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Smith v. Bayer Corp. Long Term Disability Plan

July 31, 2006


The opinion of the court was delivered by: James H. Jarvis United States District Judge


Plaintiff Terry Smith (Smith) filed this action pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq., to recover long-term disability (LTD) income and other benefits from defendant Bayer Corporation Long Term Disability Plan (the Plan) [see Doc. 1].*fn1 Defendant Bayer Corporation (Bayer) was Smith's employer for fourteen years until January 10, 2003. Bayer is also the plan sponsor and plan administrator, which is the designated fiduciary of the Plan [AR 053].*fn2 In his complaint, Smith contends that the plan administrator wrongfully denied him LTD benefits under the Plan even though Smith was suffering from a number of psychiatric impairments [see Doc. 1].*fn3 In their answer, defendants contend that coverage was properly denied under the Plan [see Doc. 5].

This matter is presently before the court on the following motions:

(1) Defendants' motion for judgment on the ERISA administrative record [Doc. 22]; and

(2) Plaintiff's motion for judgment on the record [see Doc. 24].

The issues raised have been exceptionally well briefed by the parties [see Docs. 23, 25, 26, and 27], and excellent oral arguments were heard on March 22, 2006 [see Doc. 28]. Thus, this matter is now ripe for adjudication. For the reasons that follow, plaintiff's motion will be granted, defendants' motion will be denied, and plaintiff will be awarded LTD benefits.

I. Factual Background and Procedural History

Smith, now age 50, was employed by Bayer in Knoxville, Tennessee, as a Diabetes Sales Specialist [see Doc. 1, p.2], which is a field representative responsible for the sale of diabetes-related supplies. According to Bayer's Occupational Demands Form, this position required Smith to work with very little guidance or reliance on oral or written instructions; he was required to perform a wide range of tasks as dictated by variable demands and changing conditions; he was required to relate sensitive information to diverse groups; his position required the ability to work with diverse groups to obtain consensus on complex issues; he was expected to independently apply abstract principles to solve complex conceptual issues; and he was required to persuade or explain complex issues in person or by phone [AR 018]. Smith successfully worked in that position until January 10, 2003, when he stopped because of his depression, panic disorder, and bi-polar disorder [AR 016, 020, and 021]. Smith then applied for short-term disability (STD) benefits by contacting Core, Inc. (Core), the claims administrator for the STD plan, on January 17, 2003 [AR 019-20].

Core denied Smith's STD claim by letter dated February 21, 2003, stating that "there are insufficient quantitative objective physical findings to correlate with your subjective complaints and diagnostics to support a functional impairment that you are unable to do the essential functions of your job." [AR 041]. Nevertheless, according to a letter dated April 14, 2003, from Bayer, Smith received STD benefits through April 2, 2003 [AR 045].*fn4 In that same letter, Smith was informed that his application for LTD benefits was also under review by Bayer's third- party administrator, Kemper [AR 045].*fn5 By letter dated May 14, 2003, Kemper denied Smith's claim for LTD benefits [AR 027-029]. Smith appealed that denial, but the cessation of his benefits was upheld by an ERISA Review Committee which met on January 17, 2004 [AR 001]. This case was then filed on March 18, 2004. On October 21, 2004, the court granted the parties' joint motion to remand this matter to the plan administrator for reconsideration [see Doc. 16]. The denial of Smith's benefits was again upheld on that remand by letter dated April 29, 2005 [AR 281-284]. This case was subsequently reopened by agreed order filed on November 3, 2005 [see Doc. 18].

The Plan provides LTD income and other benefits to employees who are disabled for more than 26 weeks [AR 091]. For these LTD benefits to begin, the participant "must be unable to perform the essential duties of [the participant's] regular occupation." [AR 098]. After six months of receiving LTD benefits, the participant must be "'totally disabled'" to continue to be eligible for benefits. [Id.]. Under the Plan, "'[t]otally disabled' means you are unable to work at any job for which you are or could become qualified by education, training, or experience." [Id.].

A claimant is not disabled if his medical condition allows him to earn a wage comparable to his pre-disability earnings, in most cases 70% of the pre-disability wage [AR 099]. Under the Plan, it is the employee's burden to provide proof of entitlement for LTD benefits [AR 098].

It must be noted, too, that disability benefits are paid from a voluntary employees' beneficiary association (VEBA) trust, funded in part by periodic contributions from Bayer, which is used exclusively to pay benefits to participants under the Plan or to pay expenses associated with the Plan [see Doc. 22, Ex. B, ¶ 3]. Benefits are also funded in part by participants' salary reduction contributions [AR 059].

The court will now examine in more detail the facts and circumstances surrounding plaintiff's claim, as well as the medical proof in support of the parties' respective positions. As previously noted, Smith quit working at Bayer on January 10, 2003, due to depression, panic disorder, and bi-polar disorder [AR 016]. In fact, Smith's medical records indicate that he had been treated for depression-related problems for almost a year before he quit working for Bayer. More specifically, those records reflect that Dr. Francis P. LeBuffe treated Smith on seven occasions from February 11, 2002, following plaintiff's release from the hospital for in-patient treatment of depression, through December 9, 2002 [AR 012; 265-71].*fn6 At the beginning of his*fn7 treatment, Dr. LeBuffe noted that Smith's sleep was "a major problem" as he was only sleeping a couple of hours a night [AR 271]. Dr. LeBuffe also noted that Smith's mood was "still quite depressed." [Id.]. Nevertheless, Dr. LeBuffe's assessment was that Smith was "[d]oing ok[.]" [Id.]. In November 2002, after at least four other meetings [AR 267-70], Dr. LeBuffe indicated that Smith's concentration was reduced [AR 012]. Again, however, Dr. LeBuffe's assessment was that Smith was "doing well[.]" [Id.].

Dr. LeBuffe treated Smith two more times after he quit work on January 10, 2003 [AR 009-10]. However, by June 18, 2003, Dr. LeBuffe indicated in his notes that Smith complained of decreased concentration as well as difficulty completing tasks [AR 008]. For example, Smith would forget to switch car gears and could not read a book [id.]. Further, these treatment notes reflect that Smith suffered from, among other things, ADD (Attention Deficit Disorder)*fn8 [id.].*fn9 By late June, Dr. LeBuffe's notes indicated that Smith was still suffering from ADD [AR 007].*fn10 By early August 2003, Smith complained of mood changes, irritability, and depression and his inability to pay attention and to concentrate was noted [AR 006]. Smith was, however, no longer suicidal [id.].*fn11 In September 2003, Smith reported mood swings to Dr. LeBuffe, as well as days when he felt lethargic, anxious and depressed [AR 005]. Dr. LeBuffe diagnosed Bi-Polar Disorder II and ADD [Id.].

The medical records also reflect that Dr. LeBuffe completed a medical assessment form on August 8, 2003 [AR 0013-14]. On that form, Dr. LeBuffe assessed Smith as "poor"*fn12 with respect to the following general categories: (1) capacity to interact appropriately, communicate effectively, and engage in other aspects of social functioning; (2) abilities of concentration, persistence and pace; and (3) ability to adapt to stressful circumstances in work or work-like settings where failure to adapt results in repeated episodes of deterioration or decompensation which cause patient to withdraw or to experience an exacerbation of symptoms [AR 013]. Additionally, Dr. LeBuffe rated Smith as "poor" in the following specific areas: (1) dealing with the public; (2) persisting at assigned tasks; (3) the ability to relate to supervisors and co-workers; (4) the ability to work at a consistent pace for acceptable periods of time; and (5) the ability to timely complete tasks commonly found in work settings [AR 013-14]. Dr. LeBuffe then concluded his evaluation with diagnoses of recurrent and severe major depression and panic disorder to support his assessment [AR 014].

While Smith was being evaluated by Dr. LeBuffe, Bayer hired third-party claims administrator Kemper to review Smith's file. The record reflects that Kemper ordered a peer-to-peer review, which was completed by Dr. Lawrence Burstein on May 9, 2003 [AR 030-31]. Dr. Burstein did not review any medical records at that time, but he did speak with Dr. LeBuffe and reported that Dr. LeBuffe "indicated that Mr. Smith believes that he will have a panic attack if he returns to work" and "acknowledged that Mr. Smith does not display significant symptoms and, aside from Mr. Smith's belief, there are no barriers to his returning to work." [AR 031]. Consequently, Dr. Burstein concluded that there was no reason that plaintiff was "unable to perform the core elements of his occupation from a psychological perspective." [Id.]. On the basis of Dr. Burstein's report, Kemper denied Smith's LTD claim [AR 027-28].

Smith, through his attorneys, then appealed Kemper's denial to Bayer's ERISA Review Committee on October 23, 2003 [AR 003-4]. The appeal letter was accompanied by Dr. LeBuffe's outpatient progress notes covering the period from November 1, 2002, through September 16, 2003 [AR 005-10]. These materials also contained Dr. LeBuffe's assessment prepared on August 8, 2003 [AR 013-14]. All of these materials were then submitted by Kemper to Dr. Elana Mendelssohn, a clinical psychologist and neuropsychologist.

Dr. Mendelssohn completed her peer review on November 10, 2003 [AR 032-33]. Although Dr. Mendelssohn reviewed Dr. LeBuffe's medical records, she advises the reader to refer to Dr. Burstein's peer review "to obtain further detail of the previously reviewed documentation." [AR 033]. Dr. Mendelssohn pointed out that Smith reports experiencing emotional difficulties, but concluded that "the submitted documentation by Dr. LeBuffe do [sic] not provide objective examination findings or behavioral observations substantiating how the claimant's difficulties are impacting his functioning and preventing him from performing the core elements of his occupation." [Id.].

On November 19, 2003, Dr. Mendelssohn prepared an addendum to her report after reviewing notes from Norma Albanese, APRN [AR 034-35]. In that addendum, Dr. Mendelssohn concluded that "the submitted documentation fails to describe a severity and intensity of psychiatric symptoms in objective mental status terms to preclude work." [Id.].

The ERISA Review Committee, through a peer review organization, then requested an independent review of the file by a qualified physician [see Doc. 22, Ex. A, ¶8]. On December 12, 2003, Dr. Paul Orr, a board-certified psychiatrist and neurologist, completed a record review of Smith's claim file, including the opinions of the previous file reviewers [AR 037-39]. Dr. Orr noted that both Dr. Burstein and Dr. Mendelssohn could not support cognitive impairments preventing Smith from performing his regular occupation [AR 037]. Dr. Orr further noted that Dr. LeBuffe had opined that Smith was "[c]urrently unable to work [and] unable to work in sales." [AR 038]. Dr. Orr also observed that, despite Smith's reported panic problems, Smith was able to attend a real estate course and even obtain his license [AR 039]. Although Smith was hospitalized for depression in 2002 and was under the regular care of a psychiatrist from that point forward, Dr. Orr notes that there had been no mention of any psychiatric difficulties prior to Smith's leaving Bayer in January 2003. [AR 037 and 39]. Dr. Orr was of the opinion, therefore, that Smith was not disabled from performing his job in sales or any position for which he could be trained [AR 039].*fn13

On January 15, 2004, the ERISA Review Committee denied Smith's appeal, concluding that the record did not support a finding that he was unable to perform the essential duties of his regular job [AR 001-2]. As previously noted, Smith filed this action on March 18, 2004 [see Doc. 1].

During the course of this litigation, the parties became aware of some procedural irregularities and agreed to remand the claim for further review [see Docs. 15 and 16]. Also, during the pendency of this litigation, Smith relocated to Missouri where he was treated by Dr. Robert McCool, a board-certified psychiatrist, for his mental health issues. During this time, Smith began working as a laborer at a Target store, making considerably less money than he earned with Bayer [AR 179]. Specifically, beginning on May 5, 2004, Smith began earning wages of $1,083.33 per month, which represents approximately 22% of his pre-disability earnings [AR 162].

In his sworn statement submitted on remand, Dr. McCool offered the opinion that Smith would have "a lot of difficulty being able to sustain the level of work that he had previously done in the type of sales position that he was accustomed to working in the past." [AR 202]. Dr. McCool also testified that while Smith is "somewhat stable" at his current job, he is still "struggling at the level of employment that he is working and he has had some difficulties at times." [AR 201]. According to Dr. McCool, Smith is able to maintain his current level of employment because "the work requirements are somewhat limited" and because this job does not require initiative or impose pressure on Smith [id.]. Dr. McCool also expressed doubts as to whether Smith would be able to maintain even this level of employment over the long term [AR 203-04].

Dr. McCool's treatment notes accompanied his sworn statement [AR 213-24]. According to these notes, Smith reported suicidal thoughts, depressed mood, and lack of motivation and concentration [id.]. Although Smith reported "feeling pressured at work" [AR 221], he actually received an Employee of the Month award which was "encouraging to him." [AR 219].

Also during the remand, Smith submitted a sworn statement from his previous treating psychiatrist, Dr. LeBuffe [AR 225-39]. In that statement, Dr. LeBuffe indicated that his assessment of Smith's limitations on his medical opinion form in August 2003 was based on his personal observations [AR 229-30]. Additionally, Dr. LeBuffe pointed out that when he first saw Smith during his hospitalization, Smith was "totally unable to function on his own at that time." [AR 230]. Dr. LeBuffe further explained that Smith exhibited symptoms of his panic disorder during the time in which he treated him [AR 230].

Moreover, upon inquiry by counsel regarding the so-called lack of objective findings relied on by the doctors for Kemper, Dr. LeBuffe testified as follows:

Well, I assume that they meant that there were no observable symptoms at that time, but like with most of our patients, we largely rely on patients' report of symptoms. It is also the nature of panic disorder that the symptoms occur in discrete attacks which last sometimes very briefly but leave a ...

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