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Porter v. Broadspire

March 15, 2007

WILLIE PORTER, PLAINTIFF,
v.
BROADSPIRE AND THE COMCAST LONG TERM DISABILITY PLAN, DEFENDANTS.



The opinion of the court was delivered by: Ambrose, Chief District Judge.

OPINION and ORDER OF COURT

SYNOPSIS

Pending are Cross-Motions for Summary Judgment. (Docket Nos. 16 and 17). After careful review of the submissions by the parties and based on my Opinion set forth below, Plaintiff's Motion for Summary Judgment (Docket No. 16) is granted and Defendants' Motion for Summary Judgment (Docket No. 17) is denied as more fully described below.

I. FACTUAL BACKGROUND

The parties are familiar with the facts of this case. Consequently, the following is a brief summary of the facts. Plaintiff, Willie Porter, began working for Comcast, formerly AT&T, as a customer service representative ("CSR") on June 21, 1981. Ms. Porter was approved for short term disability from the date of her disability, October 24, 2002, through the expiration of short term disability on April 30, 2003, as a result of multiple sclerosis. She was awarded social security disability benefits after a finding that she was disabled as of October 23, 2002. Ms. Porter applied for long term disability benefits ("LTDB") from Defendant, Comcast Long Term Disability Plan. Plaintiff was determined to be disabled under the Plan as of October 24, 2002, but became eligible for LTDB beginning May 1, 2003. She received LTDB through July 30, 2004.

On July 22, 2004, Defendant, Broadspire, the claims administrator for the Comcast Long Term Disability Plan, sent a letter to Ms. Porter indicating that Broadspire was conducting a review of her claim to determine her continued eligibility for benefits. (R. 348-50). On October 25, 2004, Broadspire sent a letter to Ms. Porter indicating that it reviewed her claim for disability benefits and that the medical documentation provided by her treating physicians does not support that she has a functional impairment that would render her disabled from any gainful occupation as defined by the Plan. (R. 402-04). Broadspire found Ms. Porter capable of at least sedentary work. (R. 403). Consequently, Broadspire notified Ms. Porter that she was no longer eligible for LTDB after July 30, 2004, and that her claim would be closed on October 31, 2004. Id. Ms. Porter sought a review of this decision and on June 23, 2005, the Broadspire Appeal Committee upheld the original decision to terminate Ms. Porter's LTDB effective November 1, 2004. (R. 469-71).

On December 6, 2005, Ms. Porter filed a Complaint in this Court against Broadspire and the Comcast Long Term Disability Plan pursuant to §502(a)(1)(B) of the Employment Retirement Income Security Act of 1974, as amended, 29 U.S.C. §1132(a)(1)(B). ("ERISA"). (Docket No. 1). The Complaint sets forth a cause of action for improper denial of benefits. Id. The parties have filed cross Motions for Summary Judgment. (Docket Nos. 16 and 17). The parties have filed responses and briefs in opposition. The Motions are now ripe for review.

II. LEGAL ANALYSIS

A. Summary Judgment Standard of Review

Summary judgment may only be granted 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). Rule 56 mandates the entry of summary judgment, after adequate time for discovery and upon motion, against the party who fails to make a showing sufficient to establish the existence of an 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 (1986).

In considering a motion for summary judgment, this Court must examine the facts in a light most favorable to the party opposing the motion. International Raw Materials, Ltd. v. Stauffer Chemical Co., 898 F.2d 946, 949 (3d Cir. 1990). The burden is on the moving party to demonstrate that the evidence creates no genuine issue of material fact. Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir. 1987). The dispute is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is material when it might affect the outcome of the suit under the governing law. Id. Where the non-moving party will bear the burden of proof at trial, the party moving for summary judgment may meet its burden by showing that the evidentiary materials of record, if reduced to admissible evidence, would be insufficient to carry the non-movant's burden of proof at trial. Celotex, 477 U.S. at 322. Once the moving party satisfies its burden, the burden shifts to the nonmoving party, who must go beyond its pleadings, and designate specific facts by the use of affidavits, depositions, admissions, or answers to interrogatories showing that there is a genuine issue for trial. Id. at 324. Summary judgment must therefore be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." White v. Westinghouse Electric Co., 862 F.2d 56, 59 (3d Cir. 1988), quoting Celotex, 477 U.S. at 322.

B. ERISA Standard of Review

In cases where a court is called upon to determine if an administrator of a benefits plan covered by ERISA has properly interpreted and applied the provisions of the plan, the first consideration is the degree of scrutiny the court should properly apply to those decisions. ERISA itself does not contain a standard of review. The Supreme Court has held, however, that "a denial of benefits challenged under §1132(a)(1)(B) 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). If the administrator or fiduciary is granted discretionary authority to determine eligibility for benefits or to construe the terms of the plan, then the court applies an "arbitrary and capricious" standard of review. Lasser v. Reliance Standard Life Ins. Co., 344 F.3d 381, 384 (3d Cir. 2003). "Under the arbitrary and capricious standard, an administrator's decision will only be overturned if it is without reason, unsupported by substantial evidence or erroneous as a matter of law [and] the court is not free to substitute its own judgment for that of the defendants in determining eligibility for plan benefits." Lasser, 344 F.3d at 384, quoting, Pinto v. Reliance Standard Life Ins. Co., 214 F.3d 377, 387 (3d Cir. 2000).

Plaintiff argues in its Brief in Support of its Motion for Summary Judgment that an arbitrary and capricious standard of review (either moderate or heightened) applies. See, Docket No. 20, pp. 3-7, 19-20.*fn1 Defendants argue that a simple arbitrary and capricious review applies. See, Docket No. 22, pp. 7-11, and Docket No. 24, pp. 2-4. Pursuant to the Plan, "[t]he Plan Administrator and its delegates shall have full discretionary authority in all matters related to the discharge of their responsibilities and the exercise of authority under the Plan, including, without limitation, the construction of the terms of the Plan, and the determination of eligibility for coverage and benefits....The rules, interpretations, and decisions of the Plan Administrator and its delegates shall be conclusive and binding upon all persons having or claiming to have any right or interest in or under the Plan...." See, Docket No. 17, Ex. 1, The Plan, p. 7, Art. 2.1. Defendant, Comcast, as Plan Administrator entered into an agreement with NATLSCO, Inc. (referred to as "Kemper") to handle the processing of all claims under the Plan. Therein, Kemper agreed to administer the benefits under the Plan in accordance with ERISA. Docket No. 17, Ex. 3, Service Agreement, p. 9 of 28, at ¶20.A. Moreover, under the Service Agreement "[Comcast] delegates to Kemper discretionary authority to render eligibility determination following the initial claim submission and on appeal as well as interpreting the terms of the Plan." Id. at p. 12 of 28, at ¶21.A.V. In addition, the Service Agreement provides that Comcast "[s]hall not have responsibility for making any final appeal determinations. [Comcast] and Kemper each acknowledge and agree that [Comcast] does not have final discretionary authority at the final appeal stage to determine what benefits shall be paid under the Plan, to interpret Plan provisions, and to otherwise determine the merits of any final appeal." Id. at p. 14 of 28, at ¶21.B.V. Based on the same, I find the arbitrary and capricious standard of review applies.

However, such standard must be analyzed pursuant to a sliding scale. See, Pinto, 214 F.3d at 389-92. The level of scrutiny should be more penetrating when there is greater suspicion of partiality and less penetrating the smaller that suspicion. Lasser, 344 F.3d at 385, quoting, Pinto, 214 F.3d at 392-93. The following factors may be relevant in determining the severity of the conflict to formulate the appropriate level of scrutiny: (1) the sophistication of the parties; (2) the information accessible to the parties; (3) the exact financial arrangement between the insurer and the company; and (4) the stability of the employing company. Pinto, 214 F.3d at 392; Stratton, 363 F.3d at 254. This is a non-exclusive list. Kosiba v. Merck & Co., 384 F.3d 58, 64-65 (3d Cir. 2004). Procedural irregularity, bias, or unfairness in the review of the claimant's application for benefits can also be factors. Kosiba, 384 F.3d at 66. Procedural anomalies that may indicate a higher arbitrary and capricious standard of review include: "failing to follow a plan's notification provisions and conducting self-serving paper reviews of medical files, Lemaire v. Hartford Life & Acc. Ins. Co., No. 02-2533, 2003 WL 21500334, at *4 (3d Cir. June 30, 2003); relying on favorable parts while discarding unfavorable parts in a medical report, Pinto, 214 F.3d at 393-94; denying benefits based on inadequate information and lax investigatory procedures, Friess v. Reliance Std. Life Ins. Co., 122 F.Supp.2d 566, 574-75 (E.D.Pa.2000); and ignoring the recommendations of an insurance company's own employees that benefits be reinstated, Pinto, 214 F.3d at 394." Addis v. Limited Long-Term Disability Program, 425 F.Supp.2d 610, 613 -14 (E.D. Pa. 2006)

In this case, Comcast funds the plan and hired an independent third party, Broadspire (Kemper), to interpret the plan and make plan benefits determinations. Docket No. 17, Exs. 1 and 3. As acknowledged by Plaintiff, this type of arrangement does not typically constitute the kind of conflict of interest that would warrant a higher arbitrary and capricious review. Docket No. 20, p. 18; see, Pinto, 214 F.3d at 383. However, Plaintiff argues ...


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