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Nieves v. Prudential Insurance Co. of America

United States District Court, D. Arizona

January 17, 2017

Eduardo L Nieves, Plaintiff,
Prudential Insurance Company of America, Defendant.


          David G. Campbell United States District Judge

         The parties have filed briefs on the merits of this ERISA case. Docs. 26, 29. Defendant Prudential Insurance Company of America styled its opening brief as a motion for summary judgment, to which Plaintiff has responded. Doc. 24, 31. Despite this difference in briefing, Plaintiff agrees that the Court can resolve this case on the merits. Doc. 31 at 8.[1] The Ninth Circuit has also noted that, “[i]n the ERISA context, a motion for summary judgment is merely the conduit to bring the legal question before the district court and the usual tests of summary judgment, such as whether a genuine dispute of material fact exists, do not apply.” Harlick v. Blue Shield of California, 686 F.3d 699, 706 (9th Cir. 2012) (quotation makes and citation omitted). After reviewing the merits of this case, the Court finds that Plaintiff is entitled to relief.

         I. Background.

         Plaintiff was employed with Comtech Telecommunications Corporation from June 16, 1997, until March 10, 2015. AR 85. Plaintiff participated in an employee welfare benefit plan that provided coverage for short-term and long-term disability (the “Plan”). Doc. 24 at 3. Plaintiff worked as a “Technician III” and made repairs on satellite communications equipment. AR 820-21, 843. Plaintiff alleges that his job required the continual use of his hands and constant sitting, standing, climbing, and crouching. Doc. 26 at 8.

         In 2007, Plaintiff suffered from severe headaches and required spinal surgery to correct the problem. Id. at 9-10. According to Plaintiff, the performing surgeon “was clear the surgery didn't permanently ‘fix' the problem, and that [Plaintiff] should expect his symptoms to re-occur.” Id. In 2011, Plaintiff began suffering severe back and arm pain related to his spinal condition. Id. Plaintiff asserts that he went on light duty work in 2011 at his physician's request. Id. His work restrictions included limits on “sitting, standing and lifting.” AR 538.

         Plaintiff continued to work full-time for Comtech with the aid of pain relieving shots and medication. On March 10, 2015, he was terminated as part of a Reduction in Force (“RIF”). Doc. 26 at 10-11; AR 843, 865, 867. Plaintiff alleges that he learned of the RIF on March 9, 2015. Doc. 26 at 11. Plaintiff immediately spoke with his “boss's boss, ” Brian Rogge, and asked whether he would be laid off as part of the RIF. If so, he asked permission to file for disability instead. Id. Plaintiff asserts that Mr. Rogge assured him: “you're good, ” which led Plaintiff to believe he would not be laid off and should not file for disability. Id. Plaintiff was terminated the next day. Id. At his termination meeting, Plaintiff again asked to file for disability, and asked Comtech Human Resources staff for the paperwork to make a claim. Id. Staff did not provide Plaintiff with the paperwork, and he was escorted from the building. Id.

         On April 14, 2015, Plaintiff filed a claim for short-term disability (“STD”) benefits under the Plan with Defendant Prudential, the Plan administrator. Id. at 13; AR 109. On April 22, 2015, Prudential issued a letter denying Plaintiff's claim because he did not have coverage under the Plan at the time of his disability, which Prudential found to be March 11, 2015. AR 830. On September 2, 2015, Plaintiff appealed the decision and filed a new claim for long-term disability (“LTD”) benefits. AR 128. On November 20, 2015, Prudential issued Plaintiff two letters: one rejecting his appeal of the STD benefits claim, and a second denying the LTD benefits claim. Doc. 24 at 8. On January 19, 2016, Plaintiff appealed a second time, this time submitting 290 pages of his medical records in addition to the appeal paperwork. AR 238. Prudential denied the second appeal in a letter dated February 25, 2016, concluding again that Plaintiff was not covered on the March 11, 2015 date of his alleged disability. AR 856-58. Prudential's letter acknowledged that Prudential did not conduct a review of Plaintiff's submitted medical records. Id. Prudential stated that such a review was unnecessary “because [Plaintiff's] claim was being denied for a lack of coverage.” Id.

         On March 22, 2016, Plaintiff filed this action seeking to recover benefits under the Plan. Doc. 1. The issues are fully briefed, and oral argument will not aid in the Court's decision.

         II. Analysis.

         A. Standard of Review.

         ERISA allows a participant to bring an action “to recover benefits due to him under the terms of his plan.” 29 U.S.C. § 1132(a)(1)(B). Generally, a district court conducts de novo review of a denial of benefits. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). When a plan “unambiguously provide[s] discretion to the administrator” to interpret the terms of the plan and make final benefits determinations, however, the determination is reviewed for an abuse of discretion. Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 963 (9th Cir.2006) (en banc). Defendants bear the burden of proving an ERISA plan's grant of discretionary authority. See Prichard v. Metro. Life Ins. Co., 783 F.3d 1166, 1169 (9th Cir. 2015); see also Kearney v. Standard Ins. Co., 175 F.3d 1084, 1089 (9th Cir. 1999).

         Plaintiff argues that the appropriate standard of review is de novo because the Plan does not contain an unambiguous grant of discretion. Plaintiff concedes that “there is a purported grant of discretion in” the Summary Plan Description (“SPD”), but argues that this grant is insufficient “because the discretionary language is contained only in the SPD” and “is not binding, unless it is incorporated into the Plan.” Doc. 26 at 20-21.

         The Court agrees. Statements in the SPD “do not themselves constitute the terms of the plan.” See Cigna Corp. v. Amara, 563 U.S. 421, 438 (2011). The SPD is a statutorily-required document provided by the administrator of any employee benefit plan to participants and beneficiaries of that plan, and is intended to “be written in a manner calculated to be understood by the average plan participant.” 29 U.S.C. § 1022(a). The SPD contains information “about the plan, ” but is not itself “part of the plan.” Amara, 563 U.S. at 436. The SPD cannot override or supplement the terms of other plan documents. Prichard, 783 F.3d at 1170. “[W]here - as here - a [SPD] is not incorporated in the plan document, and is ‘absent from documents listed in [the] plan's integration clause, ' a grant of discretion in the [SPD] plainly cannot be considered a term of the Plan.” Murphy v. California Phys. Servs., --- F.Supp.3d. ---, 2016 WL 568 2567 at *5 (N.D. Cal. Oct. 3, 2016) (citing Prichard, 783 F.3d at 1170-71).

         Prudential argues that the SPD is part of the Plan and that its grant of discretion is valid. Prudential argues that Amara does not hold “that [a grant of] discretion cannot be contained in an SPD, ” but rather “implies that, though not in all cases, the SPD may be enforced as a plan term when it does not contradict a plan.” Doc. 24 at 11. Prudential contends that because “[t]he SPD here does not conflict with the other governing plan documents . . . it constitutes a plan document and the grant of discretion to Prudential contained there is valid.” Id. In support, Prudential cites Eugene S. v. Horizon Blue Cross Blue Shield of N.J., 663 F.3d 1124, 1131 (10th Cir. 2011), which stated:

We interpret Amara as presenting either of two fairly simple propositions, given the factual context of that case: (1) the terms of the SPD are not enforceable when they conflict with governing plan documents, or (2) the SPD cannot create terms that are not also authorized by, or reflected in, governing plan documents.

Eugene S., 663 F.3d at 1131. The court found it unnecessary to determine which proposition applied because the SPD at issue “does not conflict with the Plan or present terms unsupported by the Plan; rather it is the Plan.” Id. (emphasis in original). The SPD stated in the introduction “that it, along with the individual Certificate of Coverage[, ] forms the Group Insurance Certificate; that it is made part of the Group Policy; and that all benefits are subject in every way to the entire Group Policy, which includes the SPD.” Id. at 1132 (internal quotations omitted). Eug ...

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