Melvin McCollum v. Life Insurance Co. of N. America

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 12a0930n.06
No. 11-2257
FILED
UNITED STATES COURT OF APPEALS Aug 21, 2012
FOR THE SIXTH CIRCUIT
LEONARD GREEN, Clerk
MELVIN MCCOLLUM, )
)
Plaintiff - Appellant, )
) ON APPEAL FROM THE
v. ) UNITED STATES DISTRICT
) COURT FOR THE EASTERN
LIFE INSURANCE COMPANY OF ) DISTRICT OF MICHIGAN
NORTH AMERICA, CIGNA GROUP )
INSURANCE, FASTEN TECH MICHIGAN )
HOLDINGS, INC., FABRISTEEL PRODUCTS, ) OPINION
INC., and DONCASTER GROUP, LTD., )
)
Defendants - Appellees. )
Before: MOORE, WHITE, and LUCERO, Circuit Judges.*
HELENE N. WHITE, Circuit Judge. Plaintiff-Appellant Melvin McCollum appeals the
district court’s order upholding the denial of long-term disability benefits under an insurance policy
issued by Defendant-Appellee Life Insurance Company of North America (LINA) and governed by
the Employee Retirement Income Security Act of 1974 (ERISA). 29 U.S.C. §1001 et seq. We
REVERSE and REMAND in part and AFFIRM in part.
I.
A. McCollum’s Injury and Disability Benefits
*
The Honorable Carlos F. Lucero, Circuit Judge for the United States Court of Appeals for
the Tenth Circuit, sitting by designation.
McCollum began working for Fabristeel Products, Inc., in June 1993 as a cold header
operator. LINA, doing business as CIGNA Group Insurance (CIGNA), issued a group Long Term
Disability (LTD) Income Policy to Fabristeel, as well as a group Life Insurance Policy providing
Waiver of Premium (WOP) benefits. JA 30, 322. The LTD Policy provides:
An Employee will be considered Disabled if because of Injury or Sickness: he is
unable to perform all the material duties of his regular occupation; and after Monthly
Benefits have been payable for 36 months,1 he is unable to perform all the material
duties of any occupation for which he is or may reasonably become qualified based
on his education, training or experience.
JA 34. The WOP benefit defines disability similarly: “A covered employee will be deemed
‘disabled,’ as used here, only if he can not do any work for wage or profit.” JA 346. Both policies
require proof of continued disability and provide that benefits terminate if McCollum ceases to be
disabled.
Around July 9, 1996, McCollum was lifting a 75-pound container of bolts when the handle
broke, causing an injury to his right shoulder rotator cuff.2 He has not worked at Fabristeel since.
In November 1996, he underwent right shoulder surgery. McCollum completed physical therapy in
May 1997, but the attending physician reported that McCollum had little improvement in his neck
or shoulder pain at that time and that as a result he was “permanently disabled from medium or
heavy type of work that he was previously doing.” The attending physician also noted “fairly
prominent degenerative joint disease throughout the lumbar spine and quite prominent canal
1
In a different version of the Policy in the record, the period an insured must wait before
becoming eligible for LTD benefits is listed as 24 months. R.16 Ex. 1 at 3b. This difference has no
impact on the issues in this appeal.
2
Apparently, McCollum sustained a prior injury when he became tangled in a machine at
work in February 1995, before his accident in July 1996.
2
stenosis,” noting that any work retraining would “have to take into account the lumbar region as
well, with input from other physicians.”3 JA 82. In addition to his back and shoulder problems,
McCollum is obese and suffers from diabetes and hypertension.
Dr. Adam Kellman, McCollum’s long-time treating physician, referred McCollum to Dr.
Stephen Boodin in July 1997 to assess his back problems. Dr. Boodin reviewed x-rays, CT scans,
and an MRI, which revealed, among other things, significant narrowing of the spinal canal at L-4-5
and L-5, S-1. Dr. Boodin then noted that McCollum suffered from “significant degenerative changes
in the lumbar spine with a definite lumbar radiculopathy” and explained that “surgical
decompression is likely his only rational option.” Dr. Boodin also noted that epidural steroid
injections were not alleviating McCollum’s pain. JA 227-28.
On April 28, 2005, McCollum saw Dr. Stephen Pomeranz for his back pain. Dr. Pomeranz
noted that McCollum had severe canal stenosis and spondylolisthesis at L5-S1, along with facet
arthrosis contributing to moderate to severe canal stenosis at L4-L5 and L2-L3. JA 80-81.
Eventually, in July 2005, McCollum underwent a laminectomy for his back pain. JA 21, 97.
LINA approved LTD benefits for McCollum beginning January 6, 1997. On April 21, 1998,
LINA also granted WOP benefits to McCollum, a determination based on two findings: (1) Dr.
Kellman’s determination that McCollum was capable of only sedentary work; and (2) a Transferable
Skills Analysis (“TSA”), using Dr. Kellman’s sedentary-work finding, that found no job matches
suitable for McCollum. JA 376-79. On August 11, 1999, LINA began the process of determining
3
Spinal stenosis is a “narrowing of the vertebral canal, nerve root canals, or intervertebral
foramina of the lumbar spine caused by encroachment of bone upon the space” that may either
congenital or due to spinal degeneration and includes pain as among its symptoms. Dorland’s
Illustrated Medical Dictionary 1770 (32d ed. 2012).
3
whether McCollum was capable of performing any occupation. JA 196. On February 17, 2000,
LINA determined that McCollum was totally disabled from performing the work of any occupation
and approved LTD benefits on this basis. JA 184, 207. LINA continued to provide LTD and WOP
benefits until at least 2005.4
During the period LINA granted benefits, Dr. Kellman submitted several Physical Ability
Assessments (PAA) to LINA as part of the requirement to document continued disability. JA 178-
182, 364. In each of these PAAs – December 19, 2002, November 25, 2003, October 18, 2004,
September 15, 2005, and July 20, 2006 – Dr. Kellman classified McCollum as capable of performing
sedentary work due to his chronic lumbar pain. Apparently satisfied with the findings in these
PAAs, LINA continued to provide benefits. McCollum also receives monthly Social-Security
disability benefits.
B. LINA Denies Benefits
In August 2006, as part of its periodic review of McCollum’s benefits, LINA requested that
McCollum provide a Disability Questionnaire and that Dr. Kellman complete a PAA. This PAA,
in contrast to earlier ones, required the physician to specify the number of hours the patient could
engage in various activities. JA 128. On September 15, 2006, Dr. Kellman submitted the PAA (“the
September PAA”) stating that McCollum could sit frequently, defined as up to 5.5 hours. The
September PAA also states that McCollum can occasionally, defined as less than 2.5 hours, stand,
walk, lift up to fifty pounds, and carry up to twenty pounds. Dr. Kellman noted that McCollum
could frequently balance, occasionally stoop and kneel, and continuously use both hands for fine
4
The parties address disability issues regarding the LTD and WOP benefits concurrently, and
we do so as well.
4
manipulation and frequently use his hands for simple grasping. Also in contrast to earlier PAAs, the
September PAA does not contain a space in which a physician classifies the category of work, such
as heavy, medium, light, or sedentary, an insured is capable of performing.
Based on the September PAA, LINA referred McCollum’s file to a Certified Vocational
Rehabilitation Counselor, who conducted a TSA on September 21, 2006. JA 130. According to
LINA, a TSA “compiles information on your restrictions, limitations, education level, prior work
history, and prior training to determine what jobs, if any, you are capable of performing.” JA 357.
The TSA, which was explicitly based on the information contained in Dr. Kellman’s September
PAA, listed two jobs – Auto Casting Machine Operator and Nut-Bolt Assembler – that were suitable
positions. Both jobs are categorized as “light.” Accordingly, on September 22, 2006, LINA
informed McCollum that it was discontinuing WOP benefits:
In summary, based upon the pertinent vocational and medical documentation
contained in our file, we have determined you retain the capacity to perform light
strength level work. As a result of alternate occupations, we have concluded you do
not satisfy the policy definitions of disability as defined the contract.
JA 356-57. The record is unclear whether LINA determined McCollum was capable of light work
or whether the Vocational Rehabilitation Counselor made that determination. Both the TSA and
LINA’s denial letter are based on Dr. Kellman’s September PAA. The letter also explained that
McCollum could appeal the denial.
C. Administrative Appeals Process
On October 6, 2006, immediately after LINA communicated its decision to McCollum, Dr.
Kellman sent a letter to LINA to clarify that his September PAA was not intended to reflect a change
in McCollum’s status:
5
At this time, it is my medical opinion that Mr. McCollum is unable to return to work
in any capacity. The form I completed and mailed to Cigna [LINA] on 9/15/06 was
not a release to return to work. Due to the fact that Mr. McCollum is able to do small
tasks involving his small motor skills and walking, it was not my opinion that he is
able to return to employment.
JA 127 (clarification added). On November 8, 2006, Dr. Kellman submitted a second PAA (the
November PAA). The November PAA revised McCollum’s limitations by noting that McCollum
could not sit frequently; could not lift weight more than ten pounds; and could not carry any weight
whatsoever. JA 77. Along with the revised PAA, Dr. Kellman provided a letter stating that the new
PAA “should clearly state that in my medical opinion Mr. McCollum is totally disabled and not able
to return to work in any capacity.” JA 76. On December 21, 2006, Dr. Kellman informed LINA that
if the information he submitted was inadequate, LINA should seek a second medical opinion from
an orthopedic neurosurgeon. JA 126.
LINA enlisted the assistance of an independent medical reviewer, Dr. Harvey Popovich, an
occupational medicine physician. Dr. Popovich reviewed McCollum’s file on April 22, 2007,
acknowledging that he had not examined McCollum. JA 119. Dr. Popovich opined that McCollum
was capable of engaging in gainful employment:
The claimant’s reported pain complaints are supported by the records provided, but
his reported limited abilities are not supported by the clinical findings on review of
the medical. Mr. McCollum is a 57-year-old male diagnosed with chronic lumbar
pain status post laminectomy on 7/6/05. He is alleging total disability and he last
worked on 7/10/96. The records provided for my review document the patient’s
history of lumbar laminectomy and reduced range of motion in the lumbar spine,
cervical spine, and right shoulder. The records do not describe loss of strength in the
upper extremities or other focal neurological findings. Consequently, I believe Mr.
McCollum is capable of engaging in gainful employment activities.
It is my independent medical opinion based upon review of the records provided that
Mr. McCollum’s reported pain complaints are supported by his history of
degenerative lumbar changes and status post lumbar laminectomy. However, the
6
records do not offer objective findings in support of complete inability to engage in
employment activities. The records describe that Mr. McCollum has improved post
lumbar surgery, but they do not describe loss of strength in the upper or lower
extremities.
***
Based upon review of the records provided, the patient is capable of working in a
light duty capacity. That is to say he is capable of lifting up to 20 pounds on an
occasional basis and up to 10 pounds on a frequent basis. He is not a candidate for
activities requiring bending or twisting at the waist on more than an occasional basis.
Additionally, he should not work with his right arm above shoulder level.
JA 123-24. Dr. Popovich explained that he attempted to contact Dr. Kellman, but that he only came
to the phone long enough to state that he was too busy to discuss the case. Id. Dr. Popovich’s report
discusses Dr. Kellman’s September PAA but makes no mention of Dr. Kellman’s November PAA.
In May 2007, LINA conducted another TSA, this time using Dr. Popovich’s April 2007 report
classifying McCollum as capable of performing light work. This TSA again found two suitable jobs,
both of which were classified as light work. JA 116.
In the meantime, McCollum submitted additional documents to support his claim, including
office notes from Dr. Eric Kovan. Dr. Kovan also completed a PAA in July 2007, which, consistent
with Dr. Kellman’s November 8 PAA, stated that McCollum could only occasionally sit, stand,
walk, and reach. JA 117. Dr. Kovan also stated that McCollum could continuously grasp with his
hands and frequently grasp firmly. He stated that McCollum could occasionally lift and carry up to
twenty pounds and frequently carry ten pounds. Dr. Kovan’s office notes consistently state
McCollum has “horrific spinal stenosis” and his opinion that McCollum “will [not] ever be able to
do work again due to the severity of his back disease.” JA 103-06; 113-14 (“He is unable to do any
activity secondary to the above symptomatology.”). Dr. Kovan’s notes describe the progression of
7
medicine used to treat McCollum’s back pain, including Duragesic patches, increasing from 25mcg
to 100mcg, as well as the placement of a spinal cord stimulator around March 18, 2008. JA 86.
In response to a letter from LINA asking for clinical findings of McCollum’s severe spinal
stenosis, Dr. Kovan wrote to LINA on September 20, 2007:
As you know, I have been taking care of Melvin for an extended period of time. In
lieu of your question, I would like to note that his examination findings revealed
decreased range of motion on lumbocacral [sic] spine with increased radicular pain
with extension and positive straight leg raising. He has mild weakness in the L5
musculatures being 5-/5 bilaterally with a severe antalgic gait, where he is wide-
based and forward flexed when he ambulates. Reflexes are diminished in the
Achilles tendon compared to the patellae bilaterally. Due to the above, he will need
long-term disability.
JA 112.
LINA provided the additional documentation – mostly Dr. Kovan’s notes – to Dr. Popovich.
In December 2007, Dr. Popovich reached essentially the same result as he did before, explaining that
Dr. Kovan’s medical notes generally describe McCollum’s physical examination as non-focal with
respect to strength, reflexes, and sensation. JA 92. Dr. Popovich thus concluded that the “objective
information does not support an inability on the part of Mr. McCollum to participate in gainful
employment activities. It remains my determination that Mr. McCollum is capable of working in
a light duty capacity.” JA 92.
On January 22, 2008, LINA informed McCollum that it was denying his claim for LTD
benefits based on Dr. Popovich’s finding that McCollum was capable of working in a light duty
capacity and the TSA’s identification of two jobs suitable for McCollum. JA 62-65. McCollum
appealed, submitting further evidence, including documentation of the spinal cord stimulator. Dr.
Mendez, an associate medical director at LINA, agreed with Dr. Popovich that the medical records
8
did not demonstrate physical limitations to “preclude Mr. McCollum from performing any sedentary
or light occupations.” JA 84-85. LINA affirmed the denial on May 5, 2008:
We do not dispute you may have been somewhat limited or restricted due to your
subsequent diagnoses and treatment as you were approved long Term Disability
benefits through January 22, 2008; however, an explanation of your functionality and
how your functional capacity prevented you from continuously performing the
material duties of any occupation beyond January 22, 2008 was not clinically
supported. The presence of a condition, diagnosis or treatment does not necessarily
equate to a presence of a disabling condition or decreased level of functionality. As
such, the results of the Transferable Skills Analysis performed on May 22, 2007
remain valid.
JA 25-26.
McCollum again appealed, submitting a letter on September 18, 2008 stating that “[e]ach
physician I have been in the care of support [sic] my claim for long term disability. I have also
requested that one of your physicians examine me. I am confident that if you had an objective
Physician on your staff perform and [sic] exam, they would draw the same conclusion.” JA 74.
McCollum also submitted a June 17, 2008 letter from Dr. Kovan, which stated:
[McCollum] was diagnosed with severe spinal stenosis via imaging and back and
radicular pain. From May 15, 2007, through my last visit on May 13, 2008, we have
been treating Melvin extensively for his spinal stenosis. First, a series of epidural
injections were given. Medications including Lyrica and nerve medication was also
used to help with the neuropathic pain. In addition, medication such as Percocet,
Duragesic patches have been given up to dose of 100 mcg of Duragesic patch, which
is Fentanyl for his pain management. With all of the above treatments, we have not
been able to give him any significant relief for shorter than one or two weeks of time.
I had the pleasure of seeing Melvin as scheduled over the last year. Other treatment
dates included June 26, 2007, August 2, 2007, August 30, 2007, September 24, 2007,
October 3, 2007, December 4, 2007, February 5, 2008, and May 13, 2008. During
all of these visits, it has been noted his examination was very limited due to pain. He
had difficulty with forward flexion and extension. He had positive straight leg
raising bilaterally with positive findings of severe spinal stenosis of lumbosacral
spine. We did talk about history of getting the pain stimulator with really minimal
improvement. Patient did receive a pain simulator [sic] but that gave him no relief.
Severe depression secondary to increasing pain had been noted. He is on the Vicodin
9
HP presently at this time one tablet four times a day. I am unable to give him further
injections, as he has not gotten any relief. Due to the above, Mr. McCollum should
be on long-term disability. He is unable to work at this time or in near future as he
has reached maximum medical improvement.
JA 75. On November 4, 2008, after a different medical director at LINA reviewed McCollum’s file,
LINA again affirmed the denial, concluding that “the information available is insufficient to support
a functional loss to prevent you from performing any occupation.” JA 71-73. Since his appeal
process was complete, LINA informed McCollum that it would accept no further appeals. Id.D. McCollum Files Suit
Having exhausted his administrative appeals, McCollum sought information from Defendants
to enable him to file this lawsuit. The Policy did not list a plan administrator or sponsor, so
McCollum, through counsel, contacted CIGNA, the insurance company that had denied his claims,
in July 2009 and September 2009, seeking a summary plan description (SPD). JA 66, 58. CIGNA
responded on September 15, 2009 that McCollum could obtain an SPD from the employer who
provided the Policy to McCollum. JA 24. McCollum then wrote to Fabristeel and Whitesell5 in
5
McCollum initially brought suit against LINA, doing business as CIGNA, and Whitesell,
doing business as Fabristeel Products, Inc., based on his understanding that Whitesell was the current
owner of Fabristeel. R.1, Complaint. The parties stipulated to dismissing Whitesell, however. R.29.
Fabristeel has changed hands at least twice since McCollum was employed there. According to a
note in Defendants’ Answer:
At the time of his employment, Plaintiff claims he worked for FabriSteel Products
Inc. (“FabriSteel”). At that time, however, FabriSteel was owned 100% by
FastenTech, Inc. Subsequently, on September 10, 2004, the assets of FabriSteel were
sold to Whitesell International Corporation (“Whitesell”). Immediately after the sale
of assets to Whitesell, FabriSteel changed its name to FastenTech Michigan
Holdings, Inc. FastenTech, Inc. is owned by FasTech, Inc. On May 15, 2007,
Dundee Holding, Inc., a Delaware corporation, purchased 100% of the shares of
FasTech, Inc. Dundee Holding, Inc. is the United States part [sic] company for
Doncasters Group Limited, a UK company.
10
December 2009 and January 2010, requesting the SPD. R.16, Ex. 1; Ex. 3. Although Defendants
searched for the SPD, they admit that they were unable to locate one, and it is unclear whether an
SPD was ever drafted. McCollum v. Life Ins. Co. of N. Am., No. 10-11471, 2011 U.S. Dist. LEXIS
101205, at *7 (E.D. Mich. Sept. 8, 2011); see also Appellees’ Br. at 29.
McCollum filed this lawsuit on April 13, 2010. The second Amended Complaint contained
three counts: a claim alleging that Defendants improperly terminated the LTD benefits (Count I);
a claim for civil penalties based on Defendants’ failure to provide the SPD (Count II); and a claim
that Defendants improperly terminated the WOP benefits (Count III). R.16. After the district court
granted limited discovery to McCollum to determine the existence of the SPD and any efforts made
by Defendants to locate it, R.25, the parties filed cross-motions for summary judgment. The district
court granted summary judgment to McCollum on his claim for civil penalties, awarding nominal
damages of $5 per day. On the main issue whether LINA properly terminated McCollum’s LTD and
WOP benefits, however, the district court granted summary judgment to LINA. McCollum, 2011
U.S. Dist. LEXIS 101205, at *12-19. McCollum timely appealed.
II.
The central issue is whether LINA properly terminated McCollum’s LTD and WOP benefits.
29 U.S.C. § 1132.6 When the benefit plan does not give the administrator discretionary authority to
determine eligibility for benefits or construe the terms of the plan, this court reviews the
R.22, PageID 185 n2; see also Appellee’s Br. at 28. For purposes of this appeal, however, the
important point is that Doncasters now own Fastech, the company that owns Fabristeel.
6
In pertinent part, the statute provides that a “participant or beneficiary” may bring a civil
action “to recover benefits due to him under the terms of his 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.” 29 U.S.C.
§1132(a)(1)(B).
11
administrative record de novo. Marks v. Newcourt Credit Group, Inc., 342 F.3d 444, 456 (6th Cir.
2003) (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989)); see also Wilkins v.
Baptist Healthcare Sys., Inc., 150 F.3d 609, 615 (6th Cir. 1998). Because there are no plan
documents granting discretion to the administrator, the district court reviewed LINA’s benefits
decision de novo, a ruling neither party challenges. Under de novo review, a reviewing court weighs
the evidence and determines whether the administrator made the correct decision, Perry v. Simplicity
Eng’g, Div. of Lukens Gen. Indus., 900 F.2d 963, 966 (6th Cir. 1990), giving “no deference or
presumption of correctness” to the administrator’s decision.7 Hoover v. Provident Life & Accident
Ins. Co., 290 F.3d 801, 808-09 (6th Cir. 2002).
The LTD Policy provides that in order to be considered disabled, a plaintiff must prove he
is “unable to perform all the material duties of any occupation for which he is or may reasonably
become qualified based on his education, training, or experience.” The WOP benefit similarly
provides that a plaintiff must demonstrate she cannot do “any work for wage or profit.”8 The district
court rejected McCollum’s argument that his treating physician should receive more weight than Dr.
Popovich, finding that the Supreme Court has explicitly declined to extend the treating physician rule
to ERISA cases. See generally Black & Decker Disability Plan v. Nord, 538 U.S. 822, 825 (2003)
(“We hold that plan administrators are not obliged to accord special deference to the opinions of
treating physicians.”). Emphasizing that LINA presented evidence of two occupations suitable for
McCollum, the district court concluded:
7
Some courts have explained that the question on de novo review is “whether the plaintiff’s
claim for benefits is supported by a preponderance of the evidence.” Niles v. Am. Airlines, Inc., 269
F. App’x 827, 833 (10th Cir. 2008) (unpublished opinion).
8
Neither party contends that there is a meaningful distinction between the two definitions.
12
Even taking Kellman’s second [PAA] assessment as the most accurate statement of
Plaintiff’s abilities, Plaintiff is capable of sitting, standing, and walking, doing each
for up to one third of a normal workday. He is likewise capable of a similar degree
of use of his right hand for fine manipulation, and he can use both hands to that
degree for simple grasping. Lifting up to ten pounds of weight and limited
occasional pushing and pulling are also within his abilities. No relevant sensory
limitations are indicated. Even making reasonable adjustment to account for the
effect of his chronic pain and medication, the record nonetheless indicates that
Plaintiff is not totally disabled. He undoubtedly suffers severe limitations, but they
do not rise to such high level as to preclude all types of work for which he is suited.
McCollum, 2011 U.S. Dist. LEXIS 101205, at *13-14 (citations omitted).
In this appeal, McCollum argues again that LINA and the district court erred by not giving
appropriate weight to the opinions of Dr. Kellman and Dr. Kovan, who both opined that he was
disabled. His treating physicians’ opinions, he says, are based on objective medical evidence. He
thus argues that LINA’s determination that he could perform light work was erroneous. As a result,
the TSA, which used a light-work classification in finding two suitable jobs, is likewise flawed. He
further emphasizes that there is no satisfactory explanation for LINA’s sudden about face after
providing benefits for eleven years.9
LINA acknowledges that objective medical evidence supports McCollum’s diagnosis of
lumbar degeneration and spinal stenosis, as well as his reports of chronic lumbar pain.10 It disputes,
9
McCollum also argues that the Social Security disability determination should be considered
as a factor in assessing whether he is disabled. But the Social Security finding is entitled to less
weight because it occurred so long ago. Morris v. Am. Elec. Power Long-Term Disability Plan, 399
F. App’x 978, 984 (6th Cir. 2010) (unpublished opinion) (noting that the quasi-estoppel rationale
underlying giving a Social-Security disability determination more weight is minimized when the
disability determination occurred years before); see also Curry, 400 F. App’x at 58.
10
LINA makes much of the fact that Dr. Kellman’s notes describe McCollum as having
improved after his laminectomy. Although Dr. Kellman’s notes show that the laminectomy
improved McCollum’s pain in his legs, Dr. Kellman also consistently states that McCollum
continued to suffer from chronic back pain after the surgery. JA 162-171. And Dr. Kovan’s office
notes support that McCollum continued to experience chronic lumbar pain post-laminectomy. LINA
13
however, that McCollum’s limitations are as severe as he claims and whether objective medical
evidence supports the extent of his claimed limitations. Although a lack of objective medical
evidence is a proper reason to deny disability benefits, see Cooper v. Life Ins. Co. of N. Am., 486
F.3d 157 (6th Cir. 2007) (“Requiring a claimant to provide objective medical evidence of disability
is not irrational or unreasonable.”), there are problems with LINA’s conclusion.
First, neither Dr. Popovich nor any of LINA’s reviewing doctors physically examined
McCollum. We have explained that “[w]hether a doctor has physically examined the claimant is
indeed one factor that we may consider in determining whether a plan administrator acted arbitrarily
and capriciously in giving greater weight to the opinion of its consulting physician.” Kalish v.
Liberty Mutual/Liberty Life Assur. Co., 419 F.3d 501, 507-508 (6th Cir. 2005); cf. Calvert v. Firstar
Fin., Inc., 409 F.3d 286, 296-97 (6th Cir. 2005) (reversing denial of benefits in part on basis that
nontreating physician never met or examined claimant); Jebian, 349 F.3d at 1109 n.8 (citation
omitted). Contrary to LINA’s insistence that McCollum is attempting to introduce the treating
physician rule into this case through the back door, nothing in Nord prohibits a court weighing the
opinions between two physicians from taking into account that a nontreating physician has not
personally examined the claimant.
Second, the only evidence in the record about McCollum’s limitations are the PAAs from
Dr. Kellman and Dr. Kovan. Huffaker v. Metro. Life Ins. Co., 271 F. App’x 493, 502 (6th Cir. 2008)
(citation omitted) (“One method of objective proof of disability, for instance, is a functional capacity
also emphasizes that Dr. Kovan’s notes describe McCollum’s physical examinations as generally
“non-focal” with respect to strength, reflexes, and sensation. But these same notes also explain that
McCollum has severe pain and “horrific spinal stenosis,” JA 103-06; JA 109-114, and a non-focal
exam with respect to strength, reflexes, and sensation says little about McCollum’s pain or degree
of functional limitations.
14
evaluation, a ‘reliable and objective method of gauging’ the extent one can complete work-related
tasks.”). These doctors opine that McCollum is disabled. In the face of this evidence, LINA, which
had the authority to force McCollum to submit to a FCE, opted not to. In fact, McCollum and Dr.
Kellman both requested LINA have an independent physician examine him. “[T]he failure to
conduct a physical examination – especially where the right to do so is specifically reserved in the
plan – may, in some cases, raise questions about the thoroughness and accuracy of the benefits
determination.” Calvert, 409 F.3d at 295; see also Helfman v. GE Group Life Assur. Co., 573 F.3d
383, 396 (6th Cir. 2009); Smith v. Cont'l Cas. Co., 450 F.3d 253, 263 (6th Cir. 2006) (quoting
Calvert for proposition that a file-review when plan reserves the right to conduct a physical exam
is suspicious).
Also problematic is LINA’s reliance on the September PAA and its determination that
McCollum could perform light work. Throughout its briefing, LINA conflates the distinction
between light and sedentary work. But the “[p]hysical demand requirements [of light work] are in
excess of those for Sedentary Work.” See Dictionary of Occupational Titles, Appendix C:
Components of the Definition Trailer, available at
http://www.occupationalinfo.org/appendxc_1.html#STRENGTH (last visited July 3, 2012); Cooper,
486 F.3d at 169 (noting problem with non-treating physician conflating distinction between
sedentary positions and light-duty positions). And Dr. Popovich’s report, which is based on the
September PAA, makes no mention of the November PAA whatsoever. The September PAA
appears to be an aberration – all of Dr. Kellman’s other PAAs classify McCollum as capable of
sedentary work – that Dr. Kellman explicitly disavowed. LINA’s reliance on it is unsupportable,
15
particularly in light of LINA’s concession that it is operating under a conflict of interest. R.23 at
PgID 194; DeLisle v. Sun Life Assur. Co. of Canada, 558 F.3d 440, 445 (6th Cir. 2009).
LINA’s denial of benefits is even more surprising given the many years that it classified
McCollum as disabled. See, e.g., Kramer v. Paul Revere Life Ins. Co., 571 F.3d 499 (6th Cir. 2009).
LINA’s attempt to distinguish Kramer is unavailing: the record belies LINA’s assertion that
McCollum’s chronic lumbar pain, as opposed to his leg pain, improved after his laminectomy. To
be sure, Kramer does not create a rule that when a plan administrator suddenly changes course, the
administrator must have new evidence of improvement. But in those circumstances, the plan
administrator must have some reason for the change based on any number of factors. Morris, 399
F. App’x at 984 (noting factors include evidence of improvement, a better definition of the
participant’s medical condition, or any new skills the participant has acquired). LINA has not
provided any convincing reason, and its sudden about face casts doubt on its conclusion that
McCollum is capable of light work after all these years.
Accordingly, reviewing the record de novo, we conclude that LINA improperly rejected
McCollum’s claim for disability benefits. But this does not mean that we conclude McCollum is
disabled under the Policy or “clearly entitled” to benefits. Elliott v. Metro. Life Ins. Co., 473 F.3d
613, 621-22 (6th Cir. 2006) (addressing question of which remedy – retroactive benefits or remand
to administrator – is appropriate). When, as here, “the plan administrator’s decision suffers from a
procedural defect or the administrative record is factually incomplete,” the appropriate remedy is to
remand to the plan administrator so that a “full and fair review can be accomplished.” Shelby
County Health Care Corp. v. Majestic Star Casino, LLC Group Health Benefit Plan, 581 F.3d 355,
372-73 (6th Cir. 2009); see also Helfman, 573 F.3d at 396 (remanding to district court when plan
16
decision incorrect but claimant not “clearly entitled to benefits”) (citations omitted and emphasis
added). Accordingly, we remand to the district court with instructions to remand to the plan
administrator to provide a full and fair review.
III.
McCollum next disputes whether the district court abused its discretion in imposing a
nominal penalty for Defendants’ failure to promptly provide the SPD, as required by statute. ERISA
requires a plan administrator to provide an SPD to a plan participant upon written request, 29 U.S.C.
§ 1024(b)(4), and the SPD is required to contain the name and address of the plan administrator. 29
U.S.C. § 1022. If a plan administrator fails to provide the required information within thirty days
of a written request, ERISA grants district courts discretion to impose a civil penalty of up to $110
per day. 29 U.S.C. § 1132(c)(1); 29 C.F.R. 2575.502c-3. A plan administrator is not liable for any
penalties when the failure to respond results from “matters reasonably beyond the control of the
administrator.” 29 U.S.C. §1132(c)(1). The district court exercised its discretion and imposed a
$1,585 penalty, representing $5 per day for the 317 days Defendants did not respond. McCollum,
2011 U.S. Dist. LEXIS 101205, at *19.
A. Doncasters’s Successor Liability
The parties first disagree whether Doncasters, as the parent corporation of Fabristeel, may
be held accountable for the penalty. The district court determined that Fabristeel was the plan
administrator, a finding McCollum does not dispute. Reply Br. at 5; Caffey v. Unum Life Ins. Co.,
302 F.3d 576, 580 (6th Cir. 2002) (“It is well established that only plan administrators are liable for
statutory penalties under § 1132(c).”) (citation omitted). Relying on Smith Land & Improv. Corp.
v. Celotex Corp., 851 F.2d 86, 90 (3d Cir. 1988), the district court held that Doncasters was not
17
liable for any penalty against Fabristeel, explaining that Fabristeel “survives as an entity separate and
distinct from its shareholders even if all the stock is purchased by another corporation.”11 McCollum,
2011 U.S. Dist. LEXIS 101205, at *16. Since Fabristeel is distinct from Doncasters, the district
court held that Fabristeel alone was liable.
McCollum argues that the district court erred because Doncasters is liable as the successor
to Fabristeel. “The general rule of corporate successorship accepted in most states is nonliability for
acquiring corporations, with the following exceptions: The purchaser may be liable where: (1) it
assumes liability; (2) the transaction amounts to a consolidation or merger; (3) the transaction is
fraudulent and intended to provide an escape from liability; or (4) the purchasing corporation is a
mere continuation of the selling company.” United States v. Gen. Battery Corp., 423 F.3d 294, 305
(3d Cir. 2005); see also Bender v. Newell Window Furnishings, Inc., 681 F.3d 253, 259 (6th Cir.
2012) (“[A] successor corporation generally is not liable for its predecessors liabilities unless
expressly assumed.”). McCollum relies on the “mere continuation” exception. But he puts forth no
evidence that Doncasters is a mere continuation of Fabristeel. See generally IBC Mfg. Co. v.
Velsicol Chem. Corp., 1999 U.S. App. LEXIS 15140 (6th Cir. July 1, 1999) (unpublished opinion)
(explaining “mere continuation” test of liability).12
Relatedly, McCollum contends that a parent corporation is liable for activities of its
subsidiaries if the parent dominates the subsidiary’s activities. McCollum argues that “[a]n entity
11
The parties apply Delaware law to the issue of corporate liability and do not raise any issue
with choice of law.
12
McCollum does not contend that successor liability in the ERISA context is different than
common-law successor liability, and we therefore do not address that issue. See, e.g., Einhorn v.
M.L. Ruberton Constr. Co., 632 F.3d 89, 91 (3d Cir. 2011) (distinguishing common-law successor
liability from successor liability in ERISA context).
18
owning 100% of another certainly controls it.” Appellant’s Reply Br. at 1; In re Tronox, Inc. Secs.
Litig., 769 F. Supp. 2d 202, 210 (S.D.N.Y. 2011) (quoting Grastly v. Michail, 2004 WL 396388(Del. Super. Ct. 2004)). The crux of McCollum’s argument is that Doncasters owns all of the stock
of Fabristeel. Grastly itself makes clear, however, that mere stock ownership of a subsidiary does
not, by itself, prove the requisite degree of control. McCollum again provides no evidence that
Doncasters exercises any significant degree of financial or operational control over Fabristeel.
Accordingly, the district court did not err in holding that Fabristeel alone is liable for the civil
penalty.
B. Nominal Penalty
The district court imposed a penalty against Fabristeel, rejecting Defendants’ argument that
the inability to locate an SPD was beyond their control. Nevertheless, according to the district court:
No prejudice or bad faith has been shown in the instant case. Plaintiff readily
identified the relevant parties, necessary substitution of Defendants was made by
stipulation, and Defendants have admitted that de novo review applies. Apart from
some minor delays and additional effort in determining the identity of the plan
administrator and the nonexistence of the SPD, Plaintiff has not been prejudiced in
any manner. Certainly, no legal rights of Plaintiff have been impinged.
McCollum, 2011 U.S. Dist. LEXIS 101205, at *18. Hence, the district court imposed a “nominal
penalty” of $5 per day. Id.This court reviews a district court’s decision on statutory penalties for abuse of discretion,
which “exists when the reviewing court is firmly convinced that a mistake has been made.” See
Bartling v. Fruehauf Corp., 29 F.3d 1062, 1068 (6th Cir. 1994). Factors courts consider include
“bad faith or intentional conduct on the part of the administrator, the length of the delay, the number
of requests made and documents withheld, and the existence of any prejudice to the participant or
19
beneficiary.” Romero v. SmithKline Beecham, 309 F.3d 113, 120 (3d Cir. 2002) (citation omitted);
accord Huss v. IBM Med. & Dental Plan, 418 F. App’x 498, 508 (7th Cir. 2011). Although “[t]he
circuits are in general accord that neither prejudice nor injury are prerequisites to recovery under the
penalty provisions of the statute,” Moothart v. Bell, 21 F.3d 1499, 1506 (10th Cir. 1994), a district
court “may consider prejudice in exercising its discretion.” Knickerbocker v. Ovako-Ajax, Inc., 1999
U.S. App. LEXIS 16982, at *14 (6th Cir. July 20, 1999). The aim of statutory penalties is to punish
violators and deter noncompliance. Leister v. Dovetail, Inc., 546 F.3d 875, 883 (7th Cir. 2008);
Byars v. Coca-Cola Co., 517 F.3d 1256, 1271 (11th Cir.2008). In this regard, some courts also
consider the administrator’s ability to pay. Leister, 546 F.3d at 883 (“[T]he poorer the defendant,
the lower the penalty can be set and still deter wrongdoers in the same financial stratum.”) (citation
omitted).
Although being forced to hire a lawyer or expend additional resources to obtain statutorily
mandated information can potentially show prejudice, see, e.g., Lowe v. McGraw-Hill Cos., 361 F.3d
335, 338 (7th Cir.2004) (finding prejudice when claimant forced to hire lawyer); Curry v. Contract
Fabricators, Inc. Profit Sharing Plan, 891 F.2d 842, 847 (11th Cir. 1990) (noting that aggravation
and frustration can constitute prejudice); Gatlin v. Nat’l Healthcare Corp., 16 F. App’x 283, 289 (6th
Cir. 2001) (unpublished opinion) (noting that prejudice results from “hindering plaintiff’s ability to
appeal the decision at the earliest opportunity), McCollum’s counsel conceded at oral argument that
he did not put forth any evidence about the additional costs – in terms of time or money – McCollum
incurred as a result of the Defendants’ actions. The district court’s determination that McCollum
experienced a minor delay is not an abuse of discretion. Mullins v. AT&T Corp., 424 F. App’x 217,
225 (4th Cir. 2011) (affirming award of $25 per day when claimant not prejudiced by delay); see also
20
Rodriguez-Abreu v. Chase Manhattan Bank, N.A., 986 F.2d 580, 589 (1st Cir. 1993) (affirming
denial of penalty when claimant failed to show how delay caused harm); Dube v. J.P. Morgan
Investor Servs., 201 F. App’x 786, 787-88 (1st Cir. 2006) (unpublished opinion) (affirming denial
even when delay made claim process more difficult or frustrating).
Further, although the Defendants’ failure to inform McCollum that they were searching for
the SPD is not admirable, their conduct does not amount to malfeasance or bad faith. Adono v.
Wellhausen Landscape Co., 258 F. App’x 12, 16 (7th Cir. 2007) (unpublished opinion) (declining
to increase statutory award of $10 per day when delay was not result of malfeasance). In fact,
McCollum’s first two requests for the SPD were addressed to CIGNA, and he only requested the
SPD from Fabristeel twice. As Defendants point out, McCollum already possessed the most
important document, the Policy itself. Ames v. American Nat’l Can Co., 170 F.3d 751, 760 (7th Cir.
1999) (upholding denial of benefits when plaintiffs had relevant portions of pertinent document
available to them). And courts often impose a lower penalty to “reflect the lack of injury and the
limited prejudice.” Moothart, 21 F.3d at 1506 (10th Cir. 1994). These facts persuade us that the
district court’s award of a nominal penalty was not an abuse of discretion.
Accordingly, we affirm the district court’s decision on the statutory penalty.
IV.
For the foregoing reasons, we REVERSE the district court’s grant of summary judgment to
LINA and REMAND to the district court with instructions to remand to the plan administrator to
provide a full and fair review. We AFFIRM the district court’s decision on the issue of statutory
penalties.
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