CHAVEZ v. STANDARD INSURANCE CO (2020)

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Pursuant to Federal Rule of Civil Procedure 52, this constitutes the Court's findings of fact and conclusions of law.¹

I. Background

A. Plan Background

Plaintiff Chavez was, at all pertinent times, an employee of Nix Door & Hardware (“Nix”). Nix provided an employee welfare benefit plan that provided disability benefits to eligible employees (the “LTD Plan”). The LTD Plan was insured by a group long term disability insurance policy (the “Policy”) issued by Defendant Standard Insurance Company (“Standard”). The administrator of the LTD plan was Nix Door & Hardware, Inc. Standard was the Claims Administrator of the LTD Plan.

The Policy limits benefits to 12 months during the beneficiary's entire lifetime for a disability “caused or contributed to” by “Other Limited Conditions.” The Policy defined that as follows:

Other Limited Conditions means chronic fatigue conditions (such as chronic fatigue syndrome, chronic fatigue immunodeficiency syndrome, post viral syndrome, limbic encephalopathy, Epstein-Barr virus infection, herpesvirus type 6 infection, or myalgic encephalomyelitis), any allergy or sensitivity to chemicals or the environment (such as environmental allergies, sick building syndrome, multiple chemical sensitivity syndrome or chronic toxic encephalopathy), chronic pain conditions (such as fibromyalgia, reflex sympathetic dystrophy or myofascial pain), carpal tunnel or repetitive motion syndrome, temporomandibular joint disorder, craniomandibular joint disorder, arthritis, diseases or disorders of the cervical thoracic or lumbosacral back and its surrounding soft tissue, and sprains or strains of joints or muscles.

The Policy also limits the OLC Limitation as follows:

Other Limited Conditions does not include neoplastic diseases, neurologic diseases, endocrine diseases, hematologic diseases, asthma, allergy-induced reactive lung disease, tumors, malignancies, or vascular malformations, demyelinating diseases, lupus, rheumatoid or psoriatic arthritis, herniated discs with neurological abnormalities that are documented by electromyogram and computerized tomography or magnetic resonance imaging, scoliosis, radiculopathies that are documented by electromyogram, spondylolisthesis, grade II or higher, myelopathies and myelitis, traumatic spinal cord necrosis, osteoporosis, discitis, Paget's disease.

B. Chavez's Health Issues

Beginning around May 2016, Chavez experienced pain in his right hand. Although initially treated with medication, in early June, Chavez was treated with surgical incision and drainage, which revealed an infection. When the infection persisted, Chavez was again surgically treated in mid-June, which showed the infection had spread to his wrist. It appears that Chavez had an additional incision and drainage in late July. In late November, Chavez again had surgery to remove the scaphoid bone from Chavez's right wrist and fuse the wrist. In early March 2017, Chavez again had surgery to remove the surgical screw used to fuse the wrist. His postoperative diagnoses were secondary osteoarthritis and pyrogenic arthritis.

In March 2017, Chavez fell and landed on his right shoulder. He sought medical care in April and was prescribed Naprosyn. Around early May, Chavez was in a motor vehicle accident in which his right shoulder hit the steering wheel. Chavez sought further medical care and had an MRI in early June. The MRI revealed full-thickness and partial tearing of tendons in his right rotator cuff. In late March 2018, Chavez had surgery to attempt to repair his rotator cuff; due to the extent of the damage to his tendons, the surgery was only of partial benefit.

Chavez was diagnosed with carpal tunnel syndrome in July 2016. During the same surgery he had for his wrist infection in July 2016, the surgeon performed a right carpal tunnel release procedure. Chavez received a steroid injection in October 2016 to treat inflammation associated with his right carpal tunnel syndrome. Afterwards, his right carpal tunnel was asymptomatic and did not require further treatment.

C. Chavez's LTD Claim

Chavez initially filed an LTD claim in June 2016 relating to his right wrist. Standard began paying Chavez LTD benefits beginning September 2016. In July 2017, Standard requested a “Medical Referral,” which was directed to its consultant, Dr. Mandiberg. Dr. Mandiberg opined that Chavez's right hand and wrist problems were arthritic and that his rotator cuff problems were sprains or strains of joints or muscles. By letter dated February 12, 2018, Standard terminated Chavez's LTD benefits. Chavez appealed that decision through Standard's administrative processes, to no avail. This litigation followed.

II. Basic ERISA Legal Principles

This is an action for benefits under the Employee Retirement Income Security Act of 1974 (“ERISA”). 29 U.S.C. § 1132(a)(1)(B). The issue before the Court is whether Chavez's medical conditions meet the definition of “Other Limited Conditions” in the summary plan description (“SPD”) and caused his disability. The parties agree that the Court is to decide this question de novo on the administrative record below, with limited supplementation. See Ariana M. v. Humana Health Plan of Texas, Inc., 884 F.3d 246 (5th Cir. 2018) (en banc).

An ERISA SPD “shall be written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan.” 29 U.S.C. § 1022(a). The SPD must include “a statement clearly identifying circumstances which may result in ․ loss, forfeiture, suspension ․ of any benefits ․” 29 C.F.R. § 2520.102-3(l). The Fifth Circuit has held that

[any] ambiguity in the summary plan description must be resolved in favor of the employee and made binding against the drafter. Any burden of uncertainty created by careless or inaccurate drafting of the summary must be placed on those who do the drafting, and who are most able to bear that burden, and not on the individual employee, who is powerless to affect the drafting of the summary or the policy and ill equipped to bear the financial hardship that might result from a misleading or confusing document. Accuracy is not a lot to ask.

Hansen v. Cont'l Ins. Co., 940 F.2d 971, 982 (5th Cir. 1991), abrogated on other grounds by CIGNA Corp. v. Amara, 563 U.S. 421, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011).

Two other legal points bear mentioning. Standard acknowledges that it has the burden of proving that Chavez's benefits were properly limited under the Other Limited Condition limitation. See Standard's Trial Brief at 13 & n.13 [75] (citing Caffey v. Unum Life Ins. Co., 302 F.3d 576, 580 (6th Cir. 2002)). Second, Standard must show that an Other Limited Condition “caused or contributed” to Chavez's total disability. Standard relies on George v. Reliance Standard Life Ins. Co., 776 F.3d 349 (5th Cir. 2015), for the proposition that the phrase “caused by or contributed to by” in a similar ERISA plan exclusion means but-for causation. Id. at 355-56. The quoted language is not materially different from the language in the exclusion here. Accordingly, the Court holds that Standard has the burden to prove that an Other Limited Condition was a but-for cause of Chavez's total disability.

III. Other Limited Conditions

A. Chavez's Wrist

It appears that, medically speaking, the infection-caused damage to Chavez's wrist is a species of arthritis. See Mandiberg Aff. ¶ 5 [75-1]. That is not the pertinent question before the Court, however. The pertinent question is whether “the average plan participant,” 29 U.S.C. § 1022(a), in the LTD Plan would understand the term “arthritis” in the plan to encompass Chavez's injuries.

Chavez worked at Nix Door & Hardware as a door installer, see Complaint ¶ 24 [1], Amended Answer ¶ 24 [13], and carpenter. See App. 256 [74]. Absent any evidence to the contrary, the Court finds that an average plan participant in the LTD Plan is, like Chavez, a skilled tradesperson who works with his or her hands.

“The most common type of arthritis is osteoarthritis.” Mandiberg Aff. ¶ 5. Osteoarthritis is “the most common form of arthritis, usually occurring after middle age, marked by chronic breakdown of cartilage in the joints, leading to pain, stiffness, and swelling. Also called degenerative joint disease.” Random House Webster's Unabridged Dictionary 1370 (2d ed. 2001). The Court finds that the average plan participant, as defined above, would understand the term “arthritis,” standing alone without qualifiers or amplification, to refer to the most common form of arthritis, that is caused by the wear and tear over time of physical activity, i.e., primary osteoarthritis.

Other than this plain meaning analysis, two additional factors support this construction. First, in the definition of “Other Limited Conditions,” the drafters amplified medical terms when they wanted inclusive definitions. For example, “chronic fatigue conditions,” “allergy or sensitivity to chemicals or the environment,” and “chronic pain conditions” all had fulsome parentheticals giving examples of related medical conditions. Arthritis, in contrast, stood alone as a single word. This supports the position that an average plan participant would have understood that word to refer to plain vanilla primary osteoarthritis. Second, to the extent that it is ambiguous whether the single word “arthritis,” standing alone, encompassed arthritis caused by an infection, the Court must construe that ambiguity in favor of the employee. See Hansen, supra.

Accordingly, the Court finds that Chavez's wrist condition, secondary to the infection, does not constitute an Other Limited Condition, within the meaning of the LTD Plan.

B. Chavez's Rotator Cuff Injury

Chavez next argues that his rotator cuff injury did not fall within “sprains or strains of joints or muscles.” It appears, as a medical matter, that Chavez's rotator cuff injury is a sprain or strain of joints or muscle. See Mandiberg Aff. ¶¶ 6-10. Chavez does not seriously dispute that. Rather, he argues that, in common usage, sprains and strains are relatively minor injuries. Chavez's rotator cuff injury, in contrast, was very severe, including full thickness tears of multiple muscles; it was so severe, in fact, that it could not be surgically repaired. Nothing that severe, he argues, would be understood by an average plan participant as a garden variety sprain or strain.

Although this is a decent argument, the Court is not persuaded. It appears to the Court to reflect an empirical assessment – most sprains and strains are minor – rather than any definitional limitation. There is nothing about the concept of a sprain or strain that requires such an injury to be minor. Chavez's rotator cuff injury, though quite severe, still retains its character as a sprain or strain of joints or muscles, and thus falls within the definition of Other Limited Conditions.

C. Carpal Tunnel Syndrome

Carpal tunnel syndrome is expressly listed in the definition of Other Limited Conditions.

IV. Caused or Contributed

Next, Standard must show that either Chavez's rotator cuff injury or carpal tunnel syndrome caused or contributed to Chavez's disability, i.e., was a but-for cause of the disability. First, the Court finds that Chavez's carpal tunnel syndrome did not cause or contribute to his disability. It appears that the medical treatment of Chavez's carpal tunnel was successful. It thus did not cause or contribute to his disability.

The rotator cuff injury is more nuanced. George v. Reliance, supra, is instructive. The employee there had both physical and mental issues. The disability plan excluded benefits for total disability caused by or contributed to by mental or nervous disorders. 776 F.3d at 351. The Court held that the “caused by or contributed to by” language meant that coverage was excluded if the employee's mental disorder (PTSD) was a but-for cause of his disability. Id. at 355-56. “Thus we consider whether [the employee's] physical disabilities were independently sufficient to render him Totally Disabled.” Id. at 356. Finding they were, the Court reversed the district court and rendered judgment in favor of the employee. Id. Applying the logic of George here, Standard must show that Chavez's wrist injuries were not independently sufficient to render him totally disabled.²

The administrative record indicates that Chavez is incapable of lifting, carrying, and pushing or pulling more than ten pounds. He is capable of occasional fingering, handling, and grasping with his right hand. This condition very well may be permanent. App. 258. Standard does not argue that this condition does not constitute a disability.³ Accordingly, Standard has failed to meet its evidentiary burden to show Chavez's rotator cuff injury caused or contributed to Chavez's disability. Chavez is thus entitled to disability benefits under the LTD Plan.

V. Remedy

The parties disagree as to what remedy the Court should provide if it finds that Chavez is entitled to benefits. The problem is that the plan has two different definitions of disability. The first definition is the “Own Occupation” coverage, which provides for benefits for two years. After that two years elapses, the second, more restrictive “Any Occupation” definition kicks in. Under the SPD, Standard has the right to request proof of ongoing disability. As of the date of briefing before the Court, Standard apparently has not requested proof of disability under the “Any Occupation” definition. Chavez's two years of “Own Occupation” benefits should have run out on September 2, 2018.

From this the parties reach very divergent results. Standard argues that the Court should award benefits only through September 2, 2018 and remand for Standard to determine in the first instance whether Chavez is entitled to any “Any Occupation” benefits. Chavez argues that Standard has waived its option to request “Any Occupation” evidence and that the Court should therefore award Chavez past benefits through the date of judgment, as well as future benefits.

While the Court agrees that Standard has waived its right to request evidence of “Any Occupation” disability so far, the Court does not see why Standard should be precluded from requesting such evidence in the future. The Court will therefore award Chavez disability benefits through the month of final judgment, together with prejudgment interest.

Conclusion

The parties are directed to confer regarding a form of judgment consistent with the Court's rulings in these findings of fact and conclusions of law. If the parties are unable to agree on a form of judgment, then each side shall submit their respective proposed form twenty-eight days after the date of these findings and conclusions.

FOOTNOTES

1.   Chavez moves to strike the Affidavit of Joseph Mandiberg, M.D. [79], which Standard filed in support of its position. By Order dated September 21, 2018, the court set the case for trial on June 3, 2019. That Order required Standard to designate experts sixty days before trial. By Order dated April 22, 2019, the Court vacated the June 3, 2019 trial setting and directed the parties to file trial briefs, proposed findings of fact and conclusions of law, and supporting affidavits “that provide translations or definitions of medical terminology in the administrative record” by June 3, 2019. It was the Court's intention for the April 22 Order also to vacate the requirement that Standard designate experts sixty days before June 3. The Court acknowledges that it could have been more clear about that intention. For that reason, however, the Court denies Chavez's motion to strike.

2.   Before this Court, Standard does not contest that Chavez would be totally disabled if Chavez's medical conditions were not Other Limited Conditions. Standard acknowledges that it has the burden of proving the exclusion applies. It thus must prove that Chavez's rotator cuff injury was a but-for cause of his disability. That means Standard must show that absent the rotator cuff injury, Chavez would not have been disabled. That means that Standard must show that Chavez's wrist injury, standing alone, would not make him totally disabled.

3.   The Court is not being critical of Standard. It was not apparent before this Court's ruling that Standard would need to make such a showing.

David C. Godbey, United States District Judge