The opinion of the court was delivered by: Nora Barry Fischer United States District Judge
Plaintiff Tracee Fultz (hereinafter "Fultz" or "Plaintiff") filed the instant civil action against the Defendant Liberty Life Assurance Company of Boston (hereinafter "Defendant" or "Liberty") pursuant to the Employee Retirement Income Security Act ("ERISA") of 1974, as amended, 29 U.S.C. § 1001 et seq., including ERISA § 502, 29 U.S.C. § 1132 (2004), challenging the Defendant's decision to discontinue her long-term disability ("LTD") benefits under the terms of the Defendant's LTD plan, Policy No. GF3-860-0385280-01 (hereinafter the "Policy" or "LTD plan"). Defendant provided long term disability insurance to the employees of Amgen, Inc. ("Amgen"), the Plaintiff's employer at the time of her disability. Presently pending before the Court for consideration are the parties' cross motions for summary judgment [27 & 30]. After considering all the parties' filings, including the parties' supplemental briefs, and oral argument heard on the motions by the Court at a status conference held on November 20, 2007, the Court DENIES Liberty's motion and GRANTS the Plaintiff's motion.
II. Factual Background*fn1
Defendant Liberty insured the LTD insurance for the employees of Amgen pursuant the Policy, effective January 1, 1998 (P-1). The Defendant issued the Policy to Amgen in California which explicitly states that the governing jurisdiction is California and the Policy is subject to the laws of that state. (P-1). The Plaintiff participated in the Policy as a result of her employment with Amgen as a tax manager during which time she was covered by the plan. The LTD plan was administered and underwritten by Liberty. (P-1). The Policy provided LTD benefits for Covered Persons who are "unable to perform all of the material and substantial duties" of her occupation because of injury or illness. (P-5). The payment of benefits can begin after a waiting period of sixty (60) days. (P-3). Benefits are payable until the insured attains the age of 65 in an amount equal to 66-2/3% of the Basic Monthly Earnings, not to exceed $15,000.00 per month. (Id.). At the time disability was claimed by the Plaintiff, her basic earnings were $8,333.32 per month. (CF-557). According to the Plaintiff, pursuant to Section 4 of the Policy, titled "Disability Income Benefits," the Plaintiff was to receive benefits for the period of her disability if she continued to give Liberty proof of her disability and of regular attendance by a physician. (P-10).
Under the Policy, there is an exclusion for a "Pre-Existing Condition," which is defined as "a condition resulting from an Injury or Sickness for which the Covered Person is diagnosed or received treatment within three months prior to the Covered Person's Effective Date." (P-19). The policy exclusion for pre-existing condition states:
This policy will not cover any Disability or Partial Disability:
1. which is caused or contributed to by, or results from a Pre-Existing Condition; and
2. which begins in the first 12 months after the Covered Person's Effective Date. (Id.). The term "treatment" is defined as "consultation, care or services provided by a Physician including diagnostic measures and taking prescribed drugs and medicines." (Id.). These provisions applied to the Plaintiff when she became a Covered Person on her date of hire, March 24, 2003. The three month "look back" period defined in the Policy would extend back to December 24, 2002. Pursuant to Section 7 of the policy, Liberty possessed the right, at it own expense, to have the Plaintiff examined by a physician of its choice, and this right "may be used as often as reasonably required." (P-24). Under the Policy, Fultz was required to provide medical proof of continued disability upon request by Liberty. (CF-10, 24).
Pursuant to the terms of the Policy and the LTD plan, Liberty had discretionary authority to make interpretations and to determine eligibility for benefits. (P-22). Specifically, the Policy states that Liberty "shall possess the authority, in its sole discretion, to construe the terms of this policy and to determine benefit eligibility hereunder. Liberty's decisions regarding construction of the terms of the policy and benefit eligibility shall be conclusive and binding." (P-22). Morever, the policy provided that any officer of Liberty can approve a change to the policy, subject to notice. (Id.). The policy was non-contributory and contained an integration clause which stated that it was the complete contract between the parties. (P-7, 22). The policy did not state that Liberty possessed the authority to conduct subsequent reviews of disability claims after benefits had previously been awarded and paid for a period of time.
B. Pre-LTD Benefits Period
On March 23, 2003, the Plaintiff was hired by Amgen as a tax consultant (CF-557). Her effective date of coverage under the group LTD policy was March 24, 2003. (Id.). She worked through June 27, 2003. (CF-555). She stopped working on June 28, 2003 when she was hospitalized for a low white blood count. (Id.). She filed an Application for Disability Benefits on July 10, 2003, as a result of Systemic Lupus Erythematosus ("SLE"), which was diagnosed in April of 2003. (Id.). Dr. Ernest Brahn, M.D., her treating physician at the time, certified that she was suffering from disabling SLE. (CF-546). An application for disability benefits was filed on July 10, 2003 under Amgen's short term disability policy. (CF-555). The Plaintiff was granted short term disability benefits effective June 30, 2003. (CF-545). Under the terms of the policy, these benefits could last up to sixty (60) days depending on whether the Plaintiff recovered, due to the elimination period under the policy.
The Plaintiff's claim was referred to the Defendant's disability claims department on August 12, 2003 for a determination of whether the Plaintiff was entitled to LTD benefits. (CF-544). The claim was transferred to a case manager on September 3, 2003 for consideration of payment under the LTD policy. (CF-79-80, Log Note 1). The case manager assigned to the claim was Monique Gunn, the same disability case manager who eventually granted disability benefits to Fultz. (CF-544). The Plaintiff was notified of this transfer by letter dated September 4, 2003. (CF-543). On September 9, 2003, the first discussion, via email, occurred regarding the application of the pre-existing exclusion to the Plaintiff's claim. (CF-542). On September 15, 2003, Fultz was notified that her claim was being evaluated under the pre-existing condition exclusion. (CF-536).
Upon request by Liberty, the Plaintiff provided it with a list of her treating physicians and other health providers. (CF-42-43, 510-511). Specifically, on September 16, 2003, the Defendant sent requests for treatment records to Dr. Brahn, Dr. John Franklin, Dr. Amy Kao, and Dr. Richard Crane, for the period of December 24, 2002 to September of 2003. (CF-532-535). Liberty did not, however, request the records from the Plaintiff's prior primary care physician, Dr. Barton Inkeles, or pharmacy records showing her prior medications. (CF-42).
December 24, 2002 marked the beginning date of the three month "look back" period based upon the Plaintiff's hiring date of March 24, 2003. The Defendant received medical records from Dr. John Franklin, a heptologist who treated the Plaintiff during the years of 2002 and early 2003, and records from the Magee-Women's Hospital Lupus Center, where the Plaintiff received treatment after she started her disability leave and relocated to the Pittsburgh area. (CF-470-497, 503-509). The records stated that the Plaintiff had been diagnosed and treated for autoimmune hepatitis ("AIH") in 2001, but was not formally diagnosed with SLE until April, 2003.
Plaintiff's file and records were received and reviewed by Monique Gunn, the Disability Case Manager assigned to her claim. (CF-77). Ms. Gunn entered a claim note in Fultz's file on October 8, 2003, in which she stated that the treatment which Fultz received during the pre-existing period was not for the condition for which she had claimed disability. (CF-77 (Claim Note 10)). On October 14, 2003, another note was entered in Fultz's file noting that a diagnosis of SLE had not been made during the exclusionary period and the condition for which she had received treatment for during the exclusionary period was not the same or related to the current condition for which she has claimed disability. (CF-76 (Claim Notes 12 and 13)).
Subsequently, on October 17, 2003, a claim review was conducted by Ms. Gunn, Katherine Simmons, a nurse case manager, Nita Chandra, and Karin Ross. (CF-75-76). It was determined that the case should be referred to a rheumotologist for a peer review to determine whether the pre-existing AIH was related to the SLE. (Id.). Dr. Reynold Karr, a consultant of Liberty, performed the peer review. (CF-446-452). On November 3, 2003, Liberty received a report from Dr. Karr stating that the Plaintiff had been diagnosed with SLE in April of 2003 and that she had a history of AIH which had been treated successfully with Imuran and Predisone in 2001 (CF-460-465). He noted that both AIH and SLE were autoimmune phenomena which can cause a patient diagnosed with one of them to be at greater risk to develop the other condition. (CF-451-452). Dr. Karr concluded that although there was a relationship between AIH and SLE, it was medically incorrect to say that one condition causes the other, and that it was more appropriate to state that the two disorders are separate conditions. (CF-464-465). On November 7, 2003, Ms. Gunn entered a note in the Plaintiff's file regarding Dr. Karr's report. (CF-73 (Claim Note 18)). It stated that Dr. Karr was asked whether AIH causes or contributes to the development of SLE and it was reported that he concluded that it cannot be determined whether one actually causes the other. (Id.). It was also noted in Fultz's file that a determination had been made that the two conditions were not the same or related and that the pre-existing review was completed. (CF-72 (Claim Notes 19 and 20)).
Before an award letter is sent, it is a requirement of the Defendant that the decision be reviewed by a manager. ((Deposition of Susan Mills ("Mills Depo."), Docket. No. 41-11, at page ("p.") 86, lines ("ll.") 13-20). Thus, the Fultz determination was reviewed and signed off by Ms. Gunn's manager. (Mills Depo. p. 86, ll. 21-24). In awarding Fultz benefits under the Plan, Liberty concluded, based on the information available to it at that time, that she did not suffer from a pre-existing condition which led to her condition of SLE.
Following its review, Ms. Gunn sent the Plaintiff an award letter dated November 11, 2003. (CF-88-89). Liberty granted monthly LTD benefits in the amount of $5,555.82. (CF-89). Pursuant to the requirements of Section 4 of the policy, the letter also informed the Plaintiff that her claim would be evaluated periodically to insure that she continued to meet the terms of the policy's long term disability provisions. (Id.). The letter did not state, however, that Defendant possessed the ability to reinstate a review of the pre-existing exclusion. The LTD benefits were paid by Liberty to Fultz, with an initial benefit date of August 29, 2003, the date following the expiration of the 60-day waiting period under the Policy (P-3). Liberty paid the Plaintiff benefits for the remainder of 2003 and 2004. During that time, the Defendant continually requested medical records from Plaintiff's physicians apparently to confirm that she continued to meet the definition of disability under the Policy, and Plaintiff complied. The benefits were reduced to $3,981.82 per month on the basis of an award of Social Security Disability benefits. (CF-85-86).
In June of 2004, Teisha Doyle assumed the management of Plaintiff's claim from Ms. Gunn. (CF-39). The claim file indicates that the Plaintiff's medical condition was continually monitored after the approval of her benefits. Initially, Ms. Gunn and Ms. Doyle had performed this function. (CF-36-39, 68-71). On September 24, 2004, a note was made in the file that the file was "out to TCMS."*fn2 (CF-35). The file was sent to TCMS and the handling of the claim was then assumed by Susan Mills, a TCMS consultant. (CF-35 (Claim Note 56)). There is no claim note or other notation in the claim file as to the reason for the referral to TCMS.
D. Discontinuance of Benefits and the Plaintiff's Appeal
On October 14, 2004, the Plaintiff's file became the subject of a TCMS review. (CF-35)(Claim Note 58)). A TCMS review is a special type of review performed by a more senior and experienced claims management personnel. (Mills Depo. p. 21, ll. 3-5; Mills Deposition Exh. 3). Claims are selected for this type of review either through an automated selection process, which considers diagnostic criteria, or because of a manual referral due to an assigned case manager's uncertainty of whether he or she fully understands the issues of a certain claim and requests assistance from a manager or from a TCMS specialist. (Mills Depo. p. 23, ll: 9-14). There are no records or any specific documented reason for the referral of the Plaintiff's claim file to TCMS. (Id. at p. 39, ll. 10, 16-18; p. 42, ll. 21-25; Defendant's Answers to the Plaintiff's First Set of Interrogatories ("Interr.") at ¶ 2). In fact, the claim log provides no basis upon which the TCMS referral was made. (Mills Depo. p. 58, ll. 3-7).
Susan Mills, the TCMS consultant assigned to the Plaintiff's claim, testified that there were factors present in the Plaintiff's claim which were consistent with a referral to TCMS under the Defendant's procedures, although no such reasons were documented in the claim file. (Mills Depo. at p. 41, ll. 21-25, p. 42, ll. 3-5, 12-25; Interr. at ¶ 2). There are reasons in the Policy, Procedure, and Exceptions to allow for TCMS review. (Mills Depo. p. 34, ll. 14-16, p.35, ll. 7-12, 20-24). Ms. Mills speculated as to how the claim could meet the following factors warranting TCMS review: (1) it involved physical complaints which were primarily subjective in nature; (2) it involved multiple treating physicians; (3) the claim involved both physical and mental symptoms; and (4) the TCMS referral occurred after the receipt by Liberty of the Plaintiff's reports from neuropsychological testing. (Interr. at ¶ 2). Ms. Mills opined that she believed that benefits were not approved correctly or according to the terms of the policy. (Mills Depo. p. 24, ll. 21-25).
During a TCMS roundtable discussion held on October 14, 2004, it was discussed whether the Plaintiff's prior claim manager properly evaluated the claim and that it appeared that the Plaintiff's SLE condition may have been a pre-existing condition (CF-35 (Claim Note 58)). The roundtable review concluded that: (1) Fultz has been treated for symptoms which led to the diagnosis of SLE; (2) she had received positive anti-nuclear antibody ("ANA") results in lab reports from January 8, 2003 which are consistent with SLE; and (3) Dr. Franklin, her treating physician at the time period before coverage, had indicated an impression of SLE in an handwritten note in his January 29, 2003 treatment notes. (CF-35 (Claim Note 58)).
After the roundtable discussion, it was decided that additional medical records, which had not been obtained for the first review would be requested in addition to the Plaintiff's pharmacy records from Eckerd Pharmacy and CVS Pharmacy. (CF-247-253). Subsequently, Liberty received these pharmacy records, which showed that the Plaintiff had been taking anti-inflammatories and steroids during January, February, and March of 2003. (CF-178-179). Liberty also received medical records from Dr. Inkeles Barton, one of her treating physicians in New York. (CF-222-225). On December 14, 2004, during a telephone call between Ms. Mills and the Plaintiff, for the first time, the Plaintiff was notified that the Defendant was reconsidering her claim on the basis of the pre-existing condition exclusion. (CF-33-34, Phone Note 18). During this conversation, Ms. Mills informed the Plaintiff of her belief that the pre-existing condition exclusion was applicable to her condition based upon her review of the medical evidence and her disagreement with the prior case ...