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Grabowski v. Lincoln National Life Ins.Co., 2011 U.S.Dist.LEXIS 89094 (W.D.Mich. August 11, 2011)(Issues: Standard of Review; Scope of Review).
The benefit plan in this case was originally underwritten by Canada Life, which was identified in the plan as the claim administrator. Claimants are required to provide "satisfactory proof" to Canada life; and under Sixth Circuit case law, the plaintiff conceded that such language would confer discretion. However, because Canada Life transferred the coverage to Jefferson Pilot, Lincoln's predecessor, the plaintiff argued that discretion was not transferred. The court disagreed, finding the "successor steps into the shoes of the predecessor." *7 (citing Schnur v. CTC Commc'ns Corp. Group Disability Plan, No. 5 Civ. 3297, 2010 U.S. Dist. LEXIS 31282, 2010 WL 1253481, at *10 (S.D.N.Y. Mar. 29, 2010); Hunley v. Hartford Life & Accident Ins. Co., 712 F. Supp. 2d 1271, 1281 (M.D. Fla. 2010); Simonia v. Hartford Ins. Co., 606 F. Supp. 2d 1091, 1096-97 (C.D. Cal. 2009), aff'd, 378 Fed. App'x 725 (9th Cir. 2010)). The plaintiff also argued that discretionary authority was barred by Michigan Admin.Code Rule 500.2202, which prohibits the inclusion of discretionary clauses in any policies issued after the effective date of the rule, along with" any such document revised in any respect on or after that date." Unfortunately for the plaintiff, there was no evidence the plan had been revised, and the court applied a deferential standard of review.
Nonetheless, the court found for the Plaintiff even under an arbitrary and capricious standard. The plaintiff had worked as a steel fabricator and became disabled due to an injury to his cervical spine that failed to heal despite spine surgery and follow-up treatment at a pain clinic. Although benefits were paid under the "own occupation" standard of disability, the insurer cut off benefits after initially approving receipt of benefits under the "any occupation" standard that began after 24 months of payments even though Grabowski suffered from a heart condition and diabetes in addition to his spine injury. Grabowski also suffered injuries in a bicycle accident, a hunting accident, and a fractured arm from a fall that occurred after an episode of heavy drinking.
Grabowski also underwent a functional capacity evaluation that found him significantly limited and unable to perform fine motor skills with his hands. Although Grabowski was unsuccessful in his application for Social Security disability benefits, the record showed he had no vocational skills for sedentary work. Although his pain medications offered relief, he experienced drowsiness and difficulty concentrating which a vocational evaluator acknowledged "would make retraining difficult." Lincoln also received a transferable skills report that found no occupations for Grabowski at the sedentary level of exertion. However, a later report generated shortly after Lincoln took over the policy found transferable skills and identified six jobs that Grabowski possessed the transferable skills, education, training and background to perform and which met the policy's gainful wage amount of $1,457 per month. Lincoln also had a nurse conduct an internal medical file review which did not address Grabowski's pain or limitations, disregarded an FCE performed in 2005, and also failed to mention the most recent reports from the treating doctor. When Grabowski appealed the benefit denial, Lincoln sent him for an examination with a neurosurgeon who found significant degenerative disease at all levels of the spine, yet found him capable of working full time at a sedentary occupation which he qualified by noting the jobs should not "involve repetitive, frequent, extreme, or prolonged movements of the cervical spine, if any" and adding that Plaintiff "should provide his own personal restrictions to maintain comfort" Based on that report, the denial was upheld.
In overturning the benefit termination, the court noted a number of points. First, lack of evidence of improvement was a factor to be considered. The court also looked at the limitations and restrictions that were indicated within the level of sedentary work Lincoln believed Grabowski could perform. The court expressed disapproval of the file review done by a nurse that was deemed selective in its disregard of the pain complaints. The court also rejected the insurer's argument that the treating doctor's findings were "variable" and that his credibility was therefore suspect. The court described that argument as being "based on a selective, ahistorical reading of the documents and assumes that variations reflect bias rather than fluctuating pain levels." *32. The court also found the defendant's description of Black & Decker Disability Plan v. Nord, 538 U.S. 822, 832, 123 S. Ct. 1965, 155 L. Ed. 2d 1034 (2003) disingenuous. The Supreme Court did not "acknowledge[e] the well known propensity for treating physicians to act as disability advocates" as defendant argued. The court also questioned the examination performed by the independent neurosurgeon because his opinion was equivocal in the restrictions he described and in his note that Plaintiff "should provide his own personal restrictions to maintain comfort."
Based on the vocational reports in the record, which found significant limitations and/or lack of relevant job skills that would preclude the performance of occupations that were identified (such as those requiring computer or typing skills or a clean arrest record (the plaintiff had been charged with domestic violence)), there was no basis for terminating benefits. The court found no evidence contrary to the 2003 and 2005 vocational assessments, nor was there any evidence of any improvement with respect to the deficiencies found in those evaluations.
Indeed, the court focused on one job that was identified as being within the plaintiff's capabilities - "address-change clerk." Because the occupation required clerical and computer skills the plaintiff lacked, that job was not a realistic vocational option. Thus, the court found defendant's "decision-making process is highly indicative of a process aimed at denial of benefits rather than one directed by proper regard for the fiduciary duties owed to a claimant. This is most evident in Lincoln's disregard of evidence at every turn, including its utilization of a limited in-house medical review, its disparagement of the opinions of Plaintiff's treating physician, its disregard of the evidence it had collected on Plaintiff's vocational skills, and its failure to analyze the job descriptions of occupations it claimed Plaintiff showed the skills, education, training and background to perform against its evidence of his actual abilities." *41. Consequently, because there was no indication of a change in the status quo, the court reinstated the plaintiff's benefits.