The opinion of the court was delivered by: JOHN E. JONES, District Judge
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
Pending before the Court is a Motion for Summary Judgment (doc.
19) filed by Plaintiff Jeanette Ott ("Plaintiff") on March 1,
2005. We also have before us a Motion for Summary Judgment (doc.
20) filed by Defendants Litton Industries, Inc. Employees'
Health/Long Term Disability Plan and Unum Life Insurance Company
of American (collectively "Defendants") on March 1, 2005.
For the reasons that follow, we will grant Plaintiff's Motion
for Summary Judgment and deny Defendants' Motion for Summary
Judgment. PROCEDURAL HISTORY:
On April 8, 2004 Plaintiff filed a complaint against Litton
Industries, Inc. ("Litton") and Unum Life Insurance Company of
America ("Unum") in the United States District Court for the
Middle District of Pennsylvania arising under the provisions of
the Employee Retirement Income Security Act ("ERISA"),
29 U.S.C. § 1001 et seq. (See Rec. Doc. 1). In Count I of the
complaint, Plaintiff contended that Defendants failed to pay
long-term disability benefits owed to Plaintiffs and Count II
asserted a claim under Pennsylvania's Insurance Bad Faith
Statute, 42 Pa.C.S. § 8371.
On September 20, 2004, with consent of defense counsel,
Plaintiff filed an amended complaint, within which Plaintiff
amended the names of the parties, alleged that subsequent to the
filing of the complaint Defendants had issued an unfavorable
decision regarding Plaintiff's disability benefit claim, and
dropped the bad faith claim previously asserted. (See Rec. Doc.
14). Plaintiff named Litton Industries, Inc., Employees'
Long-Term Disability Plan ("the Plan") and Unum as defendants
(collectively "Defendants"). An answer was filed to the amended
complaint on October 4, 2004. (See Rec. Doc. 15).
Discovery in the above-captioned action closed on February 18,
2005. On March 1, 2005, both parties filed Motions for Summary
Judgment, which have been briefed by the parties. The instant Motions are therefore
ripe for disposition.
Summary judgment is appropriate if "there is no genuine issue
as to any material fact and . . . the moving party is entitled to
judgment as a matter of law." FED .R. CIV. P. 56©); see also
Turner v. Schering-Plough Corp., 901 F.2d 335, 340 (3d Cir.
1990). The party moving for summary judgment bears the burden of
showing "there is no genuine issue for trial." Young v.
Quinlan, 960 F.2d 351, 357 (3d Cir. 1992). Summary judgment
should not be granted when there is a disagreement about the
facts or the proper inferences which a fact finder could draw
from them. Peterson v. Lehigh Valley Dist. Council,
676 F.2d 81, 84 (3d Cir. 1982).
Initially, the moving party has a burden of demonstrating the
absence of a genuine issue of material fact. Celotex Corporation
v. Catrett, 477 U.S. 317, 323 (1986). This may be met by the
moving party pointing out to the court that there is an absence
of evidence to support an essential element as to which the
non-moving party will bear the burden of proof at trial. Id. at
Federal Rule of Civil Procedure 56 provides that, where such a
motion is made and properly supported, the non-moving party must
then show by affidavits, pleadings, depositions, answers to
interrogatories, and admissions on file, that there is a genuine issue for trial. FED. R. CIV. P. 56(e). The
United States Supreme Court has commented that this requirement
is tantamount to the non-moving party making a sufficient showing
as to the essential elements of their case that a reasonable jury
could find in its favor. Celotex Corp., 477 U.S. at 322-23.
It is important to note that "the non-moving party cannot rely
upon conclusory allegations in its pleadings or in memoranda and
briefs to establish a genuine issue of material fact." Pastore
v. Bell Tel. Co. of Pa., 24 F.3d 508, 511 (3d Cir. 1994)
(citation omitted). However, all inferences "should be drawn in
the light most favorable to the non-moving party, and where the
non-moving party's evidence contradicts the movant's, then the
non-movant's must be taken as true." Big Apple BMW, Inc. v. BMW
of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992), cert.
denied, 507 U.S. 912 (1993) (citations omitted).
Still, "the mere existence of some alleged factual dispute
between the parties will not defeat an otherwise properly
supported motion for summary judgment; the requirement is that
there be no genuine issue of material fact." Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in
original). "As to materiality, the substantive law will identify
which facts are material." Id. at 248. A dispute is considered
to be genuine only if "the evidence is such that a reasonable
jury could return a verdict for the nonmoving party." Id. STATEMENT OF RELEVANT FACTS:
We initially note that we will, where necessary, view the facts
and all inferences to be drawn therefrom, in the light most
favorable to the nonmoving party in our analysis of the pending
As of May 2, 2000, Plaintiff was an employee of Litton and was
eligible to participate in the Plan. On or about May 2, 2000,
Plaintiff was involved in a motor vehicle accident that caused or
aggravated the following conditions: fibromyaligia, degenerative
joint disease, back and neck muscle spasms, bursitis, chronic
pain, including migraine headaches, and depression secondary to
the chronic pain. Following the applicable elimination period,
Plaintiff began receiving long-term disability benefits in the
amount of $1098.23 per month on or about November 2, 2000. By
letter dated April 4, 2002, the Plan's administrative agent,
Metropolitan Life Insurance Company ("MetLife") informed
Plaintiff that the first 24-months of disability would end on
November 1, 2002, and that MetLife would begin reviewing her
claim for long-term disability ("LTD") benefits based upon
whether she was precluded from performing "any job for which [she
was] reasonably qualified based on [her] training, education and
experience." (Defs.' SMF at ¶ 10).
By letter dated February 24, 2003, MetLife informed Plaintiff
that her benefits ceased as of November 1, 2002 because her claim did not
meet the criteria for continued benefits under the Plan. The
letter advised Plaintiff that she had 180 days after receipt of
the denial letter to file an appeal for the termination of her
benefits. By letter addressed to MetLife and dated August 1,
2003, Plaintiff's attorney appealed the denial of Plaintiff's
claim. MetLife sent Plaintiff a letter on August 6, 2003,
advising her that MetLife would rule on her appeal within 45 days
of its receipt of the appeal, taking an additional 45 days if
there were special circumstances requiring additional time for
MetLife to complete the review, and if MetLife notified Plaintiff
of the special circumstances in writing. By e-mail dated November
12, 2003, in response to a status inquiry, MetLife informed
Plaintiff's attorney that its appeals unit determined Plaintiff's
claim should be reinstated. The November 12, 2003 e-mail read as
Our appeals unit determined that Ms. Ott's long-term
disability claim was to be reinstated. As the
disability carrier changed effective July 1, 2003 to
Unum Provident, it was sent to them to reinstate as
this is an advise to pay group it would need to go to
the new carrier. I sent the file September 17, 2003.
Per your voice mail advising that they have not
received it, I have requested the file be printed
again. I will FedEx this to them so that we have a
way of tracking this. If you have further questions,
please contact me. Rhonda Sangonette
See Rec. Doc. 22, Ex. Q.
By e-mail dated January 14, 2004, Unum informed Plaintiff's
attorney that review of Plaintiff's claim was continuing. Unum
further informed Plaintiff's attorney that it would begin issuing LTD benefits as of January
1, 2004, and continue to pay benefits until Unum made a final
determination on Plaintiff's claim. The e-mail addressed to
Plaintiff's attorney reads, in pertinent part, as follows:
Until we have made a final determination on [Jeanette
Ott's] eligibility for benefits, we will begin
issuing benefits effective 1/1/04 and continue the
monthly benefit until a final determination has been
made. This payment or any possible future payments,
until we advise you otherwise, are being made under
Reservation of Rights. This means that payment cannot
be construed as an admission of present or future
liability, and we reserve the right to enforce any
and all provisions of the plan.
See Rec. Doc. 23, Ex. S.
Plaintiff states that as time passed and no final decision from
Unum on the appeal was forthcoming, Plaintiff filed the instant
action on April 8, 2004. Thereafter, on June 22, 2004, Unum
issued a letter stating that Plaintiff's appeal was denied and
her benefits were being terminated. Unum found Plaintiff to be
ineligible for benefits beyond November 2, 2002. Additionally,
the letter explains that Plaintiff failed to provide information
sufficient to support the conclusion that she was unable to
perform all sedentary jobs. Plaintiff characterizes the appeal
denial as a denial on the basis of reports of two physicians who
had never examined or even spoke to Plaintiff, and a rejection of
the opinions of Plaintiff's family physician, her psychiatrist,
and her orthopedist, to the effect that Plaintiff was incapable of any sort of work. Plaintiff also submits that
the denial rejected the diagnoses of Plaintiff's neurologist,
rheumatologist, and pain management specialist.
In her Motion for Summary Judgment, Plaintiff argues that
Defendants' failure to decide her appeal from the termination of
her disability claim in the time limits established by ERISA and
Defendants' own policies allows the Court to review Plaintiff's
disability status de novo. Plaintiff contends that the
undisputed facts establish that the Plan Administrator violated
Plaintiff's rights under ERISA by illegally delaying its decision
on Plaintiff's appeal from the termination of her LTD benefits.
(Pl.'s Mot. Summ. J. at ¶ 2). Plaintiff asserts that having been
advised that, following her appeal, her claim was reinstated,
Defendants are estopped from denying her appeal. Id. at ¶ 3.
Moreover, Plaintiff submits that the undisputed facts indicate
that the Plan Administrator abused its discretion in terminating
Plaintiff's disability benefits, in that she is incapable of
performing any gainful work. Id. at ¶ 4.
Defendants counter by arguing in their Motion for Summary
Judgment that there is no material issue of disputed fact on the
question of whether Plaintiff is entitled to LTD benefits after
November 2, 2002, under the terms of the Plan. (Defs.' Mot. Summ. J. at ¶ 3). Additionally, Defendants assert
that an action to recover plan benefits under ERISA should be
judicially reviewed under an arbitrary and capricious standard
when, as in this case, the Plan expressly reserves discretionary
authority to determine eligibility for benefits or to construe
the terms of the Plan to the Plan Administrator, and the Plan
provides its Administrator with authority to delegate its duties.
Defendants assert that Unum's decision that Plaintiff was not
entitled to LTD benefits on or after November 2, 2002 was not
arbitrary and capricious.
A. Applicable Standard of Review
Under ERISA, a court reviewing an administrator's decision to
deny benefits is by default reviewed de novo, "unless the
benefit plan gives the administrator or fiduciary discretionary
authority to determine the employee's eligibility or construe the
terms of the plan." Firestone Tire & Rubber Co. v. Bruch,
489 U.S. 101, 115 (1989); Stratton v. E.I. DuPont De Nemours & Co.,
363 F.3d 250, 253 (3d Cir. 2004). If a plan provides
discretionary authority to the administrator or fiduciary, then a
reviewing court applies a form of arbitrary and capricious
review. Firestone Tire & Rubber Co., 489 U.S. at 111-12, 115;
see Mitchell v. Eastman Kodak Co., 113 F.3d 433, 437 (3d Cir.
1997). Discretionary authority can be provided for by express or
implied language in the benefit plan. Luby v. Teamsters Health, Welfare, & Pension Trust, 944 F.2d 1176, 1180 (3d Cir. 1991).
Whether that arbitrary and capricious review is heightened in any
way depends on the presence of potentially conflicted ERISA
fiduciaries and is determined on a sliding scale that we will
discuss in further detail below. Pinto v. Reliance Standard Life
Ins. Co., 214 F.3d 377, 379 (3d Cir. 2000).
The scope of discovery depends upon the standard of review. In
the Third Circuit, "a district court exercising de novo review
over an ERISA determination between beneficiary claimants is not
limited to the evidence before the Fund's Administrator." Luby,
944 F.2d at 1184-85. In sharp contrast, the record available to a
court conducting an arbitrary and capricious review is the record
made before the plan administrator, which cannot be supplemented
during litigation. See Kosiba v. Merck & Co., 384 F.3d 58, 67
n. 5 (3d Cir. 2004) (citing Mitchell, 113 F.3d at 440).
Nevertheless, when a reviewing court is deciding whether to
employ the arbitrary and capricious ...