Legal Summary: Stellas v. BWXT Y-12, LLC

Stellas v. BWXT Y-12, LLC
3:04-CV-7, 2005 WL 2097796 (E.D.Tenn. August 29, 2005)

Our client, the plaintiff, was an Accounting Support Specialist at Lockheed Martin for nine years.  In 2000, she stopped working due to her diagnosed medical conditions. The severe muscle spasms and chronic pain these conditions caused made it impossible for her to work as she would be unable to keep or maintain a regular schedule. Her treating physician, Dr. Burns, determined that her condition was unlikely to improve in any area. Based on the reports from Dr. Burns, and also on her self-reports, MetLife granted her long term disability (LTD) benefits, determining that she was totally disabled under the own occupation standard. Stellas v. BWXT Y-12, LLC, 3:04-CV-7, 2, 2005 WL 2097796, 2 (E.D.Tenn. August 29, 2005)(unpublished).

After two years, MetLife’s plan required our client to prove she was disabled from any occupation (as opposed to only her own occupation) in order for her to continue receiving LTD.  MetLife reviewed the information provided by Dr. Burns, who opined that she was totally disabled from any occupation.  However, MetLife also relied on a Transferable Skills Analysis (TSA) by Stephanie Seely, which asserted that the plaintiff could perform other sedentary work. MetLife terminated her LTD based on the TSA and claiming there “was insufficient objective and clinical medical evidence to establish that plaintiff had a totally disabling condition that prevented her from performing any occupation for which she was qualified based upon her education, training or experience.” Stellas, at 4.

The plaintiff appealed and submitted additional notes from Dr. Burns as well as treatment notes from Dr. Koelsch, a chiropractic physician, who opined that she was not qualified physically to perform in any occupation. She also provided a a neurological/neurosurgical evaluation from Dr. Hauge.

Around the same time, the Social Security Administration (SSA) determined that the plaintiff was disabled, and she began receiving benefits. In her SSA case, an administrative law judge (ALJ) concluded that she suffered from “debilitating levels of fatigue and pain.”

MetLife had a non-examining consultant, Dr. Lieberman, review the file and he concluded that the plaintiff was able to perform sedentary work.  MetLife relied on Dr. Lieberman’s opinion, ignoring the SSA’s decision, and upheld its decision to terminate the plaintiff’s LTD in April 2003.

We filed suit against MetLife on behalf of our client.  We argued that MetLife’s decision to terminate her LTD benefits was based solely upon a misconstruction of Dr. Burns’ report, a transferable skills analysis report based on that misunderstood opinion, and the conclusions of a non-examining consultant.

MetLife claimed that the plaintiff did not have sufficient objective and clinical medical evidence to determine that she was totally disabled under the any occupation standard, but we explained that MetLife improperly considered two letters from Dr. Burns expressing his belief that the plaintiff was disabled for any occupation, and that she had gotten worse.

We also explained to the court that MetLife did not obtain an independent medical examination at any point. On the other hand, we pointed out that Dr. Burns had provided detailed support for his medical findings and his opinions of our client’s restrictions.

We further argued that MetLife failed to properly consider the finding from SSA that our client was disabled.

The court found in our client’s favor agreed that MetLife’s decision to deny her LTD was indeed arbitrary and capricious.

In regard to the SSA decision, the court noted that MetLife made no mention of the plaintiff’s favorable SSA decision.  Rather, MetLife stated that they relied only on the evidence provided by Dr. Burns’ medical records, Seely’s TSA, notes from Koelsch and Hauge, and the opinion of Lieberman.

The court acknowledged that an ERISA plan fiduciary is not bound by what the SSA finds. Bass v. TRW Employee Welfare Benefits Trust, 2004 WL 103001 at *3 (6 th Cir. Jan.21, 2004). However, because the ALJ relied on the opinion of both Dr. Burns and the credibility of the plaintiff’s self-reports of her ability to work, the court concluded it was arbitrary and capricious for MetLife to not consider and discuss the SSA decision in its final termination letter.  T court noted that it was “totally inconsistent” for an insurer to require the plaintiff to apply for Social Security benefits, avail itself of the Social Security determination so as to assert an overpayment, yet simultaneously deny that plaintiff is disabled. Stellas at 10.

The court also noted that “given that Dr. Burns informed MetLife that he felt his April 2002 APS had been misinterpreted, use of that report as a basis of the TSA and Dr. Lieberman opinions seems questionable.” Id.

Thus, the court largely adopted our arguments and overturned MetLife’s decision to terminate our client’s benefits. Id.

MetLife also claimed that the our client should reimburse the plan because she was overpaid for any months that she was paid her full LTD benefits and later was paid social security benefits for those months, since the social security benefits were on offset to the plan.

We argued on behalf of our client that Metlife and the Plan could offset LTD benefits going forward, but could not collect from our client for any past-due debt due to the ERISA law at that time.  Specifically, the court agreed with us that under the Supreme Court’s decision in Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209-10 (2002) that claims by insurance companies to recover overpayments under the terms of the plan were legal claims, for which only legal remedies were available and that ERISA only permitted plans to seek equitable remedies.  The court agreed to follow that case as well as a similar case from the Court of Appeals for the Sixth Circuit confirming the same rule applied.  Qualchoice, Inc. v. Rowland, 367 F.3d 638, 642 (6th Cir. 2004).  Thus, the court concluded it had no jurisdiction to adjudicate MetLife’s counterclaim.[1]

[1] Unfortunately for ERISA plaintiffs who have been paid LTD benefits and later are awarded social security benefits, and then the insurance company seeks reimbursement for an overpayment, later Supreme Court caselaw changed the analysis. See, Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006).  Now, courts do have jurisdiction over such claims, although plaintiffs have different arguments that they can make about whether they have to pay back claimed overpayments.