The opinion of the court was delivered by: William W. Caldwell United States District Judge
We are considering cross-motions for summary judgment filed by the Plaintiff, Brenda Orr ("Orr"), and the Defendant, Metropolitan Life Insurance Company ("MetLife"). Orr, a former employee of Electronic Data Services ("EDS"), filed this lawsuit pursuant to section 502(a)(1)(B) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), for wrongful termination of long-term disability ("LTD") benefits. After careful review of the motions, as well the record, we will deny both motions for summary judgment and remand the case to MetLife for further consideration consistent with this memorandum.
Orr filed a claim in state court alleging the following based on MetLife's termination of her long-term disability benefits: (1) breach of contract, (2) punitive damages, (3) violation of the Pennsylvania Unfair Insurance Practices Act, (4) violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, and (5) bad faith. (doc. 1, pp. 7-15). MetLife removed the case to this Court because Orr's claims were within the scope of ERISA section 502(a)(1). (doc. 1).
Nearly a year later, the parties submitted a stipulation of dismissal so that Orr could exhaust her administrative remedies. (doc. 23). The stipulation, which we approved, allowed Orr to appeal MetLife's decision to terminate LTD benefits. Id. After conducting a review pursuant to the stipulation, MetLife again denied LTD benefits. Orr then moved to reinstate her complaint. (doc. 27). We granted Orr's motion (doc. 30), and Orr filed an amended complaint. (doc. 31).
The amended complaint contained claims for wrongful termination of benefits pursuant to ERISA section 502(a)(1)(B)*fn1 and breach of fiduciary duty pursuant to section 502(a)(3).*fn2
Id. In the wrongful termination of benefits claim, Orr alleges that "MetLife, operating under a conflict of interest, terminated the payment of long term disability benefits under the Plan arbitrarily and capriciously and/or without complying with the procedures required by the Plan, by ERISA, and by the stipulation entered into by the parties." Id. ¶ 34. Orr's second count claimed that "MetLife breached its fiduciary duties in that it failed to act for the exclusive benefit of Plaintiff Orr, it failed to act in accordance with the governing plan documents and instruments, and it failed to disclose to Mrs. Orr material information necessary to the review of the termination of her LTD benefits." Id. ¶ 39.
After answering Count I of the amended complaint, MetLife moved to dismiss Count II, arguing that it violated the terms of the stipulation and that a breach of fiduciary claim may not proceed when a party has another potential ERISA remedy available under section 502(a)(1)(B). (doc. 38). We granted MetLife's motion to dismiss Count II, concluding that the breach of fiduciary duty claim was beyond the terms of the stipulation and that Orr's claim for wrongful termination of benefits would, if successful, provide adequate relief. (doc. 51).
After attempting to settle this dispute, the parties filed cross-motions for summary judgment as well as statements of material fact in support of each motion. (docs. 74-88). The motions are now ripe for our consideration.
1. EDS's Long-Term Disability Plan MetLife issued a long-term disability insurance policy to EDS to fund its Welfare Benefit Trust Long Term Disability Plan ("the Plan"). MetLife Statement of Material Facts ("SMF")
¶ 1. The Plan, which is governed by ERISA, vests MetLife, as a fiduciary for Plan beneficiaries, with the discretion to interpret the terms, conditions, and provisions of the Plan and determine eligibility for Plan benefits. Id. ¶¶ 2, 4; Orr's Response to MetLife's Statement of Material Facts ("Orr Resp. SMF") ¶ 4.
The Plan pays LTD benefits to an employee who is covered by the Plan and who is "disabled" pursuant to the Plan. Bates 000016; doc. 81, ex. A, p. 14. LTD benefits may be terminated when the employee is no longer disabled as defined by the Plan, or on "the date [the employee] cease[s] or refuse[s] to participate in a Rehabilitation Program as described in Work Incentive." Id. at 000016-17; pp. 14-15.
The Plan defines "disability" as follows:
"Disabled" or "Disability" means that, due to sickness, pregnancy or accidental injury, you are receiving Appropriate Care and Treatment from a Doctor on a continuing basis; and
1. during your Elimination Period and the next 24 month period, you are unable to earn more than 80% of your Predisability Earnings at your Own Occupation from any employer in your Local Economy; or
2. after the 24 month period, you are unable to earn more than 60% of your Indexed Predisability Earnings from any employer in your Local Economy at any gainful occupation for which you are reasonably qualified taking into account your training, education, experience and Predisability Earnings.
MetLife SMF ¶ 5. The Plan defines "Rehabilitation Program," in relevant part, as:
1. a return to active employment by you on either a part-time or full-time basis in an attempt to enable you to resume gainful employment or service in an occupation for which you are reasonably qualified taking into account your training, education, experience and past earnings; . . . .
The Plan's Work Incentive provision details the benefits for an employee who, while disabled, participates in a Rehabilitation Program. Specifically, the Plan provides:
While you are Disabled, you are encouraged to work or participate in a Rehabilitation Program . . . while Monthly Benefits are being paid to you. . . . When you work while Disabled, you will receive the sum of the following amounts: 1. your Monthly Benefit (including your Rehabilitation Incentive when applicable); 2. the amount of your earnings for working while Disabled . . . .
Bates 000019; doc. 81, ex. A, p. 17. Notably, under the Plan, LTD benefits terminate when an employee does not participate in a Rehabilitation Program. According to the Plan, "Monthly Benefit payments will cease on the date you refuse to participate in a Rehabilitation Program in which we determine you are able to participate." Bates 000020; doc. 81, ex. A, p. 18.
2. Orr's Injuries and Her Application for Benefits
EDS hired Orr on September 27, 1999, as a Recourse Administrator. MetLife SMF ¶ 9. Orr's duties included computer keyboarding, using the telephone, copying, and filing. Id. Orr's job responsibilities also included retrieving claims from a storage shed and sending outgoing mail. Orr Resp. SMF ¶ 9. On June 10, 2000, while on vacation, Orr slipped and fell in a hotel bathroom, sustaining numerous injuries, including: herniated cervical discs, stenosis, spondylosis, and rheumatoid arthritis. MetLife SMF, Orr Resp. SMF ¶ 10. On August 14, 2000, Orr underwent a post-cervical discectomy fusion surgical procedure for her neck injuries. Orr Resp. SMF ¶ 10, 11. From June 13, 2000, through December 11, 2000, Orr received short-term disability benefits through the Plan. MetLife SMF ¶ 11. After receiving short-term disability benefits for the maximum period, MetLife began paying LTD benefits on December 12, 2000. Id. MetLife approved LTD benefits based on Orr's cervical disc disorder with myelopathy and the aggravation of her cervical spinal stenosis. MetLife SMF ¶ 12.
In February 2001, MetLife undertook a "Rehab Review" of Orr's file, noting her cervical disc myelopathy and her rheumatoid arthritis. Orr Opp. SMF ¶ 13. On June 20, 2001, Orr spoke with a MetLife representative about a Functional Capacity Evaluation ("FCE") she had scheduled in connection with her personal injury lawsuit arising from the fall. MetLife SMF ¶ 13. On August 8, 2001, MetLife received a copy of the FCE results as well as the cover letter from George O'Malley, Jr., the therapist performing the evaluation, to Orr's treating physician, Dr. Mark R. Grubb. Id. ¶ 15. In the FCE cover letter, O'Malley noted that Orr's workday tolerance was up to six hours per day at a sedentary level. Id. ¶ 16.
MetLife forwarded Orr's FCE and her job description to its nurse consultant to determine if Orr could perform her job at EDS. Id. ¶ 17. The nurse concluded that Orr could return to work for up to six hours per day but MetLife would need to discuss the availability of such a position with EDS. Id. ¶ 18. The nurse was not sure, however, if Orr would be willing to return to work. Id. ¶ 19.
On September 26, 2001, MetLife received a copy of an office note from Orr's visit to Dr. Grubb to discuss the results of the FCE. Id. ¶ 20. Grubb agreed with the FCE and ordered follow up visits with Doctors Wiecks and Weinberg, as well as an additional radiograph of Orr's cervical spine. Id. ¶ 20; Orr Opp. SMF ¶ 20.
On October 3, 2001, MetLife contacted EDS to discuss Orr's FCE. MetLife SMF ¶ 21. MetLife reviewed the determination that Orr's working capabilities would be limited to: (1) sitting three to four hours for thirty-five minute durations, (2) standing two to three hours for fifteen minute durations, (3) walking one to two hours, and (4) wearing a head set and responding to customers directly. Id. EDS informed MetLife that it could accommodate Orr's return to work pursuant to the restrictions beginning October 8, 2001. Id. ¶ 22. When MetLife contacted Orr, however, she told MetLife that she did not believe she could work six hours per day and that she would seek a second opinion regarding the FCE's conclusions. Id. ¶ 23. Orr also mentioned that she did not intend to return to work at EDS. Id.
On November 2, 2001, MetLife sent Dr. Grubb a copy of Orr's job description and a request for his assessment of Orr's ability to return to work in light of the FCE. Id. ¶ 24. Grubb responded that Orr, "[m]ay return [with] restrictions per FCE." Id. ¶ 25. MetLife then referred Orr's file to a rehabilitation specialist for review and to work with Orr pursuant to the Plan's mandatory Rehabilitation Program. Id. ¶ 26. After numerous attempts to contact Orr, on December 3, 2001, Orr and the rehabilitation specialist discussed the FCE, Grubb's agreement with the FCE, and Orr's ability to return to work for up to six hours per day. Id. ¶¶ 26-30. Orr indicated that she was willing to return to EDS but was concerned about her ability to do so based on her injuries. Orr Opp. SMF ¶¶ 30-31. Orr underwent an ergonomic evaluation on January 17, 2002. MetLife SMF ¶ 32. On February 7, 2002, EDS informed MetLife that it could bring Orr back to work pursuant to the FCE's restrictions; however, EDS could only offer Orr four hours per day. Id.
The rehabilitation specialist attempted to contact Orr on February 7, 2002, to advise her that EDS could return her to work beginning February 11, 2002. The specialist, however, was unable to reach Orr and left her a voicemail which Orr never received. MetLife SMF ¶ 33; Orr Opp. SMF ¶ 32-36. The specialist and the MetLife case manager attempted to reach Orr the next day and again left a message instructing her to return to work on February 11, 2002. MetLife SMF ¶ 34. Orr returned the call on February 10, 2002, a Sunday evening, explaining that she could not return to work on February 11 because she had an appointment with a neck specialist. Id. ¶ 35. On the morning of February 11, the rehabilitation specialist attempted to contact Orr and again left a message instructing her to return to work that day. Id. ¶ 36. That day, Orr called the case manager and informed her of the doctor's appointment in New Jersey as well as other medical appointments that would delay her return until February 13, 2002. Id. ¶ 37. During that conversation, the case manager told Orr that she was required to return to work that day or MetLife would terminate her benefits. Id. ¶ 37. In response, Orr stated that she would not return to EDS that day, she did not know when she would return to work, and she intended to contact her attorney to find out whether she had to return at all. Id. ¶ 38. The case manager again informed Orr of the mandatory Rehabilitation Program and explained that she was required to return to work or MetLife would terminate her benefits. Id. ¶ 39. Orr responded that she had to attend her appointment and would call her case manager later in the week. Id.
On February 12, 2002, MetLife sent a letter to Orr advising her that it would not pay benefits beyond February 9, 2002. Id. ¶ 40. The letter explained that by failing to return to work on February 11, 2002, Orr did not comply with the Rehabilitation Program. Id. The letter also informed Orr of her right to appeal the decision if she believed that MetLife erroneously terminated her benefits. Id. ¶ 41.*fn3
3. MetLife's Review Pursuant to the Stipulation
Orr filed this lawsuit against MetLife on February 11, 2004, without having appealed the decision to terminate benefits. After the case was removed to this Court, the parties entered a stipulation dismissing the case so that Orr could exhaust her administrative remedies. The stipulation, which we approved, allowed Orr "60 days to submit documents, records or other proofs in support of her claim for continuation of LTD benefits based on disability." (doc. 24). MetLife agreed to consider Orr's "claim for continuation of LTD benefits based on disability pursuant to the Plan and E.R.I.S.A." Id. MetLife also agreed not to raise the issue of the timeliness of Orr's appeal. Id. The stipulation allowed Orr to reinstate ...