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Chamness v. Liberty Life Assurance Company of Boston

United States District Court, W.D. Michigan, Southern Division

February 16, 2017

James Chamness, Plaintiff,
v.
Liberty Life Assurance Company of Boston and the Spectrum Health Long Term Disability Plan, Defendants.

          OPINION AND ORDER REVERSING DECISION TO DENY LONG TERM DISABILITY BENEFITS

          Paul L. Maloney United States District Judge

         Plaintiff James Chamness, M.D., filed a complaint under the Employee Retirement Income Security Act (ERISA). Chamness alleges that his application for long-term disability benefits was improperly denied by Defendant Liberty Life, the fiduciary of the employee welfare benefit plan provided by his employer. Chamness claims to suffer from both physical and mental disabilities. The Court has conducted a de novo review of the record and reverses the decision by Liberty Life to deny Chamness's claim for long term disability benefits.

         I.

         ERISA protects and promotes the interests of employees and their beneficiaries in employee benefit plans. Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 113 (1989). Among its provisions, ERISA allows participants and beneficiaries to file civil actions seeking a review of the denial of benefits. See 29 U.S.C. § 1132(a)(1)(B). The standard of review employed by the court in an ERISA civil action typically depends on the language in the benefit plan. Ordinarily, a court will review the denial of benefits challenged under § 1132(a)(1)(B) using the de novo standard. Firestone Tire and Rubber, 489 U.S at 115. However, when the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan, the court reviews the denial of benefits using the arbitrary and capricious standard. Id.

         The Court reviews the decision challenged in this case using the de novo standard of review. In 2007, the State of Michigan's Office of Financial and Insurance Services (OFIS) promulgated a rule prohibiting insurers from issuing contracts or policies that contain discretionary clauses. American Council for Live Ins. v. Ross, 558 F.3d 600, 602-03 (6th Cir. 2009); see Mich. Admin. Code R. 500.2201(c) and 550.2202(b). The Sixth Circuit Court of Appeals upheld the rule, concluding that the rule was not preempted by ERISA. Id. at 609. Both parties agree that, as required by the OFIS Rules, this Court must review the decision denying Chamness's benefits under the de novo standard. (ECF No. 15 Pl. Br. PageID.950; ECF No. 19 Def. Br. PageID.979.)

         Under the de novo standard, the federal court must determine if the administrator or fiduciary made the correct decision. Perry v. Simplicity Eng'g, 900 F.2d 963, 966 (6th Cir. 1990). The decision is reviewed without deference and the administrator's decision is afforded no presumption of correctness. Id. The reviewing court may consider only the evidence presented to the administrator or fiduciary prior to the final decision. Id. at 967.

         II.

         Chamness is a board-certified pediatrician. He earned his medical degree in 1987. In 2007, Chamness entered into a one-year pediatric sleep fellowship at a hospital in Chicago, Illinois. Then, in September 2008, he began working for Spectrum Health at the Helen DeVos Children's Hospital in Grand Rapids, Michigan as a pediatric sleep specialist. Spectrum Health sponsors a Group Disability Income Policy for its employees through Defendant Liberty Life. (See ECF No. 11-1 Plan PageID.41.) While employed by Spectrum, Chamness was covered by the disability plan. (ECF No. 1 Compl. ¶ 4.)

         Chamness's last day of work was May 10, 2011. (Compl. ¶ 10.) On October 15, 2011, Chamness submitted a claim for long-term disability benefits. (ECF No. 13-5 PageID.811.) In a letter dated January 6, 2012, Liberty Life denied Chamness' application for long-term disability benefits. (ECF No. 11-3 Initial Denial PageID.152-55.) The letter stated that any appeal must be sent within 180 days. Through counsel, Chamness filed his appeal on June 27, 2012. (ECF No. 12-5 Appeal PageID.573-605.) The appeal was denied in a letter dated October 11, 2012. (ECF No. 11-2 Final Denial PageID.108-13.) The complaint was timely filed on March 20, 2013

         III.

         For Chamness to succeed on his claim for benefits under ERISA, he must prove by a preponderance of the evidence that he was “disabled, ” as that term is defined in his employee benefits plan. Javery v. Lucent Techs., Inc. Long Term Disability Plan for Mgmt. of LBA Employees, 741 F.3d 686, 700-01 (6th Cir. 2014) (citations omitted). Spectrum Health's Group Disability Income Policy (Plan) defines “disability” or “disabled.”

1. For persons other than pilots, co-pilots, and crewmembers of an aircraft: a. if the Cover Person is eligible for the Maximum Own Occupation benefit, “Disability” or “Disabled” means during the Elimination Period until the Cover Person reaches the end of the Maximum Benefit Period, as a result of an Injury or Sickness, he is unable to perform the Material and Substantial Duties of his Own Occupation.
b. i. if the Covered Person is eligible for the 24 Month Own Occupation benefit, “Disability” or “Disabled” means that during the Elimination Period and the next 24 months of Disability the Covered Person, as a result of Injury or Sickness, is unable to perform the Material and Substantial Duties of his Own Occupation; and
ii. thereafter, the Covered Person is unable to perform, with reasonable continuity, the Material and Substantial Duties of Any Occupation.

(Plan PageID.50.) The Plan defines the phrase “own occupation” as the individual's “occupation that he was performing when his Disability or Partial Disability began. For the purpose of determining Disability under this policy, Liberty will consider the Covered Person's occupation as it is normally performed in the national economy.” (Id. PageID.53.) When the disability arises due to mental illness, the benefits “will not exceed a combined period of 24 months of Monthly Benefit payments, while the Covered Person is insured under this policy.” (Id. PageID.67.)

         B. Physical Disability

         Chamness alleges he is entitled to long-term disability benefits for physical limitations. Chamness asserts he is physically disabled because of coronary artery disease and sleep apnea. Chamness also notes he has been diagnosed with asthma, irritable bowel syndrome, and gastroesophageal reflux disease.

         Chamness first experienced heart problems in May 2009. He was then diagnosed with heart disease and had surgery to place a stent to open the left anterior artery. Chamness visited hospitals for chest pain twice since the stent was placed, once in October 2009 and then again in June 2011. His medical records indicate that, by February 2011, Chamness had been diagnosed with heart disease, irritable bowel syndrome, gastroesophageal reflux disease, and asthma. (ECF No. 12-5 ...


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