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Falk v. Life Insurance Co. of North America/Cigna Group Insurance

United States District Court, First Circuit

September 23, 2013

Richard Falk
v.
Life Insurance Company of North America/Cigna Group Insurance No. 2013 DNH 124

OPINION & ORDER

JOSEPH N. LAPLANTE, District Judge.

This case arises out of an employee's claim for long-term disability insurance benefits due to disc displacement and discogenic disease in the cervical and lumbar spine, and their associated symptoms. Plaintiff Richard Falk, formerly a head line worker for Unitil Service Corporation, sought benefits from Life Insurance Company of North America/Cigna Group Insurance ("LINA"), the claims administrator and insurer under Unitil's long term disability insurance plan. LINA denied Falk's claim, and Falk brought suit under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq. asking this court to overturn LINA's decision and award him benefits under the plan. See id. § 1132(a)(1)(B) (authorizing civil actions "to recover benefits due" under an ERISA plan). LINA answered, defending its decision, and also filed a counterclaim against Falk alleging that under the terms of the plan, it is entitled to recover benefits it contends were overpaid to Falk. See id. § 1132(a)(3); Cusson v. Liberty Life Ins. Co. of Boston , 592 F.3d 215, 230 (1st Cir. 2010). This court has subject-matter jurisdiction under 28 U.S.C. § 1331 (federal question) and 29 U.S.C. § 1132(e)(1) (ERISA).

Both sides have moved for judgment on the administrative record, see L.R. 9.4(c), and have submitted a joint statement of material facts, see L.R. 9.4(b). Each side has also submitted a list of disputed facts. See id. After oral argument and an exhaustive review of the record, judgment is granted to LINA on Falk's claim, as the record does not establish-even under a de novo standard of review-that Falk was disabled from performing "any occupation for which he... is, or may reasonably become, qualified based on education, training or experience, " as required for him to qualify for long term disability benefits under Unitil's plan. Based on the submitted record, judgment is granted to LINA on the counterclaim as well.

I. Applicable legal standard

The standard of review in an ERISA case differs from that in an ordinary civil case, where summary judgment is designed to screen out cases that raise no trialworthy issues. See, e.g., Orndorf v. Paul Revere Life Ins. Co. , 404 F.3d 510, 517 (1st Cir. 2005). "In the ERISA context, summary judgment is merely a vehicle for deciding the case, " in lieu of a trial. Bard v. Boston Shipping Ass'n , 471 F.3d 229, 235 (1st Cir. 2006). Rather than consider affidavits and other evidence submitted by the parties, the court reviews the denial of benefits based "solely on the administrative record, " and neither party is entitled to factual inferences in its favor. Id . Thus, "in a very real sense, the district court sits more as an appellate tribunal than as a trial court" in deciding whether to uphold the denial. Leahy v. Raytheon Co. , 315 F.3d 11, 18 (1st Cir. 2002).

Courts apply varying degrees of scrutiny in reviewing a denial or termination of benefits under ERISA. Review is de novo "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch , 489 U.S. 101, 115 (1989). Thus, if the plan gives the administrator or fiduciary discretionary authority, "the administrator's decision must be upheld unless it is arbitrary, capricious, or an abuse of discretion." Wright v. R.R. Donnelley & Sons Co. Grp. Benefits Plan , 402 F.3d 67, 74 (1st Cir. 2005).

The court will assume, without deciding, that the less deferential de novo standard of review applies in this case (though the court appreciates the parties' thoughtful and thorough arguments on which standard the court should apply).[1] Under the de novo standard, the court must determine, after a full review of the administrative record, whether the denial of benefits was correct. See, e.g., Orndorf , 404 F.3d at 518. Although the de novo standard allows the court to substitute its judgment for that of the plan administrator, the claimant still carries the burden of demonstrating that she is disabled within the terms of the plan. See id. at 519; see also, e.g., Terry v. Bayer Corp. , 145 F.3d 28, 34 (1st Cir. 1998). In sum,

de novo review generally consists of the court's independent weighing of the facts and opinions in [the] record to determine whether the claimant has met his burden of showing he is disabled within the meaning of the policy. While the court does not ignore facts in the record, the court grants no deference to administrators' opinions or conclusions based on these facts.

Orndorf , 404 F.3d at 518 (citation omitted).

II. Background

A. Falk's application for disability benefits

Falk, who is 52 years old, was employed by Unitil Service Corporation as a head line worker. As a Unitil employee, Falk participated in the company's group disability insurance plan. LINA was the insurer and claims administrator under the plan.

Under Unitil's group disability insurance policy, an employee is initially defined as disabled, and thus becomes eligible for disability benefits, if, solely because of Injury or Sickness, he or she is:

1. unable to perform the material duties of his or her Regular Occupation; and
2. unable to earn 80% or more of his or her Indexed Earnings from working in his or her Regular Occupation.

After benefits "have been payable for 24 months, " however, the employee remains eligible for benefits only

if, solely due to Injury or Sickness, he or she is:

1. Unable to perform the material duties of any occupation for which he or she is, or may reasonably become, qualified based on education, training or experience; and
2. Unable to earn 80% or more of his or her Indexed Earnings.

Falk hurt his back while lifting cable in 1993. After fusion surgery on his lumbar spine, Falk returned to work while continuing to receive medical treatment, including pain medication and epidural steroid injections. In late 2007, however, Falk stopped working due to increasing pain in his spine. Though he attempted to return to work in early 2008, he was unable to remain on the job due to his pain, and applied for total disability benefits from LINA later that year. After initially denying Falk's claim in late 2008, LINA ultimately determined that Falk was incapable of performing the heavy physical requirements of his job as a head line worker, and was thus disabled within the meaning of the policy. It therefore approved his claim and began paying him monthly benefits in the amount of $3, 970.00.

In early 2010, Falk applied for disability benefits from the Social Security Administration, which determined that Falk was disabled (as that term is defined by the Social Security Act and its implementing regulations) as of December 2008. Falk began receiving monthly Social Security disability benefits in the amount of $2, 865.08. Falk also received a lump payment for retroactive benefits, going back to December 2008, that had accrued prior to the Administration's determination.

The policy acknowledges that an employee who is eligible for disability benefits under its terms might also be eligible for benefits from other sources, including Social Security disability benefits. It provides that, in that event, LINA "may reduce the Disability Benefits by the amount of such Other Income Benefits." It further provides that LINA "has the right to recover any benefits it has overpaid" by either "request[ing] a lump sum payment of the overpaid amount;" "reduc[ing] any amounts payable under this Policy; and/or tak[ing] any appropriate collection activity available to it." Upon learning that Falk had been awarded Social Security disability benefits for most of the period for which LINA had paid him benefits under the policy, LINA concluded that it had overpaid Falk by about $40, 000. LINA thus wrote to Falk requesting that he repay this overpayment in bulk. After Falk failed to do so, LINA began applying his monthly payments (now reduced, in light of the award of Social Security benefits) to this balance on a going-forward basis.

LINA continued paying benefits to Falk (or, more accurately, applying Falk's benefit payments to the claimed overpayment balance) until October 2010, the end of the initial 24-month period during which an employee is considered disabled under the terms of the policy if he is unable to perform the material duties of his regular occupation. That month, LINA informed Falk that, based upon the evidence before it, it had determined he was not disabled, as he was not (in its opinion) incapable of performing "any occupation" for which he was, or might reasonably become, qualified. After a lengthy internal appeals ...


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