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April 2010

Alfredo Leon Orea v. FS San Francisco Employment, Inc.'s Long Term De Novo Disability Plan ? New Evidence Admissible In Review Of Benefits Determination Under ERISA

Plaintiff Entitled To Discovery Where Additional Evidence Was Permitted On De Novo Review Of The Disability Benefit Decision

(March 8, 2010) 2010 U.S. Dist. LEXIS 20564

Defendant FS San Francisco Employment, Inc.'s Long Term Disability Plan (the "Plan") and real party in interest, Life Insurance Company of North America ("LINA"), moved for summary judgment that Plaintiff Alfredo Leon Orea ("Orea") was not entitled to further long-term disability benefits.  Specifically, the Plan and LINA argued Orea was not "disabled as to any occupation" as the policy required. 

In denying LINA and the Plan's summary judgment motion, Judge William Alsup reviewed the administrative record.  Judge Alsup observed Orea had become disabled on January 22, 2006, and in a report five days later chiropractor Nathan Morello concluded Orea was "total temporary disabled." 
The LINA policy stated, in pertinent part, a participant was disabled if, for the first 24 months that he or she claimed benefits, he or she was unable to perform the material duties of the occupation he or she was performing at the time the disability began.  LINA approved Orea's claim under this definition.
Chiropractor Morello continued to treat Orea and completed reports stating Orea was unable to perform his regular work as a security guard as a result of his injury.  Orthopedic surgeon Naraghi concluded in November 2007 that Orea's condition had deteriorated.  Chiropractor Rhodes-Jones also concluded, in July 2008, that Orea was restricted in his ability to perform sedentary work.  Notes from the San Francisco Veterans Affairs Medical Center noted Orea's depression and reports of "pain with 'everything.'"

In July 2008, after paying 24 months of benefits, LINA advised Orea that the policy's more stringent definition of disability now applied to his claim.  After 24 months, an employee was considered disabled if he was unable to perform the material duties of any occupation for which he was qualified.

In September 2008, neurosurgeon Dell performed an independent medical exam of Orea, and concluded Orea could perform full-time sedentary work.  Orea reported in a disability questionnaire that he could not work in any occupation.  LINA determined Orea did not satisfy the more stringent definition of disability, and terminated his benefits. 

Orea filed an administrative appeal.  LINA had Dr. Cowl perform a peer review of the medical records.  As part of his record review, Dr. Cowl spoke with chiropractor Jones who said Orea "would likely be able to do sedentary work with specific work restrictions."  Based in part on this report, LINA upheld the claim denial and Orea filed suit.

Moving for summary judgment, LINA and the Plan argued the evidence was undisputed Orea was not disabled under the "any occupation" definition.  Rejecting this conclusion, Judge Alsup found LINA and the Plan misrepresented the record by stating that chiropractor Morello had concluded Orea could work with certain restrictions when in fact Morello wrote that Orea could not return to work even with accommodations. 

Judge Alsup also challenged LINA and the Plan's statement that surgeon Naraghi's opinion was "consistent" with the opinion Orea could perform sedentary work.  In fact, Naraghi had concluded Orea likely could not return to gainful employment.

Finally, Judge Alsup observed that LINA and the Plan's motion relied on Dr. Cowl's report that described chiropractor Jones as saying Orea would likely be able to do sedentary work with reasonable work restrictions.  In his declaration submitted in opposition to the motion, Jones denied making such a statement, and stated Orea was unable to work in any occupation.

LINA and the Plan argued the Jones declaration should not be considered because it was not submitted to the plan administrator prior to its decision.  Rejecting this contention, Judge Alsup cited Mongeluzo v. Baxter Travenol Long Term Disability Benefit Plan, 46 F.3d 938, 943-44 (9th Cir. 1995), finding new evidence may be considered "when circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision." Jones's declaration "raise[d] a concern about the adequacy of the administrative record," so Judge Alsup considered the declaration. 

Judge Alsup denied the Plan and LINA's summary judgment motion because the administrative record "does not unequivocally support their position" that Orea was precluded from any gainful employment. 

Without any real explanation, Judge Alsup held that Orea was entitled to additional discovery.  LINA and the Plan argued the Court should determine what additional information was needed to perform an adequate de novo review, and then order the parties to provide that limited information, citing Walker v. American Home Shield Long Term Disability Plan, 180 F.3d 1065, 1068 (9th Cir. 1999).

Judge Alsup held Walker did not "mandate . . . the limitation on additional discovery to that ordered by the Court," and granted Orea's demand for the summary plan description, the Plan itself, and LINA's claims manual.  Judge Alsup also allowed Orea to take depositions of neurosurgeon Dell, and one representative of LINA and MES (the third party record review company LINA used to outsource Orea's claim record review) about how LINA had selected Dell given that Dell's medical license had been revoked in three other states.  Judge Alsup also permitted Orea to submit evidence concerning the Social Security Administration's determination of his disability.  Judge Alsup provided no concrete explanation as to how this additional evidence would explain whether Orea was disabled under the Plan.

This opinion is not final. It may be withdrawn from publication, modified on rehearing, or review may be granted by the 9th Circuit Court of Appeals. These events would render the opinion unavailable for use as legal authority.

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