Reyes v. USAble Life

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

FORT SMITH DIVISION

DINORA REYES PLAINTIFF

v. Case No. 2:18-CV-02075

USABLE LIFE; and

POLICY NUMBER 50019936-LTD DEFENDANTS

OPINION AND ORDER

Before the Court is an action under the Employee Retirement Income Security Act of 1974

(“ERISA”), as set out in Plaintiff Dinora Reyes’s (“Reyes”) complaint (Doc. 1). Defendant

USAble Life (“USAble”) filed an answer (Doc. 7), and the parties submitted a stipulated

administrative record under seal (Doc. 9). Reyes filed a motion (Doc. 11) for summary judgment,

a statement of facts (Doc. 12), and a brief (Doc. 13) in support. USAble filed a response (Doc. 14).

Having considered the parties’ respective briefs, the Court finds that Reyes was deprived a full

and fair review of her claim because at each stage of the review process, USAble failed to follow

the definition of “disability” as written in the policy. The appropriate remedy for this ERISA

violation is to remand the case to the plan administrator with instructions to reopen the

administrative record.

I. Background

Dinora Reyes worked as a Mental Health Professional at Western Arkansas Counseling &

Guidance Center, Inc. (“WACGC”). Reyes last worked at WACGC on April 20, 2015. On June

30, 2015, Reyes applied for long-term disability benefits. (Doc. 9-9, p. 593). WACGC sponsors

a group policy for long-term disability benefits administered by USAble Life (the “Policy”).

Reyes’s application represents that she suffered from “severe neck, joint pain, headaches,

infection, and fatigue.” (Doc. 9-9, p. 593). Reyes first received treatment for these injuries in

February 2014 and had been treated by Dr. Donna Shipley, Dr. Robert Fisher, and Dr. Sheharyar

Ali.

In support of her application for long-term disability benefits, Reyes submitted three

physician’s statements by Dr. Shipley, Dr. Fisher, and Dr. Missy Clifton. Each document

represented that the doctor had examined Reyes and each physician indicated that Reyes was

“totally disabled.” Dr. Shipley, Reyes’s primary care physician, identified, among other things,

Reyes’s spinal injury as the primary cause of her disability. Dr. Shipley noted that a fall the

previous year had caused Reyes’s cervical spine to worsen, and her injury would require additional

treatment, including neurosurgery. (Doc. 9-1, p. 173; Doc. 9-9, p. 598). Dr. Shipley did not

believe that Reyes’s condition would ever improve.

Dr. Clifton, Reyes’s dermatologist, noted a skin infection and inflammation which could

be treated with oral antibiotics. (Doc. 9-9, p. 597). However, Dr. Clifton determined Reyes was

physically impaired due her neck injury and mentally impaired “due to pain.” Id. Dr. Clifton

concluded that Ms. Reyes could not work until she underwent neck surgery. Id. Finally, Dr.

Fisher, her pain management physician, diagnosed Reyes with a cervical radiculopathy, both

physical and mental impairments, and concluded Reyes was totally disabled and could not perform

her job duties. (Doc. 9-9, p. 595).

USAble assigned Reyes’s claim to Man Ho, a Managed Disability Analyst. (Doc. 9-9,

pp. 546-48). Ho obtained medical records, payroll records, and interviewed Reyes over the phone.

At the outset of the initial review, Ho obtained a vocational review from Nancy Wiley-Gilpatrick,

a Vocational Rehabilitation Counselor. Gilpatrick was to determine “the physical demands of

[Reyes’s occupation] as it is performed in the national economy.” (Doc. 9-9, p. 338). Gilpatrick

reviewed the job description for a Mental Health Professional, Reyes’s position at the time of her

alleged disability, and determined that Reyes’s job was performed at a “sedentary level of physical

demand.” Id.

Ho then contacted Janet Thurston, a registered nurse and independent medical consultant,

to evaluate the merits of Reyes’s application for benefits.1 (Doc. 9-9, pp. 355-59). Thurston

obtained medical records from seven of Reyes’s physicians, including Drs. Fisher, Clifton, and

Shipley. (Doc. 9-9, p. 355). Thurston concluded that Reyes “has multiple and diffuse symptoms

reports however there is no clear indication that any condition or combination of conditions result

in impairment of function.” (Doc. 9-9, p. 358). Though Thurston acknowledged the treating

physicians’ conclusions that Reyes suffered physical and mental impairment, she suggested

“[t]here is no medical support for the inability to physically complete prior level of activities on a

sustained basis.” (Doc. 9-9, p. 359). Because her assessment differed from Reyes’s physicians,

Thurston intended to follow-up with the treating physicians to clarify the treating physicians’

findings. Id.

On September 14, 2015, Ho advised Reyes that additional information was necessary

before USAble could render a decision. In response, Reyes provided her notice of award from the

Social Security Administration (“SSA”) for USAble’s consideration. (Doc. 9-9, pp. 332-36).

Thurston reviewed the additional information provided by Reyes and other medical documents but

again determined that there was no evidence of Reyes’s disability.

On December 7, 2015, Ho sent a letter authored by Thurston to Dr. Shipley. (Doc. 9-7,

pp. 896-98). In the letter, Thurston acknowledged reviewing Dr. Shipley’s physician statement

1 Reyes makes much of a supposed conflict of interest amongst the individuals used to

review her application. Outside of conclusory allegations, Reyes offers no proof to support the

existence of a conflict of interest. There is nothing in the record to indicate Thurston nor any other

reviewer was anything other than an independent consultant.

“that advised [Reyes] is incapable of even sedentary activity; has severe mental/nervous

impairment and there is never improvement expected.” (Doc. 9-7, p. 897). Thurston then outlined

her conflicting assessment of Reyes’s symptoms and condition. Id. Thurston indicated that she

was “unable to identify any medical condition which would warrant a functional loss from the

work setting on April 21, 2015.” (Doc. 9-7, p. 898). At the bottom of the letter, Thurston wrote:

Our vocational staff have identified her occupation is performed at a sedentary level

of physical demand.

If you are in agreement that Ms. Reyes has the physical capacity for full time

sedentary function as of April 21, 2015, please sign and date this letter in the space

provided.

• Per the dictionary of occupational titles, sedentary level work is defined as

exerting up to 10 pounds of force occasionally to lift, carry, push, pull, or

move objects. It involves sitting most of the time, but may involve walking

or standing for brief period of time.

Id. (emphasis in original). USAble required Dr. Shipley to respond to the letter by December 16,

2015. (Doc. 9-7, p. 899).

On December 11, 2015, Reyes advised Ho that Dr. Shipley would not complete the

paperwork until Dr. Shipley reexamined Reyes, so Reyes requested an extension until

December 30, 2015. (Doc. 9-7, p. 899). Dr. Shipley was no longer Reyes’s treating physician at

this time because Reyes had moved to Texas. Ho declined to extend the response date. Id.

Nonetheless, Dr. Shipley signed and returned the letter. (Doc. 9-7, p. 898).

On December 17, 2015, USAble sent Reyes a letter denying her claim for disability

benefits. (Doc. 9-7, pp. 883-86). The letter properly outlined the procedures that USAble used in

evaluating her claim and detailed the factual basis for the decision as required by the policy.

(Doc. 9-7, pp. 883-84; Doc. 9-9, p. 630). The letter noted that “Dr. Shipley confirmed on

12/4/2015 that you have the physical capacity to perform a full-time sedentary function as of

4/21/2105.” (Doc. 9-7, p. 884). USAble determined “there are no restrictions or limitations that

would preclude [Reyes] from [her] regular employment as a Mental Health Professional.” Id.

On February 1, 2016, Reyes’s attorney notified USAble of Reyes’s intention to appeal the

first denial of benefits. (Doc. 9-7, pp. 879-80). USAble assigned the appeal to Lindsay Neithercut,

an Appeals Analyst. (Doc. 9-5, p. 60). Reyes submitted additional medical support for her claim,

and Neithercut obtained additional information from her doctors. Neithercut contacted Dr. Stewart

Russell, a consultant board certified in occupational medicine, “to review the file to determine if

the insured remains impaired from performing a sedentary physical demand occupation.”

(Doc. 9-5, p. 70). Dr. Russell reviewed all documents from Thurston’s initial review and

additional documents provided by Reyes in support of her appeal. Dr. Russell determined “that

the insured is not impaired from any of these conditions, alone or in combination, where she would

be precluded from performing a full-time sedentary occupation.” (Doc. 9-5, p. 74). As a result,

on September 15, 2016, USAble informed Reyes that her appeal was denied. (Doc. 9-2, p. 37884).

On November 14, 2016, Reyes sent a letter to USAble appealing the first two denials.

(Doc. 9-1, p. 198). Reyes submitted additional documents in support of her appeal. Dr. Russell

conducted a second review of Reyes’s claim, again “to determine if [Reyes] remains impaired

from performing a sedentary physical demand occupation.” (Doc. 9-1, p. 76). Dr. Russell

concluded “[Reyes] could perform full-time sedentary work as of 4/21/2015.” (Doc. 9-1, p. 78).

Based on Dr. Russell’s review, USAble concluded Reyes was not impaired to the extent that her

conditions “would preclude her from performing her regular occupation as of her date of loss.”

(Doc. 9-1, p. 543). On February 7, 2017, USAble notified Reyes that her claim was denied because

she did not meet the policy’s definition of disability. (Doc. 9-1, p. 542).

On April 20, 2018, Reyes filed this action appealing the denial of her long-term disability

benefits under the policy. Reyes seeks, among other things, an award of benefits retroactive to her

application for long-term benefits, continuation of her life insurance coverage, statutory penalties,

and for attorney’s fees and costs incurred in the action. In the alternative, Reyes asks that the case

be remanded to the case administrator. The parties submitted briefs arguing for and against

Reyes’s entitlement to benefits in light of the plan administrator’s denial of her claim.

II. Legal Standard

The burden is on Reyes to show, by a preponderance of the evidence, that she was disabled

under the terms of the Policy. See Biggar v. Prudential Ins. Co. of Am., 274 F.Supp.3d 954, 964

(N.D. Cal. 2017). Once a plaintiff in an ERISA action has exhausted her administrative remedies

under a benefits plan, a reviewing court’s function is to examine the record that was before the

administrator of the plan at the time the claim was denied. Farfalla v. Mut. of Omaha Ins. Co.,

324 F.3d 971, 974-75 (8th Cir. 2003); Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115

(1989). When a plan gives the administrator discretionary authority to determine a participant’s

eligibility for benefits, the Court reviews the decision for abuse of discretion, and will defer to the

determination made by the administrator or fiduciary unless such determination is arbitrary and

capricious. Firestone, 489 U.S. at 115. Where the plan does not confer discretionary authority on

the plan administrator, a court is to review the denial of benefits de novo. Id.

“When applying a de novo standard of review in the ERISA context, the role of the court

reviewing a denial of benefits is to determine whether the administrator . . . made a correct

decision. The administrator’s decision is accorded no deference or presumption of correctness.”

Shelby Cty. Health Care Corp. v. Majestic Star Casino, 581 F.3d 355, 367-68 (6th Cir. 2009)

(quoting Hoover v. Provident Life & Accident Ins. Co., 290 F.3d 801 (6th Cir. 2002)) (internal

quotations omitted); see also Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 963 (9th

Cir. 2006) (“If de novo review applies, . . . [t]he Court simply proceeds to evaluate whether the

plan administrator correctly or incorrectly denied benefits.”).

Under Arkansas Rule 101 of the Arkansas Insurance Department, “[n]o policy, contract,

certificate or agreement offered or issued in this State providing for disability income protection

coverage may contain a provision purporting to reserve discretion to the insurer to interpret the

terms of the contract . . . .” Ark. Admin. Code 054.00.101-4. This Rule applies to “all disability

income policies issued in this State which are issued or renewed on and after March 1, 2013.” Ark.

Admin. Code 054.00.101-7; see also Davis v. Unum Life Ins. Co. of Am., 2016 WL 1118258, at

*3 (E.D. Ark. Mar. 22, 2016). The policy at issue took effect on February 1, 2014 and replaced

all prior polices. (Doc. 9-9, p. 618). Because the policy was issued after March 1, 2013, Rule 101

requires a de novo review.

III. Analysis

The relevant definitions within the Policy are reproduced below:

Disability or Disabled means you satisfy either the Occupation Test or the

Earnings Test as described below. You need only satisfy one Test to be considered

disabled.

Occupation Test

1. During the elimination period2 and the first 24 months of a period of

disability, an injury, sickness, or pregnancy requires that you be under the

regular care of a physician, and prevents you from performing at least one

of the material duties of your regular occupation with reasonable

accommodations; and

2. After 24 months of disability payments, an injury, sickness, or pregnancy

prevents you from performing at least one of the material duties of any

gainful occupation with reasonable accommodations for which your

education, training, and experience qualifies you.

If, during the elimination period and the first 24 months of a period of disability,

you can perform the material duties of your regular occupation with reasonable

accommodation(s), you will not be considered disabled. If, after 24 months of

a period of disability, you can perform any gainful occupation for which your

education, training, and experience qualifies you, with reasonable

2 The Policy defines the “Elimination Period” as “the number of days during a period of

disability that must pass before benefits are payable.” (Doc. 9-9, p. 622). The elimination period

under this Policy is 90 days. (Doc. 9-9, p. 618).

accommodation(s), you will not be considered disabled. The inability to

perform a material duty because of the discontinuation of reasonable

accommodation(s) on the part of the employer does not, in itself, constitute

disability.

Material Duty or Material Duties means the set of tasks or skills required generally by

employers from those engaged in an occupation. We will consider one material duty of

your regular occupation to be the ability to work for an employer on a full-time basis as

defined in the policy.

Regular Occupation means the occupation in which you were working immediately prior

to becoming disabled.

(Doc. 9-9, pp. 621-24).

Both parties agree that the Occupation Test (the “Test”) applies to Reyes’s claim. The

Court must first determine whether the administrator correctly denied benefits during the initial 24

months of Reyes’s alleged disability as provided in section 1 of the Test. If the Court determines

the administrator incorrectly denied benefits and finds that Reyes was entitled to benefits for the

initial 24 months, the Court must then decide whether Reyes meets the definition of disability

under section 2 of the Test.

Under section 1 of the Test, Reyes must demonstrate that an injury or sickness prevented

her from performing at least one material duty of her occupation. Reyes identifies a myriad of

injuries and sicknesses during the review of her application, including, but not necessarily limited

to, severe neck and joint pain, headaches, infections, and fatigue. The Court must decide whether

any of her alleged injuries prevented her performing at least one of the material duties of a Mental

Health Professional. A material duty is “the set of tasks or skills required generally by employers

from those engaged in an occupation.” (Doc. 9-9, p. 623). After reviewing each parties’ brief and

the record before the administrator, it appears neither party has specifically identified any material

duty of Reyes’s occupation. USAble considered only the physical demands of Reyes’s occupation.

(Doc. 9-1, p. 543; Doc. 9-5, p. 74; Doc. 9-7, p. 884). In fact, in Thurston’s letter to Dr. Shipley, a

crucial piece of evidence in denying Reyes’s claim and appeals, Thurston asked Shipley to confirm

that “Ms. Reyes has the physical capacity for full time sedentary function.” (Doc. 9-7, p. 898).

This letter makes no mention of any material duty. Reyes submits that her material duties are

outlined in the Dictionary of Occupational Titles (“DOT”) job code 045.107-050 for a Mental

Health Therapist.3 (Doc. 13, p. 9). Though a DOT job description may be helpful in the analysis,

a more appropriate approach is to identify the tasks and skills WACGC actually required of

Reyes’s position as dictated by the Policy.

The administrative record includes a WACGC job description, but the Court is mindful

that there may be certain functions or duties material to Reyes’s job that were not detailed in the

job description, or, alternatively, it may include duties that are not material at all.4 Either way,

without sufficient evidence in the record, the Court is left to speculate as to what duties are material

to Reyes’s regular occupation, and cannot make a finding necessary to the disability analysis. The

Court is also unable to determine whether USAble correctly denied Reyes’s initial application for

benefits because USAble, by failing to identify and consider the material duties of Reyes’s

occupation, failed to follow the Plan’s definition of “disability.” The Court finds that this failure

denied Reyes of a “full and fair review” she is due under 29 U.S.C. § 1133(2) and has left the

administrative record factually incomplete. The appropriate remedy for this ERISA violation is

not an award of benefits, but remand with instructions to reopen the administrative record, with

this Court to retain jurisdiction over the case until such time as it determines the claim is fully

resolved. See Brown v. J.B. Hunt Transp. Servs., Inc., 586 F.3d 1079, 1087–88 (8th Cir. 2009)

3 The Social Security Administration used the DOT code 045.107-050 for a Mental Health

Therapist when completing the vocational review for Reyes’s social security claim.

4 The fact that there appears to have been an office reorganization around the time of the

Reyes’s last day of work further bolsters the Court’s uncertainty as to Reyes’s material duties.

(Doc. 6-1, p. 632-33).

(finding that the appropriate remedy for violation of § 1133(2) is not an award of benefits but to

remand the case to the plan administrator); see also Shelby Cty. Health Care Corp. v. Majestic

Star Casino, 581 F.3d 355, 373 (6th Cir. 2009) (“Remand is therefore appropriate in a variety of

circumstances, particularly where the plan administrator’s decision suffers from a procedural

defect or the administrative record is factually incomplete.”).

On remand, USAble should evaluate Reyes’s claim in light of the definition of “disability”

as written in the policy. USAble must identify the material duties of a Mental Health Professional,

and consideration should be given to each of those duties, not merely the physical demands of

Reyes’s occupation. Consideration must be given to the terms of the Policy, and the terms of the

Policy require such a process. In the event USAble determines that Reyes meets the standard for

disability under section 1 of the Test, the administrator must then consider whether she meets the

standard for disability under section 2.

IV. Attorney’s Fees

Reyes also seeks her attorney’s fees for this action. The Court has discretion to award

reasonable attorney’s fees and costs under ERISA. 29 U.S.C. § 1132(g); Sheehan v. Guardian

Life Ins. Co., 372 F.3d 962, 968 (8th Cir. 2004). In considering whether to award fees and costs,

the Court will make use of the nonexhaustive Westerhaus guidelines:

(1) the degree of the opposing parties’ culpability or bad faith;

(2) the ability of the opposing parties to satisfy an award of attorneys’ fees;

(3) whether an award of attorneys’ fees against the opposing parties could deter

other persons acting under similar circumstances;

(4) whether the parties requesting attorneys’ fees sought to benefit all participants

and beneficiaries of an ERISA plan or to resolve a significant qeustion [sic]

regarding ERISA itself; and

(5) the relative merits of the parties’ positions.

Sheehan, 372 F.3d at 968 (citing Lawrence v. Westerhaus, 749 F.2d 494, 496 (8th Cir. 1984)).

Though USAble is culpable for the instant dispute, there is no evidence demonstrating that

USAble acted in bad faith. In determining whether Reyes qualified for benefits, USAble failed to

correctly apply the definition of “disability” under its own policy. USAble has made no argument

that it cannot satisfy an award of fees and costs. An award of fees and costs would not deter plan

participants and beneficiaries from asserting their rights and might deter USAble from abandoning

its ERISA obligations in the future. Reyes’s action here benefits all participants and beneficiaries

by holding USAble accountable for departing from the policy’s definition of disability. The

relative merits of this lawsuit are clearly in Reyes’s favor—while it is of course possible that a full

and fair review will result in eventual denial of her claim, the administrative record makes clear

that she was denied a full and fair review before bringing this action.

In light of these factors, the Court finds that it is appropriate to award Reyes her reasonable

fees and costs. The parties may submit briefs on what amount that should be. Plaintiff’s brief is

due within 14 days of entry of this order. Any response is due within 7 days of Plaintiff’s

filing.

V. Conclusion

IT IS THEREFORE ORDERED that Reyes’s motion (Doc. 11) for summary judgment is

GRANTED in PART. The motion is granted to the extent it seeks remand to the plan

administrator. The motion is otherwise denied. Reyes’s claim for benefits is REMANDED to the

plan administrator, who is to reopen the administrative record and conduct a new review of Reyes’s

disability claim consistent with this order. The Clerk is directed to ADMINISTRATIVELY

CLOSE this case.

IT IS SO ORDERED this 9th day of April, 2019.

/s/P. K. Holmes, III

P.K. HOLMES, III

U.S. DISTRICT JUDGE