The opinion of the court was delivered by: Wolin, District Judge.
On further review, the Court believes its earlier Opinion was
sufficiently clear to convey accurately the Court's intent, and
that the issues raised were, in fact, not fairly before the Court
on the motion and cross-motion. However, to aid the progress of
this litigation and to provide guidance to counsel on what are
arguably unsettled issues in this area of the law, the Court will
grant the motion to clarify or to reconsider.*fn1 The motion and
the original motion and cross-motion for summary judgment have
been decided upon the written submissions of the parties pursuant
to Federal Rule of Civil Procedure 78. The November 8, 2000
Opinion and Order will be vacated and replaced with this Opinion
and the Order filed herewith.
The sections on the scope of the record to be considered by the
Court at trial in this matter and the nature of that trial
(sections 4 and 5) are new. It will be seen infra that the
opportunity for further reflection has caused the Court to modify
other sections of its Opinion in important respects. The intent
of the Court has been to clarify rather than modify. However, to
the extent any inconsistencies appear with the prior Opinion,
this later Opinion will control in all respects.
Except as noted, the following facts are not disputed.
Plaintiff, Dr. Stephen P. Lasser, M.D., is an orthopedic surgeon
employed by a four-doctor group known as Townsquare Orthopedic
Associates. Dr. Lasser brings this case to recover disability
benefits alleged to be owed to him by Reliance under a policy of
disability insurance his employer maintains as an employee
benefit. The policy defines total disability as the beneficiary's
inability to perform "the material duties of his/her occupation."
It is relevant to note that a partial disability (defined as
either the ability to perform all of the material duties of one's
occupation on a part-time basis, or less than all of the material
duties on a full-time basis) is also considered a total
disability for the purposes of an insured's right to receive full
benefits under the Reliance policy.
Dr. Lasser has experienced trouble with his heart since the
1980's and underwent coronary bypass surgery in 1986. In 1996,
Dr. Lasser suffered a myocardial infarction. At that time, Dr.
Lasser's physicians discovered a number of problems with his
heart and the earlier bypass. Dr. Robert F. Aldrich, plaintiff's
treating physician, prescribed a treatment regimen, which
included change of diet, exercise, and drug therapy.
Significantly for this matter, Dr. Aldrich also prescribed
reduced stress in Dr. Lasser's professional and personal life.
In December 1996, Reliance approved Dr. Lasser's application
for long-term disability benefits under Townsquare Orthopedic's
policy. This approval was based, at least in part, upon Dr.
Aldrich's statement on Reliance's Physician's Statement form that
Dr. Lasser could return to work on a limited basis only. However,
in June 1997, Reliance began to request additional proof of Dr.
Lasser's disability. Reliance solicited another statement from
Dr. Aldrich. Reliance also retained Dr. William M. Burke, who
examined plaintiff and subjected him to a treadmill exercise
tolerance test. Reliance reviewed the Department of Labor's
Dictionary of Occupational Titles (hereinafter "DOT"), and
determined the physical requirements of an orthopedic surgeon.
Reliance terminated Dr. Lasser's benefits by letter dated
December 8, 1997. In the letter, Reliance relied primarily upon
Dr. Burke's findings that Lasser did not demonstrate "any
cardiovascular disability," that his prognosis "is excellent,"
and that his physical capabilities show the capacity to work
Dr. Lasser sought a review of the benefits termination, and
submitted a number of reports from medical experts. These doctors
supported the position that occupational stress, as opposed to
physical exertion, was dangerous to Dr. Lasser's condition. These
reports were also critical of both Dr. Burke's conclusions and
his methodology. Reliance sought a second independent opinion
from Dr. Karel Raska which was also critical of Dr. Burke.
Following receipt of Dr. Raska's report, Reliance claims to have
discovered a conflict of interest, in that Dr. Raska is
affiliated with the same practice group as one of the medical
experts retained by plaintiff. Reliance then sought the opinion
of a Dr. Field. The details of these second and third opinions
obtained by Reliance will be discussed below. They do not
unequivocally support Reliance's position.
In addition to the DOT, Reliance also commissioned a study from
a vocational expert to determine whether a doctor who cannot
perform emergency surgery and cannot be "on-call" could,
nonetheless, perform the material duties of the occupation of an
orthopedic surgeon. The vocational expert performed a survey of
professionals in the field and concluded that an orthopedic
surgeon could practice in this field despite the listed
limitations, "however, this type of work setting typically
involves special circumstances and these circumstances are
available only rarely or occasionally." Following a review of the
survey results by an in-house vocational expert, Reliance
affirmed the termination of Dr. Lasser's benefits.
Although still operating on a reduced schedule, Dr. Lasser has
been taking some "on-call" duty, wearing a pager, and performing
emergency surgery. He has testified by affidavit that he is
forced to do this by financial hardship following the termination
of his benefits by Reliance.
1. Summary judgment and the standard of review.
The standard for deciding a motion for summary judgment has
been stated many times by this Court and will be addressed only
briefly here. Summary judgment shall be granted if "the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c); see Hersh v. Allen Prods. Co.,
789 F.2d 230, 232 (3d Cir. 1986).
The substantive law governing this matter is the Employees
Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et
seq., pursuant to which this lawsuit is brought. See
29 U.S.C. § 1132(a)(1)(B)(participant or beneficiary may bring suit to
recover benefits due under an ERISA-governed benefits plan). In
Firestone Tire & Rubber Co. v. Bruch, the United States Supreme
Court held that a claim regarding a denial of benefits is
reviewed under an arbitrary and capricious standard if "the
benefit plan gives the administrator or fiduciary discretionary
authority to determine eligibility for benefits or to construe
the terms of the plan." 489 U.S. 101, 115, 109 S.Ct. 948, 103
L.Ed.2d 80 (1989).
The Third Circuit only recently acted to dispel confusion
created by certain questions left unanswered by the Supreme Court
in Bruch, in a case concerning the same defendant-insurer at
bar. See Pinto v. Reliance Standard Life Ins. Co., 214 F.3d 377
(3d Cir. 2000). The policy at issue in Pinto is conceded to be
the same as the policy owned by Dr. Lasser's employer with
respect to the role of the Plan Administrator. In an earlier,
unreported decision, the Court of Appeals held that this policy
confers discretion on the fiduciary, thus triggering Bruch's
deferential standard of review. Pinto v. Reliance Standard Life
Ins. Co., 156 F.3d 1225 (3d Cir. 1998).
In Bruch, the High Court suggested that deference might,
however, not be appropriate where the fiduciary had an conflict
of interest with respect to the decision of whether to award
benefits. 489 U.S. at 115, 109 S.Ct. 948. In Pinto, the Court
of Appeals addressed the problem of the inherent conflict, where
the fiduciary's decision to award benefits will come at a direct
cost to the fiduciary itself. The inherent conflict problem is
presented in its classic form where an insurance company both
administrates plan benefits and pays those benefits from its own
funds. Bruch, having identified the problem, conspicuously
failed to offer guidance in evaluating the benefits decisions of
such conflicted fiduciaries.
From a variety of solutions employed in various federal
circuits, our Third Circuit chose the "sliding scale" approach.
This is termed a "heightened arbitrary and capricious standard,"
214 F.3d at 392, in which the level of scrutiny of the
fiduciary's decision "`is a range not a point . . . [it is] more
penetrating the greater is the suspicion of partiality, less
penetrating the smaller that suspicion is.'" Id. (quoting
Wildbur v. ARCO Chem. Co., 974 F.2d 631, 638 (5th Cir.
1992) (alterations in original)). Acknowledging that bias is
unlikely to be revealed by an evidentiary "smoking gun," the
Pinto court directs the district courts to examine the facts of
the particular case, id. at 392, and to "ratchet upward" the
standard of review where those facts suggest the fiduciary was
acting in its own self-interest. Id. at 394.
The Court will be careful not to permit the question of facts
indicating a conflict of interest and the appropriate standard of
review to blur its assessment of the ultimate merits of the case.
The only question presented by the pending motion and
cross-motion is whether a rational factfinder could find for one,
the other, or either of the two parties to this action. Deciding
the appropriate level of review is merely an antecedent step to
this issue, itself an intermediate point on the way to the
ultimate resolution of this controversy.
2. Factors favoring heightened arbitrary and capricious review.
The Court is satisfied that the record of this case discloses
at least two significant problems with Reliance's handling of Dr.
Lasser's claim for benefits. These problems require scrutiny of
the fiduciary's decision to be substantially increased. The first
concerns Reliance's use of expert medical opinion, and the second
concerns the vocational experts' data and conclusion regarding
the material tasks of an orthopedic surgeon.
Dr. Lasser attempts to bring his case in line with Pinto by
noting that Reliance reversed itself after first granting the
benefits. By itself, the Court would attach little weight to this
fact. The policy gives Reliance the right periodically to review
continued eligibility for benefits. Necessarily, this includes
the ability to supplement the medical record. One suggestive fact
is undeniable. Kathy Young, R.N., employed by Reliance to review
the medical records of disability claimants, substantially
revised her assessment of Dr. Lasser in October 1997, based upon
his successful performance on an exercise test, and lack of
recent symptoms. The Court finds this of limited significance,
because Nurse Young was not the final decision maker, and because
the distinction between Dr. Lasser's ability to deal with
occupational stress and his ability to do physical exercise may
have been beyond her level of expertise.
Nurse Young recommended an independent medical examination,
which led to Dr. Lasser's visit to Dr. Burke. It is here that the
difficulties commence for Reliance's handling of the case. Dr.
Burke found that plaintiff was capable of working without
restriction, and that plaintiff demonstrated no cardiovascular
disability. Dr. Burke's treadmill exercise test showed "excellent
exercise tolerance" as related by Reliance. No mention was made
either in Reliance's termination letter or in Dr. Burke's report
of the issue of occupational stress that featured so prominently
in Dr. Aldrich's earlier reports. Indeed, Reliance stated that
the attending physician's findings "were not supported by the
objective medical findings."
Dr. Aldrich responded with the first of many subsequent
criticisms of Dr. Burke's opinion, by letter dated March 25,
1998. The point was not, Dr. Aldrich maintained, that Dr. Lasser
could perform well on a treadmill. The relevant point was that
stress is a well-known risk factor for precipitating myocardial
infarction. Dr. Aldrich stated that the therapeutic goal was to
preserve the level of physical function identified by Dr. Burke.
Were he to return to a stressful occupation, Dr. Aldrich wrote,
"I believe that the risk of myocardial infarction with all of its
attendant morbidity and mortality will rise."
Having already rejected Dr. Aldrich's opinion, it is not
surprising that Reliance should have declined to reconsider based
upon his March 1998 letter. However, the second independent
opinion obtained by Reliance, from Dr. Raska, is even more
critical of Dr. Burke. The following excerpts from his report are
Stress regardless of exercise tolerance is a
recognized independent risk factor for recurrent