Krensavage v. Bayer Corp.

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
1-22-2008
Krensavage v. Bayer Corp
Precedential or Non-Precedential: Non-Precedential
Docket No. 06-4302
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 06-4302
PAULA KRENSAVAGE,
Appellant
v.
BAYER CORPORATION and BAYER
CORPORATION WELFARE BENEFITS PLAN,
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil No. 04-01476)
District Judge: Honorable Terrence F. McVerry
Submitted Pursuant to Third Circuit LAR 34.1(a)
October 30, 2007
Before: RENDELL and NYGAARD, Circuit Judges,
and VANASKIE*, District Judge
(Filed January 22, 2008)
OPINION OF THE COURT
VANASKIE, District Judge.
*
The Honorable Thomas I. Vanaskie, United States District Judge for the Middle
District of Pennsylvania, sitting by designation.
Appellant Paula Krensavage appeals a District Court decision granting summary
judgment in favor of her employer, Bayer Corporation (“Bayer”), and Bayer Corporation
Welfare Benefits Plan, on her claims of violations of the Employee Retirement Income
Security Act (“ERISA”), 29 U.S.C. § 1101, et seq., and the Americans with Disabilities
Act (“ADA”), 42 U.S.C. § 12101, et seq. For the reasons that follow we will affirm the
grant of summary judgment.
I.
As we write only for the parties, we will set forth only those facts necessary to our
analysis. The Bayer Disability Plan (“the Plan”) designates Bayer as the Plan Sponsor
and Plan Administrator. The Plan Administrator is explicitly accorded discretion to make
final determinations of facts necessary or appropriate for claims under the Plan, interpret
the terms and provisions of the Plan, and decide any and all questions under the Plan.
Disability benefits are paid from a trust funded by periodic contributions from Bayer and
participants’ payroll contributions.
Kemper Services, Inc. (“Kemper”) is the third party Claims Administrator for the
Plan. Kemper considers participants’ applications for long-term disability (“LTD”)
benefits and makes the initial determination whether to grant or deny an application. A
plan participant may appeal an adverse determination to the Bayer ERISA Review
Committee.
Krensavage applied for LTD benefits in August of 2003. Along with her
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application she submitted the opinion of her treating physician, James Kang, M.D., who
had concluded that she could not return to work at Bayer as an Administrative Assistant
due to continuing neck spasms, but could perform sedentary work for an eight (8) hour
day. On August 26, 2003, Krensavage filed an application for Social Security Disability
Income (“SSDI”) benefits, in which she represented that she was incapable of doing any
kind of work on a regular basis.
On October 10, 2003, Kemper denied Krensavage’s claim, basing its decision on
Dr. Kang’s opinion that Krensavage was able to perform sedentary work, as well as on a
medical review conducted by James Wallquist, M.D., an independent orthopedic surgeon.
By the time of Kemper’s decision, Krensavage’s short term disability leave had expired
and her continued absence from work was not excused. Bayer, however, granted
Krensavage a thirty-day “personal leave” while she appealed Kemper’s decision.
On November 3, 2003, Krensavage submitted a report of Thad C. Schrickel, D.C.,
who opined that she was unable to return to work. Two days later, however, she reported
to work, but was sent home because she had not been medically cleared to return to work
and Bayer’s policy does not permit an employee to work without medical clearance. The
only accommodation she requested at that time was an indefinite leave of absence.
On November 10, 2003, because her thirty-day leave had expired before her
ERISA appeal had been decided, Krensavage’s employment was terminated.
Krensavage, however, was informed that her employment would be reinstated if the LTD
appeal was decided in her favor.
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On February 13, 2004, the ERISA Review Committee upheld the denial of LTD
benefits. It based it decision on the opinions of several independent doctors who either
had examined Krensavage or her medical records, as well as a report and surveillance
videotape from a private investigative service that showed Krensavage engaged in
activities inconsistent with her claim of total disability.
Krensavage commenced a civil action in the United States District Court for the
Western District of Pennsylvania, asserting claims under ERISA of wrongful denial of
LTD benefits and retaliatory discharge, as well as a discrimination claim under the ADA.
After a thorough review of the record and well-supported analysis of the law, the District
Court granted Defendants’ motion for summary judgment on all counts. Krensavage v.
Bayer Corp., No. 02:04cv1476, 2006 WL 2794562 (W.D. Pa. Sept. 27, 2006). This
appeal followed.
II.
We have jurisdiction pursuant to 28 U.S.C. § 1291. We exercise plenary review
over the District Court’s grant of summary judgment. Torre v. Casio, Inc., 42 F.3d 825,
830 (3d Cir. 1994).
III.
It is undisputed that Bayer, the plan administrator, has discretionary authority to
interpret and apply the plan. Accordingly, we review the denial of benefits under the
arbitrary and capricious standard. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S.
101, 115 (1989); Vitale v. Latrobe Area Hosp., 420 F.3d 278, 281-82 (3d Cir. 2005).
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Under this standard, the denial of benefits “will be overturned only if it is ‘clearly not
supported by the evidence in the record or the administrator has failed to comply with the
procedures required by the plan.’” Orvosh v. Program of Group Ins. for Salaried
Employees of Volkswagen of Am., Inc., 222 F.3d 123, 129 (3d Cir. 2000) (quoting
Abnathya v. Hoffman-La Roche, Inc., 2 F.3d 40, 41 (3d Cir. 1993)). Where, however, a
plan administrator with discretionary authority to determine eligibility for benefits
operates under a conflict of interest, we intensify the arbitrary and capricious review on a
sliding-scale approach in direct relation to the degree of that conflict. See Pinto v.
Reliance Standard Life Ins. Co., 214 F.3d 377, 393 (3d Cir. 2000).
Concluding that Bayer, which partially funded the plan, may have had a financial
incentive to deny claims, the District Court determined that there was a conflict of interest
sufficient to warrant a level of review more rigorous than the deferential arbitrary and
capricious standard. Citing our opinion in Stratton v. E.I. DuPont De Nemours & Co.,
363 F.3d 250 (3d Cir. 2004), the District Court also found that any conflict of interest was
tempered by Bayer’s retention of Kemper as an independent third party claims
administrator with responsibility to make initial benefits determinations. Accordingly,
the District Court applied only a “slightly heightened” version of arbitrary and capricious
review.
Krensavage contends that the District Court erred in determining the appropriate
standard of review, arguing that Bayer not only operated under a conflict of interest, but
also interfered with the initial evaluation of her application by Kemper, thus destroying
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any neutrality in the decision-making process. She asserts that the denial of benefits must
be examined with a “‘high degree of skepticism.’” (Appellant’s Br. at 38, quoting Pinto,
214 F.3d at 394.)
Contrary to Krensavage’s assertions, there is no basis for scrutinizing the benefits
denial at a level more intense than that employed by the District Court. Indeed, it is
doubtful that even a “slightly heightened” standard of review should have been applied
here.
“[W]e have noted that a situation in which the employer establishes a plan, ensures
its liquidity, and creates an internal benefits committee vested with the discretion to
interpret the plan’s terms and administer benefits does not typically constitute a conflict
of interest.” Stratton, 363 F.3d at 254-55 (internal quotations and alterations omitted). In
this case, benefits are paid from a trust, not from Bayer’s operating budget. It has created
an internal benefits committee, and added the intercession of an independent claims
administrator, who has no financial incentive to deny claims. It is thus doubtful that there
was any financial conflict of interest burdening the consideration of Krensavage’s LTD
application. Moreover, the so-called interference with Kemper’s initial review of
Krensavage’s application would not warrant increasing the level of review as it is the
final decision of the ERISA Review Committee that is at issue. See Hanna v. Delta
Family-Care Disability and Survivorship Plan, No. 3:04CV1333, 2006 WL 1885181, at
*1 n.2 (M.D. Fla. July 7, 2006).
We need not decide, however, whether the District Court’s slight heightening of
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the arbitrary and capricious standard was error. It is sufficient to find that no greater than
a slight heightening was appropriate.
Applying the “slightly heightened” standard of review, we agree with the District
Court that the ERISA Review Committee acted well within its discretion in denying
Krensavage’s application. The Committee was presented with substantial evidence that
Plaintiff was not totally disabled, including the opinions of several physicians. Although
Krensavage offered opinions that she was unable to perform any work, the dispute among
health care professionals does not make the Committee’s decision arbitrary and
capricious. Stratton, 363 F.3d at 258.
IV.
As to her ADA employment discrimination claim, Krensavage contends that the
District Court erred in applying judicial estoppel to find that plaintiff could not show that
she was a “qualified individual with a disability.” The District Court held that
representations made by Krensavage in her SSDI application and LTD benefits appeal
that she was “totally disabled” precluded her from showing that she could perform the
duties of her job at Bayer.
A threshold requirement in a disability discrimination case under the ADA is that
the plaintiff be a “qualified individual with a disability.” To satisfy this requirement, the
plaintiff must show, inter alia, that she can perform the essential functions of her job,
with or without reasonable accommodation. 42 U.S.C. § 12111(8). A “totally disabled”
person, by definition, cannot perform the essential functions of her job, regardless of the
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accommodation.
We are satisfied that the District Court properly found that Krensavage was
estopped from showing that she was qualified to perform the essential duties of her
employment position with Bayer. “[A] plaintiff’s sworn assertion in an application for
disability benefits that she is, for example, ‘unable to work’ will appear to negate an
essential element of her ADA case–at least if she does not offer a sufficient explanation.”
Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795, 806 (1999). In fact, “an ADA
plaintiff cannot simply ignore the apparent contradiction that arises out of the earlier
SSDI total disability claim. Rather, she must proffer a sufficient explanation.” Id. Such
an inconsistency was present here, and the record contains no explanation for the
inconsistency.1
V.
Claiming that she was terminated “for no reason other than having asserted a
disability from performing the requirements of her job in support of her claim for LTD
Krensavage argues that it was error to apply judicial estoppel here because the
possibility of a “reasonable accommodation” is not addressed in the applications she
made for SSDI or LTD benefits. The only accommodation Krensavage suggested,
however, was extended unpaid leave, which certainly does not suggest an ability to
perform the essential functions of her job. Furthermore, it has been recognized that an
open-ended disability leave is not a reasonable accommodation under the ADA where, as
here, the plaintiff does not present evidence of the expected duration of her impairment.
See, e.g., Byrne v. Avon Products, Inc., 328 F.3d 379, 380-81 (7th Cir. 2003); Rascon v.
U.S. West Communications, Inc., 143 F.3d 1324, 1334 (10th Cir. 1998). Thus, the failure
to grant her indefinite leave could not constitute a failure to make a reasonable
accommodation of her disability.
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benefits,” (Appellant’s Br. at 56), Krensavage argues that the District Court erred in
granting summary judgment on her ERISA retaliatory discharge claim. We are satisfied
that the record lacks any direct or circumstantial evidence of retaliatory intent on the part
of Bayer. The undisputed facts are that Krensavage did not receive medical clearance to
return to work and had exhausted all available leave time when her employment was
terminated. Moreover, the termination was made conditional, so that her employment
would be reinstated if her appeal of the denial of LTD benefits was successful. Under
these circumstances, no reasonable fact-finder could draw an inference of an intent to
retaliate against Krensavage for having pursued LTD benefits.
VI.
For the foregoing reasons, we will affirm the District Court’s grant of summary
judgment for Defendants.
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