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Bustetter v. Standard Insurance Co.

United States District Court, E.D. Kentucky, Northern Division, Ashland

September 24, 2019



          David L. Bunning United States District Judge.

         Plaintiff Lewis Bustetter alleges that Defendant Standard Insurance Company (“Standard”) has wrongfully deprived him of benefits under a long-term disability (“LTD”) and life-insurance policy issued to him as an employee of Ceva Logistics U.S., Inc. (“CEVA”). Defendant Standard has filed a Motion for Judgment on the Administrative Record (Doc. # 46) and Plaintiff has filed a Motion for Summary Judgment. (Doc. # 47). Both Motions having been fully briefed (Docs. # 48, 49, 50, and 51), they are now ripe for the Court’s review. For the reasons set forth below, Plaintiff’s Motion is granted in part and Defendant’s Motion is denied.


         Plaintiff Bustetter worked as a tank-truck driver for CEVA. As a benefit of his employment with CEVA, he obtained disability coverage under a Group LTD Policy (#647503-D). (AR[1] 611). An employee’s eligibility for benefits under the Group LTD Policy is dependent upon the length of time the employee is injured. (AR 30–31). For the first 24 months, known as the “Own Occupation Period, ” an employee may qualify for benefits if he is disabled from his “Own Occupation.” (AR 30). In order to receive benefits for a period longer than 24 months, an employee must demonstrate that he is “Disabled from all occupations.” (AR 31). Under the Group LTD Policy, a claimant is “Disabled from all occupations if, as a result of Physical Disease, Injury, Pregnancy or Mental Disorder, [he is] unable to perform with reasonable continuity the Material Duties of Any Occupation. Id.

         In 2013, Standard added an amendment to the LTD Policy titled “Disabilities Subject to Limited Pay Periods.” (AR 9–10). The effect of the amendment was to cap coverage at 24 months for certain “Other Limited Conditions, ” including chronic pain conditions, carpal tunnel, arthritis, and “diseases or disorders of the cervical thoracic, or lumbosacral back and its surrounding soft tissue.” (AR 9). “Other Limited Conditions” expressly do not include “radiculopathies that are documented by electromyogram, ” myelopathies, and myelitis. Id.

         Thus, to continue collecting LTD benefits at the end of the 24-month period, a claimant must show that he is (1) “Disabled from all occupations” and (2) that he does not suffer from an “Other Limited Condition.”

         Mr. Bustetter was also insured under a Group Life Policy (# 647503-A). (AR 611, 730). Pursuant to the Group Life Policy, an insured who could demonstrate that he was “Totally Disabled” would be eligible for life insurance with waiver of premium (“LWOP”). (AR 805). “Totally Disabled” is defined in the Group Life Policy as someone who “as a result of Sickness, accidental Injury, or Pregnancy, ” is “unable to perform with reasonable continuity the material duties of any gainful occupation for which [he or she is] reasonably fitted by education, training and experience.” (AR 783). Notably, the provision which caps benefits at 24 months for disabilities “caused or contributed to” by “Other Limited Conditions” is not present in the Group Life Policy. See generally (AR 755–86).

         In October 2014, Bustetter ceased working for CEVA due to an injury suffered one year earlier that caused chronic left knee pain. (AR 587, 612, 1195). Bustetter applied for and received short-term disability benefits pursuant to the Family Medical Leave Act. (AR 66, 1189). Before he could return to work, however, CEVA laid off Bustetter effective February 1, 2015. (AR 573, 593–94). In March 2015, Bustetter’s orthopedic surgeon, Dr. Michael Grefer, diagnosed Bustetter with a “neck strain/sprain, left shoulder pain, cervicalgia, and spinal stenosis” and found that he was “unable to drive.” (AR 298–99). Bustetter’s short-term disability benefits expired on April 7, 2015. (AR 64).

         On May 27, 2015, Standard approved Bustetter’s claim for LTD benefits under the “Own Occupation” definition of disability, retroactive to January 7, 2015. (AR 375). Standard determined that due to Plaintiff’s neck sprain, left shoulder pain, cervicalgia, spinal stenosis, SLAP lesion, shoulder tendinosis, and impending back surgery, he was unable to sit, stand, or walk for prolonged periods of time. (AR 455). Thus, Standard concluded that Bustetter was “reasonably precluded from performing the Material duties of his Own Occupation as a Tank Truck Driver.” Id. Standard contemporaneously approved Bustetter for continued life-insurance coverage up to $100, 000 with waiver of premium payments. (AR 453, 455, 507–08, 728–29, 1409–11).

         On June 18, 2015, Standard informed Bustetter that it was investigating whether his conditions fell in the category of “Other Limited Conditions.” (AR 366). If so, the “Disabilities Subject to Limited Pay Periods” limitation would apply and his LTD benefits would be discontinued on January 7, 2017, 24 months after coverage began. (AR 366). Standard consulted Dr. Joseph Mandiberg, who wrote in a report on September 10, 2015 that Bustetter’s left knee, shoulder, neck, and spine conditions constituted “Other Limited Conditions” subject to the 24-month cap in the Group LTD Policy. (AR 212–13). In July 2016, however, Bustetter was diagnosed with myelitis of the cervical spine, a condition expressly excepted from the list of “Other Limited Conditions” in the Group LTD Policy. (AR 9, 138, 152). Standard confirmed with Bustetter on November 14, 2016 that his diagnosis of myelitis meant that his LTD coverage would not be limited by the two-year cap for “Other Limited Conditions” in the “Disabilities Subject to Limited Pay Periods” limitation. (AR 472). Nevertheless, Standard informed Bustetter that in order to continue to receive LTD benefits past January 7, 2017, he would have to demonstrate that he was unable to perform “Any Occupation.” (AR 472).

         In support of his claim that he was unable to perform “Any Occupation, ” Bustetter submitted records and information from his treating physicians. Dr. Douglas Deitch reported on March 27, 2015 that Bustetter should “avoid repetitive bending [of the] neck and lumbar” due to his “lumbar radiculopathies, lumbar herniated disc, neck pain, and cervical stenosis.” (AR 1060). An MRI from March 31, 2016 revealed a “slight enlargement of the cord lesion, ” which “suggest[ed] an inflammatory etiology such as viral myelitis or systemic autoimmune disease.” (AR 151). Another of Bustetter’s treating physicians, Dr. Paul Moots, noted on April 1, 2016 that Bustetter’s gait was “stiff and was slightly wide base.” (AR 150). In reviewing the MRI of Bustetter’s spine, Dr. Moots diagnosed Bustetter with “[c]ervical neuropathy related to intrinsic spinal cord lesions at ¶ 7” and noted that “[m]yelitis is favored given the partial resolution of the MRI findings.” (AR 138).

         Bustetter provided Standard with a list of medical providers and pharmacies, (AR 159–64), and identified the following medical conditions and treatments:

(1) “Myelitis/tumor of the spinal cord; unknown at this time”;
(2) “Gastritis/ulcers of the stomach; Nexium 40 mg/day”;
(3) “Hypertension; 320 mg Diovan/day and 10 mg Norvasc/day”;
(4) “Sleep apnea; CPAP @ 10 cm”;
(5) “Asthma; 500 mg Advair or Symbicort and Albuterol 90 mg.”

(AR 154).

         Finally, Bustetter filled out Standard’s “Activities and Capabilities Questionnaire” on April 25, 2016. (AR 154). On the Questionnaire, he reported difficulty completing everyday tasks, stating that he is “unable to clean heavily and regularly due to pain, paresthesia, [and] neurological problems.” (AR 155). He did, however, report being able to take out the trash, prepare his own meals, do laundry, vacuum, load the dishwasher, make his bed, and shop on his own with the assistance of a motorized shopping cart. (AR 155). Bustetter also reported that he visits with friends and relatives and that he is able to drive, but that his travel “has been drastically reduced.” (AR 156–57).

         Standard did not conduct an independent examination of Bustetter, although it was entitled to do so under the terms of the Group LTD and Group Life Plans. (AR 42, 809). It did, however, consult three board-certified physicians-Dr. Deborah Syna, Dr. John Hart, and Dr. Joseph Mandiberg-to conduct reviews of Bustetter’s medical file. (AR 71– 76, 115–19, 210–14, and 165–68). In his November 2016 report, Dr. Hart opined that Bustetter’s myelitis “is documented to be improving” and that his “strength and sensation on neurological examination regarding the upper extremities and cervical spine were essentially normal on multiple examinations at Vanderbilt [University Hospital].” (AR 119). Based on this medical evidence, Dr. Hart concluded that Bustetter had the functional capacity for light-level work. (AR 118). Dr. Mandiberg reached a similar conclusion. (AR 167).

         In addition, to determine Bustetter’s vocational abilities in light of his myelitis, Standard consulted Certified Rehabilitation Counselor Brian Petersen to conduct a Transferable Skills Assessment (“TSA”). (AR 619–38). In his report, Petersen observed that Bustetter has an Associate in Arts degree from Ashland Community College and an employment history as a truck driver. (AR 642). He also noted that Bustetter has fifteen years of customer-service experience and brief experience in telephone account collections. (AR 642–43). From this work history, Petersen determined that Bustetter could engage in sedentary occupations within his skillset that would meet the wage requirements under the Group LTD Policy. (AR 625). These occupations included motor-vehicle dispatcher, collection clerk, and order clerk. Id.

         Based on Petersen’s determination, Standard notified Bustetter on December 15, 2016 that he did not satisfy the Group LTD Policy’s “Any Occupation” definition of disability, and therefore did not qualify for continued LTD benefits past January 7, 2017. (AR 332–35). Likewise, because Bustetter was not “Totally Disabled” as defined by the Group Life Policy, he would no longer be eligible for life insurance without payment of premiums. (AR 334–37). In its denial letter, Standard explained that Bustetter’s osteoarthritis, tendinosis, and low back pain were considered “Other Limited Conditions” subject to the 24-month benefit cap. (AR 335). Because the 24-month benefit cap extended to disabilities that are ...

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