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Timm v. Unum Life Insurance Co. of America

United States District Court, N.D. Iowa, Central Division

April 9, 2018

JEREMY J. TIMM, Plaintiff,
v.
UNUM LIFE INSURANCE COMPANY OF AMERICA, Defendant.

          REPORT AND RECOMMENDATION

          C.J. Williams Chief United States Magistrate Judge

         Jeremy J. Timm (“plaintiff”) seeks judicial review of Unum Life Insurance Company's (“defendant”) denial of plaintiff's long-term disability claim brought under an employee benefit pension plan. This Court has jurisdiction to review defendant's denial of plaintiff's claim under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001, et. seq. The Honorable Linda R. Reade, United States District Court Judge, referred this case to me for a Report and Recommendation. For the following reasons, I respectfully recommend that the Court affirm defendant's decision.

         I. BACKGROUND

         Plaintiff was a participant in a long-term disability plan offered by his employer. (Docs. 13, at 3; 14, at 5). The policy was issued by defendant and became effective on September 1, 2015. (Id.). The policy did “not cover any disabilities caused by, contributed to by, or resulting from [plaintiff's] . . . pre-existing condition.” (AR 97- 98).[1] A pre-existing condition, in relevant part, [2] is present if plaintiff “received medical treatment, consultation, care or services including diagnostic measures, or took prescribed drugs or medicines in the 6 months just prior to [his] effective date of coverage.” (AR 98). The six-month period prior to the plan's effective date of coverage began on March 1, 2015. (AR 223-24). Therefore, if plaintiff “received medical treatment, consultation, care or services including diagnostic measures, or took prescribed drugs or medications” for his disability between March 1, 2015, and August 31, 2015, he would be ineligible to receive benefits under the terms of the plan.

         On approximately June 1, 2016, plaintiff submitted a disability claim to defendant alleging that optic neuropathy in his right eye rendered him unable to continue working. Plaintiff previously suffered from optic neuropathy in his left eye, but the condition in his right eye had neither been diagnosed nor treated as of the effective date of the policy. Plaintiff's condition caused him to go legally blind in both eyes. Although defendant approved plaintiff's claim for short-term disability benefits, defendant denied plaintiff's claim for long-term disability benefits on the basis that plaintiff's condition was pre-existing. The parties agree that the plan gave defendant discretionary authority to determine eligibility for benefits and to interpret the terms and provisions of the plan. (Docs. 13, at 7; 14, at 7). Plaintiff now asks the Court to reverse defendant's decision as to the long-term disability benefits.

         At issue, then, is whether the alleged disability was a pre-existing condition within the meaning of the policy. Specifically, plaintiff alleges that the optic neuropathy in his right eye was not a pre-existing condition because he did not begin receiving treatment for it until February 29, 2016. (Doc. 13, at 5). Defendant, on the other hand, contends that plaintiff's claim is actually for bilateral sequential non-arteritic anterior ischemic optic neuropathy. (Doc. 14, at 5). The principle difference between the two claims is whether the disability alleged is one affecting only plaintiff's right eye versus both eyes. Plaintiff agrees that he received treatment for optic neuropathy in his left eye on July 29, 2015, which was within the six-month period prior to the policy's effective date. (Doc. 13, at 4). As a result, if plaintiff became disabled as a result of bilateral optic neuropathy, as opposed to optic neuropathy in his right eye only, plaintiff's condition would have been “pre-existing” within the language of the policy.

         II. APPLICABLE LAW

         Plaintiff is empowered to bring this suit under 29 U.S.C. § 1132(a)(1)(B), which provides that a plan participant may bring suit “to recover benefits due to him under the terms of his plan.” Where, as here, “a plan gives discretion to the plan administrator, then a plan administrator's decision is reviewed for an abuse of discretion. Under an abuse of discretion standard of review, a plan administrator's decision will stand if reasonable; i.e., supported by substantial evidence.” Ortlieb v. United HealthCare Choice Plans, 387 F.3d 778, 781 (8th Cir. 2004) (internal citations and quotation marks omitted). “‘Substantial evidence . . . means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'” Id. at 781-82 (quoting Consol. Edison Co. of New York v. NLRB, 305 U.S. 197, 229 (1938)).

         When, however, a plaintiff presents “material, probative evidence demonstrating that (1) a palpable conflict of interest . . . existed, which (2) caused a serious breach of the plan administrator's fiduciary duty to [the plaintiff], ” the plan administrator's decision is entitled to a less deferential standard of review. Id. at 782 (quoting Woo v. Deluxe Corp., 144 F.3d 1157, 1160 (8th Cir. 1998), abrogated in part by Glenn, 554 U.S. 105 (2008)). To establish a serious breach of the plan administrator's fiduciary duty, the plaintiff need only show that the conflict of interest “has some connection to the substantive decision reached.” Id. (internal quotation marks omitted). The existence of a conflict of interest, without more, however, will not result in the Court applying a less deferential standard of review. Boyd, 879 F.3d at 320 (holding that the Supreme Court of the United States “abrogated Woo to the extent Woo allowed a less deferential standard of review based on merely a conflict of interest” (emphasis in original)). “This less deferential standard is a sliding scale approach, [whereby] the evidence supporting the plan administrator's decision must increase in proportion to the seriousness of the conflict . . ..” Boyd v. ConAgra Foods, Inc., 879 F.3d 314, 320 (8th Cir. 2018) (alteration in original) (citation and internal quotation marks omitted).

         When the entity that administers the plan “both determines whether an employee is eligible for benefits and pays benefits out of its own pocket, ” the dual role the administrator plays creates a conflict of interest that the Court should consider “as a factor in determining whether the plan administrator has abused its discretion in denying benefits.” Glenn, 554 U.S. at 108. The significance given to the conflict of interest will depend upon the circumstances of the particular case. Id. The Eighth Circuit Court of Appeals has held that the conflict may be given more weight if certain factors are present, such as a biased claims review process, the employment of reviewing medical professionals whose compensation was tied to their findings or who were employed by the insurer, and a review process that merely “rubberstamp[ed] favorable medical opinions.” Boyd, 879 F.3d at 320-21. When “the record contains no evidence about [the plan administrator]'s claims administration history or its efforts to ensure that claims assessment is not affected by the conflict, ” the conflict is given only “some weight.” Id. (alterations in original) (citations and internal quotation marks omitted).

         III. DISCUSSION

         Plaintiff contends that defendant operated under an inherent conflict of interest because it was both the entity responsible for determining whether benefits were to be paid, and it was the entity responsible for paying those benefits. (Doc. 13, at 8). Defendant does not dispute that it assumed both roles. (Doc. 14). Plaintiff argues that the Court should give substantial weight to defendant's conflict of interest because “[t]here is no evidence in the record of any measures taken to either remedy or resolve [the] inherent conflict of interest, ” and “previous case law suggests [defendant] has a history of biased claims administration.” (Doc. 13, at 8).

         In support of its argument that defendant has a history of biased claims evaluations, plaintiff turns to Fought v. Unum Life Insurance Company of America, in which defendant admitted that it operated under a conflict of interest in assessing Ms. Fought's disability claim. 379 F.3d 997, 1007 (10th Cir. 2004), abrogated on other grounds by Glenn, 554 U.S. 105. (Doc. 13, at 8). As in this case, defendant conceded in Fought that it operated as both the plan administrator and the payor. 379 F.3d at 1007. This concession of operating under an inherent conflict of interest, however, was not proven to create a per se inference of biased claim evaluation. Id. Instead, the Tenth Circuit Court of Appeals found that the inherent conflict of interest was to be considered as one factor in sliding the scale in favor of granting the administrator's decision less deference. Id. Plaintiff offers no other support for the contention that defendant “has a history of biased claims administration, ” and, as a result, I find that plaintiff has failed to establish that defendant has a history of biased claims evaluations. (Doc. 13, at 8).

         Plaintiff has not alleged in this case that the reviewing professionals were employed by defendant or that their compensation was linked to their findings. Nor has plaintiff pointed to any evidence in the record to suggest that either of the propositions is true. As such, I find that these factors cannot slide the scale in favor of granting less deference to defendant's denial of benefits. I do find it appropriate, however, to examine the record for evidence that the examiners merely “rubberstamped” defendant's determination that plaintiff was not entitled to benefits. Boyd, 879 F.3d at 320-21. In scouring the record, I am persuaded that the examiners undertook a legitimate review of the record and did not simply provide opinions that would be favorable to defendant. Plaintiff correctly asserts, however, that there is no evidence of measures taken to minimize the effects of the inherent conflict under ...


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