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Galuszka v. Reliance Standard Life Insurance Co.

United States District Court, D. Vermont

January 9, 2017



          Christina Reiss, Chief Judge United States District Court

         In this lawsuit, Plaintiff David Galuszka seeks an award of continued and past due disability benefits from Defendant Reliance Standard Life Insurance Company ("Reliance") pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§1001-1461. Based upon the administrative record ("AR") before the court, Mr. Galuszka requests a determination that he is "totally disabled" within the meaning of Reliance's group long term disability ("LTD") insurance policy LTD 120310 ("the Policy") issued to his former employer Northwestern Medical Center, Inc. ("NMC"). On July 8, 2016, the parties filed cross motions for judgment on the AR (Docs. 22 & 24).

         On July 6, 2016, Mr. Galuszka moved to supplement the AR to include four documents (Doc. 20). Reliance agreed that the AR may be supplemented with two of these documents: a July 21, 2014 letter from Mr. Galuszka's counsel to Reliance appealing the denial of coverage under group term life insurance and supplemental group term life insurance policies GL146604 and GL146608 (the "Life Insurance Policies") (Doc. 20-1); and Reliance's August 25, 2014 letter to Mr. Galuszka's counsel regarding its denial of coverage under the Life Insurance Policies (Doc. 20-2).

         Reliance opposes Mr. Galuszka's request to supplement the AR with two additional documents: a January 17, 2014 letter from his Social Security Disability Insurance ("SSDI") claim representative, Allsup, Inc. ("Allsup"), to the Social Security Administration ("SSA") (the "Allsup letter") (Doc. 20-3); and the SSA's March 17, 2014 fully favorable decision awarding Mr. Galuszka SSDI benefits based on a finding that he is disabled within the meaning of the Social Security Act (the "SSDI Decision") (Doc. 20-4).

         On July 12, 2016, the court granted Mr. Galuszka's motion to supplement the AR to the extent it was unopposed and deferred ruling on the remainder. After oral argument on October 24, 2016, the court took the pending motions under advisement.

         Mr. Galuszka is represented by Arthur P. Anderson, Esq. Reliance is represented by Andrew S. Davis, Esq. and Byrne J. Decker, Esq.

         I. The Policy.

         The Policy states that Reliance will pay monthly benefits under the Policy if the insured:

(1) is Totally Disabled as the result of a Sickness or Injury covered by this Policy;
(2) is under the regular care of a Physician;
(3) has completed the Elimination Period; and
(4) submits satisfactory proof of Total Disability to [Reliance].


         The Policy defines "Total Disability" and "Totally Disabled" to mean that "as a result of an Injury or Sickness:"

(1) during the Elimination Period and for the first 24 months for which a Monthly Benefit is payable, an Insured cannot perform the material duties of his/her regular occupation; . . . and
(2) after a Monthly Benefit has been paid for 24 months, an Insured cannot perform the material duties of any occupation. Any occupation is one that the Insured's education, training or experience will reasonably allow. We consider the Insured Totally Disabled if due to an Injury or Sickness he or she is capable of only performing the material duties on a part-time basis or part of the material duties on a [f]ull-time basis.

(AR 10.)

         The Policy provides that, at its expense, Reliance has the right to have a claimant "interviewed and/or examined . . . physically[, ] psychologically[, ] and/or psychiatrically" "to determine the existence of any Total Disability which is the basis for a claim" and "[t]his right may be used as often as it is reasonably required while a claim is pending[.]" (AR 14.)

         The Policy calculates an Insured's benefit by determining a percentage of the Insured's monthly earnings using a schedule of benefits and subtracting "Other Income Benefits" "resulting from the same Total Disability" which includes "disability or Retirement Benefits under the United States Social Security Act[.]" (AR 18.) The Policy states that "[i]f we have overpaid the Monthly benefit for any reason, the overpayment must be repaid to us." (AR 19.)

         II. Whether to Supplement the Administrative Record.

         The court "may expand its review of an administrative decision beyond the record in front of the claims administrator upon finding 'good cause' warranting the introduction of additional evidence." Krizek v. Cigna Grp. Ins., 345 F.3d 91, 97 (2d Cir. 2003) (citing Zervos v. Verizon N.Y., Inc., 277 F.3d 635, 646 (2d Cir. 2002)); see also DeFelice v. Am. Int'l Life Assurance Co. of N.Y., 112 F.3d 61, 66 (2d Cir. 1997) ("[T]he decision whether to admit additional evidence is one which is discretionary with the district court, but which discretion ought not to be exercised in the absence of good cause."). "A demonstrated conflict of interest in the administrative reviewing body is an example of 'good cause' warranting the introduction of additional evidence." Id. at 67. An administrator's conflict of interest, however, "does not constitute jeer se good cause" to allow additional evidence in a de novo review. Locher v. Unum Life Ins. Co. of Am., 389 F.3d 288, 294 (2d Cir. 2004).

         Mr. Galuszka argues that "good cause" exists to supplement the AR because Reliance's claim decision was tainted by a conflict of interest. He contends that Reliance arranged for Allsup to represent him in his application for SSDI benefits. At the same time, he asserts Allsup allegedly represented Reliance in the recovery of any overpayment of benefits under Policy.[1] Reliance paid Allsup for its services on Mr. Galuszka's behalf In turn, Allsup waived any fee from Mr. Galuszka in the event he was awarded past due benefits pursuant to the Social Security Act.

         Mr. Galuszka further notes that the Allsup letter contains factual representations regarding the extent of his disability and his ability to work that are inconsistent with Reliance's determination that he is not "totally disabled" under the Policy.[2] Mr.Galuszka contends that Allsup's coterminous representation of him and Reliance, and its conflicting factual representations, create a conflict of interest that supports a finding of "good cause."

         Mr. Galuszka argues that "good cause" exists for the further reason that he had a reasonable, albeit mistaken, belief that the Allsup letter and the SSDI Decision were included in the AR.[3] He faults Reliance for not asking Allsup to supply it with those documents upon Reliance's receipt of Allsup's March 25, 2014 notification that it had obtained the fully favorable SSDI Decision on his behalf. He claims that he was unaware that these documents were missing from the AR until his present counsel obtained the SSA file in preparation for this lawsuit.

         Reliance counters that it was Mr. Galuszka's burden to ensure that the AR was complete and that his neglect and delay in doing so precludes a finding of "good cause." While not challenging Mr. Galuszka's contention that Reliance paid Allsup to represent him before the SSA, Reliance asserts that Mr. Galuszka "cites no record evidence to support the notion that Reliance somehow controls Allsup and in fact Allsup is not related to Reliance." (Doc. 21 at 2.) With regard to whether the Allsup letter and the SSDI Decision should be included in the AR, Reliance contends that "[c]ontrary to [Mr. Galuszka's] argument, Reliance did consider the award of Social Security benefits" (Doc. 21 at 3) in its denial of benefits under the Policy. See Doc. 32 at 4 ("After Reliance notified [Plaintiff of its decision to discontinue benefits], the Social Security Administration awarded disability benefits to Plaintiff retroactively. Reliance considered the award as well as other evidence when it again considered Plaintiffs eligibility for benefits on appeal."). Reliance nonetheless asks the court to exclude the Allsup letter and the SSDI Decision from the AR because those documents reflect a different standard for a "disability" than the Policy, and are based on a different administrative record.

         In determining "good cause, " the court considers whether Mr. Galuszka's neglect was excusable, whether he timely sought supplementation of the AR, whether supplementation of the AR is unfairly prejudicial to Reliance, and whether the documents sought to be included are material to the court's determination or are merely collateral to the issues before the court or cumulative of information already in the AR. The court also considers whether there is a conflict of interest rising to the level of "good cause." Before filing the motion to supplement the AR, Mr. Galuszka's counsel sought Reliance's permission to include the additional documents in the AR. He made this request one day prior to the filing of the parties' cross motions, but prior to the completion of their briefing, and several months in advance of the court's October 24, 2016 hearing. Reliance neither asked to amend its motion in light of Mr. Galuszka's request to supplement the AR, nor sought a continuance on that basis. It is thus reasonable to infer that Reliance suffered no real prejudice because of Mr. Galuszka's delay.

         Reliance also can claim no unfair prejudice if the Allsup letter and the SSDI Decision are included in the AR. Reliance was aware of Mr. Galuszka's SSDI application and the fully favorable SSDI Decision well in advance of its January 6, 2015 final claims determination. It also factored the outcome of the SSDI Decision in its decision.

         Although Mr. Galuszka bears the burden of proof, Reliance had an independent duty to ensure that the record before it was sufficient for a fair and accurate claims determination. See Metro. Life v. Glenn, 554 U.S. 105, 116 (2008) (noting the claim administrator's independent burden to ensure accurate claims assessment and declining "to come up with a one-size-fits-all procedural system that is likely to promote fair and accurate review"); Demirovic v. Bldg. Serv. 32 B-JPension Fund, 467 F.3d 208, 313 (2d Cir. 2006) ("ERISA requires that benefit plans give a full and fair review by the appropriate named fiduciary of the decision denying the claim.") (quoting 29 U.S.C. § 1133(2)) (internal quotation marks omitted). Reliance promised Mr. Galuszka that it would conduct "[a]n investigation ... in order to gather the necessary information to determine your continued eligibility for LTD benefits." (AR 289.) If Allsup's letter and the SSDI Decision provided relevant information, Reliance could and should have ensured their inclusion in the AR. See, e.g., Mead v. ReliaStar Life Ins. Co., 755 F.Supp.2d 515, 526 (D. Vt. 2010) (noting that as part of its benefits determination on remand, "ReliaStar obtained Mead's Social Security Administration ('SSA') disability claims file.").

         "ERISA and its accompanying regulations 'were intended to help claimants process their claims efficiently and fairly; they were not intended to be used ... as a smoke screen to shield [insurers] from legitimate claims.'" Halpin v. W. W. Grainger, Inc., 962 F.2d 685, 696 (7th Cir. 1992) (citations omitted). For this reason, ERISA and its implementing regulations require "a meaningful dialogue between ERISA plan administrators and their beneficiaries." Booton v. Lockheed Med. Benefit Plan, 110 F.3d 1461, 1463 (9th Cir. 1997). To the extent that there was no meaningful dialogue about the contents of the AR before Reliance rendered its final claims determination, the fault lies with both parties.[4]

         Reliance's further contention that the SSDI Decision is immaterial to this court's de novo review is untenable. Courts may consider a SSA determination in determining whether a claimant is entitled to benefits under ERISA. See Paese v. Hartford Life & Accident Ins. Co., 449 F.3d 435, 443 (2d Cir. 2006) ("True, the SSA's determination did not bind either the ERISA Plan or the district court. However, it does not follow that the district court was obligated to ignore the SSA's determination, especially if the district court found the determination probative, if not necessarily dispositive, as was the case here."); see also Hobson v. Metro. Life Ins. Co., 574 F.3d 75, 92 (2d Cir. 2009) ("We encourage plan administrators, in denying benefits claims, to explain their reasons for determining that claimants are not disabled where the SSA arrived at the opposite conclusion[.]"). This is especially true where, as here, the ERISA plan administrator played a role in obtaining the SSDI Decision. See Glenn, 554 U.S. at 118 (observing that the court of appeals properly "found questionable the fact that MetLife had encouraged [the claimant] to argue to the Social Security Administration that she could do no work, received the bulk of the benefits of her success in doing so . . . and then ignored the agency's finding in concluding that [the claimant] could in fact do sedentary work"). A court is well-equipped to analyze whether the two decision-makers were presented with materially different factual records and used different standards to determine disability.

         Finally, the Allsup letter and the SSDI Decision are not duplicative or cumulative of other information in the AR. They thus present helpful additional information to assist this court's determination of whether Mr. Galuszka is "totally disabled" under the Policy. Inclusion of the Allsup letter and the SSDI Decision in the AR is also consistent with the court's and the parties' obligation to secure the just determination of this proceeding. See Fed. R. Civ. P. 1. Because "good cause" exists to supplement the AR, the court hereby GRANTS Mr. Galuszka's motion (Doc. 20) to include Documents 20-3 and 20-4 in the AR. The court therefore need not decide whether Reliance's relationship with Allsup rises to the level of a conflict of interest.[5]

         III. Findings of Fact.

         A. Mr. Galuszka's Claim.

         In 2009, Mr. Galuszka accidentally shot himself in the left foot while black powder hunting during deer season. His injury required an initial hospitalization followed by multiple surgeries, and a partial transmetatarsal amputation.

         At the time of his accident, Mr. Galuszka was employed as a respiratory therapist at NMC in St. Albans, Vermont.[6] He has approximately eleven years of experience as a respiratory therapist and has an Associate Degree in Science from Champlain College. Although Mr. Galuszka was initially able to return to work after his accident, he thereafter developed pain that made it difficult for him to walk. X-rays taken on February 8, 2012 revealed "bony fragments and metallic appearing foreign bodies in [his] foot." (Doc. 20-3 at 2.)

         On March 22, 2012, David Groening, D.P.M., performed transmetatarsal amputation and revision surgery on Mr. Galuszka's left foot. Mr. Galuszka stopped working at NMC on the day prior to his revision surgery. On March 26, 2012, he filed a claim for benefits under the Policy and for a waiver of premium ("WOP").[7] He supplemented his claim with a statement from his podiatrist, Dr. Groening, that he had been diagnosed with "pain [secondary] to bone fragments, exostosis & foreign bodies." (AR 673.) In May of 2012, Dr. Groening recommended that Mr. Galuszka not return to work for a month which was later extended to July 20, 2012.

         In a July 9, 2012 telephone interview, Mr. Galuszka advised Reliance that his prognosis for returning to work was "unknown" and that he was "still in a great deal of pain." (AR 278.) When asked to explain his current activities in a typical day, he indicated that he was "[s]itting with foot elevated a lot" but he could go to the grocery store, take short walks, and do his own cooking, housework, and yard work. Id. He noted that the part of his position as a respiratory therapist that he could not perform was "[n]eeds to be on feet all day." Id. He advised Reliance that he had not applied for any Social Security Act benefits because he hoped to return to work.

         On July 30, 2012, Reliance approved Mr. Galuszka's claim for monthly benefits under the Policy after the elimination period based on its determination that Mr. Galuszka could no longer work as a respiratory therapist as of March 22, 2012. Reliance informed Mr. Galuszka that, after his receipt of twenty-four months of benefits, he would be required to establish that he was "totally disabled" as defined by the Policy in order to receive LTD benefits. Reliance advised Mr. Galuszka that it would conduct an investigation prior to its final benefits determination. Mr. Galuszka began receiving benefits accrued as of June 20, 2012, and was scheduled to receive benefits until June 20, 2014.

         B. Complex Regional Pain Syndrome.

         The parties are in agreement that Mr. Galuszka suffers from complex regional pain syndrome. According to a SSA publication dated October 20, 2003, "complex regional pain syndrome, " which is also known as reflex sympathetic dystrophy syndrome, is:

a chronic pain syndrome most often resulting from trauma to a single extremity. It can also result from diseases, surgery, or injury affecting other parts of the body. . . . The most common acute clinical manifestations include complaints of intense pain and findings indicative of autonomic dysfunction at the site of the precipitating trauma.

(Doc. 20-1 at 3.) "It is characteristic of this syndrome that the degree of pain reported is out of proportion to the severity of the injury sustained by the individual." Id. The condition is characterized by symptoms including: "[s]welling; [a]utonomic instability- seen as changes in skin color or texture, changes in sweating[, ] . . . changes in skin temperature, and abnormal pilomotor erection[;] [a]bnormal hair or nail growth[;] [o]steoporosis; or [i]nvoluntary movements of the affected region of the initial injury." Id. at 6. The SSA publication further acknowledges that:

[c]hronic pain and many of the medications to treat it may affect an individual's ability to maintain attention and concentration, as well as adversely affect his or her cognition, mood, and behavior, and may even reduce motor reaction times. These factors can interfere with an individual's ability to sustain work activity over time, or preclude sustained work activity altogether.

Id. at 7.

         In his briefing, Mr. Galuszka references the National Institute of Neurological Disorder and Stroke's (the "NINDS") definition of complex regional pain syndrome. The court finds the NINDS's website provides a useful source of information regarding complex regional pain syndrome that supplements and corroborates the information set forth in the SSA publication. Pursuant to Fed.R.Evid. 201 and subject to the parties' right to object, the court takes judicial notice of the NINDS's definition which provides in relevant part:

Complex regional pain syndrome (CRPS) is a chronic pain condition most often affecting one of the limbs (arms, legs, hands, or feet), usually after an injury or trauma to that limb. CRPS is believed to be caused by damage to, or malfunction of, the peripheral and central nervous systems. The central nervous system is composed of the brain and spinal cord, and the peripheral nervous system involves nerve signaling from the brain and spinal cord to the rest of the body. CRPS is characterized by prolonged or excessive pain and mild or dramatic changes in skin color, temperature, and/or swelling in the affected area.
CRPS symptoms vary in severity and duration. Studies of the incidence and prevalence of the disease show that most cases are mild and individuals recover gradually with time. In more severe cases, individuals may not recover and may have long-term disability.
The key symptom is prolonged pain that may be constant and, in some people, extremely uncomfortable or severe. The pain may feel like a burning or "pins and needles" sensation, or as if someone is squeezing the affected limb. The pain may spread to include the entire arm or leg, even though the precipitating injury might have been only to a finger or toe. Pain can sometimes even travel to the opposite extremity. There is often increased sensitivity in the affected area, such that even light touch or contact is painful (called allodynia).
People with CRPS also experience constant or intermittent changes in temperature, skin color, and swelling of the affected limb. This is due to abnormal microcirculation caused by damage to the nerves controlling blood flow and temperature. An affected arm or leg may feel warmer or cooler compared to the opposite limb. The skin on the affected limb may change color, becoming blotchy, blue, purple, pale, or red.
Other common features of CRPS include:
• changes in skin texture on the affected area; it may appear shiny and thin
• abnormal sweating pattern in the affected area or surrounding areas
• changes in nail and hair growth patterns
• stiffness in affected joints
• problems coordinating muscle movement, with decreased ability to move the affected body part, and
• abnormal movement in the affected limb, most often fixed abnormal posture (called dystonia) but also tremors in or jerking of the affected limb. (last visited January 9, 2017).

         C. Mr. Galuszka's Relevant Medical Treatment.

         Following Mr. Galuszka's revision surgery, in March and April of 2012, Dr. Groening noted that Mr. Galuszka did not initially have any acute pain and on April 18, 2012 recorded that Mr. Galuszka stated he was "doing well" and "doing better" and experiencing a "minimal amount of edema." (AR628, 1286.) By May of 2012, however, Mr. Galuszka reported to Dr. Groening that he was "unable to stand/walk for more than 30 minutes without a break[, ]" was "still having a significant amount of pain[, ]" and was "not able to do some of the activity that he was able to do previously . . . [because] it is so painful that he is not able to bear all of his weight." (AR 629, 635.)

         On June 12, 2012, Mr. Galuszka advised Dr. Groening that "he believes that he still has more pain than he did pre-operatively." (AR 629.) On July 24, 2012, after noting that Mr. Galuszka continued to have pain[8] Dr. Groening referred him to William Roberts, M.D., a pain specialist.

         In his report, Dr. Roberts noted that he had seen Mr. Galuszka after his accident and that he "had a significant amount of pain." (AR 596.) He recorded that Mr.

         Galuszka "subsequently underwent debridements and then a complete amputation and then a revision amputation since then." Id. Because Reliance relies on Dr. Roberts's treatment and opinions as evidence that Mr. Galuszka is not "totally disabled, "[9] the court quotes from Dr. Roberts's report at some length:

I have not seen [Mr. Galuszka] since the February 2010 [accident] except in the hallways at work. My understanding from him is that he is working very little as a result of uncontrolled pain. He described allodynia at the site of the incision on the left foot and distal and what would be approximately the metatarsals of the 3 and 4. He also has complained of alternating having a cold foot or warm foot. Today, it was cold. There is no indication that he has had any new trauma. He is not sure if something is getting pinched between his metatarsals. I am open to the possibility that that could be the case, but I think it is important that we consider the mechanism of injury and most important the interval of time between the injury and his definitive therapy which was several weeks.
He denies any vasal motor instability as evidenced by hyperhidrosis. He does have coloration changes.
He is a well-appearing white male with no difficulty with his gait or station. There is a well-healed, well coapted wound across the mid portion of the metatarsals of the left foot. This appears to be a very nicely closed and healed transmetatarsal amputation. There is no indication of any dystrophic changes of the skin. There is no indication of any peripheral vascular compromise. His capillary refill is quite brisk. He does have true allodynia in the areas outlined above, but overall, the foot is very cold, as compared to the opposite side. There is no indication of any true mottling, but he does have an overall general rosy hue to the left foot as compared to the right.
There is no thickening of the hairs, nor any hyperhidrosis.
Somewhat difficult to determine if this is an automatically mediated pain process without doing a diagnostic paravertebral chemical sympathectomy. Certainly, I would not want to miss the diagnosis without aggressively considering that this could be an autonomically mediated pain problem. Today we discussed the diagnostic features of a paravertebral chemical sympathectomy and the therapeutic features of permanent surgical sympathectomy. I have sent him home with key words and we will review with him his questions after he has had a chance to look into these. He was told that he could come back even today if he had an adequate duration of time to read through some web sites and consider the diagnosis of complex regional pain syndrome.

(AR 596-97.)

         Thereafter, on June 21, 2012, Dr. Roberts administered a paravertebral block to Mr. Galuszka which was unsuccessful in relieving his pain. During the procedure, Dr. Roberts was able to document a temperature differential in Mr. Galuszka's feet. See AR 599 ("Temperature differential was clearly documented, left side being nearly 9 degrees cooler than the right."). He also noted "[o]f interest is the fact that David points out that when he was having problems with his neck he had entirely right-sided basil motor symptoms, sweating profusely in the right with no sweating whatsoever noted on the left." Id. Dr. Roberts observed that "[i]t is not clear to me if his failure to vaso-dilate is the result of failure to obtain access on the paravertebral sympathetic motor ganglia or if his sympathetic nervous system simpl[y] does not have normal motor function[.]" Id.

         On June 25, 2012, Dr. Roberts documented that Mr. Galuszka "had no improvement in either his vasomotor symptoms or pain following a chemical paravertebral sympathectomy last week." (AR 600.) He noted that "there is no improvement in his reticular pattern of discoloration in his foot" and "[h]is foot continues to be cold as compared to his nonoperative side." Id. After a consultation, Mr. Galuszka agreed to undergo the procedure a second time. This, too, proved unsuccessful as "[h]e neither vasodilated nor had any pain relief during the block" and "no interval improvements in his symptoms either." (AR 602.) During the two hours following the block, Dr. Roberts noted "differential temperatures went from a temperature differential of 14 degrees with the right foot being warmer than the ...

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