Urso v. Prudential Ins. Co.

2004 DNH 167

• Court: District Court, D. New Hampshire
• Decided: November 23, 2004
• Docket: CV-03-024-JD
• Status: Published

Opinion

Urso v. Prudential Ins. Co. CV-03-024-JD 11/23/04 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Wayne Urso

v. Civil No. 03-024-JD Opinion No. 2004 DNH 167 Prudential Insurance Company of America

O R D E R

Wayne Urso brings suit under the Employee Retirement Income

Security Act of 1984 ("ERISA"), 29 U.S.C. § 1001, et seq.,

challenging the decision made by Prudential Insurance Company of

America to discontinue his long-term disability benefits.

Prudential moves for summary judgment, contending that its

decision was properly made and that Urso failed to exhaust the

remedies available to him under the plan. Urso objects to

summary judgment. The parties disagree as to the standard of

review and failed to file a joint administrative record.

Discussion

"In an ERISA benefit denial case, trial is usually not an

option: in a very real sense, the district court sits more as an

appellate tribunal than as a trial court." Leahy v. Raytheon

C o ., 315 F.3d 11, 18 (1st Cir. 2002). A prerequisite for

judicial review is that the claimant exhaust the internal claims procedures provided by the benefits plan. Terry v. Bayer Corp.,

145 F.3d 28, 36 (1st Cir. 1998). The district court reviews a

decision to deny benefits under the de novo standard unless the

plan clearly gives the administrator discretionary authority to

make the benefit decision or to construe the terms of the plan.

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989);

Brigham v. Sun Life of Can., 317 F.3d 72, 80 (1st Cir. 2003) .

A. Exhaustion

Urso submitted his claim for disability benefits on January

26, 2000, claiming a disability due to thoracic outlet syndrome,

pronater teres syndrome, and carpal tunnel syndrome. Prudential

determined that he was disabled from his regular occupation, as a

consultant software engineer for Comsys Information Technologies,

Inc., on May 26, 2000. In September of 2000, Urso submitted

evidence that he had also been diagnosed with depression, which

he claimed was an additional disabling condition.

Under the terms of the plan, the definition of disability

changed after Urso had received benefits for twenty-four months

so that he would no longer be considered disabled unless he was

"unable to perform the duties of any gainful occupation for which

[he was] reasonably fitted by education, training or experience."

Prudential notified Urso in February of 2002 that he would not be

2 eligible for benefits under the "gainful occupation" definition

and that Prudential would pay benefits only until the middle of

April of 2 002.

Urso appealed that decision and provided additional medical

evidence to support his disability claim. In a letter dated

March 25, 2002, Prudential notified Urso of its decision to

uphold its initial decision to discontinue his disability

benefits. Urso then retained counsel and gathered his records

and additional evidence. Counsel filed a second appeal on Urso's

behalf on July 12, 2002. Prudential responded to the second

appeal on October 29, 2002, more than three months after the

appeal was filed, and again affirmed the decision to deny

disability benefits. That letter notified Urso that he could

file a third appeal to the Appeals Committee, which would issue a

final decision. Urso did not file a third appeal and, instead,

filed this action in January of 2003.

Prudential claims that Urso failed to fulfill the exhaustion

reguirement because he did not complete its internal process by

filing a third appeal. Urso responds that because Prudential did

not comply with the timeliness reguirements for issuing its last

decision, his claim is deemed to have been exhausted. Prudential

does not dispute that it failed to comply with the timeliness

reguirements but argues that the court should reguire exhaustion,

3 as a matter of policy, contrary to the applicable regulations.

The regulations applicable to ERISA plans "establish

extensive reguirements to ensure full and fair review of benefit

denials." Aetna Health Inc. v. Davila, 124 S.Ct. 2488, 2502

(2004). Included in that regulatory framework is a reguirement

that the administrator notify a claimant of its decision on an

appeal of a denial of a disability benefits claim within forty-

five days after receiving the reguest for review. 29 C.F.R. §

2506.503-1(1)(3). The regulations also limit the number of

appeals to two for group health plan claims, 29 C.F.R. §

2506.503-1(c)(2), and suggest that two appeals also would be

sufficient to exhaust disability benefits claims, § 2506.503-

1 (i) (3) . If a plan fails to establish or follow procedures that

are consistent with the regulatory reguirements, "a claimant

shall be deemed to have exhausted the administrative remedies

available under the plan." § 2506.503-1(1).

It is undisputed that Prudential failed to notify Urso or

his counsel of its decision on the second appeal within forty-

five days of receiving the reguest. Based upon the regulatory

framework, Urso was deemed to have exhausted his remedies under

the plan after that time expired. See Linder v. BYK-Chemie USA

Inc., 313 F. Supp. 2d 88, 92 (D. Conn. 2004). That Prudential

provided late notice denying benefits and offering a third appeal

4 before Urso filed suit does not affect the deemed exhaustion.

See Schmir v. Prudential Ins. Co. of Am., 2003 WL 22466168, at *3

(D. Me. Oct. 30, 2003). The court is not persuaded that any

policy favoring exhaustion would override the operation of the

regulatory framework in this case. See id.

Therefore, Prudential's motion for summary judgment based on

a theory that Urso failed to exhaust the available internal

remedies is denied.

B. Standard of Review

Because the de novo standard of review is the default in an

ERISA case, the plan administrator bears the burden of showing

that the more deferential standard should apply. Fay v. Oxford

Health Plan, 287 F.3d 96, 104 (2d Cir. 2002); Marguez-Massas v.

Squibb Mfg., Inc., 2004 WL 2406614, at *4 (D.P.R. Oct. 27, 2004);

McDonald v. Timberland Co. Group LTD Coverage Program, 2002 WL

122382, at *3 (D.N.H. Jan. 23, 2002). To carry that burden.

Prudential must show that "the language of the benefits plan

reflects a clear grant of discretionary authority to determine

eligibility for benefits." Matias-Correa v. Pfizer, Inc., 345

F.3d 7, 11 (1st Cir. 2003). If that burden is met, the court

applies the arbitrary and capricious standard of review,

determining whether the administrator's decision was

5 unreasonable. Liston v. Unum Corp. Officer Severance Plan, 330

F .3d 19, 24 (1st Cir. 2003).

Prudential contends that the following plan language clearly

confers discretionary authority to make eligibility decisions:

"You are disabled when Prudential determines that . . . " In

support of that contention. Prudential cites cases where, it

claims, courts found the same or similar language sufficient to

confer discretion. In several of those cases, however, the

parties did not dispute whether the language conferred

discretion, so the court did not decide that issue. See, e.g.,

McLaughlin v. Prudential Life Ins. Co. of Am., 319 F. Supp. 2d

115, 124 (D. Mass. 2004); Strouse v. Pruvalue Ins., 2003 WL

21556932, at *1 (N.D. Cal. July 8, 2003). In another case,

contrary to the representation made by Prudential, the plan

language expressly gave discretionary authority to determine

eligibility for benefits, unlike the language in the Prudential

plan here. Newman v. UNUM Life Ins. Co. of Am.,2000 WL 1593443,

at *2 (N.D. 111. Oct. 23, 2000).The court does not find

Prudential's largely unsupported argument persuasive.

As Prudential acknowledges, courts disagree as to whether

the language used in its plan is sufficient to confer discretion.

Compare Eubanks v. Prudential Ins. Co. of Am., 336 F. Supp. 2d

521, 528 (M.D.N.C. 2004) (holding identical language sufficient

6 to confer discretion); Mitchell v. Prudential Health Care Plan,

2002 WL 1284947, at *7 (D. Del. June 10, 2002) (same), with

Herzberger v. Standard Ins. Co., 205 F.3d 327, 331 (7th Cir.

2000) (stating that "the mere fact that the plan requires a

determination of eligibility or entitlement by the plan

administrator" was insufficient to confer discretionary

authority); Diaz v. Prudential Ins. Co. of Am., 2004 WL 1094441,

at *6 (N.D. 111. May 13, 2004) (accord); McDonald, 2002 WL

122382, at *2-3 (accord and discussing cases). That disagreement

alone suggests that the language does not clearly confer

discretionary authority. In addition, the First Circuit has

followed the guidance of the Seventh Circuit in Herzberger for

purposes of construing plan language. See, e.g., Brigham, 317

F.3d at 81. Further, this court's analysis of the same language

in McDonald, supra, applying the de novo standard, is persuasive,

and Prudential has not carried its burden of showing that the

arbitrary and capricious standard should apply here.

The court concludes that the language: "You are disabled

when Prudential determines that . . .," does not clearly confer

discretionary authority on Prudential to make the eligibility

determination. Therefore, in the absence of discretionary

authority. Prudential's decision will be reviewed under the de

novo standard.

7 C. Review of the Decision

Summary judgment is appropriate when "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 a judgment as a matter of law." Fed. R. Civ. P.

56(c). The party seeking summary judgment must first demonstrate

the absence of a genuine issue of material fact in the record.

See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A party

opposing a properly supported motion for summary judgment must

present competent evidence of record that shows a genuine issue

for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

256 (1986). All reasonable inferences and all credibility issues

are resolved in favor of the nonmoving party. See id. at 255.

Ordinarily, in an ERISA case the court reviews the last and

final decision of the administrator. See Terry, 145 F.3d at 36.

In this case. Prudential made two decisions in response to Urso's

appeals. The second appellate decision, however, as is discussed

above in the context of exhaustion, was not made in a timely

fashion, which led to the court's conclusion that Urso was deemed

to have exhausted the internal process. Nevertheless, because

the second appellate decision, issued on October 29, 2002, is the

last and final decision Prudential made on Urso's claim, that appears to be the appropriate decision for review.

Applying the de novo standard, the court reviews the October

29 decision to determine whether it was correct. Marguez-Massas,

2 004 WL 2406614, at *4; Johnson v. UNUM Life Ins. Co. of Am., 32 9

F. Supp. 2d 161, 170 (D. Me. 2004) . The court will consider only

the evidence that was available to the plan administrator, as

neither party has shown that the administrative record should be

supplemented with additional evidence. See Liston, 330 F.3d at

24. As the claimant, Urso bears the burden of showing that he

was disabled and entitled to benefits under the plan. Brigham,

317 F.3d at 84-5.

The parties did not provide an agreed record for review, and

both included additional evidence that was not part of the record

used by the administrator. In addition, Urso appears to have

mistaken the issue for review, which is whether the record shows

that he was entitled to benefits. Despite those obstacles, the

present motion may be addressed based on the evidence that was

mentioned in the October 29 decision and that both parties

represent was part of the record.

The October 29 decision concluded that Urso was not entitled

to benefits because he was not disabled from performing "the

duties of any gainful occupation for which [he was] reasonably

fitted by education, training or experience." Latore Aff. Exs. at 00146. The decision states that the administrator reviewed

the medical information in Urso's file along with "an Independent

Medical Examination requested and received from Mr. Urso's

Workers Compensation Carrier." Id. at 00147. The administrator

concluded that Urso could not drive for more than forty-five

minutes at a time, was limited to only one to three hours of

computer work each day, and had to be allowed to change positions

frequently. The restrictions, the administrator found, would not

prevent Urso from doing the work of five occupations identified

by Vocational Rehabilitation in the Manchester, New Hampshire,

labor market. The administrator also concluded that Urso's

depression would not have prevented his previous work as a

software engineer.

Contrary to the administrator's decision, Urso's treating

physician. Dr. Patterson, stated in a letter to Prudential, dated

March 22, 2002, that Urso's physical restrictions would not

permit him to do any of the five jobs identified by Vocational

Rehabilitation. Dr. Patterson is the chief medical officer of

Occupational Health + Rehabilitation, Inc., in Hingham,

Massachusetts. He became Urso's treating physician after the

workers' compensation carrier referred Urso to him for

evaluation. The October 29 decision does not mention Dr.

Patterson's opinion.

10 There does not appear to be an independent medical

examination from the workers' compensation carrier in the record,

despite reference to it in the October 29 decision. In its

motion for summary judgment. Prudential explains that it intended

to have an outside medical examination done but concluded that it

was impractical because Urso lived so far away from medical

providers and had a driving restriction. Instead, Prudential had

its own medical director. Dr. MacBride, review Urso's records.

Dr. MacBride noted Dr. Patterson's March 22, 2002, note that

Urso was, in his opinion, disabled from work because of thoracic

outlet syndrome. Dr. MacBride discounted that opinion because

Urso had declined surgery for thoracic outlet syndrome,

apparently because of the uncertainty that surgery would provide

positive results. Although he does not appear to be a

psychiatrist or psychologist. Dr. MacBride concluded that the

record did not show that Urso had severe symptoms from

depression, despite noting a psychologist's evaluation of "Major

Depression of moderate severity." Dr. MacBride noted that Urso

should have independent medical and psychiatric examinations and

that the workers compensation records were not part of the

record, which he deemed "unfortunate."

Taking the record summarized above in the light most

favorable to Urso, Dr. Patterson's opinions contradict

11 Prudential's conclusion. In addition, the decision does not

explain the relevance of the five occupations in the Manchester,

New Hampshire, job market, even if Urso were physically and

psychologically able to do that work, when Urso lives in Errol,

New Hampshire, and is limited to driving no more than forty-five

minutes. Further, Dr. MacBride's evaluation of the record, taken

in the light most favorable to Urso, provides little support for

the decision. Based on the present record. Prudential has not

shown that its decision to deny benefits was correct.

D. Further Proceedings

Only Prudential moved for summary judgment, and the motion

must be denied. If Urso's case were to proceed to trial, it

would be tried to the court, not to a jury. See Liston, 330 F.3d

at 24, n.4. However, it is not apparent that a trial would be

necessary or appropriate in this case. See Leahy, 315 F.3d at

17-18; DiGregorio v. Pricewaterhouse Coopers LTD Plan, 2 004 WL

1774566, at *13-14 (D. Mass. Aug. 9, 2004).

Urso contends that Prudential failed to provide him with a

full and fair review of his claim as is reguired by ERISA and its

implementing regulations. A procedural irregularity under the

ERISA regulations does not entitle a beneficiary to an award of

benefits. Glista v. UNUM Life Ins. Co. of Am., 378 F.3d 113, 131

12 n.13 (1st Cir. 2004). When the administrator did not provide a

fair process, however, as Urso claims here, the court may remand

the case to the administrator to reconsider the beneficiary's

claim in light of supplemental evidence. Recupero v. New England

Tel. & Tel. Co., 118 F.3d 820, 830 (1st Cir. 1997).

That appears to be the appropriate remedy in this case.

Even Dr. MacBride believed that additional evidence, including

Urso's workers compensation records and independent medical and

psychological examinations, should be considered in making the

determination as to whether or not Urso is disabled within the

meaning of the Prudential plan. Therefore, the case is remanded

to the plan administrator for reconsideration of Urso's claim,

taking into consideration all pertinent evidence and obtaining

any additional or supplemental evidence that may be necessary for

a full and fair review of the claim.

Conclusion

For the foregoing reasons, the defendant's motion for

summary judgment (document no. 60) is denied.

The case is remanded to the plan administrator for further

proceedings that are not inconsistent with this order. The clerk

13 of court shall enter judgment that the case is terminated in

favor of neither party and is remanded to the plan administrator.

SO ORDERED.

Joseph A. DiClerico, Jr. United States District Judge

November 23, 2 004

cc: Michael J. Atkins, Esguire Geoffrey M. Coan, Esguire Robert A. Shaines, Esguire