Free Status Report - District Court of Arizona - Arizona

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L AW OF F I C E S M O H R , H A C K E T T, P E D E R S O N , B L A K L E Y & R A N D O L P H , P . C .
2800 NORTH CENTRAL AVENUE, SUITE 1100 P H O E N I X , A R I Z O N A 8 5 0 0 4 -1 0 4 3 T E L E P H O N E ( 6 0 2 ) 2 4 0 -3 0 0 0 F A C S I M I L E ( 6 0 2 ) 2 4 0 -6 6 0 0 (AZ BAR FIRM NO. 0046600)

Robert C. Hackett (AZ Bar No. 001588) ([email protected]) Daniel P. Beeks (AZ Bar No. 012628) ([email protected])

Attorneys for Defendant Metropolitan Life Insurance Company

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

) ) Plaintiff, ) ) v. ) ) American Express Company, (MetLife), ) a New York Corporation, and ) ) Metropolitan Life Insurance Co., a ) Tennesssee Company, ) ) Defendant. ) )

Sybol Terrell-Sims, a married woman,

No. CV 03-1340 PHX SRB STATUS REPORT

Pursuant to the District Court's October 7, 2005 Order, defendant Metropolitan Life Insurance Company ("MetLife") submits the following status report. I. History of Litigation There have been several significant events that have occurred in this case since the parties filed their joint case management plan nearly two years ago. MetLife will attempt to summarize what this case started out to be, and what it is today. Plaintiff originally filed this litigation on July 15, 2003. Plaintiff asserted claims against both American Express ("AmEx"), which was Plaintiff's former employer, and MetLife, which was the administrator of AmEx's family leave and disability benefit

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programs. Plaintiff claimed that AmEx had discriminated against her on the basis of race and sex, and had retaliated against her for filing charges with the EEOC. Plaintiff further alleged that MetLife had improperly denied Plaintiff's claims for benefits under AmEx's short term and long term disability benefit programs. On August 28, 2003, Plaintiff amended the complaint to identify the correct corporate designation. Plaintiff then served MetLife on September 9, 2003. MetLife filed its answer on October 17, 2003. In its answer, MetLife alleged that Plaintiff had not exhausted her administrative remedies under AmEx's Plan, because she had filed suit before the administrative appeal of her benefit claim was decided. On November 25, 2003, the parties filed their joint case management plan. On December 1, 2003, the parties attended a pretrial scheduling conference, and on that same date, the Court issued its Rule 16 Scheduling Order. The complaint was amended again on December 12, 2003. In September of 2004, Plaintiff's original attorney filed a motion to withdraw, which the Court granted on September 30, 2004. This order allowed Plaintiff through November 1, 2004 to retain new counsel. On November 1, 2004, Plaintiff filed a motion requesting an extension of time to retain new counsel. AmEx and MetLife filed a joint response stating that they did not oppose this request, and further requesting that discovery and dispositive motion deadlines be extended as a result of this delay. As requested, the Court granted Plaintiff until December 1, 2004 to retain new counsel, and also extended the applicable deadlines. On November 16, 2004, Plaintiff filed a request for a further extension of time to retain new counsel. On December 10, 2004, the Court granted the motion, and allowed Plaintiff through January 2, 2005 to retain new counsel, and again extended the applicable deadlines. Plaintiff did not retain new counsel before this extended deadline. On December 27, 2005, AmEx served a notice of deposition on Plaintiff, requiring her to appear for a deposition on January 11, 2005. Plaintiff failed to appear

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at that deposition as scheduled. When contacted by telephone, she advised that she thought she could appear by telephone. The following day, counsel for both AmEx and MetLife received a fax from attorney Elizabeth A. Faulkner ("Faulkner") stating that she had met with Plaintiff, but had not yet decided whether or not to accept Plaintiff's representation. AmEx then renoticed Plaintiff's deposition for February 2, 2005. Faulkner filed a notice of

appearance on February 2, 2005, and appeared at Plaintiff's deposition. Faulkner also filed a motion to again extend applicable deadlines based on her recent retention. The Court granted the motion on March 4, 2005. Because Plaintiff's original attorney had filed this litigation before MetLife could obtain all of the documents and information necessary for it to decide the administrative appeal of the denial of her disability benefits, on March 24, 2005, Plaintiff and MetLife then stipulated to stay the litigation as against MetLife so that Plaintiff could provide MetLife with all of the requested information, and MetLife could review the requested information in connection with her administrative appeal. The stipulation provided that the stay would expire ten judicial days after MetLife sent notice of its decision on the administrative appeal to Plaintiff's attorney. The Court granted this stipulated stay on March 28, 2005. While the administrative appeal with MetLife was pending, Plaintiff settled with AmEx. The Court granted the stipulated dismissal of AmEx on June 8, 2005. On August 2, 2005, MetLife denied Plaintiff's administrative appeal of the denial of her disability benefits. Unfortunately, MetLife's appeal department was not aware that Plaintiff's original counsel had withdrawn, and they inadvertently sent the denial letter to Plaintiff's first attorney. Apparently, Plaintiff's second attorney did not receive the denial letter until approximately August 22, 2005. As a result, the stipulated stay expired ten judicial days later, on September 6, 2005. On September 15, 2005, Plaintiff's second attorney moved to withdraw. The

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Court granted the motion the following day. Since that motion was granted, MetLife's attorney has not been contacted by any new attorneys who are considering representing Plaintiff. Nor has Plaintiff contacted MetLife's attorney to discuss the litigation, or to attempt to pursue any discovery. II. Remaining Issues in Litigation In the second amended complaint, Plaintiff clarified that the only claims against MetLife arose out of alleged violations of the Family Medical and Leave Act ("FMLA") and the Employee Retirement Income Security Act ("ERISA"). A. FMLA It is unclear what Plaintiff's theory against MetLife is under the FMLA. The FMLA generally provides for 12 weeks of medical leave if an employee has a serious health condition that makes the employee unable to perform the functions of the position of such employee. See 29 U.S.C. § 2612(a)(1)(D). MetLife, as the

administrator of AmEx's FMLA and salary continuation benefit programs approved Plaintiff's leave, with salary continuation benefits, for the twelve week period between November 7, 2002 through January 30, 2003. Consequently, MetLife could not have violated the FMLA by failing to approve requested leave. Plaintiff's portion of the joint case management plan suggested that "Defendants retaliated against and terminated her in violation of the [FMLA]."1 MetLife was only an administrator of AmEx's FMLA program. Any termination of Plaintiff would have been by AmEx, as her employer. Since Plaintiff has settled with AmEx, it does not appear that there is a viable FMLA claim remaining against MetLife. B. Salary Continuation Benefits As explained in the joint case management plan, AmEx provided Plaintiff with two types of disability benefits: salary continuation (short term disability) benefits; and long term disability ("LTD") benefits. MetLife administered both salary continuation
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and LTD benefits for AmEx. MetLife, however, only funded LTD benefits. AmEx remained responsible for paying any salary continuation benefits. Because AmEx paid salary continuation benefits out of its general assets, the program was a "payroll practice," exempt from the scope of ERISA. See 29 C.F.R. § 2510.3-1(b)(2) ("For purposes of [ERISA], the terms "employee we lfare benefit plan" and "welfare plan" shall not include . . . Payment of an employee's normal compensation, out of the employer's general assets, on account of periods of time during which the employee is physically or mentally unable to perform his or her duties, or is otherwise absent for medical reasons . . . ."); Stern v. IBM, 326 F.3d 1367, 1373 (short term disability insurance program paid out of employer's general assets is a "payroll practice" beyond the scope of ERISA). Because AmEx remained ultimately liable for salary continuation benefits, and Plaintiff has dismissed all claims against AmEx, there can be no claim against MetLife relating to salary continuation benefits. C. LTD Benefits The only possible claims remaining against MetLife are ERISA claims relating to LTD benefits. The first issue to be decided in determining whether Plaintiff can prevail on her ERISA claims relating to LTD benefits is the appropriate standard of review. An abuse of discretion standard applies to the Court's review of the denial of plaintiff's claim for LTD benefits because the Plan provides MetLife with discretionary authority to determine eligibility for benefits and construe Plan terms. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Indeed, a California District Court recently held that the abuse of discretion standard applies to LTD benefits under AmEx's Plan. Olive v. American Exp. Long Term Disability Ben. Plan, 183 F.Supp.2d 1191, 1194 (C.D. Cal. 2002). In reviewing a denial or termination of benefits under ERISA, the trial court essentially sits as an appellate tribunal, reviewing the decision made by the plan

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administrator. Leahy v. Raytheon Co., 315 F.3d 11, 18 (1st Cir. 2002). The Court is limited to reviewing the arguments and evidence presented to Defendants in deciding Plaintiff's claim, and no additional arguments, facts or evidence may be considered. Bendixen v. Standard Ins. Co., 185 F.3d 939, 942 (9th Cir. 1999); McKenzie v. General Tel. Co. of Cal., 41 F.3d 1310, 1316 (9th Cir. 1994). Under the abuse of discretion standard, MetLife's decision to deny benefits "should be upheld if it is based upon a reasonable interpretation of the plan's terms and was made in good faith." Abatie v. Alta Health & Life Ins. Co., 421 F.3d 1053, ____ (9th Cir. 8/31/05). Abuse of discretion exists only if the plan administrator either: (1) renders a decision without any explanation; (2) construes provisions of the plan in a way that conflicts with the plain language of the plan; or (3) relies on clearly erroneous findings of fact in making benefit determinations. Boyd v. Bell, 410 F.3d 1173, 1178 (9th Cir. 2005). Because the Court is limited to reviewing the administrative record to determine if MetLife abused its discretion in determining that the medical documentation submitted by Plaintiff did not demonstrate that she was unable to perform each of the material duties of her regular job, there should be no need for additional discovery. III. Suggested Deadlines MetLife suggests that the Court should allow Plaintiff until November 1, 2005 to retain new counsel, and that discovery should be completed no later than November 20. MetLife further suggests that the Court set the following briefing schedule on the abuse of discretion issue: 1. MetLife's opening brief - no later than November 30, 2005; 2. Plaintiff's response brief ­ no later than December 30, 2005; 3. MetLife's reply brief ­ no later than January 16, 2005.

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DATED: October 18, 2005 MOHR, HACKETT, PEDERSON, BLAKLEY & RANDOLPH, P.C. By /s/ Daniel P. Beeks Robert C. Hackett Daniel P. Beeks Suite 1100 2800 North Central Avenue Phoenix, Arizona 85004-1043 Attorneys for Defendant Metropolitan Life Insurance Company COPIES of the foregoing mailed October 18, 2005 to: The Honorable Susan R. Bolton United States District Court of Arizona 401 West Washington, SPC 50 Phoenix, AZ 85003-0001 Sybol Terrell-Sims P.O. Box 93428 Phoenix, Arizona 85070 Plaintiff

/s/ Daniel P. Beeks

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