Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-01045/USCOURTS-caed-2_06-cv-01045-4/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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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

BARBARA STERIO, No. 2:06-CV-1045-MCE-GGH

Plaintiff,

v. MEMORANDUM & ORDER

HIGHMARK LIFE INSURANCE

COMPANY,

Defendant.

----oo0oo----

This matter came on for trial before the Court on June 20,

2008. Jesse Kaplan appeared on behalf of Plaintiff Barbara

Sterio (“Plaintiff”). Nancy Potter appeared on behalf of

Defendant HM Life, formerly known as Highmark Life Insurance

Company (“Defendant” or “Highmark”). After hearing the evidence

and arguments, the Court makes the following Findings of Fact, by

a preponderance of the evidence, and Conclusions of Law as to

Plaintiff’s claim against Defendant. The Court concludes that

judgment should be entered in favor of Defendant.

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 At trial, the parties acknowledged that they did not 1

dispute the facts of the case, but only the applicable standard

of review and eligibility determination. Accordingly, only a

cursory recitation of the facts is necessary.

2

FINDINGS OF FACT1

Plaintiff was employed as a receptionist. Defendant

provided group employee disability benefits to Plaintiff’s

employer. Plaintiff’s last date on the job was December 29,

2000. In early 2001, Plaintiff underwent hip surgery. After

that surgery, Plaintiff complained of loss of sensation in her

right calf and foot. An EMG (neurological examination) in August

2000 resulted in findings consistent with right sciatic

neuropathy, but no evidence of radiculopathy, lumbrosacral

plexopathy, or polyneuropathy of the lower extremities. In

January 2001, Plaintiff’s treating physician noted that her

physical examination was normal, except for sciatica in her right

hip and thigh, for which medication was provided. In June 2002,

she was seen by an orthopedist for her continuing hip pain, and

reported that she could walk two blocks, walk through a grocery

store with a walker, and stand for 30 minutes at a time.

In May 2003, Plaintiff dropped something on her foot,

breaking two bones. In June 2003, during an argument with family

members, she took an overdose of her medication, was

hospitalized, and thereafter spent seven days in a psychiatric

facility. Shortly after her release she first applied for

disability benefits from Highmark. In August 2003, Plaintiff was

again hospitalized in a psychiatric facility. 

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3

Records were not obtained from the psychiatric hospitalizations

because Plaintiff did not mention them on her application.

In July 2003, after her first psychiatric hospitalization,

Plaintiff was seen by physician Sayed Janmohamed. Dr. Janmohamed

is Board Certified in internal medicine. He is not a

neurologist, orthopedist, or psychiatrist.

After Highmark received Plaintiff’s claim, it made requests

to Kaiser Foundation Health Plan for medical records and to

Plaintiff’s former employer for wage information. The wage

information and medical records were received in or around late

October 2003. In addition, Dr. Janmohamed submitted a statement

that Plaintiff was using a walker and was totally disabled by

reason of her leg pain and depression.

On December 2, 2003, having received the medical records

from Kaiser and proof of wage loss, Highmark requested the

assistance of Broadspire Services to provide physician review of

the medical records and to advise on “split recommendations”,

i.e., whether the employee was initially disabled from her own

occupation, and subsequently was disabled from engaging in any

occupation.

Based upon the medical information submitted, Broadspire

procured a records review and opinion from neurologist Vaughn

Cohan, M.D. Dr. Cohan noted that Plaintiff’s occupation as a

receptionist had a light level of physical demand, that she

potentially required a foot drop brace and a walker, but that

there was no documentation to support a finding of total

disability from a neurological or orthopedic standpoint.

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4

Broadspire also procured a peer review from a psychiatrist,

Barry Glassman, M.D., who found that Ms. Sterio was totally

disabled from a psychiatric standpoint during the time she was

hospitalized following her overdose, but was not disabled by her

psychiatric prior to or after that time. When making his

evaluation, Dr. Glassman did not have the records from the

psychiatric hospital Plaintiff was transferred to following her

stay at Kaiser related to her overdosing on her pain medication. 

Those records were not provided to Highmark or Broadspire until

June 2004.

Broadspire, on December 18, 2003, sent a letter to

Ms. Sterio explaining that it was the administrator for Highmark,

that physicians with specialties in neurology and psychiatry had

reviewed her Kaiser file, that she was ambulatory with a walker,

had no cognitive dysfunction, and there was no evidence that her

medical condition prevented her from engaging in light-level work

as a receptionist. The letter concluded with instructions to

Plaintiff as to how to appeal.

On January 20, 2004, attorney Jesse Kaplan, who is also

Plaintiff’s attorney in this litigation, advised Broadspire that

he would represent Plaintiff in appealing Broadspire’s decision.

In June 2004, Mr. Kaplan provided some of the same records

Highmark had already obtained, and also provided an updated

health assessment by Dr. Janmohamed, the internist. 

Dr. Janmohamed stated that Plaintiff could walk, stand, or sit,

each for less than one hour’s duration at a time, that she needed

rest periods, that she could frequently lift less than five

pounds, but never more than that. 

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5

Dr. Janmohamed identified no emotional or psychological problems. 

Although Dr. Janmohamed repeated that Plaintiff was totally and

permanently disabled from any type of gainful employment, he did

not identify what medical conditions supported that assessment,

or supported his assessment that she had limitations in her upper

body capabilities. Mr. Kaplan also provided Broadspire with

records from the psychiatric hospital pertaining to both of

Plaintiff’s hospitalizations.

In order to evaluate the new information, together with the

information previously received, Broadspire sent the medical

records to four specialists - a psychologist, neurologist,

orthopedic surgeon, and internal medicine specialist. By August

2004, all four doctors had returned their evaluations that

Plaintiff was not totally disabled from her own or any

occupation. Broadspire sent these findings to Highmark.

In September 2004, an in-house physician employed by

Highmark reviewed the medical records and the peer review

evaluations and determined that Ms. Sterio had failed to show

that she was totally disabled from her own or any occupation. 

Accordingly, Highmark denied her request for long-term disability

benefits.

The Group Long-Term Disability Insurance Policy between

Defendant and Plaintiff’s employer provides:

Except for those functions which the Group Policy

specifically reserves to the Employer, [Highmark has]

the full and exclusive authority to administer claims

and to interpret the Group Policy and resolve all

questions arising in the administration,

interpretation, and application of the Group Policy. 

Our authority includes, but is not limited to, the

following:

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1. The right to resolve all matters when a review has

been requested.

2. The right to establish and enforce rules and

procedures for the administration of the Group

Policy and any claim under it.

3. The right to determine (a) [a member’s]

eligibility for Insurance, (b) [a member’s]

entitlement to benefits, and (c) the amount of the

benefits payable to [a member].

After Defendant denied Plaintiff’s claim for long-term disability

benefits, Plaintiff brought this action under 29 U.S.C. § 1132.

CONCLUSIONS OF LAW

“A civil action may be brought by a participant or

beneficiary ... to recover benefits due to him under the terms of

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

to clarify his rights to future benefits under the terms of the

plan.” 29 U.S.C. § 1132(a)(1)(B). The parties do not dispute

that Plaintiff is a beneficiary entitled to bring such an action. 

At trial, the parties did not dispute the facts, but only the

standard of review to be applied by this Court.

1. Standard of Review Under Abatie

A denial of benefits “is to be reviewed under a de novo

standard unless the benefit plan gives the administrator or

fiduciary discretionary authority to determine eligibility for

benefits or to construe the terms of the plan.” Firestone Tire &

Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). 

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“When a plan unambiguously gives the plan administrator

discretion to determine eligibility or to construe the plan’s

terms, a deferential abuse of discretion standard is applicable.” 

Burke v. Pitney Bowes Inc. Long-Term Disability Plan, ___ F.3d

___, 2008 WL 4276910, *6 (9th Cir. 2008)(citing Abatie v. Alta

Health & Life Ins. Co., 458 F.3d 955, 963 (9th Cir. 2006)).

Accordingly, the first step in the analysis is to determine

whether the plan at issue in this case unambiguously confers

discretion upon Highmark to determine eligibility or construe the

plan’s terms. This Court finds that it does. In Abatie, the

Ninth Circuit found the following language sufficient to confer

discretion:

The responsibility for full and final

determinations of eligibility for benefits;

interpretation of terms; determinations of claims;

and appeals of claims denied in whole or in part

under [the policy] rests exclusively with [the

insurer].

458 F.3d at 963. Like the plan in Abatie, the plan in this case

gives Highmark the “full and exclusive authority” to administer

claims, interpret the policy, resolve questions, determine

eligibility for benefits, determine entitlement to benefits, and

determine the amount of benefits. Plaintiff argues that this

clause only confers authority, but not discretion as required

under Abatie. That argument and the cases cited in support of it

are unavailing. 

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 Plaintiff also argues that Highmark’s use of Broadspire in 2

making Plaintiff’s eligibility determination requires the Court

apply de novo review. The Court disagrees, but finds that it may

be a factor to consider in determining whether Highmark abused

its discretion. See Abatie, 458 F.3d at 967. 

8

In accordance with Abatie, this Court finds that the language of

the plan unambiguously confers discretion upon Highmark. 

Accordingly, the Court will apply the abuse of discretion

standard unless other factors mitigate against it.2

2. Conflict of Interest

Where a plan grants discretionary authority to the

administrator, as does the plan in this case, the court reviewing

the denial of benefits is to apply an abuse of discretion

standard. However, the review should be “informed by the nature,

extent, and effect on the decision-making process of any conflict

of interest that may appear in the record.” Abatie, 458 F.3d at

967. A conflict of interest decreases the level of discretion

given to the plan where “the administrator provides inconsistent

reasons for denial, fails adequately to investigate a claim or

ask the plaintiff for necessary evidence, fails to credit a

claimant’s reliable evidence, or has repeatedly denied benefits

to deserving participants by interpreting the plan terms

incorrectly or by making decisions against the weight of evidence

in the record.” Id. at 968-69 (citations omitted).

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Plaintiff contends that Highmark has a conflict of interest

in that it failed to have a meaningful dialogue with Plaintiff as

required by ERISA, that it gave inconsistent reasons for denial

of Plaintiff’s claim, and that it failed to adequately

investigate the claim. Plaintiff contends there were two denial

letters sent from Broadspire to Plaintiff. In the first letter,

Broadspire reviewed some ten reports or test results and

determined that Plaintiff was not disabled from her own lightlevel physical demand position nor from any position because

there was no evidence of cognitive dysfunction or dysfunction of

her upper extremities. A.R. at 220-22. 

In the second letter, Broadspire reviewed the additional

material provided by Plaintiff’s attorney and determined that

“the submitted documentation lacked sufficient medical evidence

... to substantiate significant impairments in physical and/or

psychological functioning that would have prevented Ms. Sterio

from performing the essential functions of her occupation” or any

occupation. In the letter, Broadspire acknowledged Plaintiff’s

psychiatric hospitalizations, but found that she was not entitled

to benefits because she was not disabled on the effective date

and because the hospitalizations were beyond the 24-month window

for mental illnesses provided in the policy. A.R. at 1065-66.

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 Plaintiff’s citation to Booton v. Lockheed Martin Medical 3

Benefit Plan, 110 F.3d 1461 (9th Cir. 1997), is unavailing. In

Booton, the reviewing doctors failed to even consider some of the

plaintiff’s complaints. That is not the case here.

 See Lang v. Long-Term Disability Plan of Sponsor Applied 4

Remote Technology, Inc., 125 F.3d 794, 799 (9th Cir. 1997) cited

in Abatie. In Lang, the court found inconsistent reasons for

denial where the administrator first found the claimant did not

have fibromyalgia and later required the claimant to show that

fibromyalgia, in and of itself, was debilitating.

10

Plaintiff argues that these letters do not constitute a

meaningful dialogue as required by ERISA. The Court disagrees. 

These letters communicated to Plaintiff the reasons Plaintiff was

not found to be disabled. Her job only required light-level

activity and she suffered no cognitive injury, no significant

psychological impairment, nor any injury to her upper

extremities, only to her hip and leg.3

Plaintiff’s additional contention - that these two letters

create inconsistent reasons for denial - is without merit. The

only difference between the two letters is that the second takes

into account the additional documentation provided by Plaintiff. 

These are not the kind of inconsistent reasons for denial

contemplated by Abatie. In Abatie, the original basis for denial

of the claim was that the insurer did not accept the evidence

that payment of premiums had been waived. Then, in the final

denial letter, in addition to stating that there had been no

premium waiver, the defendant added the ground that the decedent

had not been disabled. 458 F.3d at 974. The two denial letters 4

in this case do not provide inconsistent reasons for denial.

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11

Because the Court finds no evidence of a conflict of

interest factoring heavily against the abuse of discretion

standard, the Court’s skepticism of structural conflict of

interest will be low. Abatie, 458 F.3d at 968. Additionally,

this Court finds that the relationship between Highmark and

Broadspire does alter this structural conflict and does not

warrant a higher level of scrutiny.

3. Review of Highmark’s Decision

Because the applicable standard is abuse of discretion, the

Court will review Highmark’s decision only to determine whether

the decision was arbitrary or capricious. Barnett v. Kaiser

Foundation Health Plan, Inc., 32 F.3d 413, 415-416 (9th Cir.

1994).

At the trial on this matter, it was apparent that the crux

of Plaintiff’s argument is that Highmark failed to conduct an

occupational or vocational analysis in connection with its

determination that Plaintiff was not totally disabled because she

could work with accommodations. 

On her disability claim, Plaintiff indicated that she worked

as a receptionist and that her duties involved answering phones,

taking messages, setting appointments, filing charts, pulling

charts, scheduling, and handling the mail. She described her

disability as neuropathy of the right leg and foot, inability to

walk without a walker, inability to sit or stand for more than 30

minutes, severe pain, severe fatigue, and many medications. 

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See A.R. at 95-99. Her disability claim makes no mention of any

psychiatric problems. 

The parties make much of the treating physician rule as

applied to ERISA cases. The Supreme Court has specifically held

that under ERISA “plan administrators are not obliged to accord

special deference to the opinions of treating physicians.” Black

& Decker Disability Plan v. Nord, 538 U.S. 822, 825 (2003). 

While plan administrators “may not arbitrarily refuse to credit a

claimant’s reliable evidence, including the opinions of a

treating physician,” unlike in Social Security cases, the

claimant’s physician’s opinion is not entitled to any special

weight, nor are plan administrators required to give an

“explanation when they credit reliable evidence which conflicts

with a treating physician’s evaluation.” Id. at 834.

Plaintiff has identified two reports from her treating

physician, Dr. Janmohamed. The first is a Disability Status Form

(A.R. at 99) and the second is a Functional Capacity Evaluation

(A.R. at 346-49). The Disability Status Form indicates that

Plaintiff is permanently disabled with sciatica, chronic pain,

and neuropathy. It indicates that she uses a walker and suffers

from depression. The Functional Capacity Evaluation indicates

that Plaintiff has osteoarthritis and degenerative joint disease

and that she is “totally and permanently disabled from any type

of gainful employment.” Additionally, Plaintiff’s treating

physician was not a specialist in neurology and psychiatry, which

allegedly gave rise to her disability.

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On the other hand, the several doctors that Broadspire

consulted with all determined that Plaintiff was not totally

disabled. Dr. Vaughn Cohan, a neurologist, reviewed several

laboratory test results, reports, and chart notes and determined

there was no evidence that Plaintiff had any cognitive

dysfunction or dysfunction of the upper extremities. In his

opinion, the documentation submitted by Plaintiff did not

demonstrate objective evidence of a functional impairment that

would preclude Plaintiff from performing the core elements of her

light-level physical demand occupation or from “any occupation.” 

Dr. Cohan deferred to a psychology/psychiatry peer review

physician for review of Plaintiff’s behavioral health issues. 

A.R. at 214-16.

A second neurologist, Dr. Henry Spira, reviewed the same

documents as Dr. Cohan as well as documents submitted by

Plaintiff’s counsel in connection with the appeal of the initial

denial of benefits. He also reviewed the treating physician’s

Functional Capacity Evaluation. Dr. Spira concluded that there

was no neurological objective data that would preclude Plaintiff

from performing sedentary work or work requiring light physical

exertion. A.R. 813-15.

Dr. Martin Mendelssohn, an orthopaedic surgeon, also

reviewed Plaintiff’s record. He reviewed the reports of several

physical examinations and the Functional Capacity Evaluation of

Plaintiff’s treating physician. Dr. Mendelssohn concluded that

the finding in the Functional Capacity Evaluation that Plaintiff

was permanently disabled did not correlate with the examination

findings of the other doctors. 

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Dr. Mendelssohn concluded that the medical information failed to

support a finding of a functional impairment that would preclude

Plaintiff from performing her duties as a receptionist provided

accommodations could be made for her use of a walker. A.R. 817-

20.

Dr. Glassman, a psychiatrist, found that Plaintiff was

disabled from June 8, 2003 to June 13, 2003 due to her

psychiatric hospitalization, but otherwise was not disabled from

a psychiatric perspective. A.R. 211-13. Dr. Burstein, a

psychologist reviewed Plaintiff’s records and determined that,

with the exceptions of her psychiatric hospitalizations from

June 8, 2003 to June 15, 2003, and from August 1, 2003 to

August 5, 2003, there was no evidence that Plaintiff would have

been unable to perform the core elements of her own occupation,

or work at all, from a psychological perspective. A.R. 805-08.

Dr. Tamara Bowman, a specialist in internal medicine also

reviewed Plaintiff’s medical documentation. Dr. Bowman reviewed

Plaintiff’s complaints of irritable bowel syndrome and acid

reflux and found that there was insufficient evidence to support

a finding of a level of functional impairment that would prevent

Plaintiff from performing her occupation. A.R. 809-12.

Finally, Broadspire’s Medical Director, Dr. William Goldfarb,

reviewed Plaintiff’s medical records and all the peer review

reports generated by the specialists who reviewed those records. 

Dr. Goldfarb found that the Functional Capacity Evaluation

completed by Plaintiff’s treating physician was “notable in terms

of its absence of actual objective evaluation that would serve as

a basis for the limitations noted in the report.” 

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Dr. Goldfarb concluded that there was no basis by which to

establish an inability on the part of Plaintiff to perform in her

occupation from the time period March 31, 2001 through March 30,

2003. The only evidence in the medical record that would serve

to indicate that Plaintiff was unable to be gainfully employed

subsequent to March 30, 2003 were the periods of psychiatric

hospitalization which amounted to 13 days in the months of June

and August, 2003. A.R. at 1063-64.

Plaintiff’s alleged disabling conditions were her leg

neuropathy and her depression. She required assistive devices to

walk, and medicine to deal with her depression and pain, but

these factors were not, in the opinion of specialists in

psychiatry, neurology, orthopedics, and internal medicine, so

disabling that she was precluded from working in her own

occupation as a receptionist or any other profession for which

she was reasonably fitted. In light of the conflicting evidence,

this Court cannot say Highmark abused its discretion in

evaluating Plaintiff’s disability claim. The reviewing

physicians cited objective evidence from Plaintiff’s medical

records to support their conclusions. The only evidence of

Plaintiff’s disability was the 13 days she underwent psychiatric

hospitalization. As stated in the final denial letter, Defendant

found that the mental hospitalization was beyond the 24-month

period for mental illnesses provided by the policy, which

Defendant had the authority to interpret.

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Plaintiff argues that Highmark abused its discretion by

failing to hire an occupational or vocational specialist to

determine whether Plaintiff could perform the duties of her

position as a receptionist. The Court finds this was not an

abuse of discretion as Plaintiff provided a description of her

job that included answering phones, taking messages, and filing. 

These are common tasks and it was not beyond the doctors’

expertise to determine whether she could perform them. 

Accordingly, Defendant did not abuse its discretion in relying on

the doctors’ opinions and failing to consult an occupational

specialist.

Based on the foregoing, the Court finds that Highmark’s

decision was not arbitrary or capricious, and that Highmark did

not abuse its discretion in denying Plaintiff’s claim for longterm disability benefits.

CONCLUSION

For the reasons set forth above, judgment shall be entered

in favor of Defendant.

IT IS SO ORDERED.

Dated: September 30, 2008

_____________________________

MORRISON C. ENGLAND, JR.

UNITED STATES DISTRICT JUDGE

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