Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-02165/USCOURTS-caed-2_05-cv-02165-1/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 28:1132 E.R.I.S.A.

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

MARJORIE CHERRY,

NO. CIV. S-05-2165 WBS JFM

Plaintiff,

v. FINDINGS OF FACT, CONCLUSIONS 

OF LAW, AND ORDER FOR JUDGMENT

ON THE ADMINISTRATIVE RECORD

DIGITAL EQUIPMENT CORP. LONGTERM DISABILITY PLAN, and

PRUDENTIAL INSURANCE CO. OF

AMERICA, a New Jersey

corporation,

Defendants.

----oo0oo----

Plaintiff Marjorie Cherry brought this action alleging 

violations of the Employee Retirement Income Security Act of 1974

(“ERISA”), 29 U.S.C. § 1132. The matter came on regularly for

trial on the administrative record, without a jury, on July 24,

2006. See Kearney v. Standard Ins. Co., 175 F.3d 1084, 1094-95

(9th Cir. 1999) (en banc). Having considered the evidence in the

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The court has discretion to take additional evidence as 1

needed. Kearney, 175 F.3d at 1094. However, the court has not

been called upon to exercise that discretion because the parties

have not submitted additional evidence beyond the administrative

record.

The facts included herein come from exhibits 1-4, 2

attached to the White declaration, which in turn come from two

sources. First, there is an incomplete version of the

administrative record supplied by defendants, which will be cited

as PRU 0001-0291. Second, there are documents initially included

in the administrative record but not included in defendants’

disclosure, namely, Prudential’s insurance policy and summary

plan description, the documents plaintiff submitted in her

administrative appeal of the plan decision and her subsequent

correspondence with Prudential, and plaintiff’s prior claim file,

all of which will be cited as CHERRY 00001-00510.

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administrative record and the arguments of counsel, the court now 1

makes the following findings of fact and conclusions of law

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

I. Findings of Fact2

1. While she was employed by Digital Equipment Corp. 

in Palo Alto, California as a database systems analyst and

programmer, plaintiff had symptoms of headache, dizziness, and

weakness over the course of several months and was misdiagnosed

with multiple sclerosis. Plaintiff subsequently suffered a

stroke. To correct the resulting bleeding in her brain,

plaintiff underwent surgery, during which an arteriovenous

malformation (AVM) was excised from her cerebellum. (CHERRY

00088 (Cherry Decl. ¶ 2).)

2. Defendant Digital Equipment Corp. entered into 

Group Contract No. GD-19100, an insurance contract, with

Prudential in 1987. (CHERRY 00147.)

3. Prudential’s long term disability plan (“the 

plan”) allows for disability insurance coverage, and provides the

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following definition of disability:

Total disability exists when Prudential 

determines that all of these conditions are met:

(1) Due to Sickness or accidental injury, both of

these are true:

(a) You are not able to perform, for wage or

profit, the material and substantial

duties of your occupation.

(b) After the Initial Duration of a period

of Total Disability, you are not able to

perform for wage or profit the material

and substantial duties of any job for

which you are reasonably fitted by your

education, training or experience.

(2) You are not working at any job for wage or

profit.

(3) You are under the regular care of a Doctor. 

(CHERRY 00136.) 

4. Prudential’s Summary Plan Description provides 

that no legal action may be brought until sixty days after the

submission of written proof of the loss for which a claim is

made. (CHERRY 00162.)

5. Approximately five years after her surgery, 

plaintiff began to have increasingly severe headaches, vertigo,

and confusion, and she left work in approximately 1991. 

Plaintiff was then treated by neurologists at the Stanford Stroke

Center, who informed her that the AVM surgery had included the

removal of a portion of her brain (more specifically, a portion

of her cerebellum), and also had resulted in scarring in her

brain that likely caused her intense pain and migraine-like

symptoms. (CHERRY 00088-89 (Cherry Decl. ¶¶ 2-3).)

6. In 1992, plaintiff was evaluated by Dr. Bernard 

R. Wilcosky at the Sequoia Pain Treatment Center. Her chief

complaint at that time was of headaches lasting two to four hours

in duration, occurring between two and four times each day. 

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Plaintiff informed Dr. Wilcosky that she could only consistently

tolerate the pain of her headaches by resting in a dark room. 

She also stated that she was unable to focus or concentrate, and

that this contributed to her inability to continue working. 

(CHERRY 00403 (May 28, 1992 Letter from Dr. Wilcosky to Dr.

Gregory W. Albers).)

7. Prudential contacted Dr. Albers, plaintiff’s 

physician, at her request when Prudential was considering whether

to award her disability benefits. In a May 15, 1992 telephone

interview, Dr. Albers stated that plaintiff was totally disabled

because of chronic, intractable migraine-type headaches, and that

MRI studies had shown that there was “empty space” and scarring

in plaintiff’s cerebellum as a result of her operation. (CHERRY

00420-23.) 

8. Plaintiff was referred to the Sequoia Pain 

Treatment Center for evaluation “for the use of relaxation and

other imagery techniques to help her control her severe and

totally disabling headaches.” On May 28, 1992, David Levenson,

M.D. evaluated plaintiff and outlined a program for her to follow

involving relaxation and other pain relieving techniques. 

(CHERRY 00407.)

9. On June 24, 1992, Prudential investigated 

plaintiff’s hospital records in making a determination about her

long term disability benefits. In a request for her hospital

records submitted by Prudential, the cause of plaintiff’s

disability was simply stated to be “Migraines”. (CHERRY 00415.)

10. On June 25, 1992, Prudential completed its review 

of plaintiff’s application for long term disability benefits and

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approved her application, with plaintiff’s benefits beginning on

March 19, 1992. (CHERRY 00416 (Plaintiff Claim File).)

11. On February 7, 1993, plaintiff was informed by

letter that she was to be awarded monthly disability benefits

from the Social Security Administration. (CHERRY 00381-83.)

12. In 1995, Prudential reviewed plaintiff’s condition

once more, and determined that plaintiff was unable to function

because of chronic headache, dizziness, and depression. 

Prudential also noted that plaintiff’s “inability to concentrate

and intermittent gait disturbance” were permanent deficits. 

Although defendant concluded that plaintiff was able to perform

light house chores about 20% of the time, when her “dizzy

exacerbations” subsided, defendant also noted that plaintiff was

unable to perform the duties of any job. Therefore, plaintiff’s

benefits were continued. (CHERRY 00182.)

13. In 1997, Prudential contacted plaintiff for 

medical evidence that would support her claim of continued total

disability. (CHERRY 00183-84.)

14. Plaintiff provided Prudential with medical 

information corroborating her claims of headaches, variants of

migraine, and depression. (CHERRY 00185.)

15. Plaintiff had an Independent Medical Evaluation in

December of 1997. The neurologist with whom she consulted, Rajiv

S. Pathak, M.D., concluded that plaintiff was a poor historian

with poor memory, and that she remained disabled due to

headaches, depression, and to a lesser degree, due to residual

weakness in her left side. (CHERRY 00188.)

16. Plaintiff also consulted with a psychotherapist on

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or about July 12, 1998, who stated that plaintiff is “functioning

below premorbid levels in all areas” and that she “sometimes

forgets trains of thought,” has a slow-paced thought process, and

is easily confused. (CHERRY 00192.)

17. Prudential determined that plaintiff continued to 

be disabled, but sought to determine if the condition was

irreversible or if plaintiff “would benefit from psych[ological]

and pain [management] treatment in an effort to improve [her] low

level of functioning at present.” (CHERRY 00188.)

18. On March 17, 1998, Prudential had a representative

conduct a telephone interview with plaintiff. The representative

noted that plaintiff had three major problems. First, plaintiff

had “headaches occurring often which causes dizziness and vision

impairment.” Second, she had memory problems. Third, plaintiff

experienced difficulty with becoming confused and unbalanced. 

(CHERRY 00168-169.) 

19. On July 8, 1998, Ruth Braun, Ph.D., a clinical 

psychologist who had treated plaintiff for three months, was

interviewed by an employee of Prudential. Dr. Braun indicated

that plaintiff was limited by her neurological condition,

experienced difficulty with language, her sense of time, and her

memory. She also noted that plaintiff had unpredictable onset of

headaches and dizziness. Dr. Braun was doubtful that plaintiff

would be able to return to work. (CHERRY 00171-72.) 

20. Neva Monigatti-Lake, M.D., an internist in Grass 

Valley, evaluated plaintiff’s shoulder pain in August 1999. On

December 20, 1999, Dr. Lake filled out a questionnaire for

Prudential, in which she explained that plaintiff is unable to

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work because of chronic headaches caused by her surgery, because

“[s]he is permanent and stationary.” (CHERRY 00262.)

21. According to an incomplete claim note entered on 

May 8, 2000, Prudential conducted another review of plaintiff’s

medical information. The note concludes with the statement that

plaintiff suffered from “cognitive defects that would prevent

[plaintiff] from performing any occupation.” (CHERRY 00197.)

22. In October of 2001, another entry in plaintiff’s 

claim file indicates her prognosis for returning to work was poor

at that time. This note indicated that a follow-up review of

plaintiff’s condition was scheduled for September of 2004,

approximately three years after the date of the entry. (CHERRY

00198.)

23. On October 13, 2004, Prudential obtained 

information off the internet that plaintiff was serving as a

judge at dog shows. (CHERRY 00199 (“[r]eview of [the] internet

reveals that [plaintiff] is a judge for dog shows and is

scheduled to judge on 10/16/04, 11/21/04, and recently judged on

8/31/04, 9/18/04, and 10/2/04”).) 

24. Prudential suspected that plaintiff may not be 

completely disabled, and subsequently began sub rosa surveillance

of plaintiff over the course of five days, from November 21, 2004

through December 3, 2004. (CHERRY 00216-00225.)

25. On the surveillance video, which is of 

approximately one hour in duration and does not include recorded

sound, plaintiff was recorded as she stood, walked around, bent

over, and moved about without any discernable physical

limitation. With the assistance of another person, she paced out

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distances to place orange cones in a pattern that would create an

obstacle course for dogs. She followed behind dogs and their

handlers, making notes on a hand-held clipboard. The content of

her notes was not captured on film. Plaintiff appeared to judge

two separate rounds, and talked to the participants after each

round. She then handed out prize ribbons to the participants. 

After the judging was completed, plaintiff went to her car and

drove off alone. (Supplemental Decl. Of Geoffrey V. White (Apr.

6, 2005 Compact Disk of Surveillance of Plaintiff).) 

26. The report accompanying the surveillance video 

notes that plaintiff drove from Stockton, California to Green

Valley, California, in about two hours. After the dog show,

continued surveillance led to no further observation of plaintiff

and no other information from plaintiff’s neighbors, except that

they did not feel that plaintiff maintains any particular

schedule. (CHERRY 00216, 00221, 00224.)

27. From December 2004 through June 2005, Dr. Lake 

(who had treated patient since August of 1998) had four visits

with plaintiff. Dr. Lake noted that plaintiff had trouble with

her memory and that she had “migrainous” headaches approximately

three to four times a week, of four to five hours in duration. 

(CHERRY 00072-75.)

28. Prudential called plaintiff on December 17, 2004

to obtain information about her health and how often she visited

her physician. The claim notes indicated that plaintiff said she

only sees her family practitioner and that “things are never

going to change”. (CHERRY 00176-77.) 

29. On January 21, 2005, Prudential requested that 

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The court notes that plaintiff’s benefits were actually 3

granted under a group policy issued to Digital Equipment

Corporation.

9

their Medical Director, Albert Kowalski, M.D., review plaintiff’s

recent office visit notes and the surveillance video. Dr.

Kowalski included a brief, one paragraph note that plaintiff’s

office visits had poor documentation of her condition, and that

although they did not document a good physical condition, they

also did not support sufficient impairment. Additionally, Dr.

Kowalski was persuaded that the surveillance video revealed

plaintiff’s ability to engage in sedentary work, because he saw

no evidence of significant cognitive impairment. He also

summarily discounted plaintiff’s visit with Dr. Neva on 10/8/04

and Dr. Neva’s conclusions that plaintiff had impaired cognition

and organic brain syndrome as inconsistent with the level of

activity he observed on the surveillance video. Dr. Kowalski

made no mention of plaintiff’s migraines as disabling and did not

explain whether they were consistent or inconsistent with the

activity on the surveillance video. (CHERRY 00200.) 

30. On January 27, 2005, Prudential sent plaintiff a 

letter notifying her that her long term disability benefits under

a group policy issued to Hewitt Associates were to be terminated. 3

In making its determination, Prudential relied on the fact that

plaintiff was able to move freely, assist with setting up an

obstacle course, give instructions, grade the performance of the

dogs, present award ribbons, and drive for over a two hour period

of time to conclude that her activity was “inconsistent with

impaired cognition and/or memory loss.” Additionally, Prudential

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noted that plaintiff was scheduled to judge at four other dog

shows, although she was not observed judging these shows. 

Prudential also informed plaintiff that she had a right to appeal

the decision within 180 days of receipt of the letter and that

the appeal would be decided within 45 days of the receipt of the

appeal request. (PRU 0285-87.) 

31. On June 17, 2005, Michael M. Bronshvag, M.D., a 

neurologist, examined plaintiff at her attorney’s request and

found plaintiff to be “anxious and depressed with a poor memory

and difficulty concentrating.” He also noted that “[s]he

appeared to be cognitively impaired.” (CHERRY 00076-79.) 

32. Plaintiff appealed defendants’ decision to deny 

her benefits on July 29, 2005. (CHERRY 0020-0022). 

33. Sharon A. Stewart, a licensed clinical social 

worker, saw plaintiff for nineteen sessions from February 3, 2005

through July 8, 2005. She noted that plaintiff informed her that

she experiences severe headaches three to four days a week that

typically last five hours in duration. Plaintiff also stated

that when she takes her prescribed medication to treat her

headaches, she becomes immobilized for twelve hours. Ms. Stewart

also related that she had witnessed plaintiff suffer these

headaches, which had caused her to terminate sessions early and

occasionally to “blank out” for several minutes. (CHERRY 00080.)

34. On August 17, 2005, Dr. Bronshvag further 

clarified his report by summarizing that plaintiff had

psychological/cognitive difficulty, headache pain, a need for

substantive medications, and difficulty with her legs and her

left arm. Dr. Bronshvag concluded that plaintiff’s level of

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disability was probably permanent, but noted that if the

surveillance films or other data provided a “completely different

picture” of plaintiff, his conclusion could be inaccurate. 

(CHERRY 00014-15.)

35. Plaintiff states in her declaration of July 21, 

2005, that she was an apprentice judge at a practice dog show in

November 2004. Her tasks were to help set up an obstacle course,

make notes on a checklist of the tasks completed by the dogs, and

subtract points for errors during the course. When she arrived

home, she had a severe migraine and remained home for several

days. She found the required tasks to be prohibitively

difficult, and thereafter stopped attempting to learn to become a

dog show judge. (CHERRY 00088-91.)

36. Plaintiff also declares that on her good days, she

is able to do some embroidery, read books, use a computer for

email, do simple cooking and cleaning, and pay her bills, but she

needs assistance and reminders to accomplish these tasks. She is

not able to balance her checking account. Approximately twice a

week, plaintiff goes to a store called “Scraps,” where she knows

the owner and helps in greeting customers or straightening stock

on the shelves. She is unable to use the cash register and

cannot go to the store when she has migraines. She now can only

drive places she has previously been, because of mental (but not

physical) limitations. Plaintiff has to steer with her right

hand, because her left hand is weakened to the point where it

only helps her to steady the wheel. She began attending dog

shows with her friend Laurie Rossi, who is her neighbor and who

is employed as a kindergarten teacher. Ms. Rossi was unable to

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attend the November 2004 dog show, and because plaintiff had

previously been to the location of the dog show, she decided to

attend on her own. Plaintiff said that she needed assistance in

setting up the obstacle course, even though a dog show judge is

meant to do it alone. She forgot many things and had difficulty

concentrating. She also mixed up the award ribbons for the

winners, and had to correct her mistake by going back to the

judge’s table. (CHERRY 00088-95.)

37. Arnette McClure, the co-owner of a store named 

Scraps, has known plaintiff for between five and six years. She

declares that plaintiff comes into her store about twice a week

to keep company with Ms. McClure and to pursue her love of dogs. 

Plaintiff is not paid for her time in the store. Ms. McClure

notes that plaintiff is unable to operate the cash register and

only straightens the shelves and helps customers obtain various

items from the shelves. Ms. McClure notes that plaintiff has

trouble concentrating and “blanks out” at times, and also that

she has frequent “bad days” during which she has migraines and

dizzy spells. Plaintiff cannot stay in the store for the full

time during a migraine episode. (CHERRY 00098-99.)

38. Laurie Rossi has known plaintiff for more than

five years, and she is good friends with plaintiff. Ms. Rossi

goes with plaintiff to Scraps, and she notes that plaintiff

becomes too flustered to use the cash register, cannot keep track

of what she is doing, and has severe migraines several times a

week, during which she generally stays in bed. Ms. Rossi

estimates that she drives plaintiff approximately 80% of the time

that plaintiff travels any distance or even goes into town. She

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notes that when plaintiff drives, she becomes confused by traffic

and changes in weather conditions. Ms. Rossi also typically

accompanies plaintiff when she goes grocery shopping, because

plaintiff becomes too distracted to remember to buy all of the

items on her grocery list. Ms. Rossi tried to learn “rally

obedience” dog judging, which she states is less difficult than

regular obedience shows. The judge is required to keep track of

time and mark points off of a checklist for any mistakes. 

Plaintiff and Ms. Rossi went to several practice shows as

apprentice judges, but Ms. Rossi did not attend the show on

November 21, 2004. Out of frustration with the mistakes she had

made, plaintiff told Ms. Rossi that she was going to quit trying

to learn to judge dog shows, and she did not work at any shows

after that. (CHERRY 00100-102.)

39. Prudential received plaintiff’s appeal on July 29,

2005 and acknowledged receipt on August 10, 2005. (CHERRY 00020,

00018.) In the appeal letter, plaintiff explained that the video

depicted her acting as an apprentice as a practice dog show, and

that she made numerous mistakes at the show that convinced her

she could not become a dog show judge. (CHERRY 00019.)

40. On September 9, 2005, Prudential sent a letter to

plaintiff’s counsel stating that they were continuing to review

her appeal, and they required an extension of time of 45 days to

allow for a medical review from an “external resource” who would

evaluate the information in her file. (CHERRY 00012.) Plaintiff

responded with a letter sent on September 13, 2005 expressing her

confusion about the need for further medical review and

requesting that Prudential send copies of information provided to

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the medical reviewer, a copy of the reviewer’s report, and the

reviewer’s curriculum vitae. (CHERRY 00010.) A claim note in

plaintiff’s file, dated October 10, 2005, indicates that a Dr.

Gizzi concluded that further examination of plaintiff was

necessary to evaluate her cognitive claims. (PRU 0251.) 

Prudential informed plaintiff in a letter dated October 10, 2005

that a further independent medical examination by “an external

practicing neurologist” was necessary, and that they were still

reviewing the appeal. (CHERRY 00009.) This letter was received

by plaintiff on October 17, 2005. (Id.) After some additional

correspondence with Prudential, plaintiff decided to file suit in

this court on October 27, 2005. (CHERRY 00001-2.) 

41. There is no indication in the record that 

Prudential provided plaintiff with information from the medical

reviewer or that the appeal was ever decided by Prudential.

II. Conclusions of Law

A. Exhaustion of Remedies

Initially, the court must determine whether plaintiff 

has exhausted her administrative remedies, pursuant to the

“firmly established federal policy favoring exhaustion of

administrative remedies in ERISA cases.” Kennedy v. Empire Blue

Cross & Blue Shield, 989 F.2d 588, 594 (2d Cir. 1993). The

exhaustion requirement is not provided by ERISA itself; rather,

under the applicable case law “a claimant must avail himself or

herself of a plan’s own internal review procedures before

bringing suit in federal court.” Diaz v. United Agric. Employee

Welfare Benefit Plan & Trust, 50 F.3d 1478, 1483 (9th Cir. 1995)

(citation omitted); see also Moniz v. G.M.C., No. 98-4913, 2000

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The Summary Plan Description merely provides a set of 4

“claim rules” that apply to disability benefits. However, it is

not clear whether these rules govern the initial determination of

a person’s eligibility for disability benefits or instead govern

the appeals procedure for a person whose disability benefits have

been terminated. Even assuming that these rules do place limits

on the appeal of a termination of benefits, as discussed in the

text, it appears that plaintiff abided by these rules and

exhausted her remedies. 

15

WL 1375285, at *3 (N.D. Cal. Sept. 18, 2000) (concluding that

“plaintiffs’ [sic] were required to exhaust their pension plan’s

administrative remedies before bringing suit”). 

Defendants contend that plaintiff did not exhaust her

remedies because she failed to follow the correct appeals

procedures. Plaintiff received a notice that her benefits were

to be terminated on January 27, 2005, and this notice gave her

180 days in which to file an appeal of the termination of her

benefits. Although defendants argue that the plan provides for

three levels of appeal following a claim denial, defendant does

not cite to the administrative record for this assertion, nor is

there any indication in the administrative record that three

levels of appeal are required. Prudential’s Summary Plan

Description does provide that no legal action may be brought

until sixty days after the submission of written proof of the

loss is made. Prudential received plaintiff’s appeal submitting 4

written proof of her disability on July 29, 2005. Plaintiff then

filed suit ninety days after submitting her appeal, which is in

line with this plan requirement. 

Defendants additionally argue that they were entitled

to have plaintiff submit to an independent medical examination

(IME), that they requested an extension of time for medical

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evaluation on September 9, 2005, that they informed plaintiff of

their intention to arrange for an IME by letter dated October 10,

2005, and that plaintiff improperly refused to submit to the

examination and instead filed this suit a few weeks later. 

Defendants appear to argue, without support, that plaintiff

simply had to wait until Prudential made its determination before

she could file suit. The court cannot create an exhaustion

requirement out of whole cloth based on what Prudential chose to

require of a particular plaintiff in a particular case. 

Instead, the court must again look to the terms of the

plan. Prudential’s plan states that “Prudential, at its own

expense, has the right to examine the persons whose loss is the

basis of the claim. Prudential may do this when and as often as

is reasonable while the claim is pending.” (CHERRY 132 (emphasis

added).) However, defendants’ request for an IME was not

reasonable at the time it was made. First, defendants had

already denied plaintiff’s benefits before deciding there was a

need for an IME. Thus, if an IME was genuinely necessary, this

calls into question whether there was sufficient support for

Prudential’s initial decision to deny benefits. Further, as

discussed in greater detail below, plaintiff’s medical history

demonstrated that she had a severe medical condition and an

“empty space” in her brain, and there was no evidence that her

condition had improved or would improve. Therefore, the need for

an IME was not clear for this additional reason. 

Furthermore, although plaintiff did not submit to an

IME, Prudential delayed meeting its obligations, and plaintiff

did not fail to meet the deadlines provided in the plan. 

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Plaintiff appealed the denial of disability benefits on July 29,

2005. Forty-two days later, on September 9, 2005, Prudential

sent a letter to plaintiff seeking an extension of time of fortyfive days to allow for an IME. Thirty-one days later after

requesting an extension, on October 10, 2005, Prudential informed

plaintiff that further examination was required. Plaintiff filed

this suit seventeen days after she received the notice that

Prudential wanted to conduct an IME, forty-eight days after

Prudential requested a forty-five day extension for “external

medical evaluation”, and ninety days after plaintiff commenced

the appeal. Thus, when plaintiff filed suit on October 27, 2005,

she had given Prudential the extension they requested and met the

other deadlines outlined in the plan. 

“Although plan administrators may believe that they

have articulated good reasons for their requests for more records

or additional diagnostic tests, from the claimant’s perspective

these requests are often indistinguishable from pointless

stalling.” Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 636

(10th Cir. 2003). The court in Gilbertson additionally noted

that “the costs of delay are generally much higher for claimants,

who may need disability benefits to buy their daily bread, than

for plans and administrators.” Id. (citing Booton v. Lockheed

Medical Benefits Plan, 110 F.3d 1461, 1463 n.6 (9th Cir. 1997)

(expressing concern that administrator had “little incentive to

come to grips with [beneficiaries’] claims”)). Because

Prudential unreasonably delayed in addressing plaintiff’s claim,

and plaintiff abided by the deadlines laid out in the plan, the

court concludes that plaintiff has exhausted her remedies. 

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B. Terms of ERISA Plan

Next, the court must interpret the terms of the plan

regarding plaintiff’s eligibility for disability benefits. In

doing so, a court should “look first to the terms of the plan

itself.” Nelson v. EG & G Energy Measurements Group, Inc., 37

F.3d 1384, 1389 (9th Cir. 1994). Courts should then interpret

plan terms “in an ordinary and popular sense as would a [person]

of average intelligence and experience.” Allstate Ins. Co. v.

Ellison, 757 F.2d 1042, 1044 (9th Cir. 1985).

The dispute here, under the applicable plan language,

is whether plaintiff is totally disabled by virtue of being

unable “to perform for wage or profit the material and

substantial duties of any job for which [she is] reasonably

fitted by [her] education, training or experience.” Other courts

have noted that the ability to do sedentary work for short

periods of time does not establish the ability to perform fulltime, consistent work. See, e.g., Wible v. Aetna Life Ins. Co.,

375 F. Supp. 2d 956, 969-70 (C.D. Cal. 2005) (noting that the

plaintiff’s ability to perform short periods of sedentary work

that does not require use of cognitive facilities was

insufficient to show the plaintiff was not disabled “from working

at any reasonable occupation for which [she] may be fitted by

training, education, or experience” with reasonable continuity

(alteration in original)); Bruce v. NY Life Ins. Co., No.

00-1516, 2003 U.S. Dist. LEXIS 7225, at *20-23 (N.D. Cal. Apr.

28, 2003) (noting that the ordinary interpretation of the term

“occupation,” unless modified by “part-time,” contemplates

full-time work, and concluding that a doctor’s opinion that the

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plaintiff could “perform limited part-time work out of her home

does not support a finding that plaintiff can perform ‘another

occupation’ within the meaning of the subject policy”).

///

C. Determination of Disability

Plaintiff has a long medical history, stemming from a

stroke and a surgery that left her with scarring and an empty

space in her brain. Plaintiff clearly has some ability to

perform small tasks of daily life, and is relatively unimpaired

physically. However, her medical history indicates that she

suffers from chronic, debilitating migraines a few times each

week. Several physicians who have treated plaintiff have

indicated that her disability includes headaches, dizziness,

weakness on her left side, confusion, and depression. None of

the physicians who treated plaintiff were able to find a

successful treatment or cure for plaintiff’s chronic migraines. 

Several physicians, at various times, indicated that they could

not foresee plaintiff regaining her ability to return to work. 

Significantly, although plaintiff’s confusion, distractability,

weakness on her left side, and depression clearly contribute to

her disability, when an agent of Prudential filled out a form to

obtain plaintiff’s medical records, Prudential described

plaintiff’s disability with just one word: Migraines. 

Additionally, defendant concedes that “[p]laintiff

clearly has had a long history of subjective complaints and

medical treatment treatment [sic] following her 1985 stroke.” 

(Def.’s Cross-Mot. for Summ. J. 8.) After determining that

plaintiff was totally disabled in 1992, and revisiting and

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reaffirming the status of plaintiff’s disability based upon her

medical condition in 1995, 1997, 1998, 1999, and 2001, defendant

decided in 2004 that plaintiff was no longer disabled and could

work for profit or wages. This decision to deny plaintiff’s

disability benefits rested on the opinion of one physician, Dr.

Kowalski, who did not conduct a physical examination of plaintiff

and relied solely on her medical records and a few days of sub

rosa surveillance. Based largely upon the activity he observed

in the surveillance video, he opined in a one-paragraph note that

plaintiff’s activities were not consistent with total disability.

Defendants’ video surveillance is insufficient evidence

to disprove the copious evidence from physicians who have

examined plaintiff at various times and found her to be

permanently disabled. First, defendant’s evidence does not

disprove the fact that plaintiff has migraines. Plaintiff

submits that she periodically has “good days,” during which she

is able to function reasonably well. This is consistent with the

surveillance video as well as the medical evidence in the record;

plaintiff’s physicians note that plaintiff has migraines some of

the time, but not constantly. 

Second, the tasks involved in setting up a circle for

an informal dog show and judging dogs do not appear to be

particularly onerous or intellectually challenging in a way that

would raise doubts about plaintiff’s disability. The

surveillance video shows plaintiff attending a dog show, judging

two rounds, and driving herself home. Plaintiff states that she

was not able to manage the small difficulty involved in being a

dog show judge, and that she had a migraine that began when she

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arrived home. Plaintiff further submits supporting evidence to

that effect in the form of a declaration from her friend, a

kindergarten teacher, with whom she interacted after the dog

show. For the next two days, plaintiff also states that she had

a migraine and did not leave the house. The surveillance report

appears to confirm that plaintiff remained in her home, and

defendants have not presented any evidence to disprove

plaintiff’s explanation of the events depicted in the

surveillance video.

There is also relatively recent evidence indicating

that plaintiff’s medical condition has not changed. Plaintiff

submitted evidence from 2005 in her appeal, including her own

declaration and declarations from Laurie Rossi and Arnette

McClure, all of which support the fact that plaintiff’s

migraines, confusion, and dizziness continue to have an impact on

her in the small tasks of daily life and would prevent her from

holding a job. Plaintiff additionally submitted evidence from

physicians supporting the fact that she continues to suffer from

headaches and confusion as a result of the empty space and

scarring in her brain.

The weight of the evidence clearly shows that plaintiff

had a persistent and total disability that did not lend itself to

treatment. Defendants’ surveillance video and the report of Dr.

Kowalski do not refute the most significant part of plaintiff’s

disability: her chronic, debilitating headaches. Therefore, the

court finds that plaintiff is totally disabled under the plan

definition, and is entitled to receive long-term disability

benefits. Along with awarding judgment to plaintiff, the court

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Plaintiff notes that prevailing plaintiffs in ERISA 5

actions are entitled to reasonable attorneys’ fees, absent a

showing by defendants that such an award would be unjust. See

Smith v. CMTA-IAM Pension Trust, 746 F.2d 587, 589 (9th Cir.

1984) (citing 29 U.S.C. § 1132(g)(1)); Canseco Constr. Laborers

Pension Trust, 93 F.3d 600, 609-10 (9th Cir. 1996). However,

plaintiff has not properly noticed a motion for attorneys’ fees

pursuant to the Local Rules of the Eastern District. See E.D.

Local Rule 54-293 (noting that motions for attorneys’ fees must

be filed within thirty days of an entry of judgment and are

governed by Rule 78-230); E.D. Local Rule 78-230 (“[A]ll motions

shall be noticed on the motion calendar of the assigned Judge or

Magistrate Judge. The moving party shall file with the Clerk a

notice of motion, motion, accompanying briefs, affidavits, if

appropriate, and copies of all documentary evidence that the

moving party intends to submit in support of the motion.”). 

Therefore, the court will address this issue when a motion is

properly filed within thirty days of the entry of this order. 

22

restores the long-term disability benefits that have been

withheld to the date of judgment.5

D. Prejudgment Interest

Plaintiff contends that prejudgment interest at the

rate of ten percent per year should additionally be awarded,

pursuant to California Insurance Code § 10111.2. “Whether to

award prejudgment interest to an ERISA plaintiff is ‘a question

of fairness, lying within the court’s sound discretion, to be

answered by balancing the equities.’ Among the factors to be

considered . . . is the presence or absence of ‘bad faith or ill

will.’” Landwehr v. DuPree, 72 F.3d 726, 739 (9th Cir. 1995). 

The Supreme Court has explained that, in deciding whether to

award prejudgment interest, 

[A] district court will consider a number of 

factors, including whether prejudgment 

interest is necessary to compensate the 

plaintiff fully for his injuries, the degree 

of personal wrongdoing on the part of the 

defendant, the availability of alternative 

investment opportunities to the plaintiff, 

whether the plaintiff delayed in bringing or

prosecuting the action, and other fundamental

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considerations of fairness.

Osterneck v. Ernst & Whinney, 489 U.S. 169, 176 (1989).

Stepping through the relevant factors, the court first

concludes that prejudgment interest is necessary to fully

compensate the plaintiff for her injuries. Plaintiff has been

wrongfully denied her disability benefits for approximately a

year and a half. If she simply received the amount of those

disability benefits without prejudgment interest, she would not

be compensated for the lateness of the payments. Another

relevant factor here is whether plaintiff delayed in bringing

suit. It is hard to imagine that defendants would dispute that

plaintiff did not delay in bringing this action, particularly

when they argue that the opposite is true. Additionally,

defendants have had the benefit of the interest on the money they

have withheld from plaintiff, which means that an award of

prejudgment interest would simply result in defendants’

disgorging this profit. Plaintiff has incurred the loss, and the

equities weigh in favor of plaintiff receiving the interest that

defendants have so far reaped for themselves. 

Whether the defendants acted in bad faith with regard

to plaintiff’s claim is a more difficult question. The court is

always reluctant to impute bad faith or ill will to any party;

all parties before the court are presumed to have acted in good

faith. Nevertheless, after examining the exhaustive record

documenting defendants’ review of plaintiff’s claim, the court is

compelled to make a finding of bad faith here. Prudential’s

initial skepticism upon viewing plaintiff’s actions in the

surveillance video was certainly understandable, and some action

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in response was justified. However, before terminating

plaintiff’s benefits, Prudential had some obligation to

investigate the events they saw on a video that was recorded

without sound and provided without context. They did not do so. 

If Prudential had investigated further about the

circumstances of the dog show, they would have learned that

plaintiff was attempting to train to be a dog show judge, and

that her attempt to do so was unsuccessful. She made several

mistakes on the day of their surveillance, including being unable

to perform tasks that were designed for one person without

assistance, becoming confused and distracted, and mixing up the

award ribbons she was supposed to hand to the contestants. 

Moreover, even if plaintiff had demonstrated her ability to be a

dog show judge on occasion, this would not necessarily translate

to her ability to hold a regular job, given the frequency of her

incapacitating migraines. Notably, nowhere in the record does

Prudential suggest what kind of job they believed plaintiff could

hold, except to say that she may be suited for a “sedentary

occupation”. It is unclear how plaintiff would be equipped to

perform an occupation based solely on its sedentary nature, given

her cognitive disabilities and debilitating migraines.

Additionally, the fact that Prudential persisted in not

paying benefits after they received plaintiff’s explanation for

her actions in the video was unjustified. Prudential maintained

their untenable position without sufficient evidence to do so;

significantly, they did not obtain an external medical evaluation

before terminating plaintiff’s benefits. Though Prudential did

not require an IME to make the decision to terminate her

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benefits, they protest that plaintiff has not exhausted her

remedies because she did not agree to submit to an IME in the

course of her appeal. Additionally, defendants vigorously

proclaim that an IME is so important that they are likely to

require one notwithstanding the court’s ruling on this motion. 

Now, after plaintiff has been deprived of her benefits for a year

and a half, they claim that an IME is necessary to make the

determination they have already made once and failed to reverse

upon review. The court simply cannot find that these actions

were taken in good faith. 

It must be emphasized that the court’s finding of bad

faith on the part of the defendants which is merely one of the

factors the court considers. It is important to note that an

award of prejudgment interest is not an attempt to punish the

defendants. See Dishman v. UNUM Life Ins. Co. of Am., 269 F.3d

974, 988 (9th Cir. 2001) (“Prejudgment interest is an element of

compensation, not a penalty.”). Rather, such an award is an

action taken by the court in its sound discretion to balance the

equities. In balancing defendants’ precipitous conduct against

the hardship faced by the wrongful denial of benefits to a person

with mental and physical disabilities for a year and a half, the

equities weigh in plaintiff’s favor. Therefore, plaintiff should

receive prejudgment interest.

Determining the rate of interest requires reference to

the federal rate defined in 28 U.S.C. § 1961. See Grosz-Salomon

v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1164 (9th Cir. 2001)

(applying § 1961 to determine the appropriate rate of prejudgment

interest in an ERISA case); Murphy v. City of Elko, 976 F. Supp.

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Defendants further argue that “as a general rule, a 6

right to plan benefits does not accrue prospectively,” citing

Geiger v. Hartford Life Ins. Co., 348 F. Supp. 2d 1097, 1109-10,

1112 (E.D. Cal. 2004). However, it is unclear what application

the quotation from Geiger has to this case. The court in Geiger

was faced with a situation where there were two different welfare

benefit plans in effect at different times. The court explained

26

1359, 1364 (D. Nev. 1997) (noting in an ERISA case that “since

this is a case brought under federal law, however, we think the

proper rate is the federal rate” (citations omitted)); United

States v. Gordon, 393 F.3d 1044, 1058 n.12 (9th Cir. 2004)

(“Under federal law[,] the rate of prejudgment interest is the

Treasury Bill rate as defined in 28 U.S.C. § 1961 unless the

district court finds on substantial evidence that a different

prejudgment interest rate is appropriate.” (citations omitted)). 

Under 28 U.S.C. § 1961(a), the applicable interest rate

is “the average accepted auction price for the last auction of

fifty-two week United States Treasury bills settled immediately

prior to the date of judgment.” 28 U.S.C. § 1961(a). This rate

may be found by referring to the Federal Reserve website, located

at: http://www.federalreserve.gov/RELEASES/h15/. However, with

regard to disability benefits, “the interest rate [is the rate]

that was in effect at the time payment was due to the plaintiff,

not the rate applicable as of the date of judgment.” Fleming v.

Kemper Nat’l Servs., 373 F. Supp. 2d 1000, 1013 (N.D. Cal. 2005)

(citing Nelson v. EG&G Energy Measurements Group, 37 F.3d 1384,

1391-92 (9th Cir. 1994)). Thus, the interest rate should be

determined individually for each disability benefit payment that

plaintiff was denied, based on rate at the time that the benefit

payment became due. 

6

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that “the denial of ERISA benefits is judged under the standard

of the plan in effect at the time the benefits are denied. This

ruling follows the generally accepted law that welfare benefits

do not vest prospectively, but only when payments become due.” 

Id. at 1112. Thus, based on the fact that benefits vest at the

time they are due, the court determined that the plan that was in

effect at the time the benefit payments became due was the plan

that governed. 

Here, the court is awarding prejudgment interest to be

set at the time the benefits became due. Additionally, the court

is reinstating plaintiff in the plan and awarding her past

benefits that she has been denied, but is not awarding plaintiff

her anticipated future benefits. Other than these issues, there

is no clear application of the Geiger court’s reasoning–-in

particular, there is no analogous dispute here about whether to

apply two different plans that were in effect at different times.

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III. Conclusion

IT IS THEREFORE ORDERED that:

(1) Judgment on the administrative record shall be

entered IN FAVOR OF PLAINTIFF. Plaintiff shall recover all

benefits to which she was entitled under Prudential’s long-term

disability plan from the date such benefits were terminated on

February 1, 2005 to the present.

(2) Plaintiff’s request for prejudgment interest is

GRANTED. The rate of prejudgment interest shall be determined

individually for each benefit payment according to the average

accepted auction price for the last auction of fifty-two week

United States Treasury bills settled immediately prior to the

date each of her withheld benefit payments became due, pursuant

to 28 U.S.C. § 1961(a).

IT IS FURTHER ORDERED that defendants’ motion for

summary judgment, be, and the same hereby is, DENIED as moot.

///

///

///

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This case is hereby REMANDED to the plan administrator

for proceedings consistent with this Order.

DATED: August 10, 2006

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