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Naphys v. Prudential Insurance Co. of America

United States District Court, D. New Jersey

September 21, 2018

DANIEL NAPHYS, Plaintiff and Counter Defendant,
v.
PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant and Counter Claimant.

          Richard Lowell Frankel, Esq. BROSS & FRANKEL, PA, Attorney for Plaintiff and Counter Defendant.

          Robert T. Szyba, Esq. SEYFARTH SHAW LLP, -and-Amanda A. Sonnenborn, Esq. (pro hac vice) Shelly R. Hebert, Esq. (pro hac vice) SEYFARTH SHAW LLP, Attorneys for Defendant and Counter Claimant.

          OPINION

          JEROME B. SIMANDLE, U.S. District Judge.

         I. INTRODUCTION

         This matter comes before the Court by way of Plaintiff Daniel Naphys's (“Plaintiff”) motion for summary judgment [Docket Item 43] and Defendant Prudential Insurance Company of America's (“Prudential” or “Defendant”) cross-motion for summary judgment. [Docket Item 44.] Plaintiff alleges that Prudential's decision to terminate his long-term disability benefits under a health and welfare benefit plan sponsored by Prudential violates Section 502(a) of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132(a). [Docket Item 1.] Defendant also filed a Counterclaim to recover for alleged overpayment of benefits to Plaintiff. [Docket Item 4.]

         The principal issues to be decided are: 1) whether the Court reviews this ERISA denial-of-benefits case de novo or for abuse of discretion; and 2) whether, viewed through the lens of the proper standard of review, either party is entitled to judgment on the merits of Plaintiff's denial-of-benefits claim as a matter of law. The Court must also determine whether Defendant is entitled to summary judgment on its Counterclaim for overpayment. For the reasons that follow, Plaintiff's motion for summary judgment will be denied, while Defendant's cross-motion for summary judgment will be granted with respect to the Complaint and denied with respect to Defendant's Counterclaim.

         II. BACKGROUND[1]

         The relevant facts are, for the most part, not in dispute. Plaintiff worked as a Senior Life Representative for Prudential from 1996 through on or around November 3, 2011. (AR 1913-1915, 1976.) As an employee of Prudential, Plaintiff participated in a health and welfare benefit plan sponsored by Prudential and governed by ERISA called “The Prudential Welfare Benefits Plan” (hereinafter, “the Plan”). (AR 0001-1724.) The Plan provides, among other things, long-term disability (“LTD”) benefits to certain eligible participants who are “Totally Disabled.” (PRU 0662.) Under the Plan, a person is considered “Totally Disabled” if he or she satisfies all of the following:

(A) Initial Period.
For the 12-month period beginning after the Elimination Period, the Employee will be considered Totally Disabled . . ., if:
(i) He is unable to perform the Material and Substantial Duties of his Regular Occupation due to Sickness or Injury or both . . .; and
(ii) He has a 20% or more loss in his Indexed Monthly Earnings due to that Sickness or Injury.
(B) Secondary Period.
After the end of the 12-month period beginning after the Elimination Period, the Employee will be considered Totally Disabled . . . if, due to that same Sickness or Injury, the Employee is unable to perform the duties of any Gainful Occupation for which he is reasonably fitted by his education, training, or experience.

(Id.) Notably, the Plan limits certain conditions, including “disabilities due in whole or in part to Mental Illness, ” to 24 months of benefits. (AR 0659-0660.)

         Plaintiff stopped working at Prudential on or around November 3, 2011. (AR 2811.) According to Plaintiff, he stopped working because of a disabling combination of physical and psychological conditions, including attention deficit disorder (“ADD”), depression, a pulmonary nodule, hyperlipidemia, and gastroparesis.[2] (AR 1915.) These medical conditions were diagnosed and/or treated by various physicians and specialists around that time, including Dr. Michael Marone (a family medicine doctor) on November 11, 2011 (AR 1915) and January 19, 2012 (AR 1957), Dr. Allen Zechowy (a board-certified neurologist) on December 22, 2011 (AR 1932), and Dr. Leo Katz (a gastrointestinal (“GI”) specialist) on April 20, 2011 (AR 2232, 2682), June 30, 2011 (AR 2187), and November 17, 2011. (AR 1943.)

         Immediately following his departure from Prudential, Plaintiff applied for short-term disability (“STD”) benefits, which Prudential approved in a letter dated November 17, 2011. (AR 1741.) Thereafter, Plaintiff received 26 weeks of STD benefits, the maximum duration for such benefits permitted under the Plan. (AR 1776-1777.)

         Plaintiff applied for LTD benefits sometime before his STD benefits expired on May 3, 2012. (AR 1784-1788.) In order to determine whether Plaintiff was eligible for those LTD benefits, Prudential's Clinical Reviewer Jane Howard, R.N., Disability Claim Manager Samantha Millette, and Facilitator Andy Schopfer conducted an initial claims discussion on April 25, 2012, and determined that the “information in [his] file does support an impairment as the claimant is unable to handle stress and focus. . . . He also has a physical diagnosis of gastroparesis [and] he is . . . treating with a neurologist.” (AR 2902.) They “agreed that it would be appropriate to follow again in 3 months, and to also have an activities check to determine if [Plaintiff] is socially active.” (Id.) Plaintiff started receiving LTD benefits from Prudential, effective May 4, 2012. (AR 1784-1788.)

         On August 8, 2012, Nurse Howard, Ms. Millette, and Mr. Schopfer conducted a second clinical review, this time noting that Plaintiff appeared to have significant anger issues, agreeing that Plaintiff remained impaired, and concluding that Plaintiff's claim should be reviewed again in four months to determine if there was any improvement in his condition. (AR 2895.)

         On November 15, 2012, Ms. Millette reviewed Plaintiff's October 23, 2012 Activities of Daily Living Questionnaire (AR 2040-2047) and observed that he appeared to be functional at home and could do chores and drive, but had difficulty functioning in social settings. (AR 2893.)

         Thereafter, Prudential sought updated medical records from Plaintiff's treating physicians in July 2012 (AR 1796), August 2012 (AR 1799), November 2012 (AR 1804), December 2012 (AR 1812), and March 2013. (AR 1818.) According to Prudential, these records indicated that Plaintiff was doing well on Abilify and his mood had improved in January 2013, but he was moderately depressed in February 2013 and his mood had worsened. (AR 2890.)

         In a letter dated April 3, 2013, Prudential notified Plaintiff that it had completed its review of his claim for LTD benefits under the Plan's “gainful occupation” definition of disability and determined Plaintiff was “totally disabled” and, at this time, his LTD benefits would continue. (AR 1826.) As Prudential explained, however, “[e]ven though benefits are going to continue beyond this initial period, we do not waive our right to continuously evaluate your claim under the more restrictive definition of total disability.” (Id.) Furthermore, Prudential informed Plaintiff that “[d]isabilities which, as determined by Prudential, are due in whole or part to mental illness . . . have a limited pay period during your lifetime” of 24 months. (AR 1827.)

         On October 4, 2013, Ms. Millette reviewed updated medical records from Plaintiff's behavior health providers, which indicated Plaintiff continued to have depression, anxiety, social stress, sleep problems, and issues with anger and aggression. (AR 2888.) Ms. Millette also noted that, “[w]hile we do have this information about his [behavior health] issues, we have not yet received the [medical records] from [Plaintiff's] other providers [i.e., his GI Specialist, Dr. Katz] . . . . [O]nce all the records are received, we will return to [the facilitated claim discussion] to review all of the information.” (Id.) On November 27, 2013, Ms. Millette again reviewed Plaintiff's claim and noted that the “medical [information] is supportive of [Plaintiff's] continued inability to work due to [behavioral health] issues, ” but that Plaintiff's GI Specialist, Dr. Katz, still had not provided any updated medical records since 2012. (AR 2887-2888.) That same day, Prudential notified Plaintiff by letter that his current LTD claim is based on “depression and anxiety, which are considered mental illnesses” subject to the 24-month limited pay period, but that Prudential was “also in the process of requesting updated information regarding [Plaintiff's] physical conditions in order to determine whether the 24-month limitation applies to [his] claim.” (AR 1847-1848.)

         On December 23, 2013, Plaintiff was seen in Primary Care, where it was noted that Plaintiff reported abdominal pain, decreased appetite, excessive stress, and nervousness. (AR 2145-2146.) On January 15, 2014, Plaintiff was seen for complaints of tingling in both hands and feet, as well as ankle pain, joint stiffness and pain, and back problems. (AR 2149.) On February 24, 2014, Plaintiff underwent a cervical MRI, which revealed a C5-6 central disk protrusion indenting the ventral thecal sac without canal stenosis or foraminal narrowing and at ¶ 6-7 a small central disc bulge without canal stenosis or foraminal narrowing. (AR 2196.) On March 7, 2014, Plaintiff returned to Dr. Katz and reported that he had abdominal pain, nausea, and increased urination. (AR 2472-2473.) Dr. Katz noted, among other things, that “[o]verall things are stable, ” and told Plaintiff to “[f]ollow up in 1 year.” (Id.) Three days later, on March 10, 2014, Plaintiff visited Dr. Patel and reported abdominal pain with decreased appetite and excessive stress and nervousness. (AR 2153-2154.)

         After obtaining updated these medical records on February 21, 2014 (AR 1849) and March 20, 2014 (AR 1860), Prudential's Carrie Eccles, R.N. conducted another clinical review of Plaintiff's claim on April 16, 2014. (AR 2874-2883.) Nurse Eccles noted that Plaintiff reported in an April 14, 2014 telephone conversation that his alleged gastroparesis was now the main issue currently preventing him from returning to work. (AR 2874.) Nurse Eccles also reviewed all of Plaintiff's medical records, including those from his GI doctor, neurologist, pulmonologist, psychiatrist, and primary care physician. (AR 2875-2877.) With respect to Plaintiff's alleged gastroparesis, Nurse Eccles noted, among other things, that: (1) the medical information “supports [Plaintiff] has a [history] of Gastroparesis (GP), which [sic] a slowed movement of food from the stomach to the small intestines;” (2) “[i]n the 2.5 years [Plaintiff] has been [out of work], he has seen the GI [approximately] 3 times;” (3) “[t]reatment consists of dietary changes; ie small frequent meals;” and (4) Plaintiff “[d]enied any vomiting and weight was up to 190 [pounds], ” which was 25 pounds more than his weight in February 2012. (AR 2879.) Based upon these observations, Nurse Eccles concluded that “[w]hile [Plaintiff] reports [his gastroparesis] makes him feel sick everyday and wipes him out, records do not reflect this same severity of [symptoms].” (Id.) According to Nurse Eccles, “[w]ith severe [gastroparesis], would expect to see [emergency room] visits, anti-nausea meds and weight loss, ” and “[w]hile [Plaintiff] may carry the [diagnosis] of gastroparesis, symptoms are in excess of findings [and the records] do not reflect a severity that would rise to a level of impairment.” (Id.)[3]Ultimately, Nurse Eccles concluded that she “was not able to identify any limitations from a psychological or physical standpoint or that [Plaintiff] is limited in his ability to walk, stand, sit, grasp, lift, push, pull or carry. Available records do not support an inability to concentrate [due to] physical or psychological reasons.” (AR 2882.)

         Based on Nurse Eccles' review and the medical records, Prudential decided that Plaintiff's claim that he was unable to work was not medically supported from either a physical or psychological standpoint and, in a letter dated April 21, 2014, Prudential terminated Plaintiff's LTD benefits. (AR 1862-1872.) Notwithstanding Nurse Eccles' opinion that Plaintiff was not disabled from a physical or psychological standpoint and that “the medical information does not support the extension of benefits beyond April 30, 2014, ” Prudential notified Plaintiff that because he “had previously been advised that [his] claim would be subject to a 24 month limitation based on [his] previously diagnosed mental health condition, ” Prudential had “authorized the release of LTD benefits through May 3, 2014 and [his] LTD claim is being terminated effective May 4, 2014, the Mental/Nervous benefit limitation date.” (AR 1864.)

         On June 30, 2014, Plaintiff filed his first appeal of Prudential's decision to terminate his LTD benefits. (AR 2491-2494.) Plaintiff's appeal letter emphasized that his physical conditions (including gastroparesis, tardive dyskinesia, diaphoresis, pre-diabetes, dysautonomia, foot and ankle pain, itching, and back pain) prevented him from performing the duties of any gainful occupation. (Id.) Plaintiff also provided medical records and letters from his medical providers, including Joanne Diffenbaugh (a Licensed Professional Counselor and behavior health specialist), Dr. Katz (a GI specialist), Dr. Ambarish Patel (a family practitioner), and Dr. Allen Zechowy (a neurologist). (AR 2495-2499.)

         Prudential obtained an independent medical review by Dr. Aviva R. Lehrfield-Herschman, a physician “who specializes in Internal Medicine, ” to review Plaintiff's appeal. (AR 1876) (emphasis in original). After reviewing Plaintiff's appeal and all of his medical records, Dr. Lehrfield-Herschman prepared a report dated August 20, 2014 (AR 2537-2546), which is discussed in more detail in Section IV.C.1.a, infra. Ultimately, Dr. Lehrfield-Herschman agreed with Nurse Eccles' assessment and opined that Plaintiff did not have any limitations or restrictions from any one condition or combination of physical or psychological conditions from May 4, 2014, onward. (AR 2543.)

         After reviewing Plaintiff's medical records, claim file, and Dr. Lehrfield-Herschman's report (AR 2861-2868), Prudential upheld its decision to terminate Plaintiff's LTD benefits in a letter dated September 23, 2014. (AR 1879-1885.) Prudential first explained that, “while [Plaintiff] continue[s] to report symptoms of depression, anxiety, panic disorder and ADD which may be disabling, no further benefits are payable for a condition due in whole or part to mental illness due to the 24 month benefit limitation of the policy.” (AR 1883.) Prudential then explained that, based on Plaintiff's medical records, there was no evidence that Plaintiff had an “impairment or the need for any restrictions or limitations due to any of [his] physical conditions.” (AR 1884.) Specifically, Prudential noted that the “medical records ...


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