Karen Russell v. Catholic Healthcare Partners , 614 F. App'x 271 ( 2015 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 15a0415n.06
No. 13-4084
FILED
Jun 08, 2015
UNITED STATES COURT OF APPEALS
DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
KAREN RUSSELL, )
)
Plaintiff-Appellant, ) ON APPEAL FROM THE
) UNITED STATES
v. ) DISTRICT COURT FOR
) THE SOUTHERN
CATHOLIC HEALTHCARE ) DISTRICT OF OHIO
PARTNERS EMPLOYEE LONG )
TERM DISABILITY PLAN; UNAM )
LIFE INSURANCE COMPANY OF ) AMENDED OPINION
AMERICA, )
)
Defendants-Appellees.
Before: MOORE and KETHLEDGE, Circuit Judges; TARNOW, District
Judge.*
ARTHUR J. TARNOW, Senior District Judge. Plaintiff-Appellant
appeals the dismissal of her claim for long-term disability (“LTD”) benefits under
her employee compensation package. Plaintiff had worked as a registered nurse
for about thirty years when she applied for disability benefits in 2007. Defendant-
Appellee Unum granted Plaintiff twenty-four months of LTD benefits starting in
*
The Honorable Arthur J. Tarnow, Senior United States District Judge for the Eastern
District of Michigan, sitting by designation.
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2007, and then terminated her benefits in 2009. Plaintiff filed her ERISA claim in
2011, wherein the district court upheld the administrative determination of
Plaintiff’s claim. The district court found that Plaintiff’s claim was time-barred
and, that even if her claim had been timely, her claim failed on its merits because
the administrative decision was not arbitrary and capricious. In this appeal, we
hold that Plaintiff’s ERISA action was timely and that the administrative decision
was not arbitrary and capricious. Accordingly, we AFFIRM the judgment of the
district court.
Jurisdiction is not forfeitable or waivable; therefore, we must first address
Plaintiff’s jurisdictional arguments. In re Lindsey, 726 F.3d 857, 858 (6th Cir.
2013). For the reasons stated below, we hold that we have subject-matter
jurisdiction to decide this appeal. Next, we hold that Plaintiff’s claims are not
time-barred pursuant to the intervening precedent in Moyer v. Metro. Life Ins. Co.,
762 F.3d 503 (6th Cir. 2014). Finally, we reach the merits of Plaintiff’s claim and
hold that Defendants’ termination of her LTD benefits was not arbitrary and
capricious.
On May 12, 2007, Plaintiff became unable to perform her occupational
duties due to bilateral knee osteoarthritis, right ankle post-traumatic osteoarthritis,
anxiety, and depression. Plaintiff remained disabled until November 12, 2007,
satisfying Unum’s six-month elimination period and becoming eligible to receive
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disability benefits. In a letter dated November 15, 2007, Unum informed Plaintiff
that they had approved her claim for disability benefits effective November 12,
2007. A.R. 347–48. Unum informed Plaintiff that they found her eligible for
twelve months of benefits at that time because she was “limited from performing
the material and substantial duties of [her] regular occupation due to [her] sickness
or injury. . .” A.R. 348. In that same November 2007 letter, Unum informed
Plaintiff “[a]fter 24 months of payments, you are disabled when Unum determines
that due to the same sickness or injury, you are unable to perform the duties of any
gainful occupation for which you are reasonably fitted by education, training or
experience.” Id. The November 2007 letter also informed Plaintiff of Unum’s
contractually reserved right to request proof of continuing disability. In the fall of
2008, Unum approved Plaintiff’s eligibility for disability benefits for an additional
twelve months. Throughout the twenty-four month period, Unum sent Plaintiff
several written requests for proof of continuing disability.
After twenty-four months of benefits, Unum terminated Plaintiff’s LTD
benefits, finding that Plaintiff’s medical records indicated that she could work as a
Triage Nurse or Nurse Case Manager. Plaintiff exhausted Unum’s internal
administrative appeal process on July 20, 2010, when Unum issued its final
decision denying Plaintiff’s LTD benefits. A.R. 1466–72.
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On March 30, 2011, Plaintiff filed an action in the district court seeking a
reversal of the plan administrator’s decision denying her benefits. The parties filed
dueling motions in the district court—Plaintiff filed a Motion for Judgment
Reversing Administrator’s Decision and Defendant filed a Motion to Uphold the
Administrative Decision. Each party responded and replied to both motions. The
district court decided both motions in a single Order, denying Plaintiff’s motion
and granting Defendants’ motion. R. at [39]. Plaintiff now appeals.
On appeal, Plaintiff disputes whether United States Courts have jurisdiction
over this case because the plan may not be an ERISA plan. Defendants argue that
whether the plan is an ERISA plan is a substantive element of Plaintiff’s ERISA
claim, not a jurisdictional issue. Defendants argue that Plaintiff forfeited the
substantive element by filing this action and prosecuting it to judgment. Questions
about subject-matter jurisdiction present legal issues, which we review de novo.
Musson Theatrical, Inc. v. Federal Express Corp., 89 F.3d 1244, 1248 (6th Cir.
1996).
In Daft v. Advest, Inc., 658 F.3d 583 (6th Cir. 2011), the Sixth Circuit
analyzed whether the presence of an ERISA plan is jurisdictional under the rubric
in Arbaugh v. Y&H Corp., 546 U.S. 500 (2006). We held that “the existence of an
ERISA plan is a nonjurisdictional element of Plaintiffs’ ERISA claim.” Advest,
658 F.3d at 587. “[T]he existence of an ERISA plan must be considered an
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element of a plaintiff’s claim under [29 U.S.C. § 1132](a)(1)(B), not a prerequisite
for federal jurisdiction.” Id. at 590–91. There is no basis to find that the plan here
is different from the plan in Advest, and thus we consider the existence of an
ERISA plan to be a substantive element of the claim rather than jurisdictional in
this case.
Plaintiff argues the underlying plan might be a “church plan” that is not an
ERISA plan. “[W]hen Congress does not rank a statutory limitation on coverage
as jurisdictional, courts should treat the restriction as nonjurisdictional in
character.’” Id. at 590 (quoting Arbaugh, 546 U.S. at 516). ERISA’s jurisdictional
provision does not predicate jurisdiction upon whether a plan meets the definition
of a “church plan.” 29 U.S.C. § 1132(e)(1). Both the provision defining what
qualifies as a “church plan”—29 U.S.C. § 1002(33)—and the provision stating
whether such a plan is covered by ERISA—29 U.S.C. § 1003(b)(2)—are separate
from ERISA’s jurisdictional provision.
In Advest, this Court reasoned that fairness also weighed against treating the
existence of a plan as jurisdictional because the party arguing against jurisdiction
on appeal was the party that originally invoked federal jurisdiction. 658 F.3d at
593. The interests of fairness also compel a nonjurisdictional conclusion here. It
was Plaintiff who initially invoked federal jurisdiction in 2011 and then, over two
years into the litigation, after Defendants prevailed in trial court, raised the issue of
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jurisdiction. Whether Defendants’ plan is an ERISA plan is a substantive element
that Plaintiff forfeited, not a jurisdictional prerequisite.
The parties briefed the issue of whether Plaintiff’s claim is time-barred
before the Court published Moyer. In Moyer, this Court held for the first time that
if an adverse benefit determination letter does not include notice of the time limits
for judicial review, then the contractual time limit cannot serve as ground for
denying judicial review. Id. at 507. Even before Moyer, Plaintiff relied on
Engelson v. Unum, 723 F.3d 611 (6th Cir. 2013), in her principal brief to argue that
Defendant was required to give her notice of the time limit to seek judicial review
in her denial letter. As Moyer relied heavily on Engelson to reach its holding, we
are convinced that Plaintiff preserved this issue for appeal. “[A]n appellate court
applies the law in effect at the time it renders its decision.” RYO Machine, LLC v.
U.S. Dept. of Treasury, 696 F.3d 467, 470 (6th Cir. 2012) (internal quotation
marks omitted). The record reveals that Defendant did not include notice of the
time limit for Plaintiff to seek judicial review in its adverse benefit determination
letters. A.R. 1255–60; 1466–72. Consequently, the plan’s time limit cannot
foreclose judicial review of the merits of Plaintiff’s claim.
Title 29 U.S.C. § 1133 governs adverse benefit determination letters for
ERISA plans. An adverse benefit determination letter that does not notify a
participant of the time limit for judicial review does not substantially comply with
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§ 1133. Moyer, 762 F.3d at 506. The usual procedure where an insurance
company fails to comply with the requirements of § 1133, thereby procedurally
foreclosing judicial review, is that the substantive claim should be remanded to the
appropriate body for review. VanderKlok v. Provident Life & Acc. Ins. Co., Inc.,
956 F.2d 610, 616–17 (6th Cir. 1992). Here, however, after concluding that
Plaintiff’s claim was time-barred, the district court summarily ruled that the
administrative termination of Plaintiff’s benefits was not arbitrary and capricious
without conducting any analysis. As a result of the district court’s summary ruling
on the merits, the parties fully briefed Plaintiff’s substantive claim on appeal. Had
the district court provided any analysis supporting its conclusion that the
termination was not arbitrary and capricious, we would not be required to accord it
any deference. Glenn v. MetLife, 461 F.3d 660, 665 (6th Cir. 2006) (holding that
circuit courts review de novo a district court’s grant of summary judgment based
on an administrative record in an ERISA disability benefits action). Accordingly,
we now decide the merits of Plaintiff’s claim.
Where, as here, a plan grants the plan administrator discretion to determine
eligibility for benefits, courts review the administrator’s decisions under the
arbitrary and capricious standard. Jones v. Metro. Life Ins. Co., 385 F.3d 654, 660
(6th Cir. 2004). Under that standard, we will uphold the administrator's decision
“if it is the result of a deliberate, principled reasoning process and if it is supported
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by substantial evidence.” Glenn, 461 F.3d at 666 (internal quotation marks
omitted). Application of the standard requires us to consider “the quality and
quantity of the medical evidence and the opinions on both sides of the issues.” Id.(internal quotation marks omitted).
Where, as here, the plan administrator who decides whether an employee is
eligible for benefits is also obligated to pay those benefits, we are entitled to take
into account the resulting conflict of interest. Id. (citation omitted). Plaintiff
argues that Defendant’s conflict of interest is evidenced by its reliance on the
opinions of non-treating, consulting physicians over Plaintiff’s treating doctors.
To address Plaintiff’s argument that the plan administrator has a conflict of
interest, we will only utilize the opinions of Plaintiff’s treating medical personnel
in our analysis—Dr. Robert Raines—Plaintiff’s treating orthopaedic doctor—and
Dr. Susan McElroy-Marcus—Plaintiff’s treating primary care physician.
For the first twenty-four months the plan used the following standard to
determine whether Plaintiff was disabled: “You are disabled when Unum
determines that: you are limited from performing the material and substantial
duties of your regular occupation due to your sickness or injury . . .” (emphasis
supplied). During this time period, Unum determined that Plaintiff was disabled
from working as a Registered Nurse and Nurse Manager. After twenty-four
months, the plan used the following standard to determine whether Plaintiff was
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disabled: “After 24 months of payments, you are disabled when Unum determines
that due to the same sickness or injury, you are unable to perform the duties of any
gainful occupation for which you are reasonably fitted by education, training or
experience” (emphasis supplied). After twenty-four months, Unum determined
that Plaintiff was not disabled because she could perform as a Triage Nurse or a
Nurse Case Manager A.R. 1246. Both of those jobs entail mostly seated work,
with brief periods of standing, walking, and lifting no more than ten pounds on an
occasional basis. A.R. 1246.
The parties’ dispute centers on whether Defendant’s determination that
Plaintiff was not disabled under the second definition of disability was arbitrary
and capricious. The plan limits awarding benefits based on mental illness or self-
reported symptoms to a twelve-month period. A.R. 1470. Therefore, the plan
requires objective proof that Plaintiff has a physically disabling condition to award
benefits after the first twenty-four months.
Defendants determined that Plaintiff was not disabled on October 28, 2009
and terminated Plaintiff’s benefits effective November 11, 2009. A.R. 1255, 1264.
On September 28, 2009, Defendant contacted Dr. Raines to clarify his medical
opinion as contained in a seemingly self-contradicting record. In a single form
signed on September 16, 2009, Dr. Raines indicated that he was restricting Plaintiff
from returning to work at any level and also that she could be assigned to sit-down
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duties. When Defendant contacted Dr. Raines’s office on September 28, 2009, his
employee explained that Dr. Raines was of the opinion that Plaintiff could perform
seated work on a full-time basis. A.R. 1217–1218, 1223. This level of limitation is
consistent with the work level of which Defendant found Plaintiff to be capable.
On August 21, 2009, Dr. McElroy-Marcus opined that Plaintiff could sit for
eight hours per day, stand and walk intermittently for one hour per day, lift ten
pounds, occasionally push and pull, and rarely reach shoulder level. A.R. 1276.
This level of limitation is consistent with seated work, which is the work level of
which Defendant found Plaintiff to be capable. Given that both of Plaintiff’s
treating physicians found her to be capable of sedentary/seated work immediately
before Defendant terminated benefits, we cannot say that the termination was
arbitrary and capricious.
Plaintiff argues that Dr. McElroy-Marcus’s records support the conclusion
that the administrator’s decision was arbitrary and capricious. Plaintiff emphasizes
a record from February 4, 2008 in which Dr. McElroy-Marcus states “r ankle in
brace to knee - special shoes with rockers to assist in walking . . . difficulty
standing or walking any length of time.” A.R. 776. This record, however,
memorializes Dr. McElroy-Marcus’s opinion twenty-one months before Defendant
terminated benefits. Although Plaintiff argues that her conditions are progressive,
Dr. McElroy-Marcus’s medical opinion based on the empirical evidence before her
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in the fall of 2009 was that Plaintiff could sit for eight hours per day, stand and
walk intermittently for one hour per day, lift ten pounds, occasionally push and
pull, and rarely reach shoulder level. A.R. 1276.
Plaintiff also emphasizes a Physical Residual Functional Capacity
Assessment that Dr. McElroy-Marcus submitted on March 27, 2010, while
Plaintiff was administratively appealing Defendant’s initial adverse determination.
A.R. 1286–91. Plaintiff requested this record from Dr. McElroy-Marcus for
purposes of her administrative appeal after Defendant’s initial adverse
determination. A.R. 1285. The record states that Plaintiff has end-stage
osteoarthritis in her right ankle, osteoarthritis in her knee, low back pain, bilateral
carpel tunnel syndrome, diffuse muscle atrophy, and osteopenia. After twenty-four
months, the plan requires objective proof of physical disabilities. Defendant
agreed that Plaintiff has traumatic arthritis in her ankle. A.R. 1468. However,
there are no imaging studies in the record that support the severity of Dr. McElroy-
Marcus’s opinions as expressed in the March 27, 2010 record. Nor had Dr.
McElroy-Marcus ordered any imaging studies or referred Plaintiff to a specialist.
Further, throughout the record, Dr. McElroy-Marcus refers Defendants to Dr.
Raines for information about the status of Plaintiff’s orthopaedic conditions. See
e.g. A.R. 461.
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Plaintiff also argues that the record from September 28, 2009 indicating that
Dr. Raines was of the opinion that Plaintiff could perform seated work on a full-
time basis is unreliable. Plaintiff argues that the Court should not rely on the
record because it indicates that Dr. Raines’s employee conveyed the opinion.
However, in our review we must take the administrative record as true; questioning
the veracity of the administrative record for the first time on appeal is not
cognizable. McClain v. Eaton Corp. Disability Plan, 740 F.3d 1059, 1064 (6th Cir.
2014) (holding that when reviewing a denial of benefits under ERISA, a court may
consider only the evidence available to the administrator at the time the final
decision was made).
Accordingly, we AFFIRM the judgment of the district court.
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KAREN NELSON MOORE, Circuit Judge, concurring in part and dissenting in
part. Although I agree with much of the amended opinion, I must dissent because I believe that
the decision by Unum to deny benefits was arbitrary and capricious.
Unum unreasonably interpreted Dr. Raines’s evaluation of Russell’s ability to return to
work by concluding that he had approved her return to “sedentary occupations.” A.R. at 1257;
Appellee Br. at 43 & n.13. A sedentary occupation is not the same as a seated-only occupation;
sedentary occupations “involve walking [and] standing for brief periods of time.” A.R. at 1218.
Dr. Raines explicitly concluded that Russell could not perform the non-seated tasks of a
sedentary occupation, and thus gave the following limitation to sedentary work: “sit down duty
only.” Id. See also A.R. 921 (Raines’s evaluation of 9/10/08 stating “She is unable to perform
any job that would require standing or walking.”). Unum’s determination to the contrary is
therefore arbitrary and capricious because it ignores Dr. Raines’s specific instructions.
After considering all of the evidence in the Administrative Record, I must conclude that
Unum has conflated Dr. Raines’s limitations on Russell allowing “sit down duty only” with an
ability to perform “sedentary work.” This constitutes an arbitrary and capricious determination
warranting a remand. The Majority seeing this differently, I respectfully dissent.
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