United States District Court, Western District of Pennsylvania
September 26, 2001
TRACY E. RENDULIC, PLAINTIFF,
KAISER ALUMINUM & CHEMICAL CORPORATION, DEFENDANT
The opinion of the court was delivered by: McLAUGHLIN, District Judge.
The underlying action is this case presents a challenge to a plan
administrator's decision to deny the Plaintiff, Tracy E. Rendulic's
(hereinafter "Plaintiff" or "Rendulic"), request for reinstatement of
benefits under a long-term disability policy sponsored by her former
employer, the Defendant, Kaiser Aluminum & Chemical Corporation
(hereinafter "Defendant" or "Kaiser"). Presently pending before the Court
are cross-motions for summary judgment.*fn1
Plaintiff worked as a salaried employee of Kaiser in its former Erie,
Pennsylvania facility from approximately May 27, 1986 until November 30,
1989. Due to back problems, she commenced receiving benefits under
Kaiser's Long Term Disability Benefits Plan for Salaried Employees (the
"Plan") on June 16, 1990. Plaintiff is entitled to such benefits if she
remains "totally disabled" as that term is defined by the Plan. Section
4.6 of the Plan defines "totally disabled" as follows:
(b) "Totally disabled" under [the Sick Leave and Long
Term Disability Programs] during the first twenty-four
(24) months shall mean the eligible salaried
employee due to a medically determinable severe
impairment is continuously unable to perform the
duties of his or her job for the Company or for any
other employer. That is, if such salaried employee
could perform such duties for another employer then he
or she would not qualify as "totally disabled."
(c) "Totally disabled" under the Long Term Disability
Program after the first 24 months shall mean that the
eligible Participant is continuously unable to do any
work for pay or profit which he or she is or could
become reasonably qualified by education, training or
experience due to a severe physical impairment which
can be demonstrated by clinical and laboratory
Exhibits to Defendant's Motion for Summary Judgment, [Doc. No. 12]
Plaintiff s benefits were terminated effective June 1, 1995 based upon
an assessment and determination of a Senior Case Management Specialist at
MetLife dated May 8, 1995. Defendant's Ex. 18. The Senior Case Management
Specialist found that, based upon her age, education, work experience and
medical reports, the Plaintiff had sufficient transferable skills to
perform sedentary to light duty employment. Specifically. employment
alternatives such as supervisor, production clerk, forms analyst and
information scientist were identified as jobs within the plaintiff's
residual functional capacity and commensurate with her previous salary.
Consequently, the Senior Case Management Specialist concluded that the
Plaintiff was no longer disabled as that term is defined in the Plan
documents. Defendant's Ex. 18.
The termination of the plaintiff's benefits was subsequently reviewed
by Doug Allen, the individual designated by the Plan as the "Plan
Manager." On September 6, 1996, after reviewing all of the relevant
materials concerning her claim, Mr. Allen confirmed the termination of
the plaintiff's benefits. Defendant's Ex. 6. Pursuant to the terms of the
Plan, the Plaintiff appealed Mr. Allen's determination to the Kaiser
Aluminum Personnel Policy Committee (the "Committee"). Defendant's Ex.
5. The Committee is comprised of six members, five of whom participated
in the review of the plaintiff's claim. Defendant's Ex. 1.
On July 21, 1997. the Committee reviewed and evaluated the plaintiff's
appeal. The Committee considered various documentary exhibits, including
medical records, reports and relevant correspondence relating to her
claim. Prior to the Committee's meeting and determination, these
materials were provided to the Plaintiff for her review and comment.
Defendant's Ex. 3. Plaintiff provided additional office records from her
orthopedic surgeon, Dr. John J. Euliano, Jr., and her responsive
correspondence and enclosed physician office notes were included in the
record reviewed by the Committee. Defendant's Ex. 1, 87 & 88.
During their deliberations, the Committee members identified the issue
before them as whether the Plaintiff was totally disabled under the Plan
definition on June 1, 1995, the date of the termination of her benefits.
After reviewing the facts and exhibits identified in the Committee's
meeting minutes, the Committee found two vocational addenda dated
September 19, 1995 and April 11, 1995 to be highly relevant
and persuasive. Defendant's Ex. 1. In particular, the Committee
noted that these reports, one of which was prepared after the termination
of her benefits, found that the Plaintiff possessed excellent
transferable skills to perform sedentary to light duty employment at a
skill level that was within her residual functional capacity based upon
her age, education and work experience. The Committee observed that this
conclusion was supported by the educational and employment background of
the Plaintiff as reported in her job application, her resume and
summarized in a vocational assessment of December 13, 1993. Defendant's
Ex. 38, 55 & 56. The Committee believed that the Plaintiff was more
likely to obtain such sedentary to light duty employment because (i) of
her computer literacy, (ii) she was relatively young (her date of birth
is July 16, 1958), and (iii) the Americans with Disabilities Act of
1990, which became fully effective in July 1994, prevented most employers
from discriminating against her because of her limitations.
The Committee also considered that Dr. Euliano had, 16 months prior to
the termination of her benefits, opined that she was totally disabled
from all work at that time. The Committee noted, however, that he
subsequently stated in his office note of May 4, 1995, approximately one
month before the termination of her benefits, that her condition had
[Plaintiff] is feeling quite a bit better with the
Relafen as long as she limits her lifting and
bending. At this point in time, I don't [believe] we
are talking about anything surgical. I would recommend
exercises and re-evaluation in approximately a years
Defendant's Ex. 87. Additional office notes supplied to the Committee by
the Plaintiff indicated that she had difficulty caring for her child and
often needed her mother's help. plaintiff's Ex. 7. The notes also
indicated that she was never completely without pain, and had difficulty
walking. plaintiff's Ex. 7. The notes additionally reflect that the
Relafen was discontinued since the Plaintiff did not feel it was
working. plaintiff's Ex. 7.
The Committee also considered persuasive the April 15, 1994 report of
Robert C. Porter, M.D., a National Medical Review Board certified
occupational physician. Dr. Porter did not examine the Plaintiff, but
reviewed her file at the request of MetLife. Plaintiff's Ex. 11. Dr.
Porter reviewed the plaintiff's records from Dr. Euliano, Dr. Edward T.
Spiegel, D.D.S., John F. Schmitt, D.C., and Dr. N. Rehmatullah, M.D., who
performed an independent medical evaluation of the Plaintiff on June 21,
1993. plaintiff's Ex. 11. Dr. Porter concluded that the Plaintiff "should
be able to perform sedentary type employment" and therefore was not
"continuously unable to do any work for pay or profit." Plaintiff's Ex.
11. Although Dr. Porter later stated that the Plaintiff should be
considered totally disabled, this conclusion was based primarily upon her
pregnancy. Defendant's Ex. 31. Plaintiff's Plan benefits, which had been
discontinued effective February 1, 1994, were reinstated by letter dated
August 2, 1994 and continued during her pregnancy. Defendant's Ex.
30 & 37.
In addition, the Committee found relevant an MRI performed on April
26, 1995, which, although it showed some disc disease, revealed no overt
disc herniation and only slight disc bulging. The Committee also
considered the plaintiff's statements in a Premium Waiver Claim form
dated August 31, 1995 as indicating significant mobility, since she
stated that she cooked meals, helped her husband bathe her baby, washed
dishes, helped her husband with the laundry, handled finances and
Defendant's Ex. 11. The statement also indicatetl that she hired help to
vacuum, clean the floors and bathroom. Her husband helped with the baby
if necessary, and did the outside chores. Defendant's Ex. 11. The
Committee also found that the record contained evidence indicating
improved strength on the plaintiff's part in her attempt to move her
two-year-old baby into and out of a car seat, even though this attempt
did aggravate her lower back problem. Defendant's Ex. 1.
Finally, the Committee reviewed the report of Dr. N. Rehmatullah dated
June 21, 1993, which concluded that the Plaintiff was not able to perform
her work as a heat treatment foreman. Defendant's Ex. 41. The Committee
determined that Dr. Rehmatullah's report was of limited relevance because
it was based on an evaluation almost two years prior to the
discontinuance of the plaintiff's long-term disability benefits and did
not consider her ability to work in other occupations.
A member of the Committee also noted that the Plaintiff was apparently
awarded Social Security disability benefits on August 20, 1994 by a
Social Security Administrative Law Judge ("ALJ") after her prior claims
for such benefits had previously been denied. (Defendant's Ex. 43 &
47). The ALJ concluded that the Plaintiff "does not even retain the
residual functional capacity to engage in the full range of sedentary
work activities as they are defined in 20 C.F.R. § 404.1567(a)."
plaintiff's Ex. 18. The Committee noted that this award appeared to be
based, in part, on a finding that the Plaintiff was unable to hold her
neck in an upright or stationary position for extended periods, and she
was unable to engage in extensive speaking; limitations which, if they
had continued through June 1, 1995, would have been highly relevant to
the Committee in determining her eligibility for benefits. The Committee
observed, however, that the award of Social Security benefits appeared to
be related to evidence submitted almost one year or more prior to the
decision to terminate the Plaintiff's Plan benefits on June 1, 1995. In
addition, the Committee considered the letters from Dr. Edward P.
Spiegel, D.D.S. dated March 17, 1994 and Dr. John F. Schmitt, D.C. dated
February 10, 1994, which indicated that the Plaintiff suffered from neck
and speaking problems. Defendant's Ex. 34 & 35. The Committee noted
however, that no further mention of these limitations appeared in the
statements by the Plaintiff (Defendant's Ex. 10, 13 & 58) or by her
orthopedic surgeon. Defendant's Ex. 14, 16, 19 & 36. The Committee
concluded that the plaintiff's ability to do work for pay or profit on
June 1, 1995 was not affected by these limitations. Also, the Committee
noted that the ALJ found that the Plaintiff did not have any acquired
work skills that were transferable to the skilled or semi-skilled work
activities of other work, a finding that conflicted with the more recent
vocational rehabilitation reports reviewed by the Committee and other
portions of the record. (Defendant's Ex. 11, 21, 38, 43 & 47). For
these reasons, the Committee found that the ALJ's decision was neither
persuasive authority nor timely with respect to the issue of whether the
Plaintiff was totally disabled under the Plan's definition on June 1,
After further discussion, the Committee decided. based upon the two
vocational addenda discussed above, the letter of Dr. Porter, the April
26, 1995 MRI, and various indications of retained mobility, to deny the
plaintiff's claim for reinstatement of long-term disability benefits,
notwithstanding her prior award of Social Security benefits. The
Committee unanimously adopted the following resolution:
RESOLVED, that the appeal of Tracy Rendulic for the
reinstatement of Long Term disability benefits under
the Kaiser Aluminum & Chemical Corporation Long
Term Disability Benefits Plan for Salaried Employees
is hereby denied for the reasons set forth above.
Defendant's Ex. 1.
Article VI of the Plan states the process and procedures for the
submission and review of a claim for benefits under the Plan, including a
claim for long-term disability benefits. Section 6.3 of the Plan states,
among other things, the process and procedures for a claimant's appeal
from the denial of a claim, including the claimant's ability to request a
review of the denial of the claim by the Committee, which acts as the
Plan Administrator under Section 5.2 of the Plan. Section 6.3 of the Plan
states, in pertinent part:
Any decision on review [of the denial of a claim]
shall be final, binding and conclusive upon all
persons affected thereby and shall be given the
maximum possible deference allowed by law.
Defendant's Ex. 2 & 88. The Summary Plan Description for the Plan
("SPD") specifically states that "[r]eview decisions by the [C]ommittee
are final and binding." Complaint Ex. 1.
Plaintiff instituted the instant action in the Court of Common Pleas of
Crawford County, Pennsylvania on June 1, 1999. plaintiff's Complaint
asserted a claim to recover disability benefits allegedly payable to her
under the Plan. Defendant removed the case to this Court on July 1,
1999.*fn4 Currently pending before the Court are cross-motions for
II. STANDARD OF REVIEW
Summary judgment is proper "if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P.
56(c). In order to withstand a motion for summary judgment, the
nonmoving party must "make a showing sufficient to establish the
existence of [each] element essential to that party's case, and on which
that party will bear the burden of proof at trial." Celotex Corp. v.
Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In
evaluating whether the non-moving party has established each necessary
element, the Court must grant all reasonable inferences from the evidence
to the non-moving party. Knabe v. Boury Corp., 114 F.3d 407, 410, n. 4
(3d Cir. 1997) (citing Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). "Where the
record taken as a whole could not lead a reasonable trier of fact to find
for the non-moving party, there is no `genuine issue for trial.'" Id.
(quoting Matsushita, 475 U.S. at 587, 106 S.Ct. 1348).
A. Applicable Standard of Review under ERISA
A reviewing court ordinarily applies a de novo standard of review to a
plan administrator's denial of ERISA benefits. Firestone Tire & Rubber
Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); Abnathya
v. Hoffmann-LaRoche, Inc., 2 F.3d 40, 44-45 (3rd Cir. 1993). However,
where the plan grants the administrator discretionary authority to
construe the terms of the plan, or to determine eligibility for
benefits, the court may reverse a denial of benefits only if the
administrator's decision was "arbitrary and capricious." Firestone, 489
U.S. at 115, 109 S.Ct. 948; Orvosh v. Program of Group Ins. for Salaried
Employees of Volkswagen of America, 222 F.3d 123, 128-29 (3rd Cir.
2000). In this case, the parties do not dispute that the Defendant had
discretionary authority to determine whether the Plaintiff qualified for
benefits, and therefore the arbitrary and capricious standard is
applicable. However, the parties disagree on whether this standard is
subject to the "heightened arbitrary and capricious" standard adopted by
the Third Circuit in Pinto v. Reliance Standard Life Ins. Co., 214 F.3d 377
(3rd Cir. 2000).
The issue before the court in Pinto was the standard courts should use
"when reviewing a denial of a request for benefits under an ERISA plan by
an insurance company which, pursuant to a contract with an employing
company, both determines eligibility for benefits, and pays those
benefits out of its own funds." Pinto, 214 F.3d at 378. The Third Circuit
held that heightened scrutiny is required when an insurance company is
both plan administrator and founder. Id. After a detailed analysis of the
rationale used by other circuits, the court adopted a sliding scale
approach to heightened review under the arbitrary and capricious
standard. Id. at 389-92. The court explained the approach as follows:
[This] approach allows each case to be examined on its
facts. The court may take into account the
sophistication of the parties, the information
accessible to the parties, and the exact financial
arrangement between the insurer and the company. For
example, a court can consider whether the insurance
contract is fixed for a term of years or changes
annually, and whether the fee paid by the company is
modified if there are especially large outlays of
capital by the insurer.
Another factor to be considered is the current status
of the fiduciary. Our previous cases, discussed supra
Section II.F, which hold that an employer fiduciary is
not conflicted, generally assume that the company is
stable and will act as a repeat player: The presumed
desire to maintain employee satisfaction is based on
this premise. When companies are breaking up. or
laying off a significant percentage of their
employees, or moving all their operations, these
incentives diminish significantly. See Langbein,
supra note 2, at. 216 ("The employer's reputational
interest is not likely to be effective when the long
term relationship between the firm and the workers is
dissolving, as in a plant closing or in a corporate
restructuring."). Furthermore, the sliding scale
approach better adheres to Firestone's dictate that a
conflict should be considered as a "factor" in
applying the arbitrary and capricious standard. 489
U.S. at 115, 109 S.Ct. 948. . . .
[W]e can find no better method to reconcile
Firestone's dual commands than to apply the arbitrary
and capricious standard, and integrate conflicts as
factors in applying that standard, approximately
calibrating the intensity of our review to the
intensity of the conflict. . . . In sum. we adopt the
sliding scale approach, and accordingly, will expect
district courts to consider the nature and degree of
with a view to shaping their arbitrary and capricious
review of the benefits determinations of discretionary
Pinto, 214 F.3d at 392.
Plaintiff argues that the heightened arbitrary and capricious standard
should apply because the conflict of interest is inherent, since the
Defendant both funded and administered the plan, and will experience a
direct loss by granting the Plaintiff the benefits requested.
Additionally, the Plaintiff further contends that the heightened scrutiny
is appropriate since the Erie facility was to be closing in the near
future, and therefore would not be a repeat player in regards to dealing
with the workforce, thereby allegedly diminishing the Defendant's
incentive to deal fairly with its workforce in the future. Conversely,
the Defendant argues that the heightened standard has not been extended
to an employer which maintains a self-funded plan and administers the
plan through a benefits committee. Defendant also argues that the closure
of a single facility is not contemplated by the Third Circuit's dicta in
Pinto. These arguments were recently addressed by a district court in our
circuit in the case of Frieberg v. First Union Bank of Delaware, 2001 WL
826549 (D.Del. 2001).
In Frieberg, the plaintiff was employed as a branch manager for
CoreStates Bank. CoreStates subsequently merged with First Union
Corporation and First Union Bank of Delaware ("First Union"). First Union
then launched a corporate wide reorganization, and as part of this
reorganization, the plaintiff's position was to be eliminated. The
plaintiff was offered a position as a customer relations manager, which
she declined. First Union thereafter terminated her employment. Plaintiff
sought to obtain benefits under CoreStates severance plan, which was
established prior to the merger in order to provide supplemental
employment benefits for CoreStates employees who were terminated from
their employment for non-performance reasons. Under the terms of the
merger agreement, First Union agreed to maintain CoreStates severance
plan for one year from the date of the merger. First Union concluded that
the plaintiff was not eligible for benefits under the plan because she
had been offered a "comparable position" as defined in the plan, and that
by declining this offer, her termination was a voluntary resignation.
The district court first addressed the appropriate standard of review
for a denial of benefits. The defendants' argued that Pinto's heightened
standard was applicable only when an insurance company both administered
and funded a benefits plan. In addressing this argument, the court
The Court recognizes that language in Pinto suggests
that the heightened standard should be limited to the
insurance company context. For instance, the court
explained: Employers typically structure the
relationship of ERISA plan administration,
interpretation, and funding in one of three ways.
First, the employer may fund a plan and pay an
independent third party to interpret the plan and make
plan benefits determinations. Second, the employer may
establish a plan, ensure its liquidity, and create an
internal benefits committee vested with the discretion
to interpret the plan's terms and administer
benefits. Third, the employer may pay an independent
insurance company to fund, interpret, and administer a
plan. [Pinto], 214 F.3d at 383. The Pinto court
expressly stated that it was faced with the third type
of plan, and that
such a plan "generally presents a conflict of interest
and thus invites a heightened standard of review."
Frieberg, 2001 WL 826549 at *3. The district court also noted however,
that other portions of Pinto suggest that the heightened standard should
not be limited to the insurance company arrangement, focusing on the
Third Circuit's statement that "the first two arrangements do not, in
themselves, typically constitute the kind of conflict" that would warrant
heightened review. Id. (quoting Pinto, 214 F.3d at 383). The district
court also noted that under Pinto there may be variations on the above
arrangements, and the circumstances of each variation "might affect a
district court's assessment of the incentives of an administrator/insurer
and therefore affect the nature of its review." Pinto, 214 F.3d at 383-84
The Frieberg court additionally reviewed decisions decided after Pinto
and stated the following:
Subsequent to Pinto, decisions from the Third Circuit
and from district courts within the circuit have not
characterized Pinto as being limited to the review of
plans funded and administered by an insurance
company. See Goldstein [v. Johnson & Johnson,
251 F.3d 433, 442 (3rd Cir. 2001)] (construing Pinto
to require a heightened standard of review "when the
plan, by its very design, creates a special danger of
a conflict of interest, or when the beneficiary can
point to evidence of specific facts calling the
impartiality of the administrator into question");
Bill Gray Enters., Inc. Employee Health & Welfare
Plan v. Gourley, 248 F.3d 206, 216 (3d Cir. 2001)
(suggesting that Pinto's heightened standard applies
to plans not administered by insurance companies if
specific evidence of bias or bad faith is adduced);
Orvosh, 222 F.3d at 129 n. 7 (opining that Pinto's
heightened standard applies whenever "the same entity
both funds and administers an ERISA plan"); Davies v.
Paul Revere Life Ins. Co., 2001 WL 681321, at *8
(M.D.Pa. June 13, 2001) (same). See also Skretvedt v.
E.I. Dupont De Nemours & Co., 119 F. Supp.2d 444,
451 (D.Del. 2000) (implying that an
employer-administered plan should only be accorded the
ordinary Firestone arbitrary and capricious standard
if denied claims under the plan result in no direct
financial benefit to the employer). In sum, Pinto's
heightened standard is not limited to plans that are
funded and administered by insurance companies;
rather, a reviewing court must analyze each individual
plan to determine the extent of any conflict of
interest, and the resulting level of review. See
Parente v. Aetna Life Ins. Co., 2001 WL 177086, at *2
(E.D.Pa. Jan. 25, 2001).
Frieberg, 2001 WL 826549 at *3. The court concluded that, like plans
funded and administered by insurance companies, defendants have a
financial incentive to deny borderline claims because benefits paid are
essentially expenses incurred. Frieberg, 2001 WL 826549 at *4.
Consequently, the court held that the "structure of the Plan is
substantially identical to the plan in Pinto, and that, therefore, a
significant conflict of interest is present." Id.
The court also rejected the defendant's argument that the structure of
the plan presented less of a conflict of interest than in Pinto because
an employer-administrator has an incentive to administer its plan fairly
in order to maintain employee morale. The court noted that the defendants
were reorganizing the company, "thus minimizing their incentive to
maintain morale by administering the Plan fairly." Id. Additionally, any
employees who were denied benefits under the plan were former employees,
and current employees would have little reason to fret over the
defendant's interpretation of a plan no longer in existence. Finally, an
internal memo expressed the defendant's concern that if the benefits were
paid to the plaintiff, it would create a precedent entitling other
employees to severance benefits, resulting in numerous other employees
choosing to accept benefits under the plan rather than accepting a new
job offer, which would cause a staffing shortage. Id.
Finding the plan substantially similar to the Pinto plan, the district
court applied the heightened arbitrary and capricious standard to the
defendant's decision to deny benefits. The district court proceeded to
examine the procedures used to reach the decision, in addition to the
merits of the decision. The court found several procedural defects
existed during the defendant's decision making process which warranted a
scrutinizing review on the high end of the Pinto sliding scale. Id. at *5
The court then determined that the defendant's decision to deny the
plaintiff benefits could not be sustained under the heightened review.
Id. at *7.
We find Frieberg persuasive relative to the appropriate standard of
review, and agree that Pinto's heightened standard is not limited solely
to plans that are funded and administered by insurance companies. In
Pinto, the court distinguished the structure of an employer-funded plan
from an insurance company funded plan:
We also observe that the typical employer-funded
pension plan is set up to be actuarially grounded,
with the company making fixed contributions to the
pension fund, and a provision requiring that the money
paid into the fund may be used only for maintaining
the fund and paying out pensions. As we explained in
Abnathya and Mitchell, the employer in such a
circumstance "incurs no direct expense as a result of
the allowance of benefits, nor does it benefit
directly from the denial or discontinuation of
benefits." Abnathya, 2 F.3d at 45 n. 5; Mitchell, 113
F.3d at 437 n. 4. . . .
Pinto, 214 F.3d at 388. In Abnathya v. Hoffmann-La Roche, Inc., 2 F.3d 40
(3rd Cir. 1993), the employer made fixed contributions to the plan's
fund, which was held by a separate trustee, and the plan's monies could
only be used for the exclusive benefit of the members of the plan or for
the payment of expenses of the plan and fund. Abnathya, 2 F.3d at 45 n.
4. In contrast, the benefits paid by the Defendant here are from
unsegregated general corporate funds, such that the Defendant would incur
a direct expense if the benefits were approved. plaintiff's Ex. 29.
We find further support in a recent Third Circuit opinion, decided
after Pinto, which suggests that the heightened standard applies when the
same entity both funds and administers the plan. In Orvosh v. Program of
Group Ins. for Salaried Employees of Volkswagen of America, 222 F.3d 123
(3rd Cir. 2000), Volkswagen funded and administered the company's
long-term disability plan, although an insurance company provided
administrative functions. The parties stipulated that the arbitrary and
capricious standard applied. In a footnote, the court stated:
After this case was argued, we decided that a
heightened standard of review applies where the same
entity both funds and administers an ERISA plan. See
Pinto v. Reliance Standard Life Ins. Co. 214 F.3d 377,
(3rd Cir. 2000). Here, UNUM provides important
administrative functions, but the Plan itself states
that the official Plan administrator is "Volkswagen of
America Inc." . . . However, valid stipulations
entered into freely and fairly should not be lightly
set aside. See Waldorf v. Shuta, 142 F.3d
601, 616 (3rd Cir. 1998). Thus, we will apply the
arbitrary and capricious standard of review.
Orvosh, 222 F.3d at 129 n. 7. (emphasis added).
Based upon the above, we will apply the heightened arbitrary and
capricious standard to our review of the Defendant's decision to deny the
B. Application of the Heightened Arbitrary and Capricious Standard of
In applying a heightened arbitrary and capricious review, "we are
deferential, but not absolutely deferential." Id. at 393. Furthermore,
the greater the evidence of conflict on the part of the administrator,
the less deferential our review must be. Id., (citing Vega v. Nat'l Life
Ins. Serv., Inc., 188 F.3d 287, 297 (5th Cir. 1999)). We are required to
look not only at the result-whether it is supported by reason-but at the
process by which the result was achieved. Pinto, 214 F.3d at 393.
Consistent with this directive, we shall first address the procedure used
to reach the decision to deny benefits, and then we shall focus on the
merits of the decision.
1. The Process
In Pinto, the Third Circuit found a number of procedural anomalies
which rendered the decision improper under the heightened arbitrary and
capricious standard of review. The defendant in Pinto reversed its own
initial determination that the plaintiff was totally disabled without
receiving any additional medical information. Pinto, 214 F.3d at 393.
Additionally, the defendant relied heavily on parts of a particular
physician's report regarding the plaintiff's limitations, but did not
accept, or satisfactorily explain, its rejection of the physician's
conclusion that the plaintiff was totally disabled. Id. Finally, the
defendant rejected its own employee's recommendation that benefits be
paid to the plaintiff pending further testing, and instead suspended her
benefits. Id. at 394.
We find nothing in the record here reflective of the procedural
problems present in Pinto. Plaintiff received multiple levels of review of
her claim pursuant to the Plan documents. Her benefits were initially
terminated based upon an assessment and determination of a Senior Case
Management Specialist at MetLife. Defendant's Ex. 18. She appealed this
denial to the Plan Manager, who confirmed the termination of her
benefits. Defendant's Ex. 6. Plaintiff thereafter appealed the Plan
Manager's adverse determination to the Committee. Defendant's Ex. 5.
Prior to its review of her appeal, the Committee
provided the Plaintiff with the materials it would be reviewing in
making its determination for her review and comment. Defendant's Ex. 3.
She provided the Committee with additional records, and these records
were included in the record reviewed by the Committee. Defendant's Ex.
1, 87 & 88. After reviewing the documentary evidence, the Committee
denied the plaintiff's claim for reinstatement of her benefits.
Defendant's Ex. 1.
Defendant denied the plaintiff's claim from the outset, and
consistently maintained its position throughout the appeal process.
Additionally, we see no self-serving reliance on parts of any physician's
records in this case. The Committee's minutes reflect that it considered
all of the evidence relative to the plaintiff's claim, both pro and con.
As previously discussed, the Committee examined and discussed the
plaintiff's favorable Social Security determination, but thoroughly
explained its reasons for not finding it persuasive as to whether the
Plaintiff was totally disabled under the Plan's definition. Defendant's
Ex. 1. Additionally, the Plaintiff was provided with all of the materials
the Committee would be considering in making its determination, and was
invited to comment and submit any additional evidence for consideration.
Defendant's Ex. 1, 87 & 88. There is nothing in the record before us
to suggest that the Defendant's Plan procedures were not followed in this
case, nor is there any conflicting interpretations of the factual
information which would cause us to "ratchetup" our review of the merits
of the Defendant's decision on the sliding scale of our heightened
arbitrary and capricious review. Consequently, on the sliding scale
required by Pinto, we examine the Defendant's decision to deny benefits
with a moderate degree of deference. We now direct our attention to
whether the Defendant's decision was arbitrary and capricious under the
2. The Merits
In reviewing the Defendant's decision to deny benefits to the Plaintiff
in this case under a heightened review, with a moderate degree of
deference on the sliding scale, we are of the opinion that the
Defendant's decision was neither arbitrary or capricious. It is
undisputed that the Plaintiff is totally disabled from performing the
duties of her position at Kaiser. Defendant's Ex. 11, 21 & 33. As
previously stated, the issue before the Committee was whether the
Plaintiff was totally disabled under the Plan definition on June 1,
1995, the date of the termination of her benefits. A participant is
continuously disabled if he or she is "unable to do any work for pay or
profit for which [he or she] is or could become reasonably qualified by
education, training or experience." Defendant's Ex. 2. The Committee
determined that any deterioration in her condition or her ability to do
any work for pay or profit subsequent to June 1, 1995 was irrelevant if
she was not totally disabled under the Plan on that date. Defendant's
As reflected in the Committee's meeting minutes, it reviewed the
plaintiff's medical records, reports and correspondence relating to the
plaintiff's medical condition. Defendant's Ex. 1. In reviewing these
records, the Committee focused on two vocational addenda prepared by
Crawford and Company dated September 19, 1995 and April 11, 1995.
Defendant's Ex. 1, 11 & 21. The Committee found it highly significant
that these reports, prepared around the time that Plan benefits were
discontinued, found that the Plaintiff possessed excellent transferable
skills to perform sedentary to light duty employment at a skilled level
that was within her residual functional capacity based upon her age,
education and work experience. Defendant's Ex. 1. The April addendum was
based upon a review of the plaintiff's medical records from February 9,
1994 through March 30, 1995. Defendant's Ex. 21.
Plaintiff argues that the Committee improperly considered the addendum
dated September 19, 1995, since it was evidence of her condition after
the June 1, 1995 deadline which the Committee considered irrelevant.
However, a review of the addendum reveals that although the report is
dated September 19, 1995, it was based upon a review of the plaintiff's
medical records from March 27, 1995 through August 9, 1995. Defendant's
Ex. 11. With the exception of the August 9, 1995 record, this time frame
is certainly relevant to the plaintiff's condition as of June 1, 1995.
The August 9, 1995 record is an Attending Physician's Statement of
Functional Capacity completed by Dr. Euliano. As the addendum indicates,
there was no change in Dr. Euliano's assessment of the plaintiff's
functional capacity from his March 1995 report, for which the addendum of
April 11, 1995 was based. Defendant's Ex. 11.
Plaintiff also argues that Dr. Porter stated that these addenda were
"primarily" based on the plaintiff's education and experience, and not on
any first hand medical examination or actual vocational tests performed
on the Plaintiff. Dr. Porter did state that the vocational assessments
focused on the plaintiff's educational background. Defendant's Ex. 33.
However, a review of the assessments reveal a detailed listing of the
medical records reviewed, as well as a detailed discussion of the medical
evidence in connection with determining the plaintiff's capacity to
perform substantial gainful activity. Defendant's Ex. 11 & 21.
Therefore, we find no merit to the plaintiff's argument relative to this
Plaintiff additionally contends that the Committee erred in referring
to Dr. Euliano's notes dated February 7, 1997 as evidence of her improved
strength, since this date was long after the June 1, 1995 cut off date
for evidence of her condition. We reject this contention, in large
measure because it was the Plaintiff herself who forwarded these notes
for consideration by the Committee as additional material for its
review. Defendant's Ex. 1. Plaintiff also argues that the Committee
focused on a portion of the notes without considering the remaining
portions. We disagree. The Committee noted that her attempt at moving her
baby in and out of a car seat indicated evidence of improved strength.
Defendant's Ex. 1. However, the Committee also specifically noted that
this attempt did aggravate her lower back problem. Id. Therefore the
Committee did not "arbitrarily ignore" the fact that this activity
aggravated her condition. In any event, the plaintiff's Premium Waiver
Claim Information form, completed near the relevant time frame, supports
the Committee's finding's as to her improved strength. She stated that
although she hired help to vacuum, clean the floors and bathrooms, she
performed daily household chores such as cooking, dusting, washing
dishes, helping with the laundry, and caring for her baby. We therefore
find this contention to be without merit.
The Committee was also persuaded in part by the report of Dr. Porter
dated April 15, 1994. Dr. Porter concluded that the Plaintiff should be
able to perform "sedentary type employment" and therefore she was not
"continuously unable to do any work for pay or profit." Defendant's Ex.
33. Plaintiff argues that Dr. Porter never examined her, and arbitrarily
accorded more significance to older medical
information from Dr. Rehmatullah, than the more timely medical
information from Drs. Spiegel and Euliano. We do not find the conclusions
in Dr. Porter's report to be arbitrary and capricious, or the Committee's
reliance on same to be unreasonable. Dr. Porter made it clear that he was
considering the entire medical record when he submitted his report on
April 15, 1994. Defendant's Ex. 33. Moreover, while the Committee noted it
attributed "limited relevance" to Dr. Rehmatullah's report dated June
21, 1993 (Defendant's Ex. 1), it specifically did not say that the report
was completely irrelevant.
Finally, the Plaintiff contends that the Committee paid "insufficient
attention" to the findings of the ALJ in awarding Social Security
benefits to the Plaintiff. The Committee thoroughly examined the ALJ's
opinion, and noted that his award appeared to be based, in part, on a
finding that the Plaintiff was unable to hold her neck in an upright or
stationary position for extended periods and unable to engage in
extensive speaking. Defendant's Ex. 1. The Committee specifically
recognized that these limitations, if they continued through June 1,
1995, would be highly relevant in determining her eligibility for
benefits. Defendant's Ex. 1. The Committee determined that the award
appeared to be based upon evidence submitted almost one year prior to
MetLife's decision to terminate the plaintiff's benefits, and that no
further mention of these limitations appeared in the statements by the
Plaintiff or Dr. Euliano. Defendant's Ex. 1. The Committee further found
that the ALJ's finding that she did not have any acquired work skills
which were transferable conflicted with the addendum prepared by Crawford
& Crawford, and with statements made in previous denials of Social
Security benefits. Defendant's Ex. 1. The Committee concluded that the
ALJ's decision was neither persuasive authority nor timely with respect
to the issue of whether the Plaintiff was totally disabled under the
Plan's definition on June 1, 1995. Defendant's Ex. 1.
Although the Committee rejected the ALJ's findings, we do not agree
that the Committee paid insufficient attention to the ALJ's opinion. The
Committee thoroughly explained its rationale for rejecting the ALJ's
conclusions, and specifically identified the records it relied upon in
support of its rejection.
We conclude that the Defendant's decision was not arbitrary and
capricious under the heightened standard of review. Therefore, we will
grant the Defendant's motion for summary judgment and deny the
plaintiff's motion. An appropriate Order follows.
AND NOW, this ___ day of September, 2001, and for the reasons set forth
in the accompanying Memorandum Opinion,
IT IS HEREBY ORDERED that the Cross Motion for Summary Judgment [Doc.
No. 10] is GRANTED in favor of the Defendant, Kaiser Aluminum &
Chemical Corporation, and DENIED against the Plaintiff, Tracy E.
The clerk is hereby directed to mark the case closed.