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Otero v. Unum Life Insurance Co. of America

United States District Court, N.D. Alabama, Western Division

January 13, 2017

ARTURO J. OTERO, Plaintiff,
v.
UNUM LIFE INSURANCE COMPANY OF AMERICA, Defendant

          MEMORANDUM OPINION

          KARON OWEN BOWDRE CHIEF UNITED STATES DISTRICT JUDGE.

         “Financial protection for what matters most” appears on the website of the Defendant, Unum Life Insurance Company of America. Its vision statement includes providing products that help “employees protect their families and livelihoods, ” and its statement of values places integrity above all others.[1]

         In this ERISA lawsuit, the Plaintiff, Dr. Arturo Otero, asserts, in essence, that Unum failed to live up to its own motto and statements of values and vision when it failed to act with integrity by denying him the financial protection for which he paid. He claims disability benefits under a group long-term disability policy issued to his employer. He argues that Unum waived any right to declare him ineligible for coverage based on his part-time work, because it knew he was working part-time when it accepted his premiums, and failed to follow the mandated claims procedures in processing his current claim.

         This case raises two issues that the Eleventh Circuit has not yet resolved: whether waiver applies in an ERISA context in circumstances present here, and whether the correct standard of review is de novo in a “deemed exhausted” ERISA case when the insurance company has not exercised the discretion granted it by the plan.

         This matter is before the court on cross motions for judgment on the administrative record: “Plaintiff's Motion for Summary Judgment” (doc. 21), converted to a Motion for Judgment on the Administrative Record (doc. 30), with an accompanying brief (doc. 22); and “Unum Life's Motion for Judgment on the Administrative Record, or Alternatively, for Summary Judgment” (doc. 23), with an accompanying brief (doc. 24). The parties responded to the cross motions (Unum's response - doc. 34; Plaintiff's response - doc. 36), so this matter has received thorough briefing.

         For the reasons stated in this Memorandum Opinion, [2] the court DEEMS these motions to be requests for judgment as a matter of law, not judgment limited to the administrative record; the court FINDS that Dr. Otero is eligible for coverage under the group policy and FINDS that he cannot perform the material and substantial duties of his regular occupation as a neurologist. However, the court WILL REMAND this case to Unum, directing it to request from Dr. Otero the relevant W-2 forms and to make appropriate calculations based on the W-2 forms to determine whether Dr. Otero's monthly earnings after February 2, 2013 decreased by 20 % as required to qualify as a disability under the policy.

         I. PROCEDURAL BACKGROUND

         Dr. Arturo J. Otero is a licensed neurologist who is not board certified. This case represents the second case he has filed against Unum, claiming disability benefits under the group long-term disability policy that Unum issued to his employer, Neurology Consultants of Tuscaloosa, P.C. To distinguish between the two related lawsuits, the court will refer to the first case filed, Otero v. Unum Life Ins. Co., Case No. 7:10-CV-02554-SLB (N.D. Ala.), as “Otero I”; and will refer to the instant case as “Otero II.” An understanding of Otero I sheds light on the circumstances of this suit.

         ERISA governs both the original claim made the basis of Otero I and the one made the basis of the current suit. (29 U.S.C.A. §§ 1001 to 1461). Before 2005, Dr. Otero had worked 60-80 hours per week as a neurologist, seeing patients in the office and hospital and taking night call. (Otero I, Doc. 35-14, at 74). Prior to filing the first lawsuit, Dr. Otero filed a claim with Unum for disability benefits beginning January 3, 2005, when he stopped working on a full-time basis because of atrial fibrillation. Dr. Otero continued to work as a neurologist on a part-time basis with no night call. (Otero II, Doc. 35-3, at 3).

         Unum provided Dr. Otero with full disability benefits of $10, 0000 per month for 24 months beginning April 3, 2005 (id. at 3 & 5) based on policy provisions that provided for benefits with a determination that the employee was “limited from performing the material and substantial duties of [his] regular occupation due to sickness or injury and [that he has] ¶ 20% or more loss in [ ] indexed monthly earnings due to the same sickness or injury.” (Otero II, Doc. 25-1, Ex. 2[3]; Doc. 25-2, at 19). The company's determination to provide benefits at this juncture was based on Dr. Otero's reported restriction of being unable to perform night call, a substantial duty of his job. (Otero I, Unum Opp. Br., Doc. 31, at 3 ¶ 12 (resp. to “undisputed” fact 12.)).

         After that two-year period, the eligibility for benefits under the policy changed from the determination of whether the employee could perform his “regular occupation” to whether he was “unable to perform the duties of any gainful occupation for which [he] is reasonably fitted by education, training or experience.” (Otero II, Doc. 25-1, Ex. 2; Doc. 25-2, at 19; Doc. 35-3, at 3). The policy defines gainful occupation as one that would provide the claimant with an income “at least equal to your gross disability payment within 12 months of your return to work.” (Otero II, Doc. 25-2, at 37).

         On September 28, 2007, more than 29 months after the April 2005 commencement of disability payments to Dr. Otero, Unum terminated his benefits. Although the policy's disability benefit was now based on the “any gainful occupation” standard, Unum terminated benefits because it found that Dr. Otero could perform the full-time duties required of his regular occupation as a neurologist, including working the necessary hours and taking rotational night call. (Otero I, Doc. 35-13, at 70-74).

         Dr. Otero appealed that decision, and, after review, Unum reversed the decision and reinstated Dr. Otero's disability benefits on January 17, 2008. That reinstatement letter quoted various policy provisions, and quoted the definition of “regular occupation” but not “gainful occupation.” Ultimately, the letter notifying of the reversal stated simply that the additional information from Dr. Otero's treatment providers “was reviewed by our physician and restrictions and limitations were found to be supported.” (Otero I, Doc. 35-14 at 14-17, 19).

         According to Unum's response to Dr. Otero's statement of facts in Otero I, which it adopts in Otero II, Unum based its reversal decision on the need for more information concerning Dr. Otero's restrictions and limitations in his occupation, including an independent medical exam. (Otero I, Doc. 31, at 3-4 (responding); Otero II, Doc. 34, at 4 (adopting)). However the letter itself did not qualify the reversal or say that the reversal was based on the need for more medical information. It did say that, in the future, the benefits center “will also require periodic updates of your medical status to determine if you remain eligible for continued benefits under the applicable policy provisions.” (Otero I, Doc. 35-14, at 17).

         A document entitled “Appeal Reversal” in Unum's file on Dr. Otero provided a rationale for the appeal decision that the letter itself failed to provide: the Appeal Reversal document focused on Dr. Otero's pre-disability lengthy work hours and his report of sleep deprivation triggering heart palpitations. Dr. Parisi, the medical reviewer, noted that Dr. Kay, Dr. Otero's cardiologist, had consistently restricted Dr. Otero from working night call, a restriction with which Dr. Parisi could not disagree. That same Appeal Reversal document noted that vocational reviewer Catherine Rogers had previously found night call to be a substantial and material duty in the occupation of neurologist. Although vocational reviewer Shannon O'Kelley found that night call could or could not be a substantial and material duty because some neurologists are not required to do night call, O'Kelley did agree that lack of night call would result in a decline in income. (Otero I, Doc 35-14, at 24).

         Unum paid disability benefits to Dr. Otero of $10, 000 per month for two additional years from January 2008 to March 4, 2010. On June 12, 2008, an independent medical doctor evaluated Dr. Otero and determined that he would be able to practice as a neurologist without night call or weekend call. (Otero I, Doc. 35-22, at 149). In a January 2010 telephone conversation with Unum staff, Dr. Otero advised Unum that he was working as a neurologist and general medical practitioner for about 20 hours per week, performing office-based clinical work for four hours per day and seeing a limited number of patients, but not performing night call or hospital call. (Otero II, Doc. 35-3, at 3).

         Once again, on March 4, 2010, Unum Lead Disability Benefits Specialist Andrew Hamilton sent Dr. Otero a letter terminating his benefits. In that letter, Unum noted his part-time work as a neurologist and stated that, although the medical data in his file did “not support [his] reported inability to work 40 hours per week, ” the data “supports the restrictions and limitations of no night call, weekend call, and hospital work or hospital procedures.” Unum concluded that Dr. Otero was not disabled under the “any gainful occupation” standard because he had transferable skills that would allow him to earn $10, 000 per month as an Insurance Physician (working 40 to 67 hours per month or approximately 10 to 16 hours per week to receive an income equal to $10, 000 per month), Medical File Review Physician (same), or Peer Review Physician (working 22 ½ to 31 hours per month or approximately 5.5 to 7.6 hours per week to receive an income equal to $10, 000 per month). (Otero II, Doc. 35-3, at 2-5). Unum reached that conclusion, in part, because of the vocational review completed on March 2, 2010. In that report, the reviewer opined that Dr. Otero was qualified to perform the work in those three identified jobs, and she did not discuss board certification as a qualification. (Otero I, Doc. 35-22, at 143-45). Thus, Unum based this determination that Dr. Otero was not entitled to long- term disability benefits upon a determination that he was able to perform a “gainful occupation, ” not upon a determination that he was able to perform his “regular occupation” as a neurologist. (Otero I, Doc. 35-22, at 147-150; Doc. 35-23, at 1-3, & 5).

         Dr. Otero appealed that ruling administratively, and, in a letter dated April 30, 2010, Unum Lead Appeals Specialist Robert Spellman acknowledged that Unum's own consulting physician agreed with part-time work restrictions for Dr. Otero “based on the fact that full time work would increase [his] bouts of atrial fibrillation.” However, Unum determined that termination of benefits was correct because Dr. Otero would perform other gainful employment on a part-time basis. (Otero I, Doc. 35-23, at 105). That letter gave Dr. Otero until May 30, 2010 to provide additional information, and stated that, if Unum did not receive additional information, the decision would be final. The letter also advised Dr. Otero of his right to bring a civil suit under § 502(a) of ERISA if he disagreed with the decision. (Otero II, Doc. 35-4).

         The administrative record in Otero I reflected that Dr. Otero submitted a letter dated May 24, 2010 along with a letter from his cardiologist, Dr. Kay, dated May 20, 2010. Dr. Kay's letter stated in part:

[Dr. Otero] has repeatedly shown that when he increases his work load that atrial fibrillation becomes a major problem for him. Thus, it is my opinion that Dr. Otero's current work load status is optimal for his cardiac condition. He presently attends as a practicing neurologist in an outpatient clinic setting over seeing low complex cases in a limited fashion. Asking Dr. Otero to carry out the job description as suggested in your [termination of benefits] letter would be far more stressful to him and can be expected to cause him to have more atrial fibrillation. In order for him to carry out the duties as you described would require additional training for him as he does not have expertise in these matters. I believe that this markedly increases his risk of atrial fibrillation and would hinder his health and well being . . . . My recommendation since 2007 [has] not changed and I would strongly encourage that his present level of work duties not be changed.

(Otero I, Doc. 35-23, at 119). Mr. Spellman responded to that information with a letter dated May 26, 2010, acknowledging receipt of that information and stating “we have completed our appellate review and our decision was communicated to you by letter dated April 30, 2010. If you wish to request a re-appeal of your claim, we would need a request in writing.” (Otero I, Doc. 35-23, at 121).

         In Otero I, Dr. Otero appealed Unum's 2010 decision terminating benefits by filing a civil suit in this court. By final judgment of March 30, 2012, the court granted judgment on the administrative record in Unum's favor, and denied Dr. Otero's motion. It found that the information in the administrative record did not support a finding that Unum's decision was wrong when Unum concluded that actual jobs existed that would pay Dr. Otero $10, 000 per month, and thus, that he was not disabled under the “any gainful occupation” standard. At the district court level, Dr. Otero argued that he was not qualified for the jobs that the VE identified because he is not board certified in neurology, and, to establish that fact, relied on evidence that was not in the administrative record. The court granted the motion to strike the evidence outside the administrative record. Considering only the material available to Unum when it made its determination, the court concluded: “[a]lthough plaintiff has argued that the VE's report is inaccurate, nothing in the administrative record indicated that defendant had any reason to know or suspect that VE's report was inaccurate and that plaintiff could not perform the jobs as reported by the VE.” (Otero I, Doc. 36, at 5). Dr. Otero did not appeal that judgment against him. (Otero II, Unum's Br. Doc. 24, at 7-undisputed fact #11; Doc. 36, at 4-no dispute).

         III. FACTS

         In Otero II, Dr. Otero argues that Unum accepted his premiums under the group long- term disability policy from April of 2010 forward, knowing that he was working part-time, and thus, it has waived any right to deny that he was not eligible for coverage because of his failure to work the minimum hours. Dr. Otero also argues that, as of February of 2013, he once again became disabled within the meaning of the group policy because of the deterioration of the same condition of atrial fibrillation. Comparing the 2013 claim with his prior claim, as discussed in detail below, the 2013 claim focuses on the same condition (atrial fibrillation) for a different time period (beginning February of 2013 versus the prior claims's disability commencement date of 2005 with a different disability standard applying after two years of payments) using a different disability standard (“regular occupation” standard versus the prior claim's “any gainful occupation” standard).

         On the other hand, Unum asserts that Dr. Otero is not eligible for coverage because of his part-time work and that Unum did not waive the 36-hour eligibility restriction because Unum did not know that Dr. Otero was not working the minimum number of hours until he submitted a claim. Further, Unum argues that, even if Dr. Otero were eligible for coverage, the decision to deny his claim for disability was not wrong because he is able to perform his regular occupation as a neurologist and because he did not receive a 20% or more loss in his indexed monthly earnings because of his atrial fibrillation. In light of those arguments, the following facts are relevant and material.

         A. Factual Narrative

         After the termination of his group disability benefits in March of 2012, Dr. Otero continued to work part-time as a neurologist. He asserts that, by February of 2013, his condition had so deteriorated that he was once again disabled within the meaning of his policy.

         Dr. Otero's Ability to Perform His “Regular Occupation”

         The evidence reflects that Dr. Otero's regular occupation is neurologist, and his Unum policy provides that Unum measures whether he can perform that regular occupation by how the occupation is “normally performed in the national economy, instead of how the work tasks are performed for a specific employer or at a specific location.” (Otero II, Doc. 25-2, at 25). While the briefing does not clearly list all the duties of a neurologist as that job is performed in the national economy, the evidence does reflect that such job would require working full-time, as opposed to part-time hours, and some of the evidence supports the inclusion of night call as part of those duties. Catherine Rogers, Unum's Senior Vocational Consultant, found night call to be a substantial and material duty in the occupation of neurologist. Another Unum Senior Vocational Rehabilitation Consultant, Shannon O'Kelley, found that night call could or could not be a substantial and material duty of the neurologist occupation, although a neurologist who did not take night call would expect decreased income. (Otero I, Doc. 35-14, at 8, 12, 24). Marilyn Howard of Unum stated in her note to Dr. Otero's claims file dated January 10, 2008 that “all statements indicate the insured would need to work over 40 hours per week to perform full duties.” (Otero I, Doc. 35-14, at 11-12).

         Dr. Otero suffers from chronic atrial fibrillation that generally occurs with factors such as stress, anxiety, and lack of sleep. (Otero II, Doc. 35-15, at 45). One of his cardiologists, Dr. William Hill, characterized his symptoms as “very severe and incapacitating to the point that he is unable to sustain any type of full time job. . . . [H]is clinical descriptions with his symptoms of weakness, shortness of breath, and inability to function during and after his episodes are quite consistent with the medical literature [and] there really is no question in my mind that based on the above, he is unable to carry on any meaningful sustained job.”[4] (Otero II, Doc. 35-15, at 45 & 46). In addition to Dr. Hill, Dr. Otero has been under the care of cardiovascular electrophysiologists, first Dr. Neal Kay, and, after he retired, Dr. Jose Osorio, both practicing in Birmingham.

         The seriousness of Dr. Otero's condition is reflected in the need to have medical procedures to restore his heart rhythm. Even when working part-time in the office setting to decrease the factors associated with atrial fibrillation, Dr. Otero has required several cardioversion[5] and two ablation[6] procedures to place his heart back into a sinus rhythm.

         The current claim for disability allegedly began in February of 2013 and represented a further deterioration of his heart condition. On February 2, 2013, Dr. Otero underwent a cardioversion procedure at DCH Regional Medical Center in Tuscaloosa, which successfully reestablished a sinus rhythm, and another on October 20, 2013. (Otero II, Doc. 35-15, at 32, 41, 55, 59 & 62). On January 16, 2014, Dr. Osorio stated that Dr. Otero had been hospitalized on December 4 and 5, 2013, for implementation of a new medical therapy involving a beta-blocker called Sotalol HCL to treat his atrial fibrillation. He stated that Dr. Otero “will need to continue leading a non-stressfull [sic] life and work part-time in a non-stressful environment, preferably less stressful than what he works in now in order to help decrease the symptoms of his afib.” (Otero II, Doc. 35-15, at 39.)

         Prior to the 2013 claim on appeal here, Unum had never made a final determination that Dr. Otero was able to perform his “regular occupation.” Unum paid him long-term disability benefits for years when the definition of “disability” under the policy was measured under the “regular occupation” standard, and the 2010 determination that he was not entitled to long-term disability benefits was based upon a determination that he was able to perform a “gainful occupation, ” not upon a determination that he was able to perform his “regular occupation” as a neurologist. (Otero I, Doc. 35-22, at 147-150; Doc. 35-23, at 1-3, & 5).

         Unum's Knowledge of Dr. Otero's Part-Time Work

         Unum's complex history with Dr. Otero-involving numerous disability benefits determinations, administrative appeals, and two years of litigation in federal district court, all before the denial of the current claim-meant that the company had much information available to it about Dr. Otero's part-time work schedule. In Otero I, the court entered judgment in Unum's favor in March of 2012. The information in Otero I's administrative record reflected that, after filing claims for disability benefits, Dr. Otero worked part-time as a neurologist from 2005 through the approximate date of the 2010 decision, working four hours a day and sixteen to twenty hours a week, seeing patients in the office. (Otero I: Doc. 35-14, at 7; Doc. 35-22, at 66; Doc. 35-23, at 6-7). The decision makers on his March 2010 disability benefits termination and the April 2010 administrative appeal, Andrew Hamilton and Robert Spellman respectively, reviewed materials repeatedly referring to Dr. Otero's part-time work hours, and those decision makers repeatedly acknowledged his part-time work hours in their claim file documents in March and April of 2010. (Otero I: Doc. 35-23, at 6, 23, 25, 29, 31, 48, 51, 54).

         On March 26, 2010, Dr. Otero sent Andrew Hamilton a letter, advising him that he was pursuing an administrative appeal of the termination of his long term disability benefits. In that letter, Dr. Otero specifically asked for “clarification as to what is the current status of my group policy for any premiums due or does the waiver of the premiums still apply to this policy while the appeal is in process.” (Otero I: Doc. 35-23, at 22). The same March 26, 2010 letter also contained confirmation that Dr. Otero was working part-time; it attached two letters from Dr. Otero's cardiologists, both dated in early 2010 and setting out his work schedule of four hours a day and twenty hours a week. (Otero I: Doc. 35-23, at 23-26). Unum assigned the appeal to specialist Robert Spellman.

         The administrative record reflects that Dr. Otero resumed paying premiums after termination of his benefits with the knowledge of and based on the direction of Unum decision maker Robert Spellman. Dr. Otero wrote to Unum, asking whether he needed to pay premiums during the appeals process, and he and his staff called Unum repeatedly from March 24 through April 1, 2010 to obtain an answer to that question; Dr. Otero and his staff left messages with Robert Spellman, and the decision maker on his March 2010 termination, Andrew Hamilton, among others. (Otero I: Doc. 35-23, at 18, 28, 36, 38, 39). Robert Spellman created the following notation in the claims file dated April 2, 2010: “Spoke to [Dr. Otero.] I noted that he should continue to pay premiums while his appeal is being reviewed as to avoid a lapse in coverage. [Dr. Otero] said he would continue.” (Otero I: Doc. 35-23, at 41).

         Days before and after he gave that advice to Dr. Otero about resuming payment of premiums, Mr. Spellman received documents referring to Dr. Otero's part-time work status and created documents in which he himself referred to Dr. Otero's part-time work status:

• March 29, 2010: Mr. Spellman sent a letter to Dr. Otero acknowledging receipt of his written notice of appeal; that appeal notice attached letters from Dr. Otero's cardiologists, both referring to his part-time work status. (Otero I: Doc. 35-23, at 20, 22, 23, & 25).
• April 7, 2010: Mr. Spellman spoke with Dr. Otero over the phone, and Spellman's notation of the phone call states: “He continues to work on a PT [part-time] basis in the same hours and has not applied for [social security disability income] as he has been working pt [part-time]. (Otero I: Doc. 35-23, at 48).
• April 8, 2010: Mr. Spellman acknowledged Dr. Otero's part-time work status in a file document, noting that in 2005 he had returned to work “part time . . . working appx 25-30 hours per week, ” and that Dr. Otero was arguing “that he remains unable to work full time in other gainful occupations.” (Otero I: Doc. 35-23, at 51, 54).
• April 12, 2010: a Clinical Consultant Resource file entry by Karen York duplicated the information quoted above for the April 8 entry and quoted the information from Dr. Otero's cardiologists that, as of February 2010, Dr. Otero “[h]as to divide his schedule into 2 hours in the morning and 2 hours in the afternoon . . . . He clearly reports a major problem with working more than 20 hours per week.” (Otero I: Doc. 35-23, at 54-57).
• April 15, 2010: Doctor Resource file entry, created by Karen York for referral to Dr. Alfred Parisi, again recounted Dr. Otero's cardiologists' explanation of Dr. Otero's part-time work and part-time capabilities. (Otero I: Doc. 35-23, at 58-60).
• April 21, 2010: Appeals Opinion by Dr. Alfred Parisi contained numerous references to Dr. Otero's part-time work schedule, and Dr. Parisi's conclusions focused on the issue of whether he was capable of performing full time sedentary work: “R and L Supported for not to undertake full time sedentary work . . . . In summary I cannot conclude with a reasonable degree of medical certainty that claimant would more likely than not function on a sustainable basis in a full time sedentary occupation which does not involve direct patient care responsibilities. . . .The basis for restricting claimant from full time sedentary work is the presumption that working full time would increase his stress to a level which would engender more frequent bouts of atrial fibrillation such that he could not sustain full time work on a regular basis. That is the opinion of his AP cardiologist Dr. Hill and pointed out as a consideration to be weighed by his consulting electrophysiologist Dr. Kay. I have no basis for refuting these opinions. . . . Claimant has the physical capacity to undertake full time sedentary work. Whether he would be limited in doing so by repeated bouts of atrial fibrillation is speculative.” (Otero I: Doc. 35-23, at 70-75).
• April 30, 2010: Appeal Decision Letter to Dr. Otero from Robert Spellman referred to his part-time work status: “You have been working in the office setting four hours daily five days per week seeing patients. You have been allocating your work time each day from 9:00-11:00 am and again from 1:00-3:00 p.m.” The jobs that Unum found that Dr. Otero could perform were “occupations [that] exist on a part-time basis.” Mr. Spellman stated in his letter that the specific jobs identified could be performed on a part-time basis while still generating the requisite income to meet the definition of gainful employment: the job of Insurance Physician and Medical File Review Physician would require his working “approximately 10-16 hours per week to be considered gainful” and the Peer Review Physician occupation would require his working “approximately 5.5-7.6 hours per week.” (Otero I: Doc. 35-23, at 105).

         In Otero I court filings in 2011 and 2012, Dr. Otero consistently took the position, with support from his cardiologists, that he was limited to working part-time. The briefs and evidentiary submissions focused on Dr. Otero's alleged part-time work limitation and gainful employment options given that limitation. No reasonable inferences existed from the evidence Dr. Otero produced or from Dr. Otero's briefs in that litigation that Dr. Otero planned to work more than the twenty hours per week; indeed, he claimed repeatedly that he could not. Unum did not specifically take the position that Dr. Otero could work full time, and the “other gainful employment” that it identified for him were all occupations that exist on a part-time basis. (Otero I: Otero's Br. Statement of Facts filed on 8/26/11 numbers 7, 12, 21, 32:; Doc. 24, at 4, 6, 8, 12; Unum's Resp. Doc. 31, at 3, 4, 6 with no dispute as to Dr. Otero's work schedule of 20 hours per week; Unum's Br. Doc. 27, at 3, at 5 ¶ 8, at 6 ¶ ¶ 11-13, at 7-8 ¶ 20, at 9 ¶ ¶ 25-27, at 10 ¶ 31, at 11 ¶ ¶ 33-36, at 17, 19; Memorandum Decision Doc. 36, at 2, (entered 3/30/12 - “Dr. Otero cannot take night call or work 40 hours a week. He currently works four days a week for four hours a day.”)).

         The record reflects that Dr. Otero's work schedule remained at approximately 20 hours per week from January 2010 forward, continuing throughout the pendency of Otero I and the claims period in Otero II. He sees approximately six patients from 9:00 until 11:00 in the morning and then six more from 1:00 until 3:00 in the afternoon with a two-hour break during which he sits and reads or naps because he claimed to be unable to physically see patients for four consecutive hours. Sometimes, he must cancel patients because of his symptoms. (Otero II, Doc. 35-15, at 45-47).

         Dr. Otero's Premiums Paid During Period of Part-Time Work

         The administrative record in Otero II reflects that Neurology Consultants paid a premium statement that Unum prepared monthly from Spring 2010 onward. Neurology Consultants provided Unum with information, called a census, about its employees covered under the policy and the earnings that were covered. The premium statement that Unum prepared included “Employee Detail” sheets with a box individualized for each employee, including Dr. Otero, listing in that box the employee's name, ID number, coverage amount (representing his earnings for that month) and the monthly premium due for that employee based on his earnings.

         During the period that Unum paid disability benefits to Dr. Otero prior to the March 2010 termination, the Employee Detail sheets listed his name, but the premium listed was “0.00.” (Otero II, Doc. 35-13, at 66, 71, 74). After the termination in early March 2010 of Dr. Otero's disability benefits, Neurology Consultants did not simply add Dr. Otero's premium to the statement without consulting Unum. To the contrary, as noted, in the weeks after the March 2010 decision, Dr. Otero and Neurology Consultants repeatedly contacted Unum, asking Unum whether Dr. Otero needed to resume payment of premiums.

         On April 2, 2010, Mr. Spellman of Unum specifically told Dr. Otero to resume paying premiums. (Otero I: Doc. 35-23, at 41). On the April 2010 premium statement, the first premium statement that Unum prepared for Neurology Consultants after the termination of his disability benefits in March, Neurology Consultants wrote a note: “Please add Premium for Arturo Otero $105.00.” (Otero II, Doc. 35-13, at 75). In the May 2010 premium statement Unum prepared for Neurology Consultants, Dr. Otero's box in the Employee Detail sheet changed the premium from $0.00 to $105.00. (Doc. 35-13, at 82). Therefore, each month Unum produced a document that listed Dr. Otero's name and listed the premium due for him based on his earnings, and Neurology Consultants continued to submit monthly premiums on Dr. Otero's behalf based on his monthly earnings. (Otero II, Doc. 35-2, at 2-3, ¶ 2; Doc. 35-12 (premium statements) & 35-13 (premium statements)).

         After Dr. Otero asked in March and April of 2010 whether he should resume premium payments and Mr. Spellman told him to do so, Unum did not subsequently revisit the issue of whether Dr. Otero was eligible for coverage under Neurology Consultants' group policy until after he filed a new claim in September of 2013. Unum explained that, given the millions of employees insured under its group disability policies, Unum's practice is not to perform an eligibility determination concerning whether an individual employee has coverage until that employee submits a claim.

         Dr. Otero's Earnings at Neurology Consultants

         Part of the determination of disability rests upon Dr. Otero's earnings as a neurologist and his condition's effect on those earnings. The administrative record of Otero II contains the following specific information regarding Dr. Otero's earnings. The premium statements reflected Dr. Otero's earnings of $6, 250 per month from January 2010 through February 2012; earnings of $4, 167 per month from May of 2012[7] through January of 2013; earnings of $4, 903 per month from February of 2013 through February of 2014; earnings of $4, 220.00 per month for March and April of 2014. (Otero II: Spellman Decl. Doc. 35-2, at 3 (stating that premiums are based on Dr. Otero's monthly earnings); Docs. 35-12 & 35-13 (premium statements with Dr. Otero's earnings and premiums based on those earnings)).

         Although the parties have pointed the court to no documents in the Otero I and II administrative record showing Dr. Otero's W-2 or K-1 forms for 2010, 2011, and 2012, Unum presented the W-2 statements that Dr. Otero submitted to Provident Life in connection with his individual claim. (Otero II, Doc. 25-4, at 2-8). As discussed subsequently, Provident Life is a sister company to Unum, and Dr. Otero had also purchased an individual disability policy with Provident Life and submitted a disability claim under that policy. The W-2 statements that Dr. Otero submitted to Provident Life reflected that his wages for 2010 were $45, 500.04, and that his wages for 2011 were $49, 291.71. Id. For the year 2012, neither Unum nor Dr. Otero presented a W-2 form stating his income, but Unum presented Dr. Otero's employee pay stub for the pay period December 9, 2012 through December 22, 2012, which shows a salary year to date of $58, 012.89 with a notation of “NCV Compensation”[8] of $819.00 for a total of $58, 831, 89, and net pay of $36, 848.84. (Otero II, Doc. 25-4, at 2-3 & 9).

         Neither Unum nor Dr. Otero presented W-2 forms stating Dr. Otero's income for the years 2013 and afterwards.[9] Because Unum never processed Dr. Otero's disability claim for his alleged disability beginning in February of 2013, which would require comparing his income before and after the disability commencement date, it never requested information about his earnings for that time period.

         Calculating Dr. Otero's monthly earnings for the purposes of the policy does not include income received from sources other than the employer. (Otero II, Unum Br. Doc. 24, at 13-14 (undisp. fact 36)).

         Dr. Otero's 2013 Claim for Disability Benefits

         On September 6, 2013, over a year after the entry of judgment in Unum's favor in Otero 1, Dr. Otero submitted through his attorney a request to Unum's Benefits Center Coordinator that the company find him disabled based on his current physical condition, which he characterized as having deteriorated. Dr. Otero also attached a list of over 50 companies, most of which were insurance companies, that he claimed to have contacted unsuccessfully concerning employment; Dr. Otero took the position that the jobs were unavailable to him “specifically because he is not board certified.” Dr. Otero's attorney made the following request: “If UNUM continues to maintain these jobs exist, would you please furnish the names of employers you can identify that pay the amount of money that would disqualify Dr. Otero for disability benefits.” (Otero II, Doc. 35-6, at 1-19). Dr. Otero's attorney also attached the medical records from Dr. Otero's February 2, 2013 emergency room visit documenting his heart problems. (Otero II, Doc. 35-6, at 2-3 & 20-31).

         Although Dr. Otero sent the September 2013 claim to Unum's Benefits Center Coordinator in Columbia, South Carolina and referred in the body of the letter to the prior district court lawsuit involving the claim against Unum for group disability benefits, the paragraph of the letter marked “Re:” mistakenly referred to Provident Life and Accident Insurance Company as the company administering the claim. Provident Life is a separate company administering Dr. Otero's individual disability policy, and the office administering that policy was a different office and in a different state than those handling Unum's claims. However, both Provident Life and Unum are sister companies under the umbrella of Unum Group.

         In a letter dated September 17, 2013, Carol McCue, Director of Unum's Disability Benefits Center, responded to the September 6, 2013 claim, stating: “It is our understanding you are requesting a review of the denial made by Unum concerning Dr. Otero's long term disability claim 1794623. At this time a copy of your letter and the attachments have been forwarded to the Appeals unit . . . .” (Otero II, Doc. 35-7). Thus, although the September 2013 claim sent to Unum's Benefit Center improperly referenced Dr. Otero's Provident Life policy number, because the companies were related under the Unum Group umbrella, the mistake did not prevent the correct claims personnel from receiving it eventually; the September 2013 claim was forwarded to the correct recipient, Robert Spellman of Unum's Appeals department.

         On September 17, 2013, Mr. Spellman responded: “Please understand this claim has been closed since 2010 and we cannot consider any additional information. Also, your client's coverage ceased when he stopped working and therefore is unable to make a new claim.” (Otero II, Doc. 35-9; 35-10, at 4). Mr. Spellman did not refer to the appeal of the 2010 claims determination, which did not conclude until 2012; he provided no support for the incorrect statement that Dr. Otero had stopped working; and he did not offer in that letter to return the premium payments made on Dr. Otero's behalf during the three years that he had been working part-time.

         In a letter dated November 22, 2013, Dr. Otero's attorney responded, requesting a further explanation:

Is it the position of Unum that once a claim is denied that its insured can never file another claim for disability, even if his condition gets worse?
As I described in my previous correspondence, Dr. Otero's health has continued to decline affecting his ability to work. In fact, he is now awaiting admission to the hospital . . . .
Please explain how his coverage ceased when he stopped work. I am anxious to hear your explanation as my investigation reveals that he has continued to go into the office on a periodic basis and has continued to pay premiums. If your investigation is different, please furnish me with the source so we can get to the bottom of who's telling the truth and who is not.
I look forward to your prompt response and a detailed explanation of each and every fact relied upon by Unum to deny Dr. Otero's claim.

         This letter has a stamp on it: “RECEIVED Dec 02 2013 BCCPORTAPPEALS, ” which appears to reflect receipt at the Portland Appeals office in December of 2013. (Otero II, Doc. 35-10, at 2-3).

         Neither Mr. Spellman nor anyone else on behalf of Unum provided the requested explanation; in fact, the company did not respond at all to the November 22, 2013 letter. Spellman says the failure to respond was inadvertent, but provides no further explanation. (Otero II, Doc. 35-2, at 6, ¶ 17).

         On January 16, 2014, Dr. Otero's attorney made another attempt to obtain the information about the investigation of Dr. Otero's new claim, sending a follow-up letter, and enclosing a copy of his November 22, 2013 letter. This letter has a stamp: “RECEIVED Jan 22 2014 BCCPORTAPPEALS.” (Otero II, Doc. 35-11, at 2). Once again, Unum did not respond. Despite the fact that the letter was correctly addressed to Mr. Spellman at Unum's office in Portland, Maine and had the correct group policy number plus a stamp that appears to state it was received on January 22 at “BCCPORTAPPEALS, ” Mr. Spellman stated in his declaration that someone, but not Spellman, imaged and misfiled the letter into Dr. Otero's individual disability claim file administered by Provident Life in Massachusetts. Mr. Spellman provided no documentary support for that statement, such as records showing the sending of the letter to Massachusetts or receipt of the letter in the Massachusetts center, a “RECEIVED” stamp for the Massachusetts center, or testimony from staff at the Provident Life's benefits center acknowledging that letter had somehow arrived there. Further, the only “RECEIVED” stamp on the letter appears to reflect that the Portland Appeals office received it on January 22, 2014. Mr. Spellman stated that no one in Provident Life's Massachusetts office forwarded the letter to him or otherwise advised him of it, despite the fact that it was properly addressed to him and was apparently stamped received in his office. Mr. Spellman stated that he was not aware of the letter until after Dr. Otero filed the instant suit. (Otero II, Doc. 35-2, at 7, ¶ 19).

         On April 3, 2014, Dr. Otero's attorney sent yet another letter not only to Mr. Spellman but also to Unum's Executive Vice President/Chief Financial Officer, Chairman of the Board, President/CEO, and Executive Vice President/Chief Operating officer. This letter purportedly enclosed a report from Dr. Otero's treating physician and proof of premium payments to Unum. It also referred to previous, unanswered letters from the attorney to Unum, explaining that the attorney was sending the current letter to Unum officials in addition to Mr. Spellman “in hopes that each will respond to this letter because the claim department will not.” This letter bears the stamp “RECEIVED APR 07 2014 BCCPORTAPPEALS.” (Otero II, Doc. 35-12, at 2-3).

         Spellman received the April 3 letter, and responded by letter dated April 9, 2014, enclosing disability claim forms, and stating in relevant part as follows:

         This letter is in response to your most recent correspondence, dated April 3, 2014.

We understand you are seeking to file a new disability claim. Please have the enclosed disability claim forms completed by your client, his employer, and his treating physician. We also have not received the report from Dr. Otero's physician that you reference in your letter. Please forward a copy of that report to our office with the completed claim forms.
Once this information is received, we will have The Benefits Center review it to see if your client meets the eligibility and disability requirements under the policy.

(Otero II, Doc. 35-14, at 2). After Mr. Spellman discovered that the January 16, 2014 letter from Dr. Otero's attorney had gone astray, the record did not reflect that Unum took any measures to determine why the error had occurred or to ensure that it would not reoccur.

         In a letter dated July 9, 2014, Dr. Otero's attorney returned the completed disability claim forms and other 2013 and 2014 medical information from Dr. Otero's treating physicians. (Otero II, Doc. 35-15, at 2-4). Those records and the claim form reflected that on February 2, 2013 and October 20, 2013, Dr. Otero underwent cardioversions to convert his atrial fib to sinus rhythm, and that he was hospitalized in December of 2013. The update from cardiologist Dr. Jose Osorio stated:

I have taken care of [Dr.] Otero for over a year now. He has a [ ] history of chronice [sic] atrial fibrillation. It has progressively gotten worse and he recently had to be hospitalized for implementation of a new medical therapy on December 4 and 5, 2013. He will need to continue leading a non-stressfull [sic] life and work part-time in a non-stressful environment, preferably less stressful than what he works in now in order to help decrease the symptoms of his afib. . . .

(Otero II, Doc. 35-15, at 39).

         In the July 9, 2014 letter, Dr. Otero's attorney disagreed with Unum's position that Dr. Otero could “earn the equivalent of his long term benefits performing other work, [as] Dr. Otero has been unable to obtain other work and none is available to him. More significantly, Dr. Otero's condition has worsened and he has limited his practice even more. . . . I also request that you pay Dr. Otero his benefits from February 2013 when he met the definition for disability and submitted his claim.” (Otero II, Doc. 35-15, at 2-4). Dr. Otero's attorney did not copy the CEO and President of Unum on this letter. The July 9, 2014 letter attached the previous September 6, 2013 letter, which in turn had attachments.

         According to Mr. Spellman, unbeknownst to him, the same misfiling error that occurred in January of 2014 reoccurred in July of 2014. Once again, the July letter was properly addressed to Robert Spellman in Unum's Portland, Maine office with the correct group policy number. And, once again, according to Mr. Spellman, the letter and attachments were imaged and incorrectly placed in Dr. Otero's individual disability claim file with Provident Life in its Massachusetts office instead of properly placing it in his group disability claim file with Unum. Again, the letter has a stamp marked “RECEIVED JUL 14 2014 BCCPORTAPPEALS, ” which appears to reflect receipt in the Portland Appeals office. (Otero II, Doc. 35-15, at 2). Mr. Spellman provided no documentation from Provident Life records or personnel to support his statement that the letter was misfiled in a Provident Life file, and the record does not reflect that Dr. Otero had any individual disability claim on appeal. According to Mr. Spellman, Provident Life personnel did not send the misfiled letter to him despite the fact that it was addressed to him and stamped “received” in his office. Mr. Spellman claims that he did not respond to the letter and attachments because he did not receive them. The record does not reflect that Mr. Spellman followed up with Dr. Otero in any way after his April 9, 2014 letter.

         When Unum had failed to respond to his claim in any way over four months after his attorney submitted the claim form and supporting information, Dr. Otero filed the instant suit on November 20, 2104. (Otero II, Doc. 1).

         B. Policy Provisions

         Unum amended the group policy issued to Neurology Consultants effective April 1, 2005, and the amended policy applies to disabilities that start on or after the effective date. (Otero II: Doc. 25-2, at 5). Because the new claim made the basis of this suit asserted disability as of February of 2013, the group policy amendment effective April 1, 2005 would apply.[10] The potentially relevant provisions of that policy are attached as an appendix to this Memorandum Opinion.

         IV. STANDARD OF REVIEW

         The Department of Labor's claims-procedure regulation, 29 C.F.R. § 2560.503-1, imposes minimum requirements for benefit claims procedures. ERISA does not, however, “set out the appropriate standard of review for actions under § 1132(a)(1)(B) challenging benefit eligibility determinations.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 108-09 (1989) (internal citation and quotation marks omitted).

         A. “De Novo” or Arbitrary and Capricious

         The proper standard of review in this case presents an unresolved question within the Eleventh Circuit. The Supreme Court has provided some guidance. It addressed the standard of review issue in the Firestone decision, holding that “a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Id. at 115. Thus, in a normal case, “[w]hen reviewing a denial of benefits under ERISA, the scope of the district court's review hinges upon whether the ERISA plan granted the administrator discretionary authority to make eligibility determinations or to construe the plan's terms.” See Kirwan v. Marriott Corp., 10 F.3d 784, 788 (11th Cir. 1994). If the ERISA plan included a grant of such discretion to the plan administrator and if the plan administrator makes a decision, then the district court reviews that decision under the arbitrary and capricious standard and may only consider “the facts known to the administrator” at the time of the decision.[11] If, on the other hand, the ERISA plan does not grant the plan administrator such discretion, then the district performs a de novo review and may examine facts not before the administrator.

         The instant case does not follow the normal path because the plan granted the discretion to Unum but Unum did not exercise it. The policy granted discretion to Unum: “when making a benefits determination under the policy, Unum has discretionary authority to determine your eligibility for benefits and to interpret the terms and provisions of the policy.” (Doc. 25-2, at 15). If Unum had exercised its discretion and had made a decision on the claim, then the ruling in the Firestone decision would govern, and this court must accord deference to its discretionary determinations, including the decision on this claim.

         However, both parties acknowledge that Unum did not respond to the letter submitting a claim for disability benefits beginning February of 2013, and never made a determination of his claim before Dr. Otero filed suit more than four months later. Therefore, Unum did not follow ERISA claims-procedures on timely determinations on claims, which gives the plan administrator only 45 days to act on a claim, unless the administrator properly extends that time period. 29 C.F.R. §§ 2560.503-1(f)(3), [12] 2560.503-1(g)(1).[13]

         Subsection (l) of 29 C.F.R. § 2560.503-1 states that when a plan fails to act on a claim within 45 days or to properly extend that claim, the claimant is deemed to have exhausted the plan's administrative remedies and may pursue other remedies, such as filing suit. 29 C.F.R. § 2560.503-1(l). Admittedly, subsection (l) says nothing about standards of review, and various courts have interpreted the silence in different ways. The issue, then, is the appropriate standard of review in a “deemed exhausted” case where the plan accords discretion to the plan administrator but the administrator does not exercise it.

         The Eleventh Circuit has acknowledged but refused to resolve this issue. In Torres v. Pittston Co., the Eleventh Circuit reviewed a “deemed denial”[14] ERISA case, and acknowledged a split in the Circuits regarding whether the “deemed denial” by an administrator with discretion receives “de novo” review instead the more deferential standard:

Some court have held that . . . a deemed denial receives no deference upon judicial review, since the plan administrator did not in fact exercise any discretion. See Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 631 (10th Cir. 2003)(holding that “when substantial violations of ERISA deadlines result in the claim's being automatically deemed denied on review, the district must review the denial de novo, even if the plan administrator has discretionary authority to decide claims.”); Jebian v. Hewlett Packard Co., 310 F.3d 1173 (9th Cir. 2002) (reviewing denial de novo, where the plan administrator did not issue decision until after deadline provided by plan had elapse, and more than a month after beneficiary filed suit); Gritzer v. CBS, Inc., 275 F.3d 291 (3d Cir. 2002) (extending no deference to plan administrator's post hoc justification for denying benefits, issued only after commencement of litigation). Others, however have held that the fact that the denial occurs by operation of ERISA regulations does not alter the otherwise-applicable standard of review. See McGarrah v. Hartford Life Ins. Co., 234 F.3d 1026 (8th Cir. 2000) (holding that ERISA plan fiduciary's failure to respond to beneficiary's request for administrative review does not trigger heightened scrutiny, absent showing of extreme procedural irregularities);[15] Daniel v. Eaton Corp., 839 F.2d 263, 267 (6th Cir. 1988) (holding that, even though administrative review body failed to act on claimant's appeal of an initial denial, resulting in a deemed denial, the denial should be reviewed under the arbitrary-and-capricious standard, because “the standard of review is no different whether the appeal is actually denied or is deemed denied.”).

346 F.3d 1324, 1332-33 (11th Cir. 2003) (per curiam); see also Rasenack ex. rel. Tribolet, v. AIG Life Ins. Co.,585 F.3d 1311, 1315-18 (10th Cir. 2009) (following Gilbertson and finding that de novo review was appropriate; when “the remedies were ‘deemed exhausted' by operation of law rather than the exercise of administrative discretion, [ ] Firestone's rule of deference does not apply.”); Nichols v. Prudential Ins. Co. of Am.,406 F.3d 98, 109 (2d Cir. 2005) (“[W]e may give deferential review only to actual exercises of discretion.”); Pakovich v. BroadspireServs., Inc.,535 F.3d 601, 606 (7th Cir. 2008) (adopting the Eighth Circuit's rule set out in the Seman opinion, as discussed in fn 15 to this opinion, which held that when the plan ...


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