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United States District Court,
Vorris BLANKENSHIP, Plaintiff,
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON as Administrator and Fiduciary of the Kpmg Employee Long-Term Disability Plan and the Kpmg Employee Long-Term Disability Plan, Defendants.
CONTI, J.I. Introduction
*1 Plaintiff Vorris Blankenship (“Plaintiff” or “Blankenship”) brings this action to recover long-term disability benefits he claims are owed to him under the KMPG Employee Long-term Disability Plan (the “Plan”). Defendants are the Plan itself and the issuers of the Plan, Liberty Life Assurance Company of Boston (“Liberty” or “Defendant”). This matter was briefed for trial on July 26, 2004, at which time the Court requested supplemental briefing on an additional issue. Those submissions now received and reviewed by this Court along with the administrative record and other submissions of all parties, the Court hereby makes the following findings of fact and conclusions of law.II. Findings of Fact
Plaintiff Vorris Blankenship joined the accounting firm of KPMG Peat Marwick as a tax partner in 1969. He remained in that position until 1991, when he retired from the partnership and continued to work for KPMG as a Senior Tax Consultant. While still in the employ of KPMG in 1997, Mr. Blankenship was diagnosed with prostate cancer. In August 1997, he began a treatment regimenconsisting of six months of hormone blockade therapy, twenty-five external beam radiationtreatments, and brachytherapy, which included the implantation of radioactive iodine seeds in his prostate gland.
Blankenship continued working for KPMG while he underwent the radiation and brachytherapy. As a result of his treatment, he suffered severe urinary malfunction, requiring a Foley catheter for 5 weeks, followed by a period of self-catheterization. Due to this urinary dysfunction, Blankenship was able to retain only 150 to 250 ccs of urine before experiencing bladder spasms and involuntary leakage of urine, which necessitated full-time use of adult diapers. He also experienced bladder infectionsdue to the self-catheterization. Although Blankenship ceased self-catheterization after 8 or 9 months, he was still unable to urinate voluntarily and continued to experience involuntary bladder spasms and the resultant leakage of urine. Additionally, his treating physician attributed this ongoing condition, in part, to damage to the urethra wall caused by the frequent self-catheterization (VB 376). FN1
FN1.Both parties stipulate that the Liberty Claim file is comprised of documents submitted by Plaintiff and Bates labeled VB 166 through VB 474.
In May 1998, Blankenship submitted a claim to Liberty for long-term disability benefits based on the complications arising from the prostate cancertreatments. After conducting an interview with Mr. Blankenship on June 1, 1998, Liberty approved Blankenship’s claim and began paying benefits. FN2 Liberty’s in-house nurse made the following notes in Blankenship’s file in July 1998:
FN2.Monthly benefits were computed by multiplying the insured’s monthly earnings ($11,166.67) by the benefit percentage in the application (66 2/3%) less social security or “other income benefits.”
“Claimant is a tax attorney for Peat Marwick. He is very motivated to RTW [return to work] but until he gets his voiding under control he feels he cannot function at work and I agree. Not only would he be sleep deprived but he would be distracted and preoccupied with his urinary problems. However, that may improve over time and a RTW [return to work] would be feasible at that time.”
*2 (VB 196). Shortly after granting Blankenship’s claim and commencing the payment of benefits, Liberty sent a request for medical records and documentation to Blankenship’s treating physician in Seattle, Dr. Grimm. Liberty also enclosed a “Physical Capacities Form” and a “Medical Status Functional Capacities Form” to be completed by Dr. Grimm. On the Physical Capacities Form, dated July 9, 1998, Dr. Grimm quantified Blankenship’s physical capacity in an eight hour work day for the activities listed (sitting, lifting, walking, standing, carrying, driving, traveling, typing) at 100%. Dr. Grimm also indicated that Blankenship was “continuously” able to perform “reaching, bending, kneeling, climbing, squatting, twisting.” In a space provided for comments, Dr. Grimm wrote that Blankenship’s “disability is related to urinary dysfunction-makes it difficult to sustain concentration-requirement for bathroom facilities on an urgent basis limits movement.” (VB 406).
On the Mental Status Functional Capacities Form, dated July 8, 1998, Dr. Grimm indicated that Blankenship suffered “moderate” restrictions with regard to “Daily Activities: Occupational/Social,” “Personal Habits: Appearance/Behavior,” “Constriction of Interests,” ability to “Sustain Work Performance,” and ability to “Cope with Work Pressure”; “mild” restrictions with regard to “Attention Span” and “Concentration”; and no restrictions with regard to “Interpersonal Relations,” “Ability to Think and Reason,” “Understand and Carry Out Instructions,” “Past/Present Memory,” “Insight and Judgment,” and “Thought Content.” (VB 406). After receiving this report, Liberty made no attempt to terminate Blankenship’s benefits.
In January 1999, Liberty requested updated medical information to support Blankenship’s claim of continued disability. At that time, Blankenship’s treating physician, Dr. Grimm again completed Liberty’s “Physical Capacities Form” and “Mental Status Functional Capacities Form.” The completed forms, dated January 28, 1999, were received by Liberty on February 12, 1999. Although the forms themselves were identical to those sent Dr. Grimm six months earlier, Dr. Grimm’s evaluation of Blankenship’s condition is significantly different. On the Physical Capacities Form, Dr. Grimm indicated that his patient was capable of sitting for 80% of an 8-hour day, but only capable of lifting 10%, walking 20%, standing 30%, carrying 10%, driving 20%, traveling 30%, and typing 30%. Additionally, although Blankenship should be capable of reaching “frequently,” he was only capable of bending, kneeling, climbing, squatting or twisting “occasionally.” Again, Dr. Grimm’s comments specified that Blankenship’s “physical disability is due to his urinary dysfunction, the time involved each day in dealing with it, and related fatigue caused by sleep interruptions.” (VB 289).
Dr. Grimm’s January 1999 evaluation of Blankenship’s “Mental Status” also show a worsened condition. This form indicates that with respect to “Daily Activities: Occupation/Social” and “Personal Habits: Appearance/Behavior,” Blankenship suffered “significant” restrictions. Dr. Grimm also deemed Blankenship’s ability to sustain work performance, cope with work pressure or concentrate significantly restricted. Blankenship’s degree of restriction was “moderate” as to “Interpersonal Relations,” “Constriction of Interests,” and “Attention Span.” Blankenship was deemed to suffer “mild” restrictions as to his “Insight and Judgment” and “Thought Content,” as well as to his abilities to “Think and Reason” and “Understand and Carry Out Instructions.” In this second “Mental Status” evaluation received by Liberty, Dr. Grimm found that the only area in which Blankenship suffered no restrictions was in his “Past/Present Memory.” At no point in its moving papers does Liberty acknowledge that Blankenship’s treating physician indicated that Blankenship’s physical disability had further limited his mental and physical capacities from the time Liberty granted Blankenship’s initial claim for disability benefits.
*3 In April of 1999, Blankenship saw Dr. James Downey, a colleague of Dr. Grimm. Dr. Grimm’s notes from that visit indicate that Dr. Downey recommended new medications and was “somewhat reluctant” to suggest surgical intervention due to Blankenship’s “irritative symptoms.” (VB 375). Dr. Grimm’s handwritten notation on July 1, 1999, following a phone conversation with Blankenship, classifies Blankenship’s condition as “essentially unchanged.” (VB 375). Upon request from Liberty Dr. Grimm submitted these reports and new Physical Capacities and Mental Status forms dated July 1, 1999, which also show Dr. Grimm’s evaluation of Blankenship’s capabilities to be unchanged. (VB 265-66).
In December 1999, one of Liberty’s in-house nurses Audrey Kosmo, made the following notation in Blankenship’s file: “If claimant continues to have limited bladder retention, involuntary bladder spasms, incontinence (leakage); [claimant] will continue to experience SX [symptoms] associated with fatigue and decreased level of functioning.” (VB 188). In January 2000, after speaking to Blankenship on the phone, Nurse Kosmo noted that Blankenship had last visited his urologist in September 1999. (VB 189). She also noted that Blankenship had visited another physician, Dale Coco, in approximately August 1999. Id. These notes reveal that Blankenship was taking medications, including “hytrin, ditropan, lisinopril” and that Blankenship was reluctant to undergo surgery because he was told it could worsen his current condition. Id. When Nurse Kosmo inquired whether it was possible that Blankenship could resume work from home, Blankenship told her that it wasn’t a “realistic option” since he could not meet clients or conduct those meetings from his home. Id. Following the phone call, Nurse Kosmo’s written assessment stated, “Practical prognosis for [claimant] return to gainful employment poor.” (VB 189).
In February 2000, Nurse Kosmo contacted Blankenship’s urologist, Dr. Karl Thomas. The notes of this conversation reveal that Dr. Thomas believed Blankenship’s situation to be a “complex problem.” (VB 191). He acknowledged that Blankenship suffered from the “problem” of “almost complete urinary incontinence, using 10-12 Depends/day.” Id. However, according to Nurse Kosmo’s notes, Dr. Thomas also said that he does not think that Blankenship “should be disabled from urologic indications” and “does not feel comfortable” recommending disability for Blankenship. Id. Dr. Thomas also deferred to Dr. Grimm and Dr. Sweeney in Seattle for additional information. Id.
On March 2000, Liberty asked Peter Nieh, M.D., an “independent consulting urologist” who had never examined Blankenship, to review his medical record. Liberty’s stated “Reason for Referral” asked: “Is it reasonable that this patient could return to work with or without employer accommodations and/or with reasonable medical care (i.e., assistive devices such as Foley catheter, Texas Catheter, TUIP, etc.)?” (VB 257). Dr. Nieh based his report on a review of Blankenship’s file and a phone conversation with the “attending physician” Dr. Thomas on April 4, 2004. Id. His recommendation stated, “Yes, it is reasonable that this patient could return to work with or without employer accommodations and/or with reasonable medical care.” Dr. Nieh’s rationale concluded, “Clearly this patient has had a poor result from the radiation therapy. There is a good to excellent chance that the TURP or TUIP [surgical procedures] would improve his urinary symptoms, and he certainly could be no worse than he is now. Even resuming the self-catheterization would also improve his situation to permit return to work.” (VB 258).
*4 Following receipt of Dr. Nieh’s report on April 6, 2000, Liberty sent a letter (hereinafter, the “Initial Denial”) to Blankenship stating that it was discontinuing benefits as of April 19, 2000 because it could find “no objective medical documentation to substantiate continued long-term benefits.” (VB 252). The initial denial letter, signed by Senior Case Manager Liz Swirka, refers to Blankenship’s treatment under Drs Grimm and Downey, and states that “Dr. Grimm notes you will probably require some surgical intervention such as a TUIP in the future.” (VB 253). Next, the initial denial relates that in a February 2000 phone conversation with Liberty, Dr. Thomas indicated that “alternative interventions are available which might improve your symptoms and level of functioning.” Id. Finally, the letter informs Blankenship that Dr. Peter Nieh conducted a “peer review” in which he stated that “there is a good to excellent chance that the TUIP (incision of the prostrate [sic] ) would improve your urinary symptoms.” The letter states:
In conclusion, your current symptoms of urinary retention and bladder spasm induced incontinence are related to a “Bladder Outlet Obstruction.” It is confirmed by Dr. Peter Nieh, Dr. Carl Thomas, and Dr. Peter Grimm that there are alternative interventions that would reduce these symptoms. Since there are alternative methods to correct your condition with no objective medical information to substantiate why you should not pursue these avenues, we must deny your claim for disability benefits as of April 19, 2000.”
(VB 246). Nowhere does the termination letter assert an improvement of Blankenship’s medical condition or a change of symptoms as a basis for the denial of coverage. Nor does the letter argue that Blankenship is no longer disabled because he is not under the regular care of a physician.
Following receipt of the initial denial letter, Blankenship wrote to Liberty on April 26, 2000. Relying on the stated reasons in the termination letter, Blankenship expressed his “surprise” at the “rationale for the termination.” (VB 250). As his letter made clear, Blankenship understood this rationale to be his refusal to “undergo risky invasive procedures.” Id. In accordance with the Employee Retirement Income Security Act of 1974 (“ERISA”), on June 9, 2000, Blankenship formally appealed Liberty’s decision to discontinue benefits. (VB 241). The formal request for appeal observed that Liberty acknowledged his disability in its termination letter, but nevertheless terminated benefits because Blankenship had not “submitted to ‘alternative methods’ to alleviate his disability .” Id. Blankenship reminded Liberty that his own physicians had warned him that such alternative procedures carried the risk of worsening his condition, and included documentation of just such a warning by Dr. Grimm. Id. Because his own doctors had advised against the procedures Liberty appeared to require, Blankenship requested that his disability benefits be reinstated. Id.
*5 On June 22, 2000, Liberty acknowledged receipt of the appeal, and advised Blankenship that he would be notified in writing of the “final decision” within 60 days. (VB 240). The Department of Labor has set forth “minimum requirements” for Employee Benefit Plans claims determinations procedures. See 29 C.F.R. § 2560.503-1et seq. Liberty did not inform Blankenship of the outcome of his appeal within the mandated time period, nor did Liberty request more time in writing. On August 30, 2000, Blankenship wrote again to Liberty. (VB 203). His letter cited to the ERISA regulations governing the time within an appeal must be heard, calculated that Liberty should have responded by August 12, 2000, and informed Liberty that he had not received the required response. Id. Several weeks later, Blankenship received a letter from Liberty purporting to extend its time-period to review his appeal. (VB 202). Although the extension letter was dated August 7, 2000 (within the time-period for extending an appeal under ERISA), it was received in an envelope post-marked September 8, 2000, causing an impression that it had been “backdated.” (VB 201). Blankenship immediately notified Liberty of the discrepancy, including copies of the letter and the envelope in which it arrived. (VB 200). Very shortly, Liberty wrote to Blankenship that the letter included an “incorrect date” and had in fact been written on September 7, 2000, not August 7, 2000 as previously indicated. (VB 199). Apart from this correction, this letter did not acknowledge that Liberty was now clearly in violation of ERISA with regard to its review of Blankenship’s appeal.
Finally, Liberty sent a letter to Blankenship dated September 29, 2000 (hereinafter, “Final Denial”). This final denial informed Blankenship that Liberty had “completed our review of your request for reconsideration” and “determined that we are unable to alter our decision of April 20, 2000.” After quoting from the policy for the definition of “disabled,” the final denial states: “As indicated in the letter of April 20, 2000, the basis for the denial was you do not meet the policy’s definition of disability as stated above.” (VB 178). However, the content of the final denial letter has little in common with the content of the initial denial letter. Where the initial denial focused almost exclusively on the option for “alternative” procedures, the final denial rests on selective statements of Dr. Nieh, Dr. Grimm, and an unnamed “consulting medical examiner” to conclude that “the medical documentation demonstrates no impairment that prevents you from performing your sedentary occupation.” (VB 180). The final denial also notes that Blankenship had not been treated by his doctor since April 1999, without explicitly relying on that as an alternative basis for the decision. The penultimate paragraph of the final denial letter discusses Liberty’s “obligation to conduct a full and fair review of the appeal,” followed immediately by the sentence: “Your administrative rights to review have been exhausted, no further reviews will be conducted by Liberty Life Assurance Company of Boston.” (VB 181).Iii. Conclusions of Law
*6 The court reviews an ERISA action brought under 29 U.S.C. § 1132(a)(1)(B)to recover benefits under the terms of an employee benefit plan under the “de novo standard of review unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plans.” Firestone Tire and Rubber Company v. Bruch,489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). The long-term disability policy at issue does not grant the administrator such discretion, and both parties agree that this Court should review the determination of benefits applying a de novo standard of review.
However, the parties disagree about the scope of evidence that the Court should consider. Blankenship maintains that Liberty violated ERISA regulations by conducting a flawed review of his appeal, and therefore urges the Court to limit its review to the rationale given for the initial denial. Pl.’s Trial Brief at 18-22. Blankenship also insists that the Court should consider documentation beyond that contained in the administrative record, including other evidence that Blankenship was never allowed to present. Id. Liberty argues that the de novo review standard simply means that the Court should determine whether Blankenship was disabled within the terms of the policy, based only on the information in the record at the time the determination was made. Def. Trial Brief at 12.
Normally, under a de novo standard of review, the Court limits its review to the documents in the administrative record. Kearney v. Standard Ins. Co.,175 F.3d 1084, (9th Cir.1995). However, where the circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review, the district court has discretionary authority to look at evidence that was not before the plan administrator. Mongeluzo v. Baxter Travenol Disability Benefit Plan,46 F.3d 938, 944 (9th Cir.1990). Where a plaintiff was not given the opportunity to present additional evidence to the administrator because the administrator failed to follow the statutory notice requirement, the district court may properly consider that evidence in making its eligibility determination. Remand to give the administrator an opportunity to consider the new evidence is not necessary. See Vanderklok v. Provident Life & Accident Ins. Co.,956 F.2d 610, 617 (6th Cir.1992).