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Seamons v. Deseret Mutual Benefit Administrators

United States District Court, D. Utah, Central Division

January 9, 2017

RONALD E. SEAMONS, Plaintiff,
v.
DESERET MUTUAL BENEFIT ADMINISTRATORS, Defendant.

          MEMORANDUM DECISION AND ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

          David Nuffer, United States District Judge

         Plaintiff Ronald E. Seamons seeks an award of benefits under 29 U.S.C. § 1132(a)(1)(B) for the death of his wife, Karen Seamons, who was enrolled in a group life benefits plan sponsored by defendant, Deseret Mutual Benefit Administrators (“DMBA” or Defendant). Mr. Seamons has filed a motion[1] for summary judgment (“Motion”) on his claim for benefits.[2] After careful review and consideration of the parties' memoranda, the pre-litigation record, [3] and the applicable law, Plaintiff's Motion is denied for the reasons set forth below.

         Table of Contents

UNDISPUTED FACTS .................................................................................................................. 2
STANDARD OF REVIEW .......................................................................................................... 10
DISCUSSION ............................................................................................................................... 11
1. The Arbitrary and Capricious Standard Applies to the Plan Administrator's Actions .................................................................................................................. 11
2. DMBA Decision To Deny Mr. Seamons's Claim And Rescind His Coverage Was Not Arbitrary Or Capricious ................................................................................. 15
A. DMBA did not act arbitrarily or capriciously in its decision to not further investigate Mrs. Seamons's medical records ............................................ 15
B. DMBA's determination that Mrs. Seamons made a misstatement on the Paramedical Exam questionnaire was reasonable and supported by substantial evidence .................................................................................. 17
C. The actual cause of Mrs. Seamons's death is immaterial to DBMA's decision to rescind coverage ..................................................................... 20

         ORDER ......................................................................................................................................... 21

         UNDISPUTED FACTS

         1. In 1994, Ron and Karen [Seamons] enrolled in the group life . . . benefit plan sponsored by BYU and administered by DMBA.[4]

         2. Ron and Karen [Seamons] applied for supplemental coverage under the group life . . . benefit . . . in the amount of $ 200, 000.00 in 2012.”[5]

         3. On the application for supplemental coverage, Karen answered “yes” to each of the following questions:

Do any of the persons listed here have (or have they had) any of the following? . . . If you answered “yes” to any of the items listed, give full details below.
Current prescription medication (list below name of drug, illness being treated, and duration) . . .
Heart disorder, enlarged heart, murmur, irregular heart beats, chest pain . . . Liver, kidney, ureter, gallbladder, pancreas, thyroid disorders, hepatitis . . .
Respiratory or lunch disease, asthma, shortness of breath, pneumonia[.][6]

         4. Karen went on to provide information about her prescription medications and the pacemaker procedure she had undergone in 2003.[7]

         5. DMBA wrote to Ron on February 21, 2012, after receiving the application, and requested that he provide:

a statement from Karen's cardiologist regarding her pacemaker. Include the diagnosed cardiac condition requiring pacing, any cardiac related hospitalizations, symptoms, functional capacity, pacer log, past EKGs, the current status and the prognosis.[8]

         6. Ron provided the requested medical records to DMBA.[9]

         7. The records provided by Ron to DMBA were records from Chun Hwang, M.D., Karen's cardiologist. On his February 18, 2010 office note, Dr. Hwang indicated under “Assessment:” “POTS and near syncope.” Dr. Hwang also indicated Karen's prescription for Lexapro.[10]

         8. Dr. Hwang went on to note: “Pt has possibly depressive disorder and no arrhythmic events.”[11]

         9. A “Paramedical Exam” [for Karen] was completed on March 8, 2012.[12]

         10. One of the questions during the [P]aramedical [E]xam asked whether Karen had [“ever consulted a medical practitioner, or so far as you know, been treated for any:”]

Disorder of the brain or nervous system (e.g. mental illness, seizure, fainting or loss of consciousness, severe headaches, tremors, etc.)
Karen's response to this question was “no”.[13]

         11. The notes compiled during the [P]aramedical [E]xam document Karen's cardiac condition and her depression and anxiety.[14]

         12. Ron and Karen's application for supplemental coverage was approved by DMBA in the amount of $150, 000.00.[15]

         13. Karen died on May 5, 2013. The cause of death indicated on the Certificate of Death was:

Cardiac Arrest Due to (or as consequence of):
Due to (or as a consequence of): Cardiac Cachexia [Onset: 1 Month].
Due to (or as a consequence of): Cardiac Arrhythmia [Onset: 9 Years].
Other significant conditions: Dementia
Tobacco Use: Non-user
Medical Examiner Contacted: No Autopsy Performed: No
Manner of Death: Natural[16]

         14. Ron submitted an application for the life . . . benefits. DMBA contacted Ron on May 15, 2013 and informed him that a review of the claim was required because Karen's death had occurred less than two years after the supplemental coverage was approved. DMBA requested the following information from Ron:

Date of diagnosis of her dementia or related brain/neurological condition[.] Include complete diagnosis, symptoms and date treatment began[.] Date of diagnosis of her cardiac cachexia.[17]

         15. The information subsequently provided by Mr. Seamons to DMBA revealed that Mrs. Seamons was referred to neurologist Jeff Groves by Dr. James Clark “for memory loss evaluation, ” which evaluation occurred on January 16, 2012.[18]

         16. [Although] Dr. Grove's[] and her primary care physician, Dr. Clark['s names were provided] on the form completed during the [P]aramedical [E]xam.[19]

         17. Mrs. Seamons failed to disclose that Dr. Groves is a neurologist.[20]

         18. Mrs. Seamons did not disclose that Dr. Clark referred her to a neurologist[, Dr. Groves].[21]

         19. [Mrs. Seamons did not disclose that a]s recommended by Dr. Clark, Mrs. Seamons was evaluated by Dr. Groves, a neurologist.[22]

         20. Dr. Groves' evaluation of Mrs. Seamons' revealed “possible underlying hypoxic encephalopathy [brain damage from lack of oxygen]” and discussed getting an MRI for Mrs. Seamons' brain.[23]

         21. Mrs. Seamons failed to disclose that, at the recommendation of Dr. Groves, she had recently undergone an extensive neuro[psychological] evaluation [on February 21, 2012 administered by Kent H. Gregory, Psy.D].[24]

         22. Dr. Gregory's Neuropsychological Examination was a comprehensive evaluation for Karen and noted serious deficits in Karen's memory functioning. Dr. Gregory observed that Karen was experiencing significant emotional distress in coping with her declining health and was “displaying a number of potentially troubling psychological symptoms.”[25]

         23. Dr. Gregory's diagnoses included “Cognitive Disorder NOS [not otherwise specified]” and “Adjustment Disorder with Mixed Anxiety and Depressed Mood, Chronic.”[26]

         24. Dr. Gregory recommended occupational therapy, along with speech and physical therapy, to address Karen's memory and attention problems and suggested that psychotherapy could be helpful in addressing Karen's ongoing depression and other psychological issues.[27]

         25. The neuro[psychological] evaluation resulted in Mrs. Seamons being diagnosed with Cognitive Disorder NOS.[28]

         26. The only treatment Mrs. Seamons disclosed she had received at Utah Valley Regional Medical Center is her pacemaker operation in 2003.[29]

         27. Mrs. Seamons signed the Paramedical Exam on March 8, 2013, wherein it states,

I declare that all information contained with this Paramedical Exam is, to the best of my knowledge, true, correct, and recorded in its entirety by the examiner. I understand that this information will be used to help determine eligibility for coverage and that any falsification, omission or misstatement may be grounds to void the coverage.[30]

         28. On May 22, 2013, DMBA wrote again to Ron and stated that during the review of the claim, information had come to light to indicate that a “materially significant medical condition” has been diagnosed prior to the application for supplemental coverage and had not been disclosed on the application or during the underwriting process. As a result, DMBA was rescinding the supplemental coverage and stated that Ron's premiums would be reimbursed to him.[31]

         29. Underwriting guidelines utilized by DMBA state that diagnoses of “mild cognitive impairment, delirium, or dementia” indicates a level of unacceptable risk and “[i]ndividuals with this impairment are generally not considered good candidates for preferred consideration.”[32]

         30. Ron emailed an appeal of DMBA's denial and on May 28, 2013, DMBA upheld the rescission of the supplemental coverage. DMBA maintained its position that Karen had failed to disclose a materially significant medical condition on the application.[33]

         31. Ron retained the services of an attorney, Brian Harrison, to assist him in pursing his claim for the supplemental benefit. Following the telephone conversation between DMBA and Mr. Harrison, DMBA wrote [a letter, on July 1, 2013, providing information regarding its prior denial].[34]

         32. DMBA supported its position that a diagnosed condition had not been disclosed with the enclosure of records from Maple Creek, a hospice program where Karen had been evaluated for services. The “Oasis Assessment Worksheet” completed for Maple Creek by Carma Karsten, indicated that Karen had a “tx of dementia which was diagnosed 9 yrs ago.”[35]

         33. DMBA also included with its [July 1, 2013] letter the records of a Neuropsychological Examination completed for Karen on February 21, 2012 by Kent Gregory, Psy.D., [36] and the notes from DMBA's March 8, 2012 Paramedical exam.[37] [The records of the Neuropsychological Examination of February 21, 2012 by Kent Gregory, Psy.D. were first provided by the plaintiff to DMBA after Mrs. Seamons died, in response to its request for additional information.][38]

         34. DMBA asserted in its letter that Karen's answer of “no” to the question on the Paramedical Exam about disorders of the brain misrepresented her medical conditions as she had undergone the Neuropsychological Examination approximately two weeks earlier.[39]

         35. Mr. Harrison submitted an appeal on Ron's behalf and included a number of medical records in support of his argument that Karen had not been diagnosed with dementia prior to her application for supplemental coverage.[40]

         36. Mr. Harrison's appeal also included an Affidavit from Carma Karsten, the individual who had completed the assessment for hospice care at Maple Creek. Ms. Karsten swore in her Affidavit that her statement about Karen's diagnosis of dementia was in error. Mr. Karsten stated that she had reviewed Karen's medical records and found no diagnosis of dementia.[41]

         37. Ms. Karsten also stated that the neuropsychological evaluation was in connection with Karen's depression and memory issues and not dementia.[42]

         38. All of Karen's medical care providers' records[, which were provided to DMBA after Mrs. Seamons' death, ][43] document ongoing depression and anxiety as a major contributing factor to her memory problems.[44]

         39. On October 24, 2013, DMBA maintained its denial.[45]

         40. Ron exhausted the prelitigation appeal process as required by ERISA.[46]

         41. Ron retained the services of the Law Firm of Brian S. King (“the Firm”) to assist him in litigating his claim. The Firm filed its ...


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