Landry v. Metro. Life Ins. Co.

THOMAS LANDRY, Plaintiff, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant.

19 Civ. 3385 (KPF)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

March 5, 2021

OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge:

Plaintiff Thomas Landry brings this action pursuant to Section 502 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(b), to obtain judicial review of the calculation of the long term disability ("LTD") benefits to which he is entitled under the employee benefits plan (the "Plan") of his former employer, Baker Hughes, Inc. Defendant Metropolitan Life Insurance Company ("MetLife" or "Defendant") is the Claims Administrator of the Plan. Plaintiff has received monthly LTD benefits since September 2015, but in an amount substantially less than what he believes he is owed. He now seeks recoupment of past benefits and adjustment of his benefits going forward. In the alternative, Plaintiff asks that the matter be remanded to MetLife for reconsideration of his benefits calculation. MetLife, in response, contends that Plaintiff's claim is barred by a contractual three-year suit limitation provision and that, even if not barred, Plaintiff's claim should not succeed because MetLife is entitled to deference in its benefits calculation and its calculation is supported by the administrative record. Now before the Court are the parties' cross-motions for summary judgment. For the reasons that follow, the Court denies Defendant's motion for summary judgment and grants Plaintiff's motion insofar as it remands the matter to MetLife for a full and fair review of Plaintiff's appeal, consistent with ERISA regulations regarding claims procedures, 29 C.F.R. § 2560.503-1.

BACKGROUND¹

A. Factual Background

1. Plaintiff's Claim for LTD Benefits

Prior to his disability, Plaintiff was an employee of Baker Hughes, working as an Oil Field Equipment Mechanic. (Pl. 56.1 ¶ 1). Plaintiff's last dayof work at Baker Hughes was March 3, 2015; his disability was registered as of March 4, 2015. (Def. 56.1 ¶ 16). Upon becoming disabled, Plaintiff received short term disability benefits administered on behalf of Baker Hughes by Sedgwick. (Id. at ¶¶ 2, 22; see also AR 11-54). Based on information provided by Baker Hughes, Sedgwick calculated Plaintiff's base wage for purposes of benefits calculation to be approximately $130,000 per year. (See AR 44-45).

Defendant acknowledged receipt of Plaintiff's LTD claim on July 13, 2015. (Def. 56.1 ¶ 14). Plaintiff submitted supporting documentation for his claim to MetLife on or about July 16, 2015. (Id. at ¶ 1; see also AR 83-108). By letter dated September 21, 2015, Defendant notified Plaintiff that his LTD benefits claim had been approved, with a date of disability of March 4, 2015, and an effective date of benefits of September 2, 2015. (Def. 56.1 ¶ 24; Pl. 56.1 ¶ 4).

2. The Terms of Baker Hughes' LTD Plan

The Plan grants to Baker Hughes as the LTD Plan Administrator, and to MetLife as Plan fiduciary in the role of Claims Administrator, discretionary authority to interpret the terms of the Plan and to determine eligibility for benefits. (Def. 56.1 ¶¶ 3, 7, 10). The Plan provides that "[a]ny interpretation or determination made pursuant to such discretionary authority shall be given full force and effect, unless it can be shown that the interpretation or determination was arbitrary and capricious." (Id. at ¶ 7). As ClaimsAdministrator, MetLife adjudicates LTD claims under the Plan, subject to the overall authority of Baker Hughes as Plan Administrator. (Id. at ¶¶ 9-10).

Under the Plan, a disabled employee who participates in the "Core Plan" for LTD income insurance is entitled to receive "50% of the first $30,000 of Your Predisability Earnings, subject to the INCOME WHICH WILL REDUCE YOUR DISABILITY BENEFIT section," up to a maximum of $15,000 per month. (Plan 18). An employee who participates in the "Buy Up Plan" is entitled to receive "60% of the first $25,000 of Your Predisability Earnings, subject to the INCOME WHICH WILL REDUCE YOUR DISABILITY BENEFIT section," up to a maximum monthly benefit of $15,000. (Id.). "Predisability Earnings" is defined as "gross salary or wages, as reported in the payroll system, that You were earning from the Policyholder as of Your last day of Active Work before Your disability began." (Id. at 22). The Plan specifies that "Predisability Earnings" includes:

• Field pay; and

• contributions You were making through a salary reduction agreement with the Policyholder to any of the following:

? an Internal Revenue Code (IRC) Section 401(k), 403(b) or 457 deferred compensation arrangement;

? an executive non-qualified deferred compensation arrangement; and

? Your fringe benefits under an IRC Section 125 plan.

The term does not include:

• commissions;

• awards and bonuses;

• overtime pay;

• car allowance;

• housing allowance;

• lead pay;

• cell pay;

• machine pay;

• shift differentials;

• the grant, award, sale, conversion and/or exercise of shares of stock or stock options;

• the Policyholder's contributions on Your behalf to any deferred compensation arrangement or pension plan; or

• any other compensation from the Policyholder specifically mentioned above.

(Id.). Income discussed in the "INCOME WHICH WILL REDUCE YOUR DISABILITY BENEFIT" section includes: disability or retirement benefits under the federal Social Security Act, Railroad Retirement Act, any state or public employee retirement or disability plan, or any pension or disability plan of any other nation or political subdivision thereof; any income received for disability or retirement under the Policyholder's Retirement Plan, to the extent that it can be attributed to the Policyholder's contributions; any income received for disability under a range of specified laws and programs; any income received from working while disabled, subject to the provisions of the "Rehabilitation Incentives" section of the Plan; and recovery amounts received for loss ofincome as a result of claims against a third party by judgment, settlement, or otherwise, including future earnings. (Id. at 35).

The Plan contemplates a binary decision regarding a claim: MetLife will either approve or deny the claim. (See Plan ERISA Information). In either case, the employee will receive written notice of MetLife's decision. (See id.). In the case of a denial in whole or in part, the notification is supposed to include:

the reason why your claim was denied and reference the specific Plan provision(s) on which the denial is based. If the claim is denied because MetLife did not receive sufficient information, the claims decision will describe the additional information needed and explain why such information is needed. Further, if an internal rule, protocol, guideline or other criteria was relied upon in making the denial, the claims decision will state the rule, protocol, guideline or other criteria or indicate that such rule, protocol, guideline or other criteria was relied upon and that you may request a copy free of charge.

(Id.).

To appeal a denial, an employee must submit a written appeal to MetLife within 180 days of receiving the denial notice and provide the employee name, name of the LTD plan, reference to the initial decision, an explanation of the reason(s) for the appeal, and additional documentation in support of the request. (Plan ERISA Information). The review on appeal is supposed to consider all information and documentation provided with the written appeal, "without regard to whether such information was submitted or considered in the initial determination," and the reviewer of the appeal will not be the same person or subordinate to the person who made the initial decision on the claim.(Id.). In response to an appeal, MetLife is supposed to provide a written notice of its decision within 45 days, with the possibility of extension for special circumstances. (Id.). If the decision on appeal is a denial, the notice will contain additional information regarding the basis for denial. (Id.).

Finally, the Plan provides that "[a] legal action on a claim may only be brought against [MetLife] during a certain period. This period begins 60 days after the date Proof [of claimant having satisfied the conditions and requirements for benefits] is filed and ends 3 years after the date such Proof is required." (Plan 44).²

3. Terms of the Summary Plan Description

At the time he applied for LTD benefits, Plaintiff possessed a copy of a document called the Baker Hughes Health & Welfare Summary Plan Description (the "SPD"). (Pl. 56.1 ¶ 11; Def. 56.1 Resp. ¶ 11). The SPD describes the various Baker Hughes Health & Welfare benefits plans, including the LTD benefits plan. (See generally SPD). The SPD indicates that "[t]he actual eligibility requirements, benefits, terms, conditions, limitations, and provisions that govern these plans are contained in the plan documents orgroup insurance contracts," and that "[i]n the case of any dispute, the information in the plan documents or contracts will prevail." (SPD Preamble).

The SPD purports to summarize the terms of the Plan's LTD disability benefits, including the difference between "core" and "buy-up" coverage, the cost of the plan, coverage and payment timelines, the schedule of benefits, incentives and limitations on benefits, and the claim filing and appeals processes. As relevant here, the SPD states that core coverage provides 50% of pre-disability earnings, and buy-up coverage provides 60% of pre-disability earnings. (SPD 176). In both cases, the maximum monthly benefit is $15,000. (Id.). Mirroring the Plan, the SPD defines "pre-disability earnings" as "gross salary or wages, as reported in the payroll system, that you were earning from Baker Hughes as of your last day of active work before your disability began." (Id.). It also lists other disability income benefits or sources of income that may reduce the LTD benefits an employee is entitled to receive from Baker Hughes...