Urso v. Prudential Ins. Co. of America

557 F.Supp.2d 208

Wayne R. URSO v. PRUDENTIAL INSURANCE COMPANY OF AMERICA.

Civil No. 06-cv-346-JM.

United States District Court, D. New Hampshire.

April 24, 2008.

Robert A. Shaines, Shaines & McEachern PA, Portsmouth, NH, for Wayne R. Urso.

William T. Bogaert, Christopher P. Flanagan, Wilson Elser Moskowitz Edelman & Dicker, Boston, MA, for Prudential Insurance Company of America.

ORDER

JAMES R. MUIRHEAD, United States Magistrate Judge.

Plaintiff Wayne Urso successfully brought this action, pursuant to 29 U.S.C. §§ 1001, et seq. ("ERISA"), to enforce payment of long-term disability benefits due under an employee welfare benefit plan ("Plan") offered by his former employer, Comsys Information Technology Services, Inc. ("Comsys") and insured by defendant, The Prudential Insurance Company of America ("Prudential"). Before the court are two motions filed by Urso, one for damages, interest and costs (document no. 22), and one for attorney's fees (document no. 27). Prudential objects to both motions (document nos. 24 and 30, respectively). Because I found that Urso was disabled within the meaning of the Plan, he is entitled to long-term disability ("LTD") benefits. The parties dispute the amount of the benefits award, whether Urso is entitled, to prejudgment interest, and whether Urso may be reimbursed for his attorney's fees and costs. As explained in detail below, both of Urso's motions are granted.

1. Motion for Damages, Interest and Costs (doc. no. 22)

Urso claims he is entitled to receive $165,032.37 from Prudential, which represents the sum total of his damages ($152,640.26), interest thereon ($7,922.56) and the costs associated with obtaining the benefits at issue here ($4,469.55). Urso also asserts that he is entitled to continue to receive monthly benefit payments until he reaches retirement, 156 months from now, in 2021. Prudential disagrees with the monthly benefit amount Urso used to calculate the damages award, arguing the wrong salary figure was used. Prudential also argues that Urso is not entitled to either interest or future benefits payments as a matter of law. Prudential asserts that Urso's LTD benefits award must be limited to the period from April 17, 2000, when Urso first became entitled to LTD benefits, to January 31, 2008, the last day of the month in which liability was determined.

(a) Damages Calculation

How much Urso is entitled to receive in damages is governed by the terms of the Plan. See Balestracci v. NSTAR Elec. & Gas Corp., 449 F.3d 224, 230 (1st Cir.2006) (applying "common sense principles of contract interpretation" to ERISA plans) (internal quotation omitted); Orndorf v. Paul Revere Life Ins. Co., 404 F.3d 510, 517-18 (1st Cir.2005) (explaining de novo standard of review in ERISA cases). The Plan provides a four-step process to calculate benefit payments if a claimant, like Urso, is both disabled and not working. See Administrative Record WU0022 (hereinafter referred to simply by the Bates-numbered page).¹ The first step requires a claimant's monthly earnings to be multiplied by 60%, to determine the gross amount of any potential LTD benefit payment. The next three steps require that gross amount to be capped, and then reduced by "any deductible sources of income," which includes social security disability payments and worker's compensation payments, to arrive at the actual monthly payment. The threshold issue in determining the benefits award, therefore, is what the "monthly earnings" are.

The Plan defines "monthly earnings" as: "your average months Base Pay and Commissions during the 3 month period prior to your date of disability. It does not include income received from bonuses, overtime pay, any other extra compensation, or income received from sources other than your Employer." WU0023. Critical to this definition is the onset "date of disability," because the Plan requires the average salary for the three months before a claimant becomes disabled to be the "monthly earnings" used to determine the LTD benefits award.²

The parties dispute what period of time constitutes the "3 month period prior to your date of disability." Prudential argues Urso became disabled on January 18, 2000, when he stopped working at Comsys and filed his claim for LTD benefits, so the relevant time period is October—December, 1999. Urso argues he was already disabled in 1998 or 1999, as evidenced by his medical records and his reduced work load and salary in 1999, rendering the three months when he last worked on a full-time basis the relevant time period. Although the record shows that Urso first applied for LTD benefits when he stopped working on January 18, 2000, neither the date of his application nor the date he stopped working is the definitive date for purposes of calculating Urso's benefits award. The critical date in determining a benefits award is when the participant becomes disabled, not when the claimant stops working^ because the Plan provides for benefits payments regardless of whether or not a claimant is working, as long as the claimant is disabled. See WU0023 (formula for calculating benefits if you work while disabled).

The Plan defines when a participant becomes disabled, as when Prudential determines that:

you are unable to perform the material and substantial duties of your regular occupation due to your sickness or injury; and

you have a 20% or more loss in your indexed monthly earnings due to that sickness or injury.

WU0021 (emphasis in original). The Plan defines "material and substantial duties" to be "duties that are normally required for the performance of your regular occupation, and cannot be reasonably omitted or modified," except that if the job regularly requires more than 40 hours per week, Prudential may consider a claimant still "able to perform that requirement" so long as the claimant retains the capacity to work 40 hours per week, id.; in other words, the "material and substantial duties" of a job are still being performed even if a claimant, who previously worked more than 40 hours per week, can still perform those duties but limits his work to a regular full-time schedule of 40 hours per week. This definition of disability has both an occupational component, the inability to continue performing the material and substantial duties of one's regular job, and an economic component, the loss of at least 20% of one's income. A claimant is not disabled unless he satisfies both criteria.

After carefully reviewing the record, I conclude that the onset date for Urso's disability was April 1, 1999, making the relevant 3 month period of "average months Base Pay and Commissions" January—March 1999. In April 1999, Urso was unable to perform the material and substantial duties of his regular occupation, and he sustained a 25% reduction in pay, rendering him disabled as defined by the Plan. Several factors support this conclusion.

First, the undisputed evidence shows that Urso was diagnosed with thoracic outlet syndrome on July 2, 1998. WU0111 (notes from Dr. William Patterson). On September 10, 1998, Urso's application for "Airman Medical Certificate" was denied, because he did not meet the prescribed medical standards. See WU0188³. As a result of his loss of certification, Urso was "grounded," which prevented him from continuing his work as a project-based software engineer and computer scientist on assignment with the Massachusetts Institute of Technology ("MIT"), which he had been doing for several years. See WU0187LD-LE; WU0187YE-YF. Because of his medical issues, Urso could no longer work in the confined spaces of bunkers and airplanes as he had done previously when at a project site, but was required to work in an office on restricted duty. See PL's M. for Damages, Ex. 4 (explaining Urso was required to have the medical certification as a condition of his employment as a computer consultant in aviation systems); see also WU0187YF; WU0187YJ. Although Urso had not wanted his injuries to inhibit his ability to perform his job, see Pl.'s M. for Damages, Ex. 6 (Urso's January 1999 letter stating he was "not looking for a reduction in workload, or a change in responsibilities, or any extended time off), he continued to suffer from physical ailments related to his computer work that required him to reduce his work load in April 1999 to only 6 hours per day. See Pl.'s M. for Damages, Ex. 1 (doctor's "Authorization for Absence" to "avoid aggravation of his condition"); see also WU0187YK. That reduced work day continued through the end of 1999 until he eventually had to stop work completely on January 18, 2000.

These facts demonstrate that Urso first became disabled when he reduced his work load to 6 hours per day in April 1999. In late 1998 and early 1999, Urso already had been forced to stop performing the "material and substantial duties" that were normally required in his "regular occupation" as a computer software engineer on special projects with MIT, because the loss of his Airmen Medical Certification had prevented him from continuing in that capacity. While the loss of an occupational license is not "in itself proof of disability, see WU0021, the fact that the Plan specifically addresses such a loss indicates the significance of licensing in performing an occupation and suggests the loss is a factor to be considered in determining when a claimant becomes disabled. It was not until April 1999, however, when Urso's work day was reduced by 25% from a standard 8 hour day to 6 hours per day, and his salary was proportionately reduced as well, that he satisfied the second component of the Plan's definition of disability by having "a 20% or more loss in your indexed monthly earnings due to that sickness." See WU0021; see also WU0200-02 (printout of Urso's "Payroll Detail earnings" for 1999).

Second, the plain language of the Plan reflects a broad concept of "disability," to encompass both partial and total disability, as well as temporary and...