IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA
June 25, 2010
ROBERT POLICARO, PLAINTIFF,
EATON CORPORATION, DEFENDANT.
The opinion of the court was delivered by: Magistrate Judge Bissoon
MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION
It is respectfully recommended that Defendant‟s Motion for Summary Judgment (Doc. 22) be denied, that Plaintiff‟s Motion for Summary Judgment (Doc. 24) be granted, and that the parties be ordered to appear before the undersigned to discuss the judgment amount to be entered in favor of Plaintiff.
Plaintiff has filed this ERISA action against his employer, Eaton Corporation, seeking payment of benefits under its short term disability plan ("the Plan"). See generally Compl. (attached to Doc. 1). Plaintiff was granted short term disability ("STD") benefits effective April 1, 2008, and he received them through August 7, 2008, at which time they were terminated by Defendant. See Def.‟s Facts (Doc. 23) at ¶¶ 2-3.*fn1
Defendant‟s initial determination of disability was based on Plaintiff‟s cervical pain and psychiatric problems. Id. at ¶ 9. Although the parties‟ filings address both types of impairment, the Court need not discuss Plaintiff‟s cervical issues because Defendant‟s handling of his mental conditions is dispositive. See generally discussions infra.
Defendant asserts that, although Plaintiff‟s treating psychiatric sources "provided [objective] evidence [of disability] at the outset of Plaintiff‟s claim," such evidence was lacking by August, 2008. See Def.‟s Opp‟n Br. (Doc. 27) at 2; cf. also id. at 13 (given reports of treating psychiatrists, "[Defendant] does not dispute that Plaintiff was disabled in April and May[,] 2008"). In arguing against continued disability, Defendant relies on the reports of three non-examining consultative physicians, each of whom identified a purported lack of objective medical evidence supporting the opinions of Plaintiff‟s treating psychiatrists. See Admin. Rcd. (filed under Doc. 23-1 through 23-8, hereinafter, "R. at __") at 185 (Rpt. of Dr. Vogel, stating that "[t]here [was] insufficient objective evidence of cognitive dysfunction"); id. at 159 (Rpt. of Dr. Polsky, rejecting findings of Plaintiff‟s treating psychiatrist as "[un]substantiated" by "objective mental status examination findings"); and id. at 126-27 (Rpt. of unnamed medical reviewer, concluding same).
Defendant is correct that, under the Plan, "[o]bjective findings" were required to establish continued disability. See Def.‟s Facts at ¶ 7. The Plan‟s definition of "objective findings," however, is instructive:
Objective findings are those your physician observes through objective means, not your description of the symptoms. Objective findings include:
* Physical examination findings (functional impairments/capacity);
* Diagnostic test results/imaging studies;
* X-ray results;
* Observation of anatomical, physiological or psychological abnormalities; and
* Medications and/or treatment plan[s].
Id. (quoting Plan).
For the purposes of mental impairments, all of Plaintiff‟s medical reports came from the same group of treating physicians, at Beaver County Psychiatric Services ("BCPS").
On April 10, 2008, BCPS psychiatrist Dr. Joseph Peters authored a two-page report that, among other things, recited the history of Plaintiff‟s illnesses and observed that he was "highly anxious," "displayed mild stuttering," had "mildly impaired" cognitive and memory functions, and possessed "limited" insight. See R. at 236-37. Based on these and other findings, Dr. Peters diagnosed Plaintiff with "[a] Major Depressive Episode" and "Panic Disorder with Agoraphobia," and he opined that Plaintiff‟s conditions resulted in "severe . . . occupational problems." Id. at 237.
On summary judgment, Defendant concedes that this and other evidence was sufficient to establish Plaintiff‟s disability in April and May, 2008. See discussion supra; see also Def.‟s Opp‟n Br. at 5 (characterizing Dr. Peters‟s April 10th report as reflecting "a comprehensive examination" supporting determination of disability). Defendant‟s stated objection, however, has been Plaintiff‟s failure to supply further evidence of continuing disability. See, e.g., Def.‟s Br. (filed under Doc. 22) at 5-6 (citing provisions of Plan requiring evidence of continued disability).
The record is to the contrary. After Dr. Peters‟s April 10th report, Plaintiff‟s treating psychiatrists provided multiple, consistent findings and opinions of disability. See, e.g., Rpt. of Dr. Peters dated May 5, 2008 (R. at 222) ("[Plaintiff was] essentially housebound [due] to his psychological status," he "[had] been started on a psychopharma[co]logical treatment regime," and "[i]t [was] not possible . . . to make a definitive estimate as to when he may be able to return to work"); Rpt. of Dr. Peters and Dr. Suzanne Vogel-Scibilia dated Aug. 21, 2008 (Plaintiff "has been followed for the treatment of a Major Depressive Disorder and a Panic Disorder with Agoraphobia," and, although "minimal gains" had been made, "his functional patterns continue[d] to be severely constricted and marked by significantly depressed mood, strong fear/anxiety, ruminations, feelings of helplessness and hopelessness, impaired concentration and attention, agitation and restlessness, and ongoing minimal activity and socialization levels"; "[Plaintiff did] not now nor in the immediate future appear capable of performing reliably the duties of his job"); Rpt. of Dr. Peters dated Oct. 22, 2008 (R. at 173) (Plaintiff‟s "mental status and functional patterns [were] essentially [unchanged]," and "[h]e still [did] not present as capable of performing reliably the duties of his job"); Rpt. of Drs. Peters and Vogel-Scibilia dated Nov. 19, 2008 (R. at 136) (same); Rpt. of Dr. Vogel-Scibilia dated Jan. 9, 2009 (R. at 133-34) (discussed in detail, infra); and Rpt. of Dr. Vogel-Scibilia dated Mar. 20, 2009 (R. at 131) (reaffirming opinion of disability, and stating: "[Plaintiff] has decreased short term memory, decreased concentration[,] problems initiating tasks," and "panic symptoms that [were] disabling and prevent[ed] him from working").
This evidence notwithstanding, Defendant persists in relying on the reports of three non-examining physicians, each of whom found that Plaintiff, and his treating physicians, supplied insufficient objective evidence of disability. See discussion supra.
The problem with Defendant‟s reliance on those physicians, however, was their failure:
(a) to consider the meaning of "objective" evidence, as defined under the Plan; and (b) to provide Plaintiff any guidance regarding precisely what, in the physicians‟ views, constituted sufficient "objective evidence."
As seen above, "objective findings" under the Plan included "[d]iagnoses," "[o]bservation[s] of . . . psychological abnormalities," and "[m]edications and/or treatment plan[s]." See discussion supra. The ongoing reports of Plaintiff‟s treating psychiatrists were replete with "objective findings," as so defined. See discussions supra (offering consistent diagnoses of major depressive disorder and panic disorder with agoraphobia; observing psychological abnormalities, including "high anxi[ety]," mild stuttering, impaired cognitive and memory functions, limited insight, significantly depressed mood, strong fear, ruminations, feelings of helplessness and hopelessness, impaired concentration and attention, agitation and restlessness, decreased short term memory, decreased concentration, problems initiating tasks, and disabling panic symptoms; and outlining psychopharmacological and other treatment regimens).
To the extent that these objective findings were deemed insufficient, neither Defendant nor its non-examining physicians offered specific explanations as to what, in their minds, would satisfy the "objectivity" requirement. Indeed, Plaintiff‟s treating physician Dr. Vogel-Scibilia expressed frustration regarding the elusiveness of Defendant‟s demands:
[M]y teleconference . . . on December 8, 2008 . . . does not in my reading adequately reflect the conversation that I had with [one of Defendant‟s non-treating] psychiatric specialist[s]. I would like to put on the record very clearly in writing that I very clearly told the [non-treating psychiatrist] that [Plaintiff] suffers from significant depressive and anxiety symptoms, has chronic pain as well as trouble with short term memory and attention such that he was completely unable to work. I also stated that[,] as documented in my [treatment notes], he cannot concentrate, has decreased attention, and decreased short term memory. All of his symptoms are very clearly documented in the paper work here at [BCPS].
R. at 133-34; see also id. (concluding, after recitation of various treatment notes in support of her opinions, that "it would be psychiatrically unwise to have [Plaintiff] in any type of industrial situation given the significance of his depressive and anxiety symptoms," and his working would be "dangerous and unwise both for the safety of the plant as well as for the patient").
Defendant‟s decision to terminate Plaintiff‟s STD benefits is reviewed under an "abuse of discretion" standard. Estate of Schwing v. The Lilly Health Plan, 562 F.3d 522, 525-26 (3d Cir. 2009).*fn2 Defendant has failed the applicable standards in many respects.
First was Defendant‟s rejection of the opinions of Plaintiff‟s treating physicians, in favor of medical sources who were limited to a "paper review." Although treating physicians are not entitled to special deference under ERISA, courts have "frequently expressed concern where, as here, the administrator denies a claim [in] reliance on the reports of paper-review consultants, in opposition to the treating and examining physicians‟ consistent and concurring opinions that the claimant is disabled." Schwarzwaelder, 606 F. Supp.2d at 559 (collecting cases). Administrators may not arbitrarily refuse to credit the reliable opinions of treating physicians, id., and Defendant acted arbitrarily in rejecting the findings of Drs. Peters and Vogel-Scibilia for lack of objectivity, given that their conclusions were supported by "objective findings" as defined under the Plan. See discussions supra; cf. also Schwarzwaelder, 606 F. Supp.2d at 560 n.45 ("[u]nlike cardiologists or orthopedi[st]s, who can formulate medical opinions based upon objective findings derived from objective clinical tests, the psychiatrist typically treats his patient‟s subjective symptoms"; and "[w]hen a psychiatrist evaluates a patient‟s mental condition, a lot . . . depends on interviewing the patient and spending time with [him]") (citation to quoted source omitted).*fn3
"In addition, a decision to forego an IME [independent medical examination] and conduct only a paper review, while not rendering a denial of benefits arbitrary per se, is another factor to consider in the Court‟s overall assessment of the reasonableness of the administrator‟s decision-making process." Schwarzwaelder, 606 F. Supp.2d at 559.
No IME was conducted in this case, and this omission further undermines Defendant‟s decision to terminate benefits. See id. at 560 & n.45 ("[c]courts have noted the particular appropriateness and helpfulness of an IME where the disability claim encompasses significant inherently subjective complaints," as do psychological impairments) (citations omitted).
Another serious deficiency flows from Defendant‟s current admission that the BCPS reports in April and May, 2008 constituted acceptable evidence of disability, while at the same time insisting that that same treatment group‟s later reports and opinions lacked the support of "objective evidence." Dr. Peters‟s April 10th report identified few, if any, more "objective findings" than did his or Dr. Vogel-Scibilia‟s subsequent reports, and Defendant acted arbitrarily in failing to appreciate or accept the cumulative nature of Plaintiff‟s treatment reports.*fn4
Relatedly, Defendant‟s termination of benefits "in the absence of a significant change in the information available to it . . . weigh[s] against the propriety of [the] decision to discontinue [benefits]." Dillard‟s Inc. v. Liberty Life Assur. Co. of Boston, 456 F.3d 894, 900 (8th Cir. 2006) (citation to quoted source omitted); accord Miller v. American Airlines, Inc., 2009 WL 6039583, *12 (M.D. Pa. Nov. 30, 2009) (absent new information, "abrupt reversals of benefits determinations may constitute significant procedural irregularity that may support finding an administrator‟s benefits determination to be arbitrary and capricious") (citations omitted). While Defense counsel undoubtedly would highlight that the reports of the non-examining physicians post-dated Defendant‟s initial grant of disability benefits, those reports merely asserted that medical findings and opinions of disability, already accepted by Defendant (as now reaffirmed on summary judgment), did not reflect "objective evidence," notwithstanding the Plan‟s definitions to the contrary. In sum, Defendant‟s reliance on the non-examining physicians‟ opinions cannot withstand judicial scrutiny. See discussions supra; see also, e.g., Hession v. Prudential Ins. Co. of Amer., 2008 WL 5207089, *4 (3d Cir. Dec. 15, 2008) (where insurer terminated benefits in "heavy reliance on a paper review," despite findings of disability by "nearly all of the [claimant‟s] treating physicians," procedural irregularity was evident and decision was reviewed, and ultimately rejected, under heightened scrutiny standard) (citation to published authority omitted).*fn5
Finally, the Court finds it very troubling that Defendant failed to advise Plaintiff, or his treating physicians, regarding what additional "objective" medical evidence was necessary. See discussion supra (quoting letter of Dr. Vogel-Scibilia, who expressed frustration regarding non-examining physician‟s characterization of her reports and purported lack of objective evidence supporting her opinions). This failure to allow Plaintiff to remedy any perceived or asserted shortcomings in his physicians‟ reports arguably also is arbitrary and capricious.
See Skretvedt v. E.I. DuPont de Nemours & Co., 268 F.3d 167, 178 n.8 (3d Cir. 2001) (Third Circuit Court was "trouble[ed]" by defendant‟s "fail[ure] to provide an explanation of what would constitute sufficient "objective‟ medical evidence of a psychological disability," but Court declined to reach issue because defendant‟s decision was arbitrary and capricious on other grounds) (citations omitted).
For all of the reasons stated above, Defendant‟s termination of Plaintiff‟s STD benefits constituted an abuse of discretion, and summary judgment should be entered in favor of Plaintiff. Plaintiff‟s request for attorneys‟ fees, however, should be denied. In this regard, the Court considers:
(a) the offending parties‟ culpability or bad faith;
(b) the ability of the offending parties to satisfy the award of attorneys‟ fees;
(c) the deterrent effect of an award of attorneys‟ fees against the offending parties;
(d) the benefit conferred upon members of the plan as a whole; and
(e) the relative merits of the parties‟ positions.
In re Unisys Corp. Retiree Med. Benefits ERISA Litig., 579 F.3d 220, 239 (3d Cir. 2009) (citation to quoted source omitted), cert. denied, -- U.S. --, 130 S.Ct. 1546 (2010).
As to factor (a), the undersigned, having sat by referral in this case from its inception, sees little basis for finding culpability or bad faith on the part of Defendant. To the contrary, Defendant has consistently expressed its belief that the defense of this lawsuit was consistent with, and required by, its fiduciary duties to protect the funds of the Plan and the interests of other potential disability claimants. See id.; see also factor (d) (considering "members of the plan as a whole").
Furthermore, Defendant secured the opinions of six consultative, albeit non-examining, medical professionals before determining that Plaintiff‟s benefits should be terminated.
See Def.‟s Br. at 14 (accounting for Plaintiff‟s mental and physical impairments). Although the Court ultimately disagrees with the definitions of "objectivity" relied upon by Defendant and its psychiatric reviewers, Defendant‟s evaluation of Plaintiff‟s claim file, on the whole, does not evince a party in need of future deterrence. See factor (c), supra.
The final factor,*fn6 the relative merits of the parties‟ legal positions, does not counsel in favor of assessing fees. Although the undersigned would not necessarily characterize this as a "close case," it is fair to say that Defendant possessed colorable legal defenses. Only with the benefit of hindsight, and after careful judicial review, has it become clear that Defendant abused its discretion in evaluating Plaintiff‟s mental conditions. For all of these reasons, Plaintiff‟s request for attorney‟s fees should be denied.
The only outstanding issue is determining the monetary amount of the judgment to be entered against Defendant. The Court cannot make this determination on the current record, and the parties should be afforded an opportunity to reach agreement on an amount, or to submit counter-proposals.
If the instant Report and Recommendation is adopted, the District Court should direct the parties to appear before the undersigned to facilitate a resolution of the appropriate judgment amount. At the same time, the parties may consider whether pre-judgment settlement negotiations are desirable given the costs associated with a potential appeal.
Consistent with the foregoing, Defendant‟s Motion for Summary Judgment (Doc. 22) should be denied, Plaintiff‟s Motion for Summary Judgment (Doc. 24) should be granted, and that the parties should be directed to appear before the undersigned as contemplated above.
In accordance with the Magistrates Act, 20 U.S.C. § 636(b)(1) (B) and (C), and Rule 72.D.2 of the Local Rules for Magistrates, objections to this Report and Recommendation are due by July 9, 2010. Responses to objections are due by July 23, 2010.
Cathy Bissoon United States Magistrate Judge