Osbun v. Auburn Foundry, Inc.

293 F.Supp.2d 863

Ronald J. OSBUN, Plaintiff, v. AUBURN FOUNDRY, INC., and Auburn Foundry, Inc. Retirement Income Plan, Defendants.

No. 1:03-CV-063.

United States District Court, N.D. Indiana, Fort Wayne, Division.

October 28, 2003.

COPYRIGHT MATERIAL OMITTED

Christopher C. Myers, Christopher Myers and Associates, Fort Wayne, IN, for Plaintiff.

Douglas D. Powers, M. Kristin Glazner, Baker & Daniels — FW/IN, Fort Wayne, IN, for Defendant.

MEMORANDUM OF DECISION AND ORDER

COSBEY, United States Magistrate Judge.

I. INTRODUCTION

This matter is before the Court¹ on the parties' cross-motions for summary judgment. Defendants Auburn Foundry, Inc., and Auburn Foundry, Inc., Retirement Income Plan (collectively, "Auburn") filed their motion for summary judgment on May 30, 2003. Plaintiff Ronald J. Osbun ("Osbun") filed his response and cross-motion for summary judgment on September 5, 2003. Auburn filed its reply to Osbun's response and its response to Osbun's cross-motion on September 22, 2003. Osbun declined to file a reply, although he filed a brief statement of supplemental authority on September 29, 2003. The cross-motions are therefore ripe for review.

Osbun's claim is based on 29 U.S.C. § 1132, better known as § 502 of the Employee Retirement Income Security Act ("ERISA"). Osbun alleges that Auburn arbitrarily and capriciously terminated his long-term disability benefits and seeks to recover them under § 502(a)(1)(B).

The record consists only of the affidavit of Auburn's Benefits Manager, Lori Wenino ("Wenino").² There are several exhibits attached to the affidavit, which together comprise all relevant evidence available to Auburn when it made the decision to terminate Osbun's benefits.³

After examining the motions and the relevant law, the Court finds that Auburn's motion should be DENIED and Osbun's motion should be GRANTED.

II. FACTUAL BACKGROUND

For much of his life, Osbun has coped with a host of physical and mental infirmities: mild mental retardation, illiteracy, total blindness in his right eye, partial blindness in his left eye, total deafness in his right ear, and partial deafness in his left ear. (Exs.B, K.) In spite of these difficulties, he performed heavy physical labor at Auburn for roughly twenty years. (Ex. B.) However, his working days came to an end in 1990, when he sustained a back injury on the job. (Ex. B.) Upon examination after the accident, Dr. Stephen Ribaudo ("Dr.Ribaudo")⁴ determined that Osbun had "degenerative lumbar disc disease causing lower back pain," and that due to this and Osbun's other maladies, Osbun was "totally disabled and [unable to engage] in gainful employment." (Ex. B.) Based on this determination and the provisions of Auburn's Retirement Income Plan ("the Plan"), particularly § 4.05(b),⁵ Auburn began paying disability benefits to Osbun. (Aff. ¶ 7.)

The Plan provides that a participant receiving disability benefits "may be required by the Plan Administrator to provide satisfactory proof of his continued disability." (Ex. A. § 4.05(d).) Accordingly, at the request of Auburn, Dr. Kain Oo ("Dr.Oo") reexamined Osbun on July 21, 2000. (Ex. C.) Dr. Oo determined that Osbun remained permanently and totally disabled and could not return to work. (Id.) Dr. Oo also catalogued Osbun's physical capabilities, finding that Osbun could not stand or walk for any length of time, lift more than five pounds, drive, climb, bend, stoop, squat, or push and pull with his arms, legs, or body. (Id.) After this examination, Auburn continued to pay disability benefits to Osbun. (See Aff. ¶ 8.)

Roughly two months later, Dr. Oo called Leisa Fluke ("Fluke"), Auburn's Benefits Coordinator, to report that she observed Osbun when she chanced upon him at a local gas station. (Ex. D.) According to Fluke,⁶ Dr. Oo expressed concern that Osbun might have misrepresented his physical condition to her at the July examination; in Dr. Oo's office, Osbun had been "walking with a [cane] and bent over," but at the gas station Osbun "was walking fine and without the assistance of his [cane]." (Id.) Dr. Oo "was concerned and wanted to bring this to [Auburn's] attention and ... did not want to get herself into any trouble for not reporting it." (Id.)

As a result of Dr. Oo's phone call, Auburn hired an investigator to perform video surveillance on Osbun on May 12 and 13, 2001. (Aff. ¶ 10; Exs. E, F.) Source Investigations, Inc., produced a five-page surveillance report and roughly 1.5 hours of videotape from its observations of Osbun. (See Exs. E, F.) The videotape depicts Osbun performing several physical tasks, including: (1) driving a vehicle; (2) carrying what appears to be a full five-gallon water jug; (3) picking up two bricks from the ground; (4) picking up two children's tricycles from the ground; (5) attaching a trailer to a vehicle; and (6) handwashing and vacuuming two vehicles. (Exs.E, F.)

On June 21, 2001, Auburn terminated Osbun's disability benefits, as it no longer considered him "totally disabled." (Ex. G.) Auburn cited only the video surveillance tape as evidence that Osbun no longer met the Plan's definition of "totally disabled," explaining that "[t]he activities which were performed [on the videotape] were extensive and not those which a permanently and totally disabled person would be able to perform." (Id.) Accordingly, Auburn "determined that [Osbun is] not unable to engage in any occupation or employment." (Id.)

On August 10, 2001, Osbun sent Auburn a "Request for a Full and Fair Plan Review" arguing for reinstatement of his benefits. (Ex. J.) Osbun also enclosed several pieces of evidence which he believed supported a finding of continued disability. First, he submitted a medical report prepared by Dr. Ribaudo on July 5, 2001, which concluded that he remained totally and permanently disabled. (Ex. K.) Dr. Ribaudo opined that Osbun's condition was "actually worse than the last time he was seen" in 1990, as his litany of medical woes had since expanded to include (1) "ASHD ... /post myocardial infarction,"⁷ (2) thyroid insufficiency; (3) high blood pressure; and (4) arthritis in his left hip. (Id.) Second, Osbun submitted the signatures of five people who claimed to have seen him walking with a cane and a considerable limp. (Ex. L.) Finally, Osbun included a videotape of his own, which included footage of him walking with a cane and then limping slowly without a cane. (Ex. M.)

Auburn was not swayed by Osbun's new evidence, and it denied his appeal on October 5, 2001. (Ex. N.) In a letter explaining the decision, Auburn cited its surveillance video as "[t]he most compelling evidence that Mr. Osbun is no longer disabled." (Id. at 2.) Auburn claimed that "the ease" with which Osbun performed the physical tasks depicted in the surveillance video provided "a strong indication that he can perform substantial gainful activity." (Id.) Auburn also cited Dr. Oo's phone call, saying that she "observed behavior ... inconsistent both with his behavior during his examination as well as, in her opinion, an ongoing disability status." (Id.) Auburn inferred from this evidence that Osbun had "not been truthful in presenting his condition to the doctors that have examined him," and consequently it "discounted significantly the weight accorded the reports of Drs. Ribaudo and Oo." (Id.) For these reasons, Auburn refused to reinstate Osbun's benefits.

III. STANDARD OF REVIEW

Summary judgment may be granted only if there are no disputed genuine issues of material fact. Payne v. Pauley, 337 F.3d 767, 770 (7th Cir.2003). When ruling on a motion for summary judgment, a court "may not make credibility determinations, weigh the evidence, or decide which inferences to draw from the facts; these are jobs for a factfinder." Id. The Court's only task in ruling on a motion for summary judgment is "to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial." Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir.1994). If the evidence is such that a reasonable jury could return a verdict in favor of the non-moving party, summary judgment may not be granted. Payne, 337 F.3d at 770. A court must construe the record in the light most favorable to the nonmoving party and avoid "the temptation to decide which party's version of the facts is more likely true[,]" as "summary judgment cannot be used to resolve swearing contests between litigants." Id. However, "a party opposing summary judgment may not rest on the pleadings, but must affirmatively demonstrate that there is a genuine issue of material fact for trial." Id. at 771.

IV. DISCUSSION

1. Auburn's Decision Cannot Be Overturned Unless It Was Arbitrary and Capricious

Osbun's claim arises under ERISA § 502(a)(1)(B), which enables a "participant"⁸ in an employee benefits plan "to recover benefits due to him under the terms of the plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan."⁹ When a plaintiff seeks benefits under § 502(a)(1)(B), the defendant's decision to deny or terminate benefits "is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 112, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). However, where the plan confers discretionary power on an administrator or fiduciary, "the proper standard of review is the deferential `arbitrary and capricious' one." Ramsey v. Hercules Inc., 77 F.3d 199, 202 (7th Cir. 1996).

Much ink has been spilled debating what plan language confers the necessary discretion on administrators to trigger deferential review. See, e.g., Herzberger v. Standard Ins. Co., 205 F.3d 327, 329 (7th Cir.2000) (collecting cases). Accordingly, the Seventh Circuit specified the following "safe harbor" language: ...