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NICKOLA v. CNA GROUP LIFE ASSURANCE

August 5, 2005.

KURTIS NICKOLA, Plaintiff,
v.
CNA GROUP LIFE ASSURANCE, CO., Defendant.



The opinion of the court was delivered by: MARK FILIP, District Judge

MEMORANDUM OPINION AND ORDER

Kurtis Nickola ("Nickola" or "Plaintiff") brings this action against CNA Group Life Assurance Company ("CNA" or "Defendant").*fn1 Plaintiff filed a complaint (D.E. 1)*fn2 that invokes Section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B) ("Section 502"). Plaintiff alleges that he has been wrongfully denied long-term disability ("LTD") benefits which he had been receiving for some three years prior to Defendant's alleged wrongful and improperly justified termination of those benefits in 2003. Plaintiff has moved for summary judgment (D.E. 12) and Defendant has filed a cross-motion for summary judgment (D.E. 21). Defendant has also filed a motion to strike certain attachments to Plaintiff's Response to Defendants' Statement of Facts (D.E. 29). As explained below, Plaintiffs's motion (D.E. 12) is granted, Defendant's motion for summary judgment (D.E. 21) is denied, and Defendant's motion to strike (D.E. 29) is denied — although in practical terms that motion is of no consequence and is effectively moot.

I. FACTS*fn3

  From October 17, 1994, through November 6, 1999, Kurtis Nickola was employed by the Ag States Agency, LLC, as a Department Manager for Consumers Coop Oil Company. (D.E. 12 ¶ 7.) His background indicates that he has a high school diploma and his work experience includes over seven years as an HVAC (heating, ventilation, and air conditioning) technician and fifteen years as an automobile mechanic. (D.E. 22 ¶ 46.) His position required him to have complete mobility, including the ability to climb stairs and ladders, carry heavy objects, squat, and kneel. (Id. ¶ 13; D.E. 12 ¶ 7.) As part of his employment, Plaintiff was insured under, and thus Plaintiff was a "participant" in, a long term disability plan ("LTD Plan" or "Plan") underwritten by CNA. (D.E. 12 ¶ 8; D.E. 22 ¶¶ 5-6.)

  The Plan provides for benefits after the passing of a 90-day elimination period. (D.E. 12 ¶ 9.) Relevant to the present inquiry, the Plan defines "Disabled" as follows:
Disability means that during the Elimination Period and the following 24 months, Injury or Sickness causes physical or mental impairment to such a degree of severity that You are:
1. continuously unable to perform the Material and Substantial Duties of Your Regular Occupation; and
2. not working for wages in any occupation for which You are or become qualified by education, training, or experience. After the LTD Monthly Benefit has been payable for 24 months, Disability means that Injury or Sickness causes physical or mental impairment to such a degree of severity that You are:
1. continuously unable to engage in any occupation for which You are or become qualified by education, training, or experience; and
2. not working for wages in any occupation for which You are or become qualified by education, training, or experience.
(D.E. 22 ¶ 8 (emphasis in original).) There were also some specific limitations on the amount of earnings one could acquire and still qualify under the LTD Plan. (D.E. 22 ¶ 10.) The Plan further states other requirements to filing a claim. In relevant part,
 
The following items, supplied at Your expense, must be a part of Your proof of loss. Failure to do so may delay, suspend, or terminate Your benefits:
5. Objective medical findings which support Your Disability. Objective medical findings include but are not limited to tests, procedures, or clinical examinations accepted in the practice of medicine, for Your disabling condition(s).
6. The extent of Your Disability, including restrictions and limitations which are preventing You from performing Your Regular Occupation.
(Id. ¶ 9.)
  Amendment Number 4 to the policy, which potentially took effect on January 1, 2002 (this is a matter of dispute between the parties, as referenced below), states that
[t]he Administrator and other Plan fiduciaries have discretionary authority to interpret the terms of the Plan and to determine Your eligibility for and entitlement to benefits under the Plan and to interpret the terms and provisions of any insurance policy issued in connection with the Plan. With respect to making benefit decisions, the Plan Administrator has delegated sole discretionary authority to Continental Casualty Company to determine Your eligibility for and entitlement to benefits under the Plan and to interpret the terms and provisions of any insurance policy issued in connection with the Plan.
(Id. ¶ 10.) The Amendment was signed by the Chairman of the Board of Continental Casualty Company, and the Plan was maintained by Ag States Agency, LLC. (D.E. 13 at 004, 008.) In addition, the Plan contained a Certificate of Insurance, which stated that "[w]hen making a benefit determination under the policy, [Continental Casualty Company has] discretionary authority to determine Your eligibility for benefits and to interpret the terms and provisions of the policy." (D.E. 22 ¶ 11.)

  Nickola signed his "LTD Employee's Statement" on November 12, 1999. (D.E. 12 ¶ 12.) This statement indicated that his last day of work was November 5, 1999. (Id.) About this time he requested LTD benefits. Over the next month, Dr. James Slattery ("Dr. Slattery"), Dr. James Sehloff ("Dr. Sehloff"), and Dr. Steven Johnson ("Dr. Johnson") submitted documents to CNA indicating, respectively, that Plaintiff's cervical spine degeneration limited him to sedentary exertion, that his asbestosis and pulmonary disease also limited his work ability, and that Nickola also suffered from spasmodic, frenzied diarrhea. (Id. ¶¶ 13-15; D.E. 22 ¶¶ 14-16.) On or about December 23, 1999, Plaintiff filed his claim for benefits under the Plan. (D.E. 22 ¶ 12.)

  Dr. Slattery, in particular, had treated Nickola for some time prior to the November filing; in addition to assessing back pain since June 1998 (he was treating Nickola for degenerative changes of the cervical spine (D.E. 12 ¶ 17)), in August 1998 Dr. Slattery noted that Plaintiff was "using Vicodin four to five tables daily," and this Vicodin use was not impeding Plaintiff's ability to work. (D.E. 22 ¶ 22.) Apparently, however, by November 1999, Plaintiff's chronic pain from his back was sufficiently intense that Dr. Slattery increased Plaintiff's OxyContin*fn4 dose (seemingly from 80 mg/day to 120 mg/day), and continued the Vicodin for "breakthrough pain." (D.E. 12 ¶ 17; A.R. 247.) During this time period, it appears that Plaintiff's pulmonary problems (stemming largely, if not entirely, from his asbestosis) remained status quo and neither improved nor worsened.*fn5 (D.E. 22 ¶ 25.) At around the same time, Dr. Johnson noted that Nickola had been vomiting in the mornings and having intermittent diarrhea and constipation. (D.E. 12 ¶ 18.) As a consequence, he concluded that disability was appropriate, and that Nickola could work a sedentary job, although he would have to miss numerous days due to his various maladies. (Id.; D.E. 22 ¶ 35.)

  On February 22, 2000, CNA approved Nickola's application for LTD benefits, with a recognized disability date of November 6, 1999. (D.E. 12 ¶ 28; D.E. 22 ¶ 36.) Benefits became payable on February 4, 2000, after the expiration of a ninety-day elimination period. (D.E. 12 ¶ 28.)

  By late 2001, Dr. Johnson's treatment notes indicate Nickola was taking a wide variety of medicines to treat, among other things, pain, insomnia, and GI symptoms. (D.E. 12 ¶ 19.) Dr. Johnson also signed an Attending Physician's Statement showing that Dr. Johnson diagnosed Plaintiff with "(1) Chronic Diarrhea, (2) Cervical Radiculitis — Chronic; neck pain, (3) COPD [chronic obstructive pulmonary disease] — Pulmonary Fibrosis & asbestosis," and Dr. Johnson stated that Plaintiff's symptoms had not changed in the past three years. (D.E. 22 ¶ 38.) Dr. Johnson further noted that he "expect[ed] no improvement. No treatments (different from already tried) available." (Id.)

  On February 7, 2003, in response to an inquiry from CNA, Dr. Johnson completed a Functional Assessment Tool which indicated he did not believe Nickola would be capable of performing full-time work that was primarily seated in nature, but allowed the flexibility to stand when needed and required lifting less than ten pounds. (D.E. 22 ¶ 44; D.E. 12 ¶ 24.) On February 7, 2003, Dr. Johnson again examined Nickola and concluded that he continued to have severe abdominal and bowel issues, for which there had been no effective treatment. (D.E. 22 ¶ 45; D.E. 12 ¶ 25.) On May 9, 2003, Dr. Johnson again concluded that he believed Nickola was "permanently disabled" by his problems. (D.E. 22 ¶ 48.)

  In a May 16, 2003, letter to CNA's Rebecca Katz ("Katz"), Dr. Johnson again stated he did not think Nickola had improved and concluded that Nickola's "gastrointestinal problems cause unpredictable and intermittent diarrhea and vomiting. If he was to hold a job, I would expect he would miss probably every other day. . . . In addition, [Nickola] is on chronic narcotics on a daily basis. . . ." (D.E. 12 ¶ 27.) Furthermore, by 2003, Plaintiff's prescribed narcotics treatment had doubled from the level in 1999, in that he was taking 240 mg/day of OxyContin. (Id.) Dr. Johnson stated he would "not expect somebody that is taking 240 mg of OxyContin a day to be able to able to function normally or appropriately in any sort of job situation." (Id.) In sum, Dr. Johnson concluded that Nickola's medical and severe diarrhea problems would interfere "with virtually any job he might hold," such as security guard or customer support representative. (Id.) While the demands of the job (e.g., walking, not sitting) would preclude the former, the apparent justification for the latter stems from the likelihood that Nickola would, in Dr. Johnson's view at least, regularly miss substantial amounts of time on an unpredictable but recurrent basis.

  There is no evidence in the record that Dr. Johnson witnessed the sudden intestinal attacks; Defendant claims (and this is not substantially challenged by Plaintiff) that most of Dr. Johnson's statements in this regard were based on Nickola's reporting of his symptoms to Dr. Johnson. (D.E. 22 ¶ 54.) Nonetheless, as Plaintiff highlights, there is material third-party corroboration for Plaintiff's claims about his vomiting and spasmodic diarrhea. Specifically, his former boss, Daniel Baun, wrote Defendant to attest to Nickola's health problems, including having seen the regular, emergency, spasmodic diarrhea episodes. See A.R. 105 (Baun letter to CNA in conjunction with benefits appeals review process, in which Baun attests to having seen Nickola's "sudden and unpredictable needs of bathroom facilities, often interrupting in the middle of a sentence or discussions. These interruptions can last for five, ten or several minutes longer. And these are on good days. There are many times when he is virtually bed ridden or confined to a chair or even the bathroom for hours at a time. How is it possible for any employer to even consider hiring a person in this condition?"); see also A.R. 102-03 (Baun letter protesting Defendant's final denial of LTD benefits for Plaintiff and discussing various issues, including regular emergency diarrhea episodes).

  On April 30, 2003, CNA issued a determination that Nickola was no longer disabled and thus would be discontinuing his LTD benefits. (D.E. 12 ¶ 30.) The finding indicated that Nickola was able to fill other appropriate jobs, such as "Automotive Materials Dock Supervisor," "Customer Support Representative," and "Stationary Security Guard," and it included vocational assessment assertions offered by its claim representative, Ms. Rebecca Katz. (Id.) Nickola requested an appeal on May 21, 2003. (Id. ¶ 31.) On June 13, 2003, CNA advised Plaintiff that his file was being referred to a medical consultant for assessment and CNA further indicated that it would reinstate Plaintiff's benefits pending that review. (D.E. 22 ¶ 51.) On July 21, 2003, Dr. Eugene Truchelut ("Dr. Truchelut"), serving as a medical consultant to CNA, provided an initial report to Rebecca Katz. (D.E. 12 ¶ 38.) (Defendant apparently had not had a medical consultant review the file before it decided to reverse its prior disability determination and to conclude that continued LTD payments for Plaintiff were inappropriate.) Dr. Truchelut concluded that Nickola's pulmonary difficulties mandated that he not go above a sedentary exertional level and that his gastrointestinal symptoms would "not preclude each and every occupation" if a restroom "was close at hand." (Id.; D.E. 22 ¶ 52.) He found that "the information provided in the medical records supplied and reviewed above does not currently support the claimant's inability to perform full-time work if this was primarily seated with the flexibility to stand when needed, use a keyboard and mouse and required no lifting more than ten pounds." (D.E. 22 ¶ 52.) Two days later, after speaking with Dr. Johnson, Dr. Truchelut supplemented his report with more notes, but his ultimate conclusion (that Nickola was not entirely disabled) remained the same. (Id. ¶ 56.) After the supplement was filed, the Appeals Committee informed Plaintiff that CNA decided not to change its April 30 decision terminating payment of Nickola's LTD benefits. (D.E. 12 ¶ 34; D.E. 22 ¶ 58.) In late November 2003, Plaintiff filed this action claiming wrongful denial/termination of benefits under ERISA. (D.E. 22 ¶ 59.)

  II. STANDARDS OF REVIEW

  A. ERISA

  Under ERISA, the judicial standard of review for benefit determinations hinges on whether the plan administrator or fiduciary has been granted discretion in making the benefit determination. See, e.g., Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). As a default, courts review benefit determinations under ERISA through a de novo standard. Id. However, if the administrator or fiduciary is given discretionary authority to determine eligibility for benefits, the decision will be reviewed under the deferential arbitrary and capricious standard. Hackett v. Xerox Corp. Long-Term Disability Income Plan, 315 F.3d 771, 773 (7th Cir. 2003). For a plan to convey enough discretion to a plan administrator to trigger the more administrator-friendly review, the plan "`must contain language that . . . indicates with the requisite if minimum clarity ...


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