Webster v. ITT-Hartford CV-97-373-JD 11/02/98 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Katherine A. Webster
v. Civil No. 97-373-JD
ITT-Hartford Life and Annuity Insurance Co.
O R D E R
Defendant, ITT-Hartford Life and Annuity Insurance, moves
for summary judgment (document no. 6) asserting that Katherine
Webster's state law claims are preempted by the Employee
Retirement Income Security Act ("ERISA"), 29 U.S.C.A. § 1001, et
seq., and that her long-term disability benefits were properly
terminated. Ms. Webster objects, contending that her state law
claims are exempted from ERISA preemption and that Hartford
improperly terminated her benefits under ERISA. For the reasons
that follow, summary judgment is granted in favor of Hartford.
Standard of Review
Summary judgment is appropriate only if 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 judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party bears the initial burden of informing
the court of the basis for the motion. See Celotex Corp. v.
Catrett, 477 U.S. 317, 322-25 (1986) . If the moving party meets
its threshold obligation, the nonmoving party must establish
specific facts, with appropriate record references, showing that
there is a genuine dispute of material fact as to each issue for
which the nonmoving party bears the burden of proof at trial.
See id.; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256
(1986). For summary judgment analysis, the court construes the
record in the light most favorable to the nonmoving party and
indulges all reasonable factual inferences in its favor. See
Pilgrim v. Trustees of Tufts College, 118 F.3d 864, 870 (1st Cir.
1997). Thus, summary judgment should be granted when there is no
dispute as to any material fact and the moving party is entitled
to judgment as a matter of law. See Citv of Hope National
Medical Center v. Healthplus, Inc., No. 98-1038, 1998 WL 568610,
at *2 (1st Cir. Sept. 11, 1998).
Background
Ms. Webster was employed by Mary Hitchcock Memorial Hospital
as an operating room nurse in April of 1993 when she was injured
in a skiing accident. Ms. Webster injured both knees in the
accident and underwent arthroscopic surgery which revealed damage
2 to ligaments in both knees. Ms. Webster had reconstructive
surgery for her left anterior cruciate ligament in July and for
her right cruciate ligament in October of 1993.
As a Hitchcock employee, Ms. Webster was insured for short
and long term disability benefits through a group policy with
Hartford. Because of her injury, Ms. Webster was unable to work
and began to receive short-term benefits in April 1993. In
August 1993, Ms. Webster applied for and was granted long-term
benefits to begin in October.
Dr. Shirreffs, Ms. Webster's treating orthopedic surgeon,
completed disability forms in support of her applications for
benefits. In November of 1993, Dr. Shirreffs indicated that he
expected Ms. Webster to be able to return to work as an operating
room nurse in four to six months. In a form completed in January
of 1994, Dr. Shirreffs indicated that Ms. Webster was capable of
doing light work but not her job as an operating room nurse. He
found that she was not disabled from all other jobs.
Ms. Webster returned to her nursing job on a part-time basis
in March of 1994. While she worked part-time, she continued to
receive benefits in a reduced amount. In June of 1994, Dr.
Shirreffs indicated that Ms. Webster would reguire several more
months of rehabilitation before she would be able to return to
full-time work. Ms. Webster hoped to find another nursing
3 position at Hitchcock that was less physically taxing than
operating room work, but no such position was then available.
She was not chosen for an open position as a case facilitator.
Ms. Webster then decided to return to school to earn her bachelor
degree in nursing and Hartford agreed to subsidize one-third of
the projected cost of her training while she remained eligible
for long-term disability benefits.
In January of 1995, Ms. Webster stopped working and began
her college program. Dr. Shirreffs's evaluation in May of 1995
indicated, as in October of 1994, that Ms. Webster was capable of
light work, that she was disabled from her previous work, but not
from all other work. A telephone call record dated in July of
1995 says that Ms. Webster reported to Hartford that she would
receive her degree in December of 1996 and that she was aware
that her disability benefits would "almost definitely" be
terminated before that time.
Under Hartford's long-term disability policy, an insured
must be "totally disabled," as defined in the policy, to receive
benefits. The definition of "totally disabled" changes after an
initial period of receiving benefits. During an insured's six-
month gualifying period and for the next twenty-four months, an
insured is totally disabled if she "is prevented by accidental
bodily injury or sickness from doing the material and substantial
4 duties of [her] own occupation." Thereafter, an insured is
"totally disabled" only if she "is prevented by accidental bodily
injury or sickness from doing any occupation or work for which
[she] is or could become qualified by training; or education; or
experience." Hartford's Appendix ("Def. App.") at 8.
Hartford notified Ms. Webster on September 29, 1995, that
her benefits would be terminated as of October 3, 1995, which was
the twenty-four month anniversary date of when her long term
benefits began. Ms. Webster appealed the termination of her
benefits and submitted additional evidence of her disability from
Dr. Shirreffs and Dr. Morgan. Dr. Shirreffs completed another
evaluation form dated December 8, 1995, based on an examination
in October of 1995, in which he indicated that Ms. Webster's
condition was improved and that she was still capable of light
work, but he said she was totally disabled from both her previous
work and any other job. Dr. Morgan, who treated Ms. Webster for
rheumatoid arthritis, examined her in December of 1995. He wrote
to Ms. Webster's counsel that her rheumatoid arthritis in her
hands, wrists, and shoulders combined with her knee problems made
her totally disabled from work specifically as to walking,
climbing, lifting, squatting, kneeling, and repetitive tasks
using the hands. Dr. Morgan marked on a physical capacities form
that Ms. Webster could do sedentary work but then said in a
5 letter sent six months later that she could not work at the
sedentary level.
In response to her appeal, Hartford notified Ms. Webster in
September of 1996 that it had determined that its decision to
terminate her long term disability benefits was appropriate. Ms.
Webster graduated from her college program in December of 1996,
and began to work full-time in January of 1997.
Ms. Webster brought a declaratory judgment action in New
Hampshire state court in July of 1997 against Hartford seeking
long-term disability benefits for the period from October 3,
1995, until January of 1997; reimbursements for the costs of her
college program; damages for all economic losses and emotional
distress associated with the termination of her benefits; treble
damages pursuant to New Hampshire's consumer protection law. New
Hampshire Revised Statutes Annotated ("RSA") § 358-A:2; and
attorneys' fees. Hartford removed the action to this court
on grounds that the exclusive remedy for Ms. Webster's claims was
through ERISA. Hartford now moves for summary judgment in its
favor.
Discussion
The parties agree that the Hartford long term disability
policy in guestion is an employee benefit plan governed by ERISA.
6 Ms. Webster contends that her state law causes of action are
exempted from ERISA preemption through the ERISA "savings
clause," 29 U.S.C.A. § 1144(b)(2)(A). With respect to her ERISA
claims, Ms. Webster urges a de novo review of the decision of the
plan administrator and argues that her claims under ERISA survive
summary judgment.
A. State Law Claims
ERISA's preemption of state law claims is limited by a
provision known as the "insurance saving clause" that exempts
state laws regulating insurance from ERISA governance. 29
U.S.C.A. § 1144(b)(2)(A). To come within the exemption provided
by § 1144(b)(2)(A), "a law must not merely have an impact on the
insurance industry, or on particular insurance products, but must
be directed specifically toward the business of insurance."
Williams v. Ashland Enqineering Co., Inc., 45 F.3d 588, 592 (1st
Cir. 1995) .
This court has previously determined that New Hampshire's
consumer protection statute, RSA § 358-A:2, is not a law
regulating insurance within the meaning of section 1144(b)(2)(A).
See Camire v. Aetna Life Ins. Co . , 822 F. Supp. 846, 852-53
(D.N.H. 1993). Ms. Webster has offered no basis for recon
sideration of the court's analysis in Camire. Accordingly, Ms.
7 Webster's consumer protection claim is preempted by ERISA, and
Hartford is entitled to summary judgment on that claim.
Ms. Webster's state law claim seeking a declaration of her
right to benefits under RSA § 491:22 is not exempt from ERISA
governance since the New Hampshire declaratory judgment statute
does not regulate the business of insurance within the meaning of
section 1144(b)(2)(A). To regulate the business of insurance
within the meaning of § 1144(b)(2)(A), the state statute must
first meet a common sense definition of insurance regulation, and
second, must satisfy each of three factors: (1) the state law
has the effect of transferring or spreading a policyholder's
risk; (2) the state law is an integral part of the policy
relationship between insurer and insured; and (3) the state law
is limited to entities within the insurance industry. Pilot Life
Ins. Co. v. Dedeaux, 481 U.S. 41, 48 (1987) (citing Metropolitan
Life Ins. Co. v. Massachusetts, 471 U.S. 724, 740 (1985)). In
addition, if the state cause of action "seeks remedies for the
improper processing of a claim for benefits under an ERISA-
regulated plan," it is preempted by the exclusive remedies
provided through ERISA as the legislative intent of ERISA was to
provide a uniform and exclusive remedy in claims for benefits
under ERISA-regulated plans. Pilot, 481 U.S. at 52-57.
Section 491:22, including the burden of proof provision of section 491:22-a, does not meet the common sense test of a law
regulating the business of insurance. Section 491:22 does not
control insurance business practices. Instead, it fixes the
burden of proof in New Hampshire declaratory judgment cases
concerning insurance coverage, and is not a law controlling
business practices in insurance. RSA § 491:22-a. Even if Ms.
Webster were able to show that section 491:22 met the common
sense test and would satisfy the three Metropolitan factors,
however, ERISA is the exclusive remedy in a claim for benefits
under an ERISA-regulated plan precluding exemption under section
1144(b)(2)(A) in this case. See, e.g., Tracv v. Principal
Financial Corp, 948 F. Supp. 142, 144 (D.N.H. 1996); Patuleia v.
Sun Life, 95-358-M, slip op. at 4-5 (D.N.H. Jan. 19, 1996);
Schuvler v. Protective Life Ins., No. 92-192, slip op. at 9,
(D.N.H. Duly 23, 1993). Claims brought under section 491:22 and
related provisions pertaining to the burden of proof and
attorneys' fees are preempted by and not exempt from ERISA.
Ms. Webster's state common law claim for emotional distress,
seeking damages for harm caused by Hartford's decision to
terminate benefits, is also preempted by ERISA. See Pilot Life,
481 U.S. at 47-48 (common law claim for emotional distress
preempted). Ms. Webster has not argued that her emotional
distress claim is exempt, pursuant to section 1144(b) (2) (A) . Accordingly, Hartford is entitled to summary judgment with
respect to Ms. Webster's claims brought under New Hampshire law.
Ms. Webster also argues that Hartford's policy language
defining long term disability is at odds with the rules of the
New Hampshire Insurance Commission. As Ms. Webster has
identified no private state law cause of action arising from an
alleged violation of the Commission's rules, none of her state
law claims may be exempted from ERISA on that basis. See, e.g.,
Andrews-Clarke v. Travelers Ins. Co . , 984 F. Supp. 49, 56 n.22
(D. M a s s . 1997).
B. ERISA Claim
Ms. Webster also seeks benefits under ERISA, 29 U.S.C.A. §
1 1 3 2 (a). When a plan beneficiary challenges a denial of benefits
from an ERISA-regulated plan, the decision is reviewed under a de
novo standard unless the plan gives the administrator
discretionary authority to determine eligibility or to construe
terms of the plan. Firestone Tire and Rubber Co. v. Bruch, 489
U.S. 101, 115 (1989). If the plan confers the reguisite
discretionary authority, the court reviews an administrator's
decision under a deferential arbitrary and capricious standard.
See id., see also Terry v. Baver Corp., 145 F.3d 28, 37 (1st Cir.
1998). While the decision of an impartial and disinterested
10 administrator is entitled to great deference, a conflict of
interest in the decision making process will be considered "in
determining whether there is an abuse of discretion." Firestone,
489 U.S. at 115 (citations omitted).
1. Standard of Review
Ms. Webster relies on the burden of proof provided in RSA §
491:22-a as part of the standard of review for her ERISA claim.
While section 491:22-a provides the burden of proof in diversity
jurisdiction cases involving insurance coverage, see General
Linen Serv. Co. v. Charter Oak Fire Ins. Co . , 951 F. Supp. 15,
17-18 (D.N.H. 1995), a dispute governed by ERISA is founded on
federal guestion subject matter jurisdiction and federal law
applies, see Tracv, 948 F. Supp. at 144. In the unpublished case
Ms. Webster relies on, Johnson v. Watts Regulator Co . , No. 92-
508, the district court held that ERISA did not govern the long
term disability policy in guestion as it was not a plan
established or maintained by an employer as reguired by the
statute. Id., 1994 WL 258788 (D.N.H. May 3, 1994), aff'd , 63
F.3d 1129 (1st Cir. 1995). Since the court's subject matter
jurisdiction rested on diversity of the parties' citizenship in
Johnson, the court applied New Hampshire decisional law including
the applicable burden of proof. See Johnson, No. 92-508, 1994 WL
11 587801, at *6 (D.N.H. Oct. 26, 1994), aff'd , 63 F.3d 1129 (1st
Cir. 1995). Because ERISA controls Ms. Webster's claims in this
case, federal law applicable to ERISA claims provides the
standard of review.
Under applicable federal law, "a benefits plan must clearly
grant discretionary authority to the administrator before
decisions will be accorded the deferential, arbitrary and
capricious, standard of review." Rodriquez-Abreu v. Chase
Manhattan Bank, N.A., 986 F.2d 580, 583 (1st Cir. 1993).
Hartford, as the administrator of its plan, relies on language in
the "Proof of Loss" section of the policy as a grant of
discretionary authority sufficient to invoke the deferential
standard of review: "The Hartford reserves the right to
determine if proof of loss is satisfactory." Ms. Webster argues
that the policy language is not sufficiently clear to entitle
Hartford's decision to deference. In particular, Ms. Webster
contends that the language does not explain what is to be proven
or the purpose for submitting proof.
For purposes of a deferential standard of review, the plan
must clearly grant discretionary authority to decide claims,
Rodriquez-Abreu, 986 F.2d at 583, but need not clearly define
what information is necessary to make a sufficient claim, as Ms.
Webster contends. The language in the Hartford policy is neither
12 as clear nor as detailed as the description of decisional
authority considered in Terry. See Terry, 145 F.3d at 37, (plan
gave Bayer "exclusive right" to make necessary factual findings,
to interpret the plan's terms, and to determine a claimant's
eligibility for benefits). On the other hand, the Hartford plan
language is more specific than the statement determined to be
insufficient in Cooke v. Lynn Sand & Stone Co . , 70 F.3d 201, 204
(1st Cir. 1995), where "the plan language stated only that the
administrator had 'exclusive control and authority over
administration of the Plan.'" Terry, 145 F.3d at 37.
Two other district courts determined that the same language
in Hartford long term disability benefit plans was a sufficiently
clear grant of discretionary authority to reguire a deferential
standard. See Vesaas v. Hartford Life & Accident Ins. C o , 981 F.
Supp. 1196, 1199 (D. Minn. 1996), aff'd , 124 F.3d 209 (8th Cir.
1997); Ceasar v. Hartford Life and Accident Ins. Co . , 947 F.
Supp. 204, 206 (D.S.C. 1996). "Magic words" are not necessary to
confer discretionary authority, and most courts have found a
sufficient grant of authority in proof of loss statements when
the plan reguired that a claimant's evidence of loss be
satisfactory to the insurer. See Perez v. Aetna Life Ins. Co . ,
150 F.3d 550, 555-56 (6th Cir. 1998) (citing cases).
13 Taken in context,1 the proof of loss statement gives
Hartford the right to determine whether a claimant's proof of
disability is satisfactory to Hartford for purposes of awarding
benefits. Accordingly, the statement is a sufficient grant of
discretionary authority to invoke deferential review.
Ms. Webster contends that deference is inappropriate in this
case because Hartford was operating under a conflict of interest
since Hartford was both the administrator, deciding who will
receive benefits, and the insurer, liable for paying benefits.
Ms. Webster offers no evidence of an actual conflict or that
Hartford's decision was improperly influenced by the existence of
a conflict of interest. While crediting an inference that
Hartford's dual role as administrator and insurer of the plan may
conflict with a beneficiary's interest in receiving benefits, a
competing motive may be inferred that an insurer would not be
overly "tight fisted" in benefit determinations in order to
maintain good relations with the employer and to continue
participation in the plan. Doyle v. Paul Revere Life Ins. Co . ,
144 F.3d 181, 184 (1st Cir. 1998). In circumstances of an
1ERISA governed plans are construed using federal common law which employs "common-sense canons of contract interpretation" including interpreting contracts according to their plain meaning taken in context. Smart v. Gillette Co. Long-Term Disability Plan, 70 F.3d 173, 178 (1st Cir. 1995) (guotation omitted).
14 inferred conflict, the court applies the deferential arbitrary
and capricious standard "with special emphasis on reasonableness,
but with the burden on the claimant to show that the decision was
improperly motivated."2 Id. As Ms. Webster offers no evidence
that the decision was improperly motivated, the court will
proceed under a deferential standard of review.
2. Hartford's Decision to Terminate Benefits
In determining whether Hartford's decision was arbitrary or
capricious, "a court is not to substitute its judgment for that
of the decision-maker," but rather the decision will not be
disturbed if it is reasonable. Terry, 145 F.3d at 39 (guotations
omitted). A decision is reasonable as long as it is "rational in
light of the plan's provision" and shows no abuse of discretion.
Tavares v. Unum Corp., No. 96-614-L, 1998 WL 566012, at *5
(D.R.I. Sept. 2, 1998).
Hartford's long term disability policy reguired that a
claimant be "totally disabled" within the meaning of the policy
to be eligible for long term disability benefits. For the first
thirty months (the six month gualifying period and twenty-four
2The court notes that neither party cited applicable First Circuit law pertaining to the appropriate standard for evaluating a decision under a conflict of interest.
15 months thereafter) the policy defined "totally disabled" to mean
"that the Insured Person is prevented by accidental bodily injury
or sickness from doing the material and substantial duties of his
own occupation." Hartford's Appendix ("Def. App.") at 8. After
that initial period, a claimant would remain eligible for
benefits "as long as he stays disabled," meaning "that he is
prevented by accidental bodily injury or sickness from doing any
occupation or work for which he is or could become gualified by:
training; or education; or experience." Id.
After receiving benefits for thirty months, Ms. Webster was
notified that Hartford had determined "that by your education,
training, and experience, you gualify for occupations in nursing
which do not reguire lifting or prolonged standing, i.e., medical
case management, nurse in doctor's office, research, etc." For
that reason, Hartford determined that Ms. Webster was no longer
totally disabled, as defined in the policy, for the period after
the initial thirty months of benefits.
Ms. Webster argues that Hartford's definition of "totally
disabled" is prohibited by the New Hampshire Insurance
Commissioner's rules and, therefore, that the definition in the
rules should apply. The referenced rules provide, in pertinent
part, that policies may define total disability "in relation to
the inability of the person to perform duties but such inability
16 may not be based solely upon an individual's ability to: (1)
Perform 'any occupation whatsoever,' or 'any occupational duty, '
or 'each and every duty of his occupation,' or (2) Engage in any
training or rehabilitation program." N.H. Code Admin. R. Ins.
1901.04(13) (1993). Although Ms. Webster's argument is not
entirely clear, she seems to contend that Hartford's decision was
based on her ability to be trained for other work and that
reguirement violated the Commission's rule. She also contends
that Hartford's agreement to pay part of her school tuition as
long as she remained totally disabled, when Hartford knew that
she would not gualify as "totally disabled" as soon as the second
definition became applicable, violated public policy.
Even if the New Hampshire insurance rule defining disability
would apply in this context, it offers no support for Ms.
Webster's claim. As Hartford points out, its decision that Ms.
Webster was not totally disabled within the meaning of the policy
was based on her then present education, training, and
experience, not her ability to gain education or training that
would gualify her for particular work in the future. The court
need not decide, therefore, what effect, if any, a violation of
the New Hampshire rule would have on review of Hartford's
decision. The court also finds that Hartford's willingness to
pay part of Ms. Webster's college tuition for only a limited
17 period does not raise a public policy issue.
Ms. Webster contends that Hartford's decision was arbitrary
and capricious because it gave inconsistent interpretations of
its policy language in three written explanations of its decision
to terminate her benefits. In the September 2 9 , 1 9 9 5 , letter
from Carol Johnson to Ms. Webster notifying her of Hartford's
decision to terminate benefits, Ms. Johnson guoted the applicable
policy definition and then stated Hartford's determination that
Ms. Webster was gualified for particular occupations in nursing.
In the notification letter to the hospital, Ms. Johnson
paraphrased the applicable policy definition saying "it must be
shown that she is prevented by disability from doing any
occupation or work for which she is or could become gualified by
training, education or experience." Plaintiff's Appendix at H.
Ms. Johnson then stated that Hartford found Ms. Webster was not
disabled according to the definition without giving the specific
determination provided in the letter to Ms. Webster. Id. In a
letter to Ms. Webster's counsel pertaining to Ms. Webster's
appeal of the termination of her benefits, Hartford (writer is
not identified) paraphrased the applicable definition in terms
more pertinent to Ms. Webster's particular determination: "she
must be Totally Disabled from any occupation based upon prior
experience, training and education."
18 The three letters Ms. Webster compares present explanations
with varying levels of specificity about Hartford's determination
in her case. The differences Ms. Webster notices between prior
training and future training are due to references to her
particular situation, which depended on her prior training, and
statements of the general disability definition which included
work a claimant could become gualified to do. Hartford's
determination was clearly based on her gualifications as of
October of 1995. The letters are not inconsistent with
Hartford's definition of "totally disabled" or with its decision
in this case.
Ms. Webster also contends that Hartford's decision is not
supported by the medical evidence. She points to evaluations and
opinions given by her treating physicians in late 1995 and 1996
to show that contrary to Hartford's determination, she was
totally disabled in October of 1995. The evidence of record
supports Hartford's decision.
Despite Ms. Webster's physical limitations caused by her
knee injuries and the effects of rheumatoid arthritis, she was
able to work part time as an operating nurse from March of 1994
until January of 1995 when she began attending a college program
full time. She continued her full time college program until
graduation in December of 1996. She returned to full time work
19 in January of 1997.
Dr. Shirreffs's evaluations during the period before Ms.
Webster's benefits ended indicate that Ms. Webster was unable to
work full time as an operating room nurse but do not rule out her
ability to do other sedentary and, later, light duty work. In
the evaluation form Dr. Shirreffs completed in December of 1995,
he continued to find her able to do light duty work. Dr.
Shirreffs also indicated that she had improved, but he then
marked boxes to indicate that she was totally disabled from her
previous job and any other job. Dr. Shirreffs opinion in 1995,
therefore, contradicted his previous opinions about Ms. Webster's
ability to work and contradicted his opinion that her physical
condition continued to improve. Given the inconsistencies in Dr.
Shirreffs's opinions, Hartford was justified in giving his
opinion of total disability in December of 1995 little weight.
Although Ms. Webster's medical records confirm she had been
treated for rheumatoid arthritis before her injury in April of
1993, the records do not show that rheumatoid arthritis
interfered with her ability to work until Dr. Morgan's opinion in
December of 1995. Even then. Dr. Morgan indicated that Ms.
Webster was capable of sedentary work until he amended his
opinion in a letter in August of 1996. The timing and
inconsistencies of Dr. Morgan's opinions might reasonably be
20 interpreted as his efforts to help Ms. Webster gain benefits
rather than to provide an objective view of her capabilities.
As part of Ms. Webster's appeal process, Hartford referred
Ms. Webster to their Vocational Rehabilitation Unit for a
"Transferable Skills Analysis." Hartford reported to Ms.
Webster's counsel on January 31, 1997, that the analysis found
Ms. Webster qualified for four jobs listed in the letter as of
October of 1995. Hartford upheld its decision in part based on
the results of the analysis.
Applying the appropriately deferential standard, the court
concludes that the record supports Hartford's decision to
terminate Ms. Webster's benefits. The decision was also based on
a reasonable interpretation of the policy provision for
disability benefits. As Ms. Webster has raised no trialworthy
issue pertaining to her claim for benefits, based on the facts of
record Hartford is entitled to summary judgment.
21 Conclusion
For the foregoing reasons, Hartford's motion for summary
judgment (document no. 6) is granted. The clerk of court is
directed to enter judgment accordingly and to close the case.
SO ORDERED.
Joseph A. DiClerico, Jr, District Judge
November 2, 1998
cc: Gordon A. Rehnborg Jr., Esguire William D. Pandolph, Esguire