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Boothe v. Deseret Mutual Benefit Administrators

United States District Court, D. Utah, Northern Division

June 27, 2017

KATHY BOOTHE, Plaintiff,
v.
DESERET MUTUAL BENEFIT ADMINISTRATORS, DESERET HEALTHCARE EMPLOYEE BENEFITS TRUST, Defendants.

          MEMORANDUM DECISION AND ORDERGRANTING [24] MOTION FOR SUMMARY JUDGMENTDENYING [35] MOTION FOR SUMMARY JUDGMENT

          David Nuffer District Judge.

         District Judge David Nuffer This is an ERISA case. Plaintiff Kathy Boothe's application under the ERISA plan (Plan) for disability benefits was denied by the Plan administrator, defendant Deseret Mutual Benefit Administrators (DMBA). The other defendant, Deseret Healthcare Employee Benefits Trust (Trust), is the Plan payor. DMBA and the Trust are collectively referred to as “Defendants.” Boothe and Defendants cross move for summary judgment.[1] Each party opposes the other's motion.[2] Defendants reply in support of their motion.[3] Boothe did not.[4]

         There are no disputed material facts. DMBA's decision to deny Boothe benefits was not arbitrary and capricious. Therefore, Defendants' Motion is GRANTED, and Boothe's Motion is DENIED.

         Table of Contents

         A. Preliminary Rulings ............................................................................................................ 2

         1. Boothe may supplement the Record in part. . .......................................................... 2

         2. There is no conflict of interest between the Trust and DMBA. . ............................. 5

         3. Nothing supports the allegation of supervisor interference. . .................................. 7

         B. Undisputed Material Facts .................................................................................................. 9

         C. Discussion ......................................................................................................................... 16

         1. DMBA's decision to deny Boothe benefits will be reviewed under the abuse of discretion standard. . .............................................................................................. 16

         2. DMBA's decision to deny Boothe benefits was not arbitrary or capricious. . ...... 18

         3. ERISA § 501(a)(3) does not apply ........................................................................ 21

         D. Order ................................................................................................................................. 24

         A. PRELIMINARY RULINGS

         Boothe makes numerous arguments that are best addressed at the outset. First, Boothe argues that there are grounds to expand the administrative record.[5] Because this is an ERISA case, the administrative record (Record) is significant. The Record should include the evidentiary bases for DMBA's denial of benefits. Second, Boothe argues that there is a conflict of interest between DMBA and the Trust.[6] And third, Boothe argues that her former supervisors interfered with the review of her disability application.[7]

         1. Boothe may supplement the Record in part.

         Boothe argues that there is a conflict of interest between DMBA and the Trust and that her former supervisors interfered with the claim review process.[8] To better address these arguments, Boothe seems to be asking for additional discovery[9] and to be permitted to supplement the record with two documents, [10] her affidavit[11] and Social Security Administration Retirement, Survivors and Disability Insurance Notice of Award (Notice of Award).[12]

         “It is the unusual case in which the district court should allow supplementation of the record.”[13] Courts are prohibited “from considering materials outside the administrative record where the extra-record materials sought to be introduced relate to a claimant's eligibility for benefits.”[14] “[I]nstances where the payor and the administrator are the same entity and the court is concerned about impartiality, ” however, may warrant the admission of additional evidence.[15]“[T]he party seeking to introduce [additional evidence must] demonstrate that it could not have been submitted to the plan administrator at the time the challenged decision was made.”[16] “The party moving to supplement the record or engage in extra-record discovery bears the burden of showing its propriety.”[17] “[T]he district court must bear in mind both the need for a fair and informed resolution of the claim and the need for a speedy, inexpensive, and efficient resolution of the claim.”[18] The party seeking to expand the record should file a motion to that effect before the deadline for dispositive motions.[19] Indeed, the Tenth Circuit has specifically criticized plan participants for failing to raise the need to refer to extra-record evidence prior to filing or responding to a motion for summary judgment.[20]

         In her opposition, Boothe states “[i]n order for Plaintiff to have [sic] privy to Defendants actions and bias it is imperative that she be allowed to present additional evidence outside of the administrative record.”[21] It is not clear whether Boothe is seeking additional discovery. If so, she should have made this request as a motion and filed it prior to submitting her opposition and prior to filing her own motion for summary judgment. Regardless, she has not satisfied her burden of “showing its propriety.”[22] Nothing suggests that it would result in a more “fair and informed resolution of the claim.”[23] She has not demonstrated that it would be anything more than “an unwieldy, burdensome, and speculative fishing expedition.”[24] It would undermine the “need for a speedy, inexpensive, and efficient resolution of the claim.”[25] Therefore, Boothe may not engage in additional discovery.

         Boothe seems to be arguing that she should be able to supplement the record with two documents.[26] In the section entitled “Additional Facts regarding conflict of interest, ”[27] Boothe references her personal affidavit.[28] And in the section entitled “Additional facts regarding substantial evidence of disability, ” Boothe references the Notice of Award.[29] The Notice of Award is from the Social Security Administration Retirement, Survivors and Disability Insurance.[30] Even though the affidavit could have been “submitted to the plan administrator at the time the challenged decision was made, ”[31] it is now part of the record and Boothe may refer to it. The Notice of Award, however, “relate[s] to [Boothe's] eligibility for benefits.”[32] As stated above, presenting extra-record materials in an attempt to reargue the eligibility of benefits is not permitted. The Notice of Award is not part of the record and Boothe may not refer to it.

         DMBA may likewise refer to the Declaration of Pamela J. Larsen, [33] Declaration of Lisa Bosley, [34] Declaration of Jana Sybrowsky, [35] and Declaration of Allison Neuteboom.[36] These documents are limited to Boothe's arguments that there is a conflict of interest between the Trust and DMBA and that her former supervisors interfered with the claims process.

         2. There is no conflict of interest between the Trust and DMBA.

         “Where a party is both the administrator and payor or insurer of a disability plan an inherent conflict exists.”[37]

         Boothe makes the conclusory assertion that “DMBA acts as both the administrator and the payor of the disability plan.”[38] She continues, “Defendants have admitted as such that they are the administrators of the Plan. Thus, there is an inherent conflict of interest and the review is less deferential.”[39] To what admission Boothe refers is not clear. She may be referring to one of the “Additional Facts regarding conflict of interest” that she includes in her opposition. She states:

         1. Defendants include as background facts essential facts regarding conflict of interest, namely:

The defendant Deseret Healthcare Employee Benefits Trust is a self-funded voluntary employees' beneficiary association, established under Section 501(c)(9) of the Internal Revenue Code, which provides for the payment of life, health, accident or other benefits to its members, who are employees of entities that are owned by or affiliated with The Church of Jesus Christ of Latter-day Saints. These benefits are collectively referred to and administered as a single “Deseret Healthcare Employee Benefits Plan.” (Def. Motion for summary judgment “Separate Background Statement of Facts” paragraph 1.) The defendant DMBA is a non-profit corporation, separate from the Trust, which acts as trustee of the Trust and handles claims administration for the Trust and processes claims for benefits. Id. at para. 3.

         This paragraph does not support an argument for an inherent conflict of interest. It undercuts it. Boothe seems to misunderstand or ignore the difference between DMBA and the Trust. Pamela J. Larsen, “Director and Senior Associate Counsel at Deseret Mutual Employee Benefits Trust, ”[40] details the nature of the relationship between the two.[41] She summarizes: “The Trust is the payor of the Plan. DMBA administers the Plan and by so doing makes benefit eligibility determinations in accordance with the Plan's specifications. But payment under the Plan is not made by DMBA. It is made by the Trust.”[42] Boothe never addresses this distinction. The distinction, however, eliminates any issue of inherent conflict.

         Therefore, there are no facts on the record that demonstrate an inherent conflict of interest between DMBA and the Trust. Boothe's related arguments fail.

         3. Nothing supports the allegation of supervisor interference.

         Boothe also argues that “[a] conflict exists in the present case where the [sic] Ms. Boothe worked directly for and was ultimately fired by the persons making the decision on her disability application.”[43] Specifically, Boothe argues that Allison Neuteboom, who had been her direct supervisor was “a member of the [Claims Review Committee] meeting that upheld the denial of [Boothe's] application.”[44] And that Jana Sybrowsky, a DMBA executive with whom Boothe had worked, “had intervened in the claim and caused the initially favorable decision to be changed to unfavorable.”[45] Boothe argues that Neuteboom and Sybrowsky, who allegedly had personal biases against her, were given the opportunity to harm her efforts to obtain disability benefits because “the administrator took no precautions to protect [Boothe's] identity.”[46]

         It is true that a conflict of interest can be created “when corporate officers and directors serve in a dual fiduciary capacity, with simultaneous duties running both to beneficiaries, in their capacity as plan trustees, and to shareholders, as directors of the corporation.”[47] But Boothe's argument does not suggest this type of conflict. Instead, Boothe seems to be arguing that her former supervisors interfered with her protected rights, a claim that would properly be brought under Section 510 of ERISA.[48]

         “In order to state a section 510 claim a plaintiff must allege: 1. prohibited employer conduct; 2. taken for the purpose of interfering; 3. with the attainment of any right to which the employee may become entitled.”[49]

         Even construing Boothe's allegations against her former supervisors as Section 510 claims, Boothe fails to fully allege or support the requisite elements. First, regarding Allison Neuteboom, Boothe has misread the record. The CRC minutes from December 4, 2014, state that Allison Neuteboom was in attendance.[50] Boothe's claim was not discussed on December 4, 2014.[51] The minutes for the January 29, 2015, meeting immediately follow the minutes for the December 4, 2014, meeting.[52] Boothe's claim was discussed in the January 29, 2015, meeting.[53]Allison Neuteboom was not in attendance.[54] Boothe seems to have carried the attendance list over from one meeting to another. Neuteboom avers that she is not a member of the CRC and that she did not attend that January 29, 2015, meeting.[55] Pamela J. Larsen makes similar averments.[56] In short, Boothe's arguments against Neuteboom are weak and unsupported.

         Second, regarding Jana Sybrowsky, Boothe's averments fail to support a 510 claim. Boothe states “I was informed by Lisa Bosley, who handled my claim, that my claim had been approved. However, I was later informed by Lisa that Jana Sabrowski, one of the vice presidents, had pulled the claim and changed it to a denial.”[57] Bosley flatly denies making those statements: “I never told Ms. Boothe that her application had been approved, and I never told her that Ms. Sybrowsky had caused her application to be denied.”[58] And Sybrowsky denies having anything to do with Boothe's denial:

I hereby attest to the fact that I had nothing whatsoever to do with DMBA's denial of Ms. Boothe's application for disability benefits. I was not involved in any degree with the decision to deny her application. And I certainly did not intervene in any respect in DMBA's process of evaluating and eventually denying Ms. Boothe's application. That process was undertaken completely independent of me.[59]

         Putting the possible evidentiary issues aside, Boothe's assertions regarding Sybrowsky are insufficient to rise to the level of interference. Supposing that Sybrowsky could and did intervene to change Boothe's claim status, there is nothing to indicate that intervening was necessarily prohibited conduct. Or that Sybrowsky did that for the express purpose of interfering, as opposed to fulfilling a fiduciary obligation she may have to the beneficiaries or shareholders. Simply stated, Boothe fails to show interference.[60]

         Finally, DMBA's efforts to protect Boothe's information were satisfactory. And anyway, given the rulings above, this argument is moot. Therefore, Boothe's arguments regarding supervisor interference fail. Any facts related to these arguments are immaterial.

         B. UNDISPUTED MATERIAL FACTS

         The following Undisputed Material Facts are quoted directly from Defendants' Motion. Boothe makes general observations about each fact listed in the Motion.[61] She does not make the effort to respond to each allegation individually.[62] Nor does she dispute the allegations. Instead, she copies wholesale the facts listed in her separate motion[63] and labels them “Additional Facts regarding conflict of interest”[64] and “Additional facts regarding substantial evidence of disability.”[65] This practice violates DUCivR 56-1(c) and is strongly discouraged. Many of Boothe's Additional Facts are-at best-repetitive and overlap with those listed in the Motion; others misrepresent or misinterpret the Record.

         1. The defendant Deseret Healthcare Employee Benefits Trust is a self-funded voluntary employees' beneficiary association, established under Section 501(c)(9) of the Internal Revenue Code, which provides for the payment of life, health, accident or other benefits to its members, who are employees of entities that are owned by or affiliated with The Church of Jesus Christ of Latter-day Saints. These benefits are collectively referred to and administered as a single “Deseret Healthcare Employee Benefits Plan.”[66]

         2. The Trust also qualifies for exemption from federal income tax under Section 501(c)(9) of the Internal Revenue Code, because no part of the net earnings of the Trust inures, other than by payment of life, sick, accident, or other benefits to its members or their dependents or designated beneficiaries, to the benefit of any private shareholder or individual, and substantially all of its operations are in furtherance of providing these benefits.[67]

         3. The defendant DMBA is a non-profit corporation, separate from the Trust, which acts as trustee of the Trust and handles claims administration for the Trust and processes claims for benefits.[68]

         4. Boothe was an employee at DMBA commencing in approximately 1991, and worked most recently as an auditor in DMBA's Member Services department. Boothe provided support for retirement benefits administered by DMBA under a separate Deseret Mutual Employee Pension Plan Trust.[69]

         5. DMBA provided Plan benefits to certain of its own employees, including Boothe.[70]

         6. Boothe, during her employment with DMBA, was a participant in the Plan.[71]

         7. The Plan provides benefits for eligible employees who are “unable to perform at least 70% of [their] regular job duties because of illness or injury as documented by objective medical evidence.”[72]

         8. The Plan definition of disability varies based upon the duration of the benefit payments:

During the first six months of disability payments your benefit eligibility is determined by your inability to work in your own occupation. To qualify for disability benefits, you must have a disabling injury or illness that prevents you from performing at least 70% of the duties of your regular occupation.
After the first six months of disability payments, your benefit eligibility is determined by your inability to work in any occupation. This means to qualify for disability benefit payments, your disability must prevent you from holding a comparable job (any job in the national economy in which you have the ability to earn 70% of your regular monthly income that was in effect on the last day you worked before you became disabled, or your predisability income).[73]

         9. The Plan specifies that “[c]overage automatically ends on the earliest of the following dates: The day your employment ends, either voluntarily or involuntarily, such as retirement or termination . . . .”[74]

         10. The Plan, under a section heading entitled “Notification of Discretionary Authority, ” states that “Deseret Mutual has full discretionary authority to interpret the Plan and to determine eligibility.” “Deseret Mutual also has the sole right to construe the plan terms.” “All Deseret Mutual decisions relating to plan terms or eligibility are binding and conclusive.”[75]

         11. On April 24, 2012, Boothe was involved in an automobile accident.[76]

         12. As a result of injuries sustained in the automobile accident, Boothe alleges to have suffered various ailments.[77]

         13. Boothe received treatment from Dr. David B. Thompson, DC, commencing on April 27, 2012, and continuing thereafter.[78]

         14. Boothe also received treatment from an orthopedic doctor, Dr. Dennis J. Wyman, MD, commencing on May 14, 2012, and continuing thereafter.[79]

         15. During treatment with Dr. Thompson between April 27, 2012, and November 2, 2012, Boothe's self-reporting of the pain she was suffering diminished from a report of 7 on a scale of 1 to 10 down to a range from 3 to 5 out of 10.[80]

         16. During that same treatment window with Dr. Thompson, Dr. Thompson's assessment of Boothe's medical improvement over time increased from 5% on May 9, 2012, to 55% on November 2, 2012.[81]

         17. On May 14, 2012, Dr. Wyman evaluated Boothe in connection with a Family and Medical Leave Act (“FMLA”) physician's certification and indicated that Boothe “[w]ill be able to work 40 hrs/wk if allowed to work from home.”[82]

         18. This recommendation was conditioned upon a recommended four-day work-week with one day in the office and three days at home.[83]

         19. Boothe's work schedule was adjusted to accommodate this recommendation.[84]

         20. Dr. Wyman's recommendation continued unchanged in a subsequent letter dated July 17, 2012.[85]

         21. Boothe's employment at DMBA ended on November 2, 2012.[86]

         22. On December 29, 2012, Boothe completed an application for disability benefits under the Plan.[87]

         23. On January 15, 2013, in connection with Boothe's application for disability benefits, Dr. Wyman submitted a physician's statement regarding Boothe's condition.[88]

         24. In the January 2013 physician's statement, Dr. Wyman reported with regard to work restrictions that Boothe “can work from home as before” and to “see FMLA forms from July 2012.”[89]

         25. On March 1, 2013, DMBA received an independent report from Medical Review Institute of America, Inc. (“MRIoA”).[90]

         26. In the report, a board certified physician reviewed and reported on the various claims for alleged disabling conditions.[91]

         27. The MRIoA review included evaluation of clinical records, including physician statements, office notes, correspondence, and an MRI report.[92]

         28. The MRIoA physician determined that the clinical findings do not substantiate a disability, and that Boothe had not presented sufficient documentation to reasonably conclude that she was eligible for disability benefits.[93]

         29. This was due in part to physician reports of normal sensation and gait in Boothe's examination one month after the accident and no loss of motor power from that time period despite the claim for disability on these grounds in January 2013.[94]

         30. On March 8, 2013, DMBA denied Boothe's application.[95]

         31. On June 4, 2014, Boothe, through counsel, appealed DMBA's denial of benefits.[96]

         32. The stated grounds for such appeal were that DMBA's determination “was based on an improper focus on a few physical exam findings, ” “appeared to focus solely on one medical condition, ” and “does not place proper consideration on the opinions and findings of treating medical providers.”[97]

         33. On July 1, 2014, DMBA responded to the Boothe appeal and affirmed the prior denial of benefits.[98]

         34. In the July 1 response, DMBA confirmed for Boothe that “[a]ll documentation provided by the Participant was reviewed by [DMBA] and… MRIoA, ” that DMBA “reviewed all medical documentation provided by the Participant, ” and that all “medical documentation presented by the Participant from the treating medical providers was evaluated by both [DMBA] and MRIoA….”[99]

         35. On August 27, 2014, Boothe, through counsel, submitted a further appeal of DMBA's denial of benefits.[100]

         36. On November 6, 2014, Boothe supplemented the August 27 appeal with a restated and additional argument and a Vocational Assessment Report dated November 5, 2014.[101]

         37. On January 29, 2015, the DMBA Claims Review Committee (“CRC”) met to consider Boothe's appeal of the prior denial of benefits.[102]

         38. The CRC was presented with a factual history of the claims administration.[103]

         39. The CRC was also presented a redacted copy of the November 6, 2014 appeal letter, removing only personal identifying information to ensure that the CRC review was confidential and without ...


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