizzy when standing up. I

was experiencing night sweats, fever, chills, muscle aches,

swollen glands and sore throat.

HYD112. Although Plaintiff tested positive again for

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mononucleosis, her doctor believed that the illness was

attributable to another cause. Plaintiff again began to work from

home part-time on her doctor's orders. On April 2, 2001, after she

returned to the United States, Plaintiff met with Mark Hickey,

Vodafone Vice-President of Human Resources. He gave her a

severance notice which explained that unless she obtained another

job within Vodafone within sixty days, she would be terminated on

June 1, 2001. The letter offered Plaintiff a $105,854.60 severance

package if she would agree to release any claims she might have

against Vodafone. Second Penrose Decl., Ex. A, April 1, 2001

Letter from Mark A. Hickey to Nancy Hyder. Plaintiff asked Mr.

Hickey for information about the company's disability plan and how

disability would affect her severance package. Mr. Hickey told

Plaintiff he would contact her once he found more information, but

he never did so. Plaintiff claims that since she no longer had job

responsibilities or an office in San Francisco, "[i]t was therefore

understood that I was relieved of duty, and would be excused with

pay until June 1, 2001." HYD113. 

In May, 2001, Plaintiff contacted her doctor and explained

that she was still experiencing the same symptoms. The doctor

"excused" Plaintiff from work until November 1, 2001. HYD113. 

In a July 6, 2001 letter to Mr. Hickey regarding Vodafone's

request that she sign a release of her claims against it, Plaintiff

again asked for "information on how my disability affects my

termination/severance benefits." HYD227. Vodafone Human Resources

Manage Bob Rosemeyer responded in a July 18, 2001 letter, 

Mark said he did not recall a conversation with you regarding

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5The Summary Plan Descriptions sent by Mr. Rosemeyer to

Plaintiff refer to her previous employer, Airtouch, which merged

with Vodafone in 1999. The Claims Administrator referred to in the

Summary Plan Descriptions is a company called Matrix Absence

Management, Inc. HYD238. 

6

A later draft severance agreement proposed by Vodafone would

have excepted from the general release any claims by Plaintiff

against Kemper under the LTD Plan or against Vodafone for benefits

under its retiree health plan and reduced the severance benefit to

$69,962.06. Second Penrose Decl., Ex. E, Draft Addendum to

Severance Agreement. Plaintiff rejected this offer. 

8

your health, or your request for information on how your

disability would affect your termination and severance

benefits. You state that you were disabled on the date of

your termination on June 1, 2001, yet our records do not

indicate that a claim was filed with Kemper, our Short Term

Disability plan administrator. But even if you were

determined to have been disabled and eligible for STD

benefits, those benefits would have expired on your

termination date. 

HYD228. On August 10, 2001, Plaintiff wrote back that she did not

understand Mr. Rosemeyer's letter, noting that she "did not even

know how or with whom to file a claim" because she was never given

the disability plan information. HYD230-31. She continued,

I am very concerned there may be benefits I am entitled to as

a disabled person that I am currently unaware of because I do

not have access to the plan documents. I am not comfortable

signing the Release of Claims document Mark gave me on April

2nd until I understand precisely what benefits are included in

each Vodafone benefit package I might qualify for. 

I ask that you consider this to be my third request for

information on the Vodafone disability plans. 

HYD231. On August 27, 2001, Mr. Rosemeyer sent Plaintiff copies of

the STD and LTD Summary Plan Descriptions.5 Second Penrose Decl.,

Ex. C, August 27, 2001 Letter from Bob Rosemeyer to Nancy Hyder. 

He told her that she could accept Vodafone's proffered severance

benefit "without prejudice to your ability to qualify for long-term

disability benefits."6 Id. Plaintiff did not accept the severance

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package. 

Believing that her eligibility for STD benefits had terminated

on June 1 but that she could be eligible for LTD benefits after a

period of 180 days of disability, Plaintiff called Kemper on

December 13, 2001. According to Kemper's intake records, Plaintiff

told it that her STD eligibility began on May 21, 2001, that her

first full date of absence from work was also May 21, and that she

had been terminated on June 1, 2001 and was currently receiving

California State disability benefits. HYD097. According to

Plaintiff, Angela, the Kemper representative, at first said that

she did not know how to file a LTD claim if a STD claim had not

been filed previously, and later told Plaintiff that filing a STD

claim was a prerequisite to filing for LTD benefits. HYD114. 

In a letter dated January 2, 2002, Kemper characterized

Plaintiff's claim as one for STD benefits and denied it on the

grounds that she had failed to call in her claim no later than her

eighth day of absence from work. HYD093. The letter explained

that Plaintiff could file a written request for review of this

determination "within sixty (60) days from [her] receipt" of the

letter. Id. 

In a letter dated March 8, 2002, Plaintiff appealed this

determination on two grounds: (1) that she was not provided with

information about Vodafone's disability plan, that Vodafone's Human

Resources Manager provided her with inconsistent information, and

thus that she did not know how or with whom to file a timely claim;

and (2) that any failure to file for STD benefits was irrelevant to

her eligibility for LTD benefits, and that her "sole intention" in

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contacting Kemper in December, 2001 was to file a LTD claim. 

HYD113-114. Plaintiff emphasized that she had "no desire to claim

any benefits under the STD plan." Id. at HYD114. She informed

Kemper that on February 28, 2002, a specialist confirmed her

doctor's diagnosis of chronic fatigue, agreeing that the illness

prevented Plaintiff "from performing the usual and customary duties

associated with the job of Assistant Treasurer for a multi-national

corporation" and excusing Plaintiff from work "indefinitely." 

HYD113. 

In a letter dated April 8, 2002, Kemper denied Plaintiff's

appeal. It reasoned that the initial denial letter "was sent on

12/31/01" and should have been received by Plaintiff "within 3-5

days," but that Kemper did not receive the appeal until March 18,

2002, and thus Plaintiff filed it "over two weeks past the accepted

date in order to appeal." HYD109. Plaintiff countered in an April

15, 2002 letter that she did not receive the initial denial until

January 8, 2002, according to Kemper's own delivery instructions on

the Federal Express packing slip, and thus her appeal was timely. 

HYD100. Kemper never responded to this letter. 

According to an internal June 6, 2002 Kemper email, Kemper

realized by that point that Plaintiff was "requesting LTD," and

already possessed letters and provider notes sent by Plaintiff. 

HYD094. Kemper employee Dorothy D. Perron requested that an LTD

application be sent to Plaintiff. Id. In a June 10, 2002 letter,

Kemper provided Plaintiff with an application for LTD Plan

benefits. Plaintiff was instructed to return the completed forms

"within three weeks (July 1, 2002)" and to authorize the release of

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7

Plaintiffs says that she never received the July 11 denial of

her benefits, which was apparently produced in connection with this

litigation, and theorizes that Kemper decided not to send the

letter because it had received a voice message that same day

indicating that Plaintiff would be represented by counsel. HYD274. 

11

her medical information to Kemper. HYD085-087. 

Plaintiff submitted her completed application for LTD benefits

on June 27, 2002. She explained that she was disabled due to

chronic fatigue, causing "fevers, night sweats, dizziness,

sleeplessness and extreme exhaustion," and that her doctor had

ordered mandatory rest. HYD074 (emphasis in original). She

reported being able to water her plants twice weekly, walk her dog

ten to twenty minutes per day, do laundry once a week and

participate in two twenty-minute physical therapy sessions per

week. Id. 

In a letter dated July 11, 2002, Kemper informed Plaintiff

that it was investigating her disability status, that it would

contact her and her physician for information on her current

medical condition and treatment plan, and that it would inform her

of a decision after it had received the necessary information. 

HYD082. Inconsistently, Kemper drafted another July 11, 2002

letter telling Plaintiff that review of her claim and been

completed, and that she was not eligible for LTD benefits.7

HYD071. In a fax dated July 12, 2002, Plaintiff informed Kemper

that she would be represented by an attorney, Susan F. Williamson. 

HYD147. 

In an August 7, 2002 letter, Kemper informed Plaintiff that

her application for LTD benefits was denied because her June 1,

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2001 termination rendered her ineligible. It cited the Proof of

Loss section of the Plan Documents requiring applicants to notify

Kemper "as soon as reasonably possible, but in no event more than

30 days after the start of the period for which you are filing a

claim." HYD145. This letter is virtually identical to the July 11

denial letter. Kemper did not advise Plaintiff how she might

appeal the decision to deny her LTD benefits. 

Plaintiff hired her present counsel, Richard Johnson, in 2004. 

Kemper, by then known as Broadspire, provided Mr. Johnson with a

copy of Plaintiff's file on May 20, 2004. On September 29, 2004,

Mr. Johnson filed an appeal of the decisions to deny Plaintiff both

STD and LTD benefits. He provided updated information about

Plaintiff's medical condition, showing that an MRI had revealed a

brain lesion causing a multiple sclerosis-like "demyelinating brain

disorder, which causes and has caused, among other things: pain,

burning and tingling sensation in Ms. Hyder's arm; tremor and loss

of motor skills; dizziness; gait disturbance; lack of balance and

coordination; severe and chronic fatigue; impaired cognitive

skills; and lack of ability to concentrate." HYD277-78. Mr.

Johnson's appeal was accompanied by a report from Dr. Peter Madill,

Plaintiff's current treating physician, who concluded based on a

review of her previous medical records that Plaintiff had been

"completely disabled from being able to perform any and all of the

duties of her executive position with Vodafone in May of 2001." 

HYD279. Dr. Madill also completed a Residual Functional Capacity

Questionnaire for Plaintiff in which he diagnosed a "demyelinating

brain disorder," and described Plaintiff's impairments in some

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detail, concluding that she was "incapable of even 'low stress'

jobs" due to her frequent need for rest periods during the day. 

HYD291. 

Broadspire rejected this appeal on November 8, 2004,

reiterating its position that Plaintiff's application for STD

benefits was untimely, and stating that Plaintiff was ineligible

for LTD benefits because she "did not meet the elimination period

(26 weeks of Short Term Disability)." HYD311. Its Appeal

Coordinator advised that Plaintiff "should have contacted her Human

Resources Department for clarification" if she was uncertain

whether to apply for STD benefits. HYD310. Plaintiff filed this

lawsuit on February 25, 2005 in Sonoma County Superior Court. 

Defendants removed the case to federal court on April 29, 2005. 

DISCUSSION

I. Standard of Review

ERISA provides Plaintiff with a federal cause of action to

recover the benefits she claims are due under the Vodafone LTD and

STD Plans. 29 U.S.C. § 1132(a)(1)(B). The parties dispute the

applicable standard of review; Plaintiff argues that the denial of

her claims under both the STD Plan and the LTD Plan should be

reviewed de novo, while Defendants contend that those decisions

should be reviewed for abuse of discretion. 

A. Applicable Law

The standard of review of a plan administrator's denial of

ERISA benefits depends upon the terms of the benefit plan. Absent

contrary language in the plan, the denial of ERISA benefits is

reviewed under a de novo standard. Firestone Tire & Rubber Co. v.

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Bruch, 489 U.S. 101, 115 (1989). However, if "the benefit plan

expressly gives the plan administrator or fiduciary discretionary

authority to determine eligibility for benefits or to construe the

plan’s terms," an abuse of discretion standard is generally

applied. Id.; Taft v. Equitable Life Assurance Soc’y, 9 F.3d 1469,

1471 (9th Cir. 1993). The Ninth Circuit has also referred to this

as an "arbitrary and capricious" standard. McKenzie v. Gen. Tel.

Co. of Cal., 41 F.3d 1310, 1314 & n.3 (9th Cir. 1994); Taft, 9 F.3d

at 1471 n.2 (use of the term "arbitrary and capricious" versus

"abuse of discretion" is a "distinction without a difference").

However, even where a benefit plan expressly grants

discretionary authority to the plan administrator, a district court

may nevertheless apply a more stringent standard of review if the

plaintiff can show that a conflict of interest exists. Hensley v.

Northwest Permanente P.C. Retirement Plan & Trust, 258 F.3d 986,

995 (9th Cir. 2001). An apparent conflict arises where the plan

administrator is also the insurer. Tremain v. Bell Indus., Inc.,

196 F.3d 970, 976 (9th Cir. 1999). In such cases, the court must

“look further into the plan administrator’s dual role by applying

the ‘less deference’ test.” McDaniel v. Chevron Corp., 203 F.3d

1099, 1108 (9th Cir. 2000). The test is two pronged: (1) the

plaintiff must provide material, probative evidence tending to show

an actual conflict of interest, which (2) shifts the burden of

proof to the plan administrator to show that the apparent conflict

did not affect the decision to deny or terminate benefits. Id. If

there is probative evidence of an actual conflict and the plan

administrator cannot rebut it, the denial of benefits is reviewed

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de novo. Nord v. Black & Decker Disability Plan, 356 F.3d 1008,

1010 (9th Cir. 2004), on remand from Black & Decker Disability Plan

v. Nord, 538 U.S. 822 (2003).

In a de novo review of a defendant's decision to deny

benefits, the court must decide whether a plaintiff is disabled

under the terms of the plan. In Juliano v. Health Maintenance

Organization of New Jersey, Inc., 221 F.3d 279, 287-88 (2nd Cir.

2000), the Second Circuit held that it was the plaintiffs’ burden

“to establish that they were entitled to [the] benefit [sought]

pursuant to the terms of the Contract or applicable federal law.” 

Following Juliano, the Court concludes that Plaintiff must carry

the burden to prove that she was disabled under the meaning of the

plan. Sabatino v. Liberty Life Assur. Co., 286 F. Supp. 2d 1222,

1232 (N.D. Cal. 2003). On de novo review, the Court may weigh

contradictory evidence. Newcomb v. Standard Ins. Co., 187 F.3d

1004, 1007 (9th Cir. 1999). 

B. STD Plan Standard of Review

Plaintiff maintains that the STD Plan determinations should be

reviewed de novo because the language in the Plan Documents

explicitly vesting Kemper with discretion is contained in the

subsection dealing with only the LTD Plan, and therefore does not

apply to the STD Plan. 

Defendants concede that the vesting language is located only

in the subsection addressing the LTD Plan, but urge the Court to

construe the subsection to apply to both the STD Plan and the LTD

Plan. Defendants point to an adjacent provision requiring

claimants to wait sixty days before filing a lawsuit, and argue

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that a waiting period for the LTD Plan but not the STD Plan would

be inconsistent. Defendants rely on the "long tradition in

contract law of reading contracts sensibly." Beanstalk Group,

Inc., v. AM General Corp., 283 F.3d 856, 869 (7th Cir. 2002)

(quoting Rhode Island Charities Trust v. Engelhard Corp., 267 F.3d

3, 7 (1st Cir. 2001)). 

Unlike the contract between merchants in Beanstalk Group,

however, ERISA plans are not garden variety contracts and are not

interpreted as such. An ERISA plan's conferral of discretion must

be "unambiguous"; "ambiguities are construed contra proferentem,"

in favor of the insured. Kearney, 175 F.3d at 1090. The vesting

language, based on its location, does not unambiguously apply to

the STD Plan, and therefore the Court construes the plan in

Plaintiff's favor. Accordingly, the Court reviews the denial of

Plaintiff's STD benefits de novo. 

C. LTD Plan Standard of Review

With respect to the LTD Plan, Plaintiff maintains that this

claim should also be reviewed de novo despite clear language

vesting discretion because (1) the identity of the entity vested

with discretion is ambiguous and (2) there is both an appearance of

conflict and material, probative evidence tending to show a breach

of duty. 

The Plan Documents confer discretion on "Kemper," elsewhere

defined as "Kemper Insurance Company, the Plan's insurer." P0421. 

Unlike the self-funded STD Plan, however, the LTD Plan purchased

insurance from Lumberman's. Furthermore, "Kemper Insurance

Company" is not Kemper's actual name, which is Kemper National

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Services, Inc. (later known as Broadspire). According to

Defendants, "Kemper Insurance Companies" is a trade name that

includes Lumberman's, Kemper and Broadspire. Defs.' Resp. to Pl.'s

Cross-Mot. at 13. In a separate agreement, Lumberman's has granted

any authority to administer claims to Natlsco, Inc., a name by

which Broadspire has been known. 

Under ERISA, a named fiduciary may delegate its fiduciary

responsibilities: 

The instrument under which a plan is maintained may expressly

provide for procedures . . . (B) for named fiduciaries to

designate persons other than named fiduciaries to carry out

fiduciary responsibilities (other than trustee

responsibilities) under the plan. 

29 U.S.C. § 1105(c)(1). The Ninth Circuit has held that where the

ERISA plan expressly gives its administrator discretionary

authority, and that administrator delegates its discretionary

authority by properly designating another fiduciary, then the

"arbitrary and capricious" standard for review still applies. 

Madden v. ITT Long Term Disability Plan for Salaried Employees, 914

F.2d 1279, 1283 (9th Cir. 1990). Plaintiff shows that there is

ambiguity regarding which entity is named as the administrator. 

However, this particular ambiguity cannot be resolved in her favor. 

The ambiguous reference conferring discretion on "Kemper Insurance

Company, the Plan's insurer" could be construed either to refer to

Kemper or to the insurer, Lumberman's. If the former, then Kemper

had discretion to administer Plaintiff's claims. If the latter,

then Kemper still had discretion to administer Plaintiff's claims

pursuant to its agreement with Lumberman's; Plaintiff has not shown

that the distinction between Kemper, Broadspire and Natlsco is

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material here. 

Plaintiff contends in the alternative that there is both an

appearance of conflict and material, probative evidence of conflict

tending to show a breach of fiduciary duty. First, the ambiguity

between who the insurer is and who is vested with discretion

suggests some apparent conflict, as do the Plan Documents which on

their face delegate authority to "the Plan's insurer." At the

hearing, counsel for Defendants conceded the appearance of

conflict. 

Plaintiff has identified several pieces of evidence tending to

show a breach of duty. Plaintiff points to the two July 11, 2002

letters, one stating that Kemper would investigate her claim, which

it never did; another, possibly unsent, peremptorily denying her

claim as untimely. There is no evidence that Kemper did

investigate her claim. Plaintiff also notes the inconsistent and

misleading rationales given for denying her LTD benefits: that she

was not a member of an "eligible class" due to her termination or

that she could not get LTD benefits due to her failure to apply for

and receive STD benefits. Defendants offer no explanation for

these irregularities and inconsistencies. Defendants' ultimate

rationale for denying Plaintiff's request for benefits is

procedural rather than substantive, but the mixed information given

suggests that the procedural issues at stake were in fact not

clear. Therefore, the Court reviews the denial of Plaintiff's

request for LTD benefits de novo. 

II. STD Benefits

Defendants move for adjudication of Plaintiff's STD claim in

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8

Kemper never considered these reasons because it denied

Plaintiff's appeal on the ground that it was untimely. The Court

agrees with Plaintiff that her appeal was, in fact, timely. Kemper

incorrectly stated that its letter was sent on December 31, 2001

when it was dated January 2, 2002 and delivered, according to the

FedEx delivery slip, on January 8. The initial denial letter

merely instructed Plaintiff to file her appeal within sixty days of

her receipt; it did not state that an appeal had to arrive within

sixty days. 

19

their favor, on the grounds that it is barred because (1) the STD

Plan requires that notice of a claim be provided within eight days

of injury; and, in the alternative, because (2) Plaintiff waived

her STD claim when she told the claim administrator that she was

not seeking STD benefits. Plaintiff counters that Defendants are

estopped from asserting the eight-day deadline. 

A. Timely Notice

Plaintiff concedes that the STD Plan requires claimants to

contact Kemper within eight days of injury, and that she did not do

so. She argues that the Plan Documents create an exception for

reasonable cause, and that her failure to contact Kemper in a

timely manner was justified. 

The Plan Documents state that benefits will be reinstated if a

claimant's failure to meet Plan conditions, including the eight day

filing deadline, "was due to reasonable cause." Plaintiff says

that she did not apply for STD benefits because she was not

provided with the Plan Documents. Furthermore, she had been told

misleadingly by her employer that as long as Vodafone was paying

her, she did not need to file a disability claim. Finally, she was

informed on July 18, 2001 by Mr. Rosemeyer that her eligibility for

STD benefits had expired.8 Plaintiff does not claim her

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impairments prevented her from filing a claim with Kemper. Cf.

Weyrauch v. CIGNA Life Ins. Co. of New York, 416 F.3d 717 (8th Cir.

2005) (finding dispute of fact as to whether prospective claimant's

mental condition reasonably prevented him from filing a claim). 

Nevertheless, Plaintiff's failure to apply for benefits was

reasonable; without a copy of the Plan Documents, she had no way of

knowing how to file a claim for STD benefits, or when the deadline

would be. The misinformation provided by Vodafone further

undermined her ability to file a timely application. For this

reason, the Court finds that Plaintiff is entitled to STD benefits

despite her failure to contact Kemper within eight days of her

injury. 

B. Waiver

Defendants further argue that Plaintiff "waived" her right to

STD benefits because of the statements made in her March 8, 2002

letter, and thus that she should be estopped from now claiming STD

benefits. 

Before estoppel can apply, the following conditions must be

met: “1) the party to be estopped must be apprised of the facts;

2) the other party must be ignorant of the true state of facts, and

the party to be estopped must have acted so that the other party

had a right to believe that the party intended its conduct to be

acted upon; and 3) the other party relied on the conduct to its

prejudice." Hinton v. Pac. Enters., 5 F.3d 391, 396-97 (9th Cir.

1993) (quoting Golden v. Faust, 766 F.2d 1339, 1341 (9th Cir.

1985)). 

The first two requirements for estoppel are not met here. 

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Plaintiff was not apprised of the true state of facts at the time

she wrote the March 8 letter. She had been misled as to the

application requirements; Kemper admonished that she "should have

contacted her Human Resources Department" if she was uncertain

whether to apply for STD benefits, yet officials in Vodafone's

Human Resources Department did not give her correct information on

that subject. Plaintiff's statement in her March 8 letter that she

did not desire to claim STD benefits referred to her appeal of

Kemper's characterization of her December, 2001 phone call as an

application for STD, but not LTD, benefits. Kemper had no basis to

conclude that Plaintiff intended Kemper to rely on this letter as a

waiver of STD benefits. In these circumstances, Plaintiff cannot

be said to have waived STD benefits, and is not estopped from

claiming them now.

Therefore, the Court finds that Plaintiff was entitled to STD

benefits. 

III. LTD Benefits

Defendants move for adjudication of Plaintiff's LTD claim in

their favor, on the grounds that she failed to bring her suit

within the Plan Documents' three-year limitations period. 

Plaintiff opposes the motion on the grounds that (1) the Plan

provisions are too vague to impose an enforceable time bar;

(2) Defendants are estopped from asserting the three-year time bar;

(3) the law provides that a limitations period cannot expire while

an administrative appeal is still pending; and (4) even if the

contractual bar is applied, Plaintiff's lawsuit is timely. 

The contractual limitations period provides that claimants may

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not file a lawsuit more than three years after the date when "proof

of your claim was required." Defendants' interpretation is that

"proof of your claim" is equivalent to "proof of the loss," which

the LTD Plan elsewhere requires "not later than 30 days prior to

the end of the Benefit Qualifying Period," i.e. 150 days after

disability begins. P0427. Plaintiff, on the other hand, points to

other language suggesting a likely alternative meaning for "proof

of claim." Applicants are required to notify Kemper no "more than

30 days after the start of the period for which you are filing a

claim," which will prompt Kemper to send the applicant forms to

fill out. P0426. The Plan Documents further provide that if an

applicant does not receive the forms within fifteen days, then he

or she "can send Kemper written proof . . . of your claim." Id.

The language in this last sentence comes closest to the contractual

limitations period's "proof of your claim" reference. Cf. NM

Investors Life Ins. Co. v. Sup. Ct. of Shasta County, 208 Cal. App.

3d 1070, 1073 (1989) (finding policy language requiring lawsuits to

be filed within three years of "proof of loss" to be unambiguous

where term used consistently). Furthermore, this proof of claim

provision does not require that an applicant submit written proof

within fifteen days of notifying Kemper, but rather states that an

applicant can do so. 

Under this interpretation of the contractual limitations

period, Plaintiff's three years did not begin to run until July 1,

2002, the date by which Kemper required that she return the

completed LTD application form. This interpretation of the Plan

Documents, although contrary to Kemper's, is also reasonable. 

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Because ambiguous language in ERISA Plans is interpreted against

the insurer, the Court finds that Plaintiff's February, 2005

lawsuit was timely filed. 

Even if Plaintiff's interpretation of the contractual

limitations period were unreasonable, Defendants would be estopped

from asserting that the contractual deadline for filing an action

constitutes a time bar. Kemper's June 10, 2002 letter to Plaintiff

informed her that she had until July 1 to return the form providing

proof of her disability, and she therefore had the right to believe

that this was the date from which the limitations period would run. 

Defendants may not prevail in their argument that the lawsuit is

time-barred where Plaintiff has relied on Defendants' conduct to

her prejudice. 

For these reasons, the Court denies Defendants' motion for

adjudication in their favor of Plaintiff's claim for LTD benefits. 

Because the Court finds the Plan language too vague to impose an

enforceable time bar here, it need not consider Plaintiff's

alternative arguments. 

IV. Disability Determination

Plaintiff cross-moves for adjudication of her LTD claim in her

favor. Defendants oppose this motion on the grounds that Plaintiff

has failed to make a prima facie demonstration that she is unable

to perform the essential functions of her job. 

The parties dispute whether the Court may consider the

additional evidence provided by Plaintiff to Kemper along with her

appeal of its denial of LTD benefits. Defendants rely on the rule

that when a court reviews a disability determination for abuse of

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discretion, it may only consider the evidence presented to the

plan. Taft v. Equitable Life Assurance Soc'y, 9 F.3d 1469, 1471

(9th Cir. 1993). However, Plaintiff did submit this additional

evidence, including Dr. Madill's report, along with her appeal of

Kemper's denial of benefits. 

Furthermore, this limitation does not apply on de novo review. 

Jebian v. Hewlett-Packard Co. Employee Benefits Organization Income

Protection Plan, 349 F.3d 1098, 1110 (9th Cir. 2003). On de novo

review, "new evidence may be considered . . . to enable the full

exercise of informed and independent judgment." Mongeluzo v.

Baxter Travenol Long Term Disability Benefit Plan, 46 F.3d 938, 943

(9th Cir. 1995). Even if Plaintiff had not submitted the

additional evidence of disability with her appeal to Kemper,

consideration of new evidence would be appropriate here because

Kemper rejected her application on purely procedural grounds, and

did not investigate her alleged physical impairments. 

Defendants assert that nothing in the administrative record

demonstrates that Plaintiff could not perform the essential

functions of her job from the period of May, 2001 through 2003. 

This assertion ignores the opinion of her treating physician, Dr.

Madill, based on a review of Plaintiff's medical records, that she

was indeed unable to perform any of the duties of her position with

Vodafone beginning in May, 2001. He specifically addresses

Plaintiff's limitations, including severe fatigue, impaired

cognitive skills and inability to concentrate. Dr. Madill's

opinions are more detailed than the "conclusory" opinions deemed

insufficient in Jordan v. Northrup Grumman Corp. Welfare Benefit

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Plan, 370 F.3d 869, 880 (9th Cir. 2004), and, unlike Jordan,

Defendants do not present a more thorough or careful opinion

refuting Dr. Madill's conclusions. Nor does the fact that

Plaintiff's brain lesion was not diagnosed until after her

disability began mean that Plaintiff was not disabled as of May,

2001. See Thompson v. Standard Ins. Co., 167 F. Supp. 2d 1186,

1194 (D. Or. 2001) (rejecting insurer's contention that court could

not consider later medical records as evidence of prior

disability). The evidence also indicates, and Defendants do not

contest, that Plaintiff cannot perform the "essential functions of

any gainful Occupation that [her] training, education and

experience would allow [her] to perform," as the Plan requires

after twenty-four months. 

Defendants also conclusorily contend that Plaintiff is subject

to the twenty-four month limitation on "self-reported conditions." 

Again, Defendants ignore the more recent evidence that her fatigue

is a symptom of a measurable, verifiable demyelinating brain

lesion. 

For these reasons, the Court grants Plaintiff's motion for

summary adjudication that she is disabled under the terms of the

LTD plan. 

V. Offsets

Defendants move for adjudication that any benefits be offset

by State disability benefits and Social Security benefits, and that

her STD benefits be offset by the amount of the severance package

offered by Vodafone. 

Plaintiff does not oppose the offsetting of Social Security

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benefits. P0417, P0436. At the hearing, counsel for Plaintiff

conceded that any recovery would also be offset by State disability

benefits. Accordingly, the Court grants Defendants' motion to

offset LTD benefits by the amount of other income benefits received

as a result of that period of disability. 

However, Defendants have shown no basis for their request that

Plaintiff's STD recovery be offset by the severance package offered

by Vodafone. The Plan provides that disability benefits will be

offset by the amounts of other benefits which the recipient is

entitled to receive "as a result of the Period of Disability." 

Here, the severance package was not a benefit Plaintiff was

entitled to receive as a result of the Period of Disability. In

fact, the severance package was offered to Plaintiff on the

condition that she release any claims against Vodafone. She

rejected these terms, and did not receive any severance benefits. 

Defendants may not reduce their payments to Plaintiff on the basis

of this unaccepted offer. 

CONCLUSION

For the foregoing reasons, the Court GRANTS Plaintiff's motion

for adjudication under Rule 52, and DENIES Defendant's motion. 

Plaintiff's recovery will be offset by the amount of Social

Security and State disability benefits received as a result of that

period of disability. Plaintiff is entitled to receive LTD

benefits. Within two weeks of the date of this order, Plaintiff

shall submit to the Court a proposed calculation of back benefits

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in an amount certain and a formula for calculating pre-and postjudgment interest. 

IT IS SO ORDERED.

Dated: 6/30/06 

CLAUDIA WILKEN

United States District Judge

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