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Masuda-Cleveland v. Life Insurance Company of America

United States District Court, D. Hawaii

January 31, 2017




         Before the Court is Plaintiff Marnie Masuda-Cleveland's (“Plaintiff”) Motion to Determine Scope of Administrative Record (“Administrative Motion”), filed on August 24, 2016. [Dkt. no. 33.] Defendant Life Insurance Co. of North America (“Defendant”) filed its memorandum in opposition on September 30, 2016, and Plaintiff filed her reply on October 17, 2016. [Dkt. nos. 40, 44.] Also before the Court is Plaintiff's Motion to Determine Applicable Standard of Review (“Standard of Review Motion”), filed on September 9, 2016. [Dkt. no. 35.] Defendant filed a memorandum in opposition on September 30, 2016.[1] [Dkt. no. 38.] Both motions came on for hearing on November 7, 2016. After careful consideration of both motions, supporting and opposing memoranda, and the arguments of counsel, the Administrative Motion and the Standard of Review Motion are HEREBY DENIED for the reasons set forth below.


         Plaintiff's Complaint, filed on February 9, 2016, challenges Defendant's denial of accidental death benefits after the untimely passing of Plaintiff's husband, Harlan Masuda (“Masuda”). [Dkt. no. 1.] The Complaint states that: Masuda was driving towards Baldwin Beach Park in Pa`ia, Maui on February 11, 2014; he stopped the car before the entrance, and then proceeded forward, sideswiping Lifeguard Glenn Larson's (“Larson”) truck; Larson approached Masuda's car and saw him “laughing, ” “spinning in his seat, ” and “stepping on the gas and revving his engine”; Masuda's car reached a barrier, and he continued to rev the engine until the barrier tipped over; and “the truck took off across the field at a high rate of speed and then collided into a coconut tree on the opposite side of the field.” [Complaint at ¶ 8a.-d.] Plaintiff argues that Masuda died as the result of “fatal head injuries” caused by a car accident. [Id. at ¶ 8e.]

         Masuda worked for Hawaiian Electric Industries, Inc. (“Hawaiian Electric”), and, pursuant to 29 U.S.C. § 1002(7), [2] was a participant in its Group Accident Plan (“the Plan”). [Id. at ¶ 4.] Plaintiff contends that she “is a beneficiary of the group accidental death plan issued to her husband . . . that was underwritten by [Defendant], pursuant to 29 U.S.C. [§] 1002(8).”[3][Id.] Defendant administered the Plan under Group Accident Policy No.: OK 820810 (“the Policy”).[4] [Id. at ¶ 5.] After Masuda's death, Plaintiff submitted a claim for accidental death benefits. [James Decl., Exh. G.] Plaintiff's claim was denied on May 20, 2014 (“5/20/14 Denial”). [Id., Exh. L.] Plaintiff filed her first appeal on November 5, 2014 (“First Appeal”), [5]which Defendant denied on December 18, 2014 (“12/18/14 Denial”).[6][Id., Exh. Q (First Appeal); id., Exh. S (12/18/14 Denial).] Plaintiff filed a second appeal on June 15, 2015, and submitted an additional document on June 16, 2015 (collectively “Second Appeal”). [Id., Exhs. U, V.] Defendant denied the Second Appeal on August 20, 2015 (“8/20/15 Denial”).[7] [Id., Exh. AA.]

         On August 24, 2015, Plaintiff requested a copy of all documents upon which the 8/20/15 Denial was based (“8/24/15 Letter”), which Defendant provided on September 9, 2015 (“9/9/15 Letter”). [Id., Exh. BB (8/24/15 Letter); id., Exh. CC (9/9/15 Letter).] On November 5, 2015, Plaintiff requested a review of the 8/20/15 denial because she alleged that it “raised an entirely new and different theory” (“11/5/15 Letter”).[8] [Mem. in Supp. of Administrative Motion, Decl. of Jeffrey C. Metzger (“Metzger Administrative Motion Decl.”), Exh. A.] Attached to the 11/5/15 Letter were letters from: (1) Lindsey Harle, M.D. (“Dr. Harle Letter”), dated October 20, 2015; [id., Exh. B;] (2) Peter W. Rossi, M.D. (“Dr. Rossi Letter”), dated September 25, 2015; [id., Exh. C;] and (3) Joana H. Magno, M.D. (“Dr. Magno Letter, ” and collectively “Doctors' Letters”) [id., Exh. D].[9] On November 18, 2015, Defendant informed Plaintiff that she had exhausted her appeals. [James Decl., Exh. DD.] On November 30, 2015, Plaintiff again requested a review of the 8/20/15 Denial, and included the Doctors' Letters. [Metzger Administrative Motion Decl., Exh. E.] On December 21, 2015, Defendant wrote Plaintiff and reminded her that her appeals had been exhausted, and denied adding a new theory of denial. [James Decl., Exh. EE.] The instant suit followed.

         Plaintiff brings her claims pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, 29 U.S.C. § 1132(a)(1). [Complaint at ¶ 1.] Plaintiff argues that she was denied a full and fair review of her benefits claim. [Id. at ¶ 30.] Plaintiff seeks attorneys' fees and costs, [id. at ¶ 39, ] and equitable relief in the form of: the addition of the Doctors' Letters to the administrative record; an order enjoining Defendant from denying Plaintiff's claim; and an order removing Defendant as the “plan and/or claims administrator” for Plaintiff's claim [id. at ¶ 40]. Plaintiff also seeks: accidental death benefits under the Plan, plus interest; a declaration that Masuda's death was accidental; a declaration that Defendant violated the Plan's terms; and any other relief the Court “deems just and proper.” [Id., Prayer for Relief ¶¶ 1-3, 7.[10]

         I. Administrative Motion

         The Ninth Circuit has stated:

When a plan administrator has failed to follow a procedural requirement of ERISA, the court may have to consider evidence outside the administrative record. . . . We follow the Sixth Circuit in holding that, when an administrator has engaged in a procedural irregularity that has affected the administrative review, the district court should “reconsider [the denial of benefits] after [the plan participant] has been given the opportunity to submit additional evidence.” VanderKlok v. Provident Life & Accident Ins. Co., 956 F.2d 610, 617 (6th Cir. 1992).
Even when procedural irregularities are smaller, though, and abuse of discretion review applies, the court may take additional evidence when the irregularities have prevented full development of the administrative record. In that way the court may, in essence, recreate what the administrative record would have been had the procedure been correct.

Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 972-73 (9th Cir. 2006) (some alterations in Abatie).[11] Plaintiff argues that the Court should consider the Doctors' Letters as part of the administrative record because, by including a “new reason” in the 8/20/15 Denial and failing to give Plaintiff copy of the Denton Report, Plaintiff was denied a full and fair review. [Mem. in Supp. of Administrative Motion at 5, 9.] The Court will address each of these arguments in turn.

         A. The “New Reason” in the 8/20/15 Denial

         Plaintiff argues:

Defendant's initial determination denying Plaintiff's claim, and its determination rejecting Plaintiff's first appeal, both asserted that a) Masuda died from the injuries suffered in the accident, and b) Masuda suffered some medical event, that . . . the second denial speculated was either a heart attack or a seizure, that was the etiology or cause of the crash. Plaintiff is only required to appeal the grounds upon which the claim is denied. As there was no dispute, therefore, that Masuda's death was from the injuries in the accident, there was nothing for Plaintiff to appeal on that issue.
Defendant's flip-flop in the “final denial” to claiming that Masuda's death did not occur from his head injuries, but was from a “cardiac event” (and added that it might have been an arrhythmia that Masuda suffered if not a heart attack) is precisely the kind of last-minute excuse to reject a claim to which the Abatie court wrote of.

[Mem. in Supp. of Administrative Motion at 8-9.]

         The Ninth Circuit has found a denial of a fair review in violation of ERISA where the reasoning for the decision is “shifting, ” “inconsistent, ” or “illogical.” Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 678 (9th Cir. 2011). In Salomaa, the plaintiff - a car company employee with an impeccable employment record - was diagnosed with chronic fatigue syndrome. Id. at 668-69. The plaintiff applied for disability benefits, appealed the defendant's determination, and filed a suit in federal district court, but he was denied each time. Id. at 670-73. The Ninth Circuit considered the standard of review the district court should have applied, id. at 673-76, as well as the “reasonableness” of the denial of the plaintiff's claim, id. at 676-80. In examining the plan administrator's reasons for denial, the Ninth Circuit observed:

The plan's reasons for denial were shifting and inconsistent as well as illogical. The initial denial says that there were “no specific serial descriptions of appearance or physical signs consistent with chronic fatigue syndrome, ” but the final denial omits any mention of physicians' observations, because the physicians' letters to CIGNA are replete with dramatic descriptions of their observations of Salomaa's appearance and physical condition. About the only thing that stays the same from the initial denial to the final denials is the irrelevant emphasis on absence of objective evidence such as blood tests.

Id. at 678.

         While Plaintiff argues that the same thing happened here - namely, that “Defendant . . . added a new reason and basis for denial in its rejection of Plaintiff's second appeal” [Mem. in Supp. of Administrative Motion at 9] - the record says otherwise. The Policy states that, We agree to pay benefits for loss from bodily injuries:

a) caused by accident which happens while an insured is covered by this policy; and b) which, directly and from no other causes, resulted in a covered loss. . . .
We will not pay benefits if the loss was caused by:
a) sickness, disease, or bodily infirmity; or b) any of the Exclusions listed in the policy.

[The Policy at 4.[12]

         The 5/20/14 Denial explains:

Documentation received and reviewed indicates that Harlan Masuda passed away on 2/11/2014 after sustaining blunt force injuries in a single vehicle crash. Information on file supports that Mr. Masuda suffered a medical event while driving, which resulted in his crash. This is supported by not only the Coroner, but multiple witnesses, who stated that there was no breaking or avoidance maneuvers as Mr. Masuda sped toward the coconut tree. In his review of the case file, in-house Medical Director, Dr. Hall, stated that “with the history of the bizarre, immediate events prior to the crash, the past medical history of prediabetes, hypertension, and dyslipidemia and the autopsy findings of ...

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