Metropolitan Life Ins. Co. v. Socia

16 F.Supp.2d 66

METROPOLITAN LIFE INSURANCE COMPANY, Plaintiff, v. Nancy SOCIA, Defendant.

Civil Action No. 97-11721-WGY.

United States District Court, D. Massachusetts.

July 10, 1998.

James M. Campbell, Campbell, Campbell & Edwards, Boston, MA, for Plaintiffs.

James A. Cutelis, Lowell, MA, James J. Ciapciak, Duggan, Caccavaro & Ciapciak, Norwood, MA, for Defendants.

MEMORANDUM AND ORDER

YOUNG, District Judge.

The Plaintiff, Metropolitan Life Insurance Company ("MetLife"), is the underwriter for the Raytheon Long Term Disability Plan (the "Plan"), an employee benefit plan governed by ERISA, 29 U.S.C. §§ 1001-1461. The Defendant, Nancy Socia, was a Plan participant and beneficiary, and began receiving long-term disability benefits effective in November, 1992. MetLife alleges that Socia collected $17,735.31 worth of excess benefits, contrary to the terms of the Plan, and brings this suit under 29 U.S.C. § 1132(a)(3) to enforce the terms of the Plan and to collect the remaining amount of the overpayment, some $14,742.66. Socia denies liability for the alleged overpayments, and counterclaims for retroactive reinstatement of benefits totaling $18,890.04 which she maintains were terminated wrongfully in November 1994. She also requests prospective reinstatement of her benefit payments effective November 1997. The parties filed cross motions for summary judgment.

This case raises interesting questions regarding the scope of relief available to ERISA fiduciaries against beneficiaries — questions that have been resolved in conflicting ways among the circuits and present issues of first impression in this circuit. This Court concludes that MetLife may recover some part of its overpayments, but that as to the better part of the sum ERISA simply does not afford a remedy.

BACKGROUND

Nancy Socia was employed as a wire assembler at Raytheon until July 6, 1992, about which time she was diagnosed with fatty liver, gallstones with colic, and depression, and tested positive for HIV. Socia filed for disability benefits under the Plan, her claim was approved, and she began to receive biweekly benefits in the amount of $744.80 effective November 1992.

A. The Plan Overpayments

Under the terms of the Plan, benefits are to be reduced by the amount of any other disability benefits received by the beneficiary, including any Social Security disability insurance benefits for which the beneficiary may be eligible. The Plan provides that if benefits are paid that are found later to have been excessive, the Plan has a right to a refund from the beneficiary. Specifically, the Plan states:

You must give us prompt notice and also submit appropriate written prior notice to us if [sic]:

(a) an award; or

(b) a settlement; or

(c) a compromise; or

(d) any other determination;

which results or will result in payment or entitlement to any amounts which are derived from a source listed in the Table in part (2).

When we receive any such notice and proof or otherwise learn of such award, settlement, compromise or determination, we will compute:

(a) the amount of your future Bi-Weekly Benefits in accordance with the provisions of this subsection A; and

(b) the amount of Adjusted Bi-Weekly Benefits, if any, for any period for which Bi-Weekly Benefits have already been paid or credited to you before the date that we receive such notice and proof or otherwise learn of such award, settlement, compromise or determination.

. . . . .

If we pay Long Term Disability Benefits to you, and it is found that we paid more Long Term Disability Benefits to you than we should have paid, we will have the right to a refund from you. The amount of the refund is the difference between:

(a) the amount of Long Term Disability Benefits paid by us; and

(b) the amound of Long Term Disability Benefits which should have been paid by us.

Reytheon Employees Disability Trust Bi-Weekly Benefits Plan, 6-7, 10.

MetLife notified Socia in April of 1993 that she should apply for Social Security benefits, and that any retroactive award could result in an overpayment of Plan benefits, which would have to be refunded to the Plan. In December 1993, MetLife notified Socia that it had not received any confirmation of her application or eligibility for Social Security benefits. MetLife warned that it would estimate the amount of benefits to which she was entitled, and reduce her Plan benefit payments by the estimated amount if she did not respond or apply for Social Security benefits. When Socia did not respond, MetLife began in March 1994 to reduce her monthly benefits by $726.00. In June, MetLife learned that Socia had been awarded Social Security benefits, including a retroactive lump sum payment, and revised its adjustment to reflect a $726.00 monthly reduction for Primary benefits and a $363.00 monthly reduction for Family benefits, both effective February 1993. As a result, MetLife calculated that Socia was entitled to a bi-weekly payment of $242.18, and that she was obligated to refund $17,735.31 to the Plan. By applying Socia's remaining bi-weekly benefits to the outstanding amount of the overpayment, MetLife reduced the amount of the debt to $14,724.66 before terminating benefits in November 1994.

B. The Termination of Benefits

Following the award of benefits effective November 1992, MetLife solicited and received a number of statements from physicians evaluating Socia's functional capacity. Although at least one doctor found Socia "totally disabled" within the meaning of the Plan, at least one other doctor subsequently disagreed, concluding that she could resume work anytime. Based on that evaluation, MetLife informed Socia in September that it no longer considered her eligible for benefits and would terminate her claim effective October 1, 1993.

Socia asked for a review of this decision. Throughout October, November, and December 1993, Socia submitted physicians' evaluations in response to repeated requests by MetLife. On October 11, 1993 the company informed Socia that her benefits were reinstated but then on November 11, 1993 without explanation informed Socia that it had insufficient medical data on file. A subsequent examination performed in February 1994 again concluded that Socia was not disabled and that she could return to work. MetLife then requested additional supplementation in two identical letters dated March 30 and May 19, 1994. Receiving no response, MetLife again threatened termination of benefits in an August 1994 letter, and terminated benefits in September.

Socia again sought review. In response to further medical documentation, MetLife reinstated benefits in November 1994, but requested additional information. Finally in a January 1995 letter, MetLife informed Socia that benefits were terminated as of November 1994. Socia apparently has not responded to that action, nor has she sought further review of her claim.

ANALYSIS

Summary judgment is appropriate if the moving party makes a showing on the basis of the pleadings and other materials that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as matter of law. Fed.R.Civ.P. 56(c). The burden is on the non-moving party "to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The cross motions for summary judgment present two issues. First, were Socia's benefits wrongfully terminated? Second, can MetLife maintain an action to recover the alleged overpayments? The first issue is the simpler.

A. Standard for Reviewing the Decision of MetLife

"A denial of benefits challenged under section 1132(a)(1)(b) is reviewed under a de novo standard unless the benefit plan under which benefits are claimed gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). If the plan does afford discretionary authority, the standard of review is whether the ERISA out-of-court decision maker's denial of benefits was "arbitrary and capricious" See id.; Recupero v. New England Tel. & Tel. Co., 118 F.3d 820, 827 (1st Cir.1997).

In this case, MetLife is vested with discretionary authority to deny benefits.¹ The plan provides that it may ask for proof of disability "as often as we reasonably choose," and that "all proof must be satisfactory to us." See Raytheon Employees Disability Trust Bi-Weekly Benefits Plan p. 7, Tab B of MetLife's Motion for Summ. Judgment (hereinafter "Plan Provisions"). The terms "we" and "us" refer to MetLife. Id. at 9. Similar language has been held by a court in this District interpreting another of MetLife's policies to discretionary authority directly in MetLife. See Guarino, 915 F.Supp. at 444. This Court therefore reviews MetLife's eligibility determination according to an arbitrary and capricious standard.

B. Termination of Benefits

Socia's argument that MetLife's determination was arbitrary and capricious is based on the contention that MetLife demanded too frequent submissions of medical evidence and eventually simply exhausted Socia's will to pursue her claim. This argument overlooks the fact that the evidence submitted by Socia was internally contradictory. The initial physician's evaluation pronounced her disabled, but subsequent examinations found little or no limitation in her ability to return to work. Even if repeated and frequent requests for documentation could be considered unreasonable or abusive under other circumstances, a point with the Court does not address, this was not a case — as Socia contends — of redundant and unnecessary production of the same medical evidence.

Moreover, in November 1994, Socia was required to substantiate a significantly...