United States District Court, W.D. Kentucky, Louisville
DENISE R. BASHAM, Plaintiff,
PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant.
MEMORANDUM OPINION AND ORDER
CHARLES R. SIMPSON, III, Senior District Judge.
This matter is before the Court on the following motions:
1) Plaintiff Denise R. Basham's ("Basham") Motion for Judgment as a Matter of Law (DN 72);
2) Basham's Motion for Hearing regarding her Motion for Judgment as a Matter of Law (DN 73);
3) Defendant Prudential Insurance Company of America's ("Prudential") Motion to Exclude Evidence from Outside the Administrative Record (DN 76);
4) Basham's Motion for Leave to File a Sur-Reply to Prudential's Reply in Support of its Motion to Exclude Evidence from Outside the Administrative Record (DN 80);
5) Prudential's Motion for Leave to File a Sur-Reply to Basham's Reply in Support of her Motion for Judgment as a Matter of Law (DN 81).
For the reasons set forth in this opinion, the Court will deny the motion for judgment as a matter of law, and will instead remand to Prudential for a full and fair review of Basham's Long-Term Disability claim. As explained below, this disposition will moot the remaining motions submitted for the Court's decision.
Unless otherwise indicated, the following facts are undisputed. Basham is a former employee of Harrah's Operating Company, Inc. ("HOC"), where she worked as a retail supervisor. As part of its employee benefits program, HOC sponsored Short-Term Disability ("STD") as well as Long-Term Disability ("LTD") benefits. While Prudential both administers and insures HOC's LTD benefits, HOC self-insures its STD benefits, for which Prudential merely acts as administrator.
On April 6, 2010, Basham was forced to stop working due to a variety of medical issues, including depression, anxiety, migraines, irritable bowel syndrome, muscle pain, and an inability to concentrate. In accordance with Prudential's instructions, Basham shortly thereafter filed a claim for STD benefits by submitting an Attending Physician's Statement ("APS"), an Employee's Statement, and an Employer's Statement. After reviewing Basham's application, Prudential informed her by letter dated April 16, 2010, that her STD benefits had been approved beginning April 21, 2010, and continuing through May 18, 2010. On May 10, 2010, Basham's Attending Physician Dr. Ellen Knox ("Dr. Knox") submitted a second APS listing Basham's expected return-to-work date as July 1, 2010. Based on the second APS, Prudential informed Basham by letter dated May 14, 2010, that her STD benefits had been extended until June 30, 2010, at which point they would expire. Also included in the letter was information regarding Basham's right to appeal Prudential's determination as well as an explanation of the procedures necessary for doing so.
On June 8, 2010, Basham attempted to apply for LTD benefits by faxing Prudential another APS prepared by Dr. Knox which changed her expected return-to-work date to "unable [to determine] at this time." (D107-09). On June 9, 2010, Basham called Prudential to confirm that it had received her fax. After a Prudential representative confirmed that Prudential had received the APS, Basham asked to speak to Prudential's Disability Claims Manager Russell Lashua ("DCM Lashua") about her claim for LTD benefits, at which point the representative transferred Basham to DCM Lashua's voicemail.
Having not heard back from DCM Lashua, on June 10, 2010, Basham emailed Prudential to once again inquire about the status of her LTD claim. In her e-mail, Basham specifically stated that "I have sent in an application to apply for Long Term Disability faxed from Dr. Ellen Knox on June 8, 2010." (D170). That same day, Prudential Representative Eileen Valentino responded to Basham's e-mail stating that "the information you provided for claim number 11324364 was forwarded to the claims manager for review." (D170-71).
On June 24, 2010, DCM Lashua left a message on Basham's voicemail acknowledging receipt of the APS on June 8, 2010, but requesting additional medical documentation to support Basham's claim that she would remain disabled beyond June 30, 2010. That same day, Prudential sent Basham a letter informing her that additional medical support would be required within 15 days in order to re-open her STD claim. At no point in either the voicemail or the letter did DCM Lashua inform Basham that additional medical evidence would be required in order for her to proceed with her LTD claim.
On July 6, 2010, DCM Lashua sent Basham an identical letter once again instructing her to provide additional medical documentation in support of her STD claim. Like the letter dated June 24, 2010, this letter made no mention of Basham's LTD claim and did not inform her that additional medical evidence would be required in order for her to proceed with her LTD claim. On August 9, 2010, DCM Lashua sent a final letter to Basham informing her of Prudential's denial of her claim for STD benefits and providing information related to the procedures for filing an appeal. Once again, this letter made no mention of Basham's LTD claim.
On August 16, 2011, Basham filed the present action against Prudential seeking recovery of past-due STD and LTD benefit payments, as well as attorneys' fees, costs, and pre- and post-judgment interest, based on the following legal theories: 1) breach of contract under 29 U.S.C. § 1132(a)(1)(B); (2) breach of fiduciary duty under 29 U.S.C. § 1132(a)(3); and 3) entitlement to attorneys' fees and costs under 29 U.S.C. § 1132(g). (DN 1).
On December 6, 2011, Prudential filed a motion for judgment on the pleadings arguing that: 1) Basham's STD benefits are self-funded by HOC, meaning that Prudential is not responsible for payment thereof and thus cannot be liable for STD benefit payments allegedly owed to Basham; and (2) that Basham's breach of fiduciary duty claim is not viable under 29 U.S.C. § 1132(a)(3) because the remedy for failure to pay benefits due under an ERISA-governed plan requires a claim under 29 U.S.C. § 1132(a)(1)(B). (DN 14).
On January 13, 2012, prior to the resolution of Prudential's Motion for Judgment on the Pleadings, Basham filed a motion to amend complaint wherein she voluntarily abandoned her breach of contract claim with respect to STD benefit payments as well as her claim for breach of fiduciary duty under 29 U.S.C. § 1132(a)(3). (DN 23). In lieu thereof, Basham's Amended Complaint asserted state common law claims for breach of duty of good faith and fair dealing and tortious interference with contract. As a result, Basham's only remaining claims were her claim for LTD benefits, her claim for attorneys' fees and cost under 29 U.S.C. § 1132(g), and the substituted state-law claims.
On February 20, 2012, Basham filed a motion to remand for a full and fair review of her LTD claim. (DN 27). In response, Prudential filed a motion for summary judgment arguing that Basham failed to exhaust her ...