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Schwarzwaelder v. Merrill Lynch & Co.

March 9, 2009

CHERYL SCHWARZWAELDER, PLAINTIFF,
v.
MERRILL LYNCH & CO., INC. AND METROPOLITAN LIFE INSURANCE CO., DEFENDANTS.



The opinion of the court was delivered by: Judge Terrence F. McVerry

Magistrate Judge Lisa Pupo Lenihan

MEMORANDUM OPINION AND ORDER

I. CONCLUSION

The Motion for Summary Judgment filed by Defendant will be denied and the Motion for Summary Judgment filed by Plaintiff will be granted, as Defendant Metropolitan Life Insurance Company's ("MetLife" or the "Administrator") denial of benefits on remand constituted an abuse of discretion in light of (a) the applicable Plan provisions and (b) the medical and occupational evidence of the Administrative Record (the "Record"). This Court will grant Plaintiff's request for summary judgement "on the issue of whether [Plaintiff] is entitled to a grant of long-term disability benefits commencing May 3, 2004." Plaintiff's Motion for Summary Judgment at 1. It will also grant Plaintiff's request for "interest, fees and costs". Id. at 2.

II. DISCUSSION

This case, which has been re-opened and is again before this Court following remand to the Administrator in December, 2006, involves the question of a long-term disability plan claim administrator's denial of benefits to a financial consultant. The consultant sought benefits under the language of a Plan providing them - in Plaintiff's circumstances, for a maximum of twenty-four (24) months - to an employee who is "unable to perform all of the regular duties of the Merrill Lynch job [s/he] had before [the] disability began and [is] under the continuous care of a doctor treating [the employee] within the scope of his or her speciality".*fn1 Presently before the Court are fully-briefed cross Motions for Summary Judgment.

Because the Administrator's denial of long-term disability benefits on remand constituted an abuse of discretion under the terms of the Plan, the Defendants' Motion for Summary Judgment will be denied and Plaintiff's Motion for Summary Judgment will be granted. More specifically, the Court has considered MetLife's (1) self-serving selectivity in its use and interpretation of the medical evidence, including reliance upon the solely paper-review reports of its consultants while giving scant weight to the contrary, more detailed, and consistent reports of Plaintiff's three treating/evaluating physicians, where the claim turned on Plaintiff"s mental health, and MetLife had discretion to supplement the medical evidence with independent medical evaluation ("IME"); (2) rejection of evidence self-reported by Plaintiff to her physicians where (a) MetLife had no basis for rejecting the treating/evaluating physicians' conclusions that Plaintiff's evidence was credible and (b) the Plan did not impose an evidentiary standard that excluded, e.g., the treating psychiatrist's office notes of observations and reported symptoms and events; (3) failure to provide the consultants relied upon with all relevant evidence, i.e., an accurate and complete profile of the scope and requirements of the job Plaintiff was usually/actually performing, (including, e.g., requirements and conditions reasonably related to the disability alleged) and to obtain meaningful assessment of Plaintiff's disability under her Plan, despite this Court's express guidance to the contrary; (4) continued reliance on consultant's conclusions reached with reference to a standard of disability constituting an unreasonable interpretation of the Plan language and/or one expressly refuted by Defendant, and (5) failure to respond to the treating/evaluating physicians' conclusions regarding the impact of employment-related stress on claimant's medical condition.*fn2 The Court notes that an administrator's history of biased claims administration may also properly be considered in an abuse of discretion review,*fn3 but it did not find it necessary, in its abuse of discretion determination, to consider what weight, if any, should be given to MetLife's history as a long-term disability benefit claims administrator.*fn4 The Court also notes, in reaching its case-specific recommendation, that (a) the Plan, as now interpreted by MetLife, provides a lenient disability benefit standard (i.e., a claimant need only be unable to perform any one job function of her own position)*fn5 and, conversely, (b) the performance parameters of claimant's position were quite high.*fn6

A. Statement of Facts and Procedural History

1. Initial Benefits Review and Denial

As set forth in the November 21, 2006 Report and Recommendation adopted as the opinion of this Court (the "R&R"), the long-term disability benefit plan at issue ("the Plan") was established by Plaintiff's employer, Defendant Merrill Lynch & Company, Inc. ("Merrill Lynch"), and is self-funded by Merrill Lynch, with claims administered by Defendant Metropolitan Life Insurance Company. The Plan confers upon the Administrator discretion as to both Plan interpretation and determinations of benefit eligibility. It is governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §1001, et seq. ("ERISA"). See Glenn, 128 S.Ct. at *2347 (noting that administrators "should consider a benefit determination to be a fiduciary act (i.e., an act in which the administrator owes a special duty of loyalty to the plan beneficiaries")); id. at *2350 (observing that ERISA requires plan administrators to discharge their duty solely in the interest of the plan participants and beneficiaries and to provide a full and fair review of claim denials).

Plaintiff Cheryl Schwartzwaelder ("Plaintiff" or "Claimant") was actively employed by Merrill Lynch for approximately one year, i.e., from approximately November 14, 2002 through November 3, 2003, as a high-end broker and financial consultant responsible for approximately $400-$500 Million in assets.*fn7 Plaintiff represented that her treating psychiatrist advised that she was unable to continue in her high-stakes, high-pressure, high-performance-requirements position owing to increasing mental health difficulties, and that she therefore ceased work and sought disability benefits.*fn8

The medical records initially before the Administrator indicate that Plaintiff sought treatment with Dr. Goubert, a psychiatrist, and was seen approximately every two weeks beginning November, 2003. Those records further reflect Plaintiff's Beck Depression Inventory and Initial Psychiatric Evaluation documents; Dr. Goubert's treatment observations/notes; Plaintiff's Patient Health Questionnaires; and Dr. Goubert's March 8, 2004 Attending Physician Statement.*fn9 Dr. Goubert diagnosed Plaintiff with severe depression. His conclusions regarding her impairments included decreased concentration, organizational ability, and memory; together with an inability to "engage in stress situations or engage in interpersonal relations [marked limitations]."*fn10 Dr. Goubert expressly diagnosed Plaintiff's mental health condition as resulting from "work-related stress" and recommended that she not return to work as a financial consultant.*fn11 The records indicate that Plaintiff underwent an extensive and varying trial of pharmaceutical mental health treatment, including Zoloft, Lexapro, Remeron, Wellbutrin, Xanax, and Ambien.*fn12

Plaintiff received short-term disability benefits from her employer for approximately three (3) months and her disability claim was referred to the Claims Administrator on February 20, 2004. The Administrator denied her claim approximately six weeks later, on April 7, 2004, by correspondence informing Plaintiff that there was insufficient documentation to support a significant "functional impairment that would prevent Plaintiff from performing all the regular duties of her job." See Defendants' Motion for Summary Judgment ("Defendants' MSJ") at ¶¶ 13-14; R. at 51-52.*fn13

On April 19, 2004, Plaintiff's counsel notified the Administrator of Plaintiff's desire to appeal its denial of benefits. Dr. Goubert provided a letter of April 14, 2004.*fn14 In addition, on May 27, 2004, Plaintiff underwent a neuropsychological evaluation and testing performed by Michael Franzen, Ph.D., the Chief of Psychology and Neuropsychology of Allegheny General Hospital.*fn15 Dr. Franzen concluded that Plaintiff was suffering "very high levels of psychological distress related to anxiety and depression." He diagnosed her condition as severe adjustment disorder, stating that she was "markedly limited in her ability to perform complex cognitive operations" and that her cognitive state was "significantly compromised by her emotional state" and this would "significantly interfere with and limit her ability to perform at the high level of functioning she previously reported."*fn16

The Administrator obtained a medical file review/assessment (a "paper review") from Mark Schroeder, M.D., a psychiatrist, who concluded, in September, 2004, that Plaintiff had failed to "substantiate a severity of illness or impairment that would be expected to preclude [her] from working at her own occupation". R. at 95.*fn17 At Dr. Schroeder's request, a paper review of Dr. Franzen's evaluation only was obtained from John Shallcross, Psy.D., a psychologist, who opined that (a) Plaintiff's "observed symptoms . . . in the Mental Status Exam [were] not sufficient to suggest a major depressive disorder and such a disorder [was] not diagnosed", (b) the decline in IQ estimated by Dr. Franzen exceeded that normally anticipated due to an adjustment disorder, (c) the testing did not outline specific restrictions/limitations on employment, (d) the limited observed symptoms were "not of a severity that would indicate preclusion of all work capacity". . .", and (e) generally, Dr. Franzen's conclusions regarding Plaintiff's significant cognitive compromise were not "borne out by" the test data.*fn18

The Administrator upheld its denial of benefits on September 23, 2004, reiterating that the "available records submitted for review" did not "substantiate psychiatric functional impairments that would "'preclude [plaintiff] from performing all of the regular duties of her Merrill Lynch job'. . . ." R. at 104. Compare Plaintiff's Prior Brief in Opposition at ¶¶ 26-27 (attesting that Defendants never asked Plaintiff about her specific job duties, the "full scope" of her position, or the level at which she was expected to perform) with September 23, 2004 MetLife letter (noting that Plaintiff's "occupation as a financial consultant is categorized as a sedentary exertion level occupation").*fn19

2. Prior Proceedings Before the Court

The initial action was filed on December 15, 2004

In considering the Defendants' Motion for Summary Judgment, it was unclear to this Court whether the Administrator interpreted the Plan language requiring that a claimant be "unable to perform all the regular duties of [her] Merrill Lynch job" to mean disabled from (a) "one or more" regular duty, or (b) "each and every" regular duty. Indeed, the Administrator took strikingly inconsistent positions on this question during the prior proceedings. See R&R at 9-12.*fn20

The case was therefore remanded to the Administrator for an express statement of its interpretation of the Plan language and, if necessary, reconsideration of Plaintiff's disability claim in light of that interpretation in the first instance. The Court further suggested that, if the Administrator adhered to its denial of benefits, it should clearly define the Plan interpretation applied, and articulate its basis for denial with reference to Plaintiff's individual job requirements.

3. Benefit Review on Remand and Denial

On remand, the Administrator interpreted the Plan to require only that Plaintiff evidence disability from any one regular job duty.*fn21 MetLife obtained a copy of the pro forma description of the financial consultant position from Merrill Lynch.*fn22

MetLife also obtained a file review by Dr. Keven Murphy, a psychologist, who, by Report of May 16, 2007, opined that Dr. Franzen's neurocognitive testing had failed to include measures to assess malingering and that Plaintiff, given her test scores, retained the cognitive abilities to continue work in her own occupation without restrictions or limitations.*fn23 Plaintiff's physicians, Dr. ...


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