Case 8:20-cv-01675-FLA-KES Document 78 Filed 02/28/23 Page 1 of 8 Page ID #:4135

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 JULIE STOUT, Case No. 8:20-cv-01675-FLA (KESx)

12 Plaintiff,

ORDER FOLLOWING BENCH

13 v. TRIAL 14 15 LIBERTY LIFE ASSURANCE Date: August 2, 2022 COMPANY OF BOSTON, et al., Time: 9:00 a.m. 16 Courtroom: 6B Defendants. 17 18 19 This is an action brought pursuant to the Employee Retirement Income Security 20 Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”), by Plaintiff Julie Stout (“Plaintiff” 21 or “Ms. Stout”) against Defendant Liberty Life Assurance Company of Boston 22 (“Defendant” or “Liberty”). The action involves a dispute over Plaintiff’s entitlement 23 to short-term disability (“STD”) and long-term disability (“LTD”) benefits under an 24 employee welfare benefit plan established by Plaintiff’s former employer, non-party 25 Dassault Systèmes Americas Corp. (“Dassault”), and administered by Liberty. 26 Defendant filed an Opening Trial Brief on January 20, 2022. Dkt. 47 27 (“DOTB”). Plaintiff filed a Corrected Amended Opening Trial Brief on March 24, 28 2022. Dkt. 62 (“POTB”). Plaintiff filed a Responsive Trial Brief on April 15, 2022.

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1 Dkt. 63 (“PRTB”). Defendant filed a Corrected Amended Responsive Trial Brief on 2 April 19, 2022. Dkt. 66-1 (“DRTB”). 3 On August 2, 2022, the court held a bench trial in this case. After evaluating 4 the evidence at trial, including making determinations of credibility, the court issues 5 the findings of fact and conclusions of law set forth below. 6 FINDINGS OF FACT1 7 A. The Disability Benefit Plans 8 Plaintiff began working for Dassault on April 9, 2018. Dkt. 41-1 at 1. Her 9 employment with Dassault ended on March 8, 2019. Dkt. 41-5 at 144-48. In 10 connection with her employment, Dassault offered a STD and LTD benefits plan. 11 Dassault established a self-insured STD plan, and entered into an agreement 12 with Liberty to administer claims. Dkt. 41-5 at 225-30. As the Sponsor of the plan, 13 Dassault is “responsible for all the payment of all benefits under the [STD] Plan,” 14 while Liberty provides claims administrative services including reviewing and 15 evaluating claims and making payment recommendations. Id. at 230. 16 The STD plan provides: “[w]hen Liberty, on behalf of the Sponsor, receives 17 Proof that a Covered Person is Disabled due to Injury or Sickness … [s]he may be 18 eligible to receive a Weekly Benefit … .” Id. at 245. To be eligible for benefits under 19 the STD plan, an employee must be in “Active Employment” with Dassault and 20 coverages ends on the “date employment terminates.” Id. at 233, 252. 21 Dassault also maintained a LTD plan. Id. at 175. Unlike the STD plan, the 22 LTD plan was fully insured, with Liberty responsible for payment of benefits. Id. 23 The LTD plan included a pre-existing condition provision, which excluded disability 24 caused by a pre-existing condition that began in the first 12 months immediately after 25 26 27 1 The characterization of a finding as one of “fact” or “law” is not controlling. To the extent that a finding is characterized as one of “law” but is more properly 28 characterized as one of “fact” (or vice versa), substance shall prevail over form.

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1 the covered person’s effective date of coverage. Dkt. 41-5 at 210. Plaintiff’s 2 effective date of coverage was April 9, 2018. Dkt. 41-1 at 1. 3 B. Plaintiff’s STD Claim 4 Liberty first received notice of Plaintiff’s STD claim on March 18, 2019. Dkt. 5 41-1 at 13-14. Prior to that date, Dassault encouraged Stout to open a claim with 6 Liberty, but Stout opted only to open a California state disability claim. Id. at 33. 7 Because Stout apparently believed that Dassault had opened a STD claim on her 8 behalf, Dassault agreed to open a claim as of February 19, 2019. Id.; Dkt. 41-5 at 144. 9 In connection with Plaintiff’s application for STD benefits, her primary care 10 provider, Constance Bouvier, PAC (“Bouvier”), returned a Restrictions Form dated 11 April 10, 2019. Dkt. 41-5 at 134-36. Bouvier described that Plaintiff was “required to 12 be healthy enough for frequent travel and [was] restricted by repeated GI infections” 13 and that she experienced a lack of energy, fatigue, nausea, and cough. Id. Plaintiff 14 also reported that on March 13, 2019, she fell and injured her knee. Dkt. 41-1 at 12. 15 On May 6, 2019, Nurse Disability Consultant Margaret O’Brien (“O’Brien”) 16 completed a clinical assessment, finding there was insufficient evidence to warrant 17 functional restrictions from February 19 to March 17, 2019. Dkt. 41-5 at 2001-2002. 18 However, O’Brien opined that Stout may have had functional restrictions from March 19 18, 2019 through at least April 30, 2019 based on her knee injury. Id. at 78-79. 20 On May 15, 2019, Disability Claims Manager Na’Shawn Davis (“Davis”) 21 informed Plaintiff by letter that she had not met her burden of proving entitlement to 22 STD benefits, and that the knee injury occurred after Stout’s employment terminated. 23 Id. at 73-76. 24 C. Plaintiff’s Appeal of the STD Claim Decision 25 On May 15, 2019, Plaintiff appealed the adverse claim decision. Dkt. 41-1 at 26 10. In support of her appeal, Plaintiff submitted a letter to Liberty on May 27, 2019, 27 which detailed her medical conditions. Dkt. 41-4 at 464-71. Appeals Consultant 28 Jeronda King (“King”) referred Plaintiff’s file to a third party for review by a board-

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1 certified internal medicine physician, Dr. Taj Jiva (“Jiva”). Id. at 441-48. King sent 2 Jiva’s report to Plaintiff for comment. Id. at 431-40. Attorney Robert McKennon 3 responded, indicating he represented Plaintiff “in connection with her group long-term 4 disability and short-term disability insurance claims.” Id. at 421-24. On July 25, 5 2019, Liberty sent McKennon a complete copy of Plaintiff’s STD benefits claim file 6 and informed him that “[n]o long term disability claim has been processed for Ms. 7 Stout.” Id. at 420. On November 8, 2019, McKennon submitted a second appeal of 8 Plaintiff’s STD claim. Id. at 381-404. Liberty conducted additional review of the 9 STD claim and, by letter dated March 31, 2020, King informed Plaintiff that Liberty 10 was upholding its initial claim recommendation. Dkt. 41-1 at 33-56. At no point did 11 Plaintiff file a claim for LTD benefits. POTB at 5. 12 D. Plaintiff’s Settlement Agreement 13 On January 3, 2020, Plaintiff filed a lawsuit against Dassault (the “Dassault 14 action”) alleging, inter alia, she was disabled when Dassault hired her, she informed 15 Dassault she had a medical disability at the time she was hired, and that Dassault 16 wrongfully terminated her employment after she took disability leave. See generally 17 Dkt. 65-3. On December 22, 2020, Plaintiff entered into a Settlement Agreement 18 (“Settlement Agreement”) in which she agreed to a general release of all claims 19 against Dassault, including any claim against Dassault for short-term or long-term 20 disability benefits. See Dkt. 50 at 3-4. The Settlement Agreement explicitly excluded 21 Liberty Life Assurance Company of Boston from the released parties. Id. at 3. 22 CONCLUSIONS OF LAW 23 A. Standard of Review 24 In the Ninth Circuit, actions to recover benefits under ERISA are adjudicated by 25 bench trial under Fed. R. Civ. P. 52(a) (“Rule 52(a)”). Kearney v. Standard Ins. Co., 26 175 F.3d 1084, 1094-95 (9th Cir. 1999). Under Rule 52(a), the court can resolve 27 factual issues in favor of either party, and must “find the facts specially and state its 28 conclusions of law separately.” Fed. R. Civ. P. 52(a).

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1 A denial of ERISA benefits challenged under 29 U.S.C. § 1132 “is to be 2 reviewed under a de novo standard unless the benefit plan gives the administrator or 3 fiduciary discretionary authority to determine eligibility for benefits or to construe the 4 terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). 5 “[California Insurance Code] § 10110.6 voids any ‘provision that reserves 6 discretionary authority to the insurer, or an agent of the insurer.’” Orzechowski v. 7 Boeing Co. Non-Union Long-Term Disability Plan, Plan No. 625, 856 F.3d 686, 695 8 (9th Cir. 2017) (quoting Cal. Ins. Code § 10110.6(a)). “The statute, which became 9 effective on January 1, 2012, is ‘self-executing’; thus, if any discretionary provision is 10 covered by the statute, ‘the courts shall treat that provision as void and 11 unenforceable.’” Id. at 692 (quoting Cal. Ins. Code § 10110.6(g)). 12 Here, the parties agree that de novo review applies. See POTB at 16; DOTB at 13 29. The court, therefore, reviews Plaintiff’s claim under a de novo standard and 14 “evaluate[s] whether the plan administrator correctly or incorrectly denied benefits, 15 without reference to whether the administrator operated under a conflict of interest.” 16 Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 963 (9th Cir. 2006). Regardless 17 of the standard of review, “[w]hat the district court is doing in an ERISA benefits 18 denial case is making something akin to a credibility determination about the 19 insurance company’s or plan administrator’s reason for denying coverage under a 20 particular plan and a particular set of medical and other records.” Id. at 969. 21 It is a claimant’s burden to prove she is entitled to benefits by a preponderance 22 of the evidence. Muniz v. Amec Constr. Mgmt. Inc., 623 F.3d 1290, 1294 (9th Cir. 23 2010) (“As concluded by other circuit courts which have addressed the question, when 24 the court reviews a plan administrator’s decision under the de novo standard of 25 review, the burden of proof is placed on the claimant.”); Shaw v. Life Ins. Co. of N. 26 Am., 144 F. Supp. 3d 1114, 1123 (C.D. Cal. 2015). 27 / / / 28 / / /

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1 DISCUSSION 2 First, the court finds that Plaintiff’s claim for STD benefits against Liberty fails. 3 Dassault’s STD plan is self-funded, and Dassault is responsible for the payment of all 4 benefits under the STD plan. Dkt. 41-5 at 225-30. Liberty acts as a claims 5 administrator and is not obligated to pay STD benefits. Id. In connection with the 6 Dassault action, Plaintiff entered into a Settlement Agreement releasing Dassault from 7 any obligation to pay STD benefits.2 Dkt. 50 at 3-4. Plaintiff, thus, has already 8 settled and released her STD claims. See US Airways, Inc. v. McCutchen, 569 U.S. 9 88, 100-01 (2013) (“The statutory scheme … is built around reliance on the face of 10 written plan documents. … The plan, in short, is at the center of ERISA.”) (quotation 11 marks omitted). 12 Plaintiff argues she did not release Liberty through the Settlement Agreement.3 13 PRTB at 4. Although the Settlement Agreement explicitly excludes Liberty from any 14 release of liability, Liberty cannot be held liable for benefits it has no obligation to 15 pay. See US Airways, 569 U.S. at 100-01. Accordingly, Plaintiff’s claim for STD 16 benefits against Liberty fails. 17 Second, Plaintiff’s claim for LTD benefits fails for failure to exhaust 18 administrative remedies. “ERISA itself requires covered benefit plans to provide 19 administrative remedies for persons whose claims for benefits have been denied.” 20 Amato v. Bernard, 618 F.2d 559, 567 (9th Cir. 1980). It is well settled that “a 21 claimant must avail himself or herself of a plan’s own internal review procedures 22 23 24 2 At trial, Plaintiff argued the court should ignore the Settlement Agreement because it was not included in the Administrative Record. The Administrative Record pertains 25 to the merits of Liberty’s denial of STD benefits. The Settlement Agreement would 26 not be included in the Administrative Record, and it does not go to the merits of Plaintiff’s claim. 27 3 During trial, Plaintiff conceded that all claims against Dassault were resolved as part 28 of the Settlement Agreement.

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1 before bringing suit in federal court.” Diaz v. United Agr. Emp. Welfare Ben. Plan & 2 Tr., 50 F.3d 1478, 1483 (9th Cir. 1995). 3 Unlike the STD plan, the LTD plan is fully insured, and Liberty is responsible 4 for paying claims under the LTD plan. Plaintiff, however, concedes she did not apply 5 for LTD benefits as required, before filing the subject action. POTB at 5. Because 6 Plaintiff did not pursue a claim for LTD benefits through the plan, Liberty never 7 evaluated whether she was disabled under the LTD benefit plan and did not issue a 8 denial of LTD benefits. Without the benefit of an initial evaluation or administrative 9 review, Plaintiff cannot establish she is entitled to LTD benefits. Likewise, the court 10 is without a factual record it can evaluate in connection with a LTD claim. Thus, 11 Plaintiff’s claim for LTD benefits fails. See Diaz, 50 F.3d at 1483. 12 Plaintiff argues it would have been futile for her to pursue a LTD claim because 13 her STD claim had already been denied. POTB at 5. However, the requirements to 14 qualify for benefits under the LTD plan differ from those under the STD plan. For 15 example, the LTD plan contains a pre-existing condition exclusion. See Dkt. 41-5 at 16 210. If Plaintiff had submitted a LTD claim, it would have been subject to a different 17 level of review, and Liberty would have needed to evaluate whether Plaintiff’s 18 disability was subject to the pre-existing condition exclusion. Indeed, in her opening 19 brief, Plaintiff asserts she suffers from multiple medical conditions that were ongoing 20 for years, including Multiple Sclerosis, which was previously diagnosed as a major 21 thyroid condition from mold exposure starting in June 2018, severe pain related to 22 spinal surgery in 2015, abdominal ovarian disease for which she had 11 operations, 23 and moderate episode of major depressive disorder for which she has taken 24 medication since 2013. POTB at 17-18. 25 Plaintiff does not explain how the denial of her STD claim would have rendered 26 it futile for her to apply for LTD benefits under the LTD plan. “[B]are assertions of 27 futility[,]” like those alleged here, “are insufficient to bring a claim within the futility 28 exception, which is designed to avoid the need to pursue an administrative review that

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1 | is demonstrably doomed to fail.” Diaz, 50 F.3d at 1485. Accordingly, Plaintiff fails 2 || to establish it was futile for her to pursue a LTD claim under the plan, and the court 3 | finds Plaintiff was required to exhaust her administrative remedies by applying for 4 | LTD benefits under the plan before filing the subject action. 5 Having found Plaintiff's claims for STD and LTD benefits fail for the reasons 6 | discussed above, the court need not reach the merits of Plaintiff’s claim for STD 7 | benefits. 8 | IV. CONCLUSION 9 Plaintiff's claim to recover benefits under ERISA against Liberty is DENIED. 10 | No later than five business days from the filing of this order, Defendant’s counsel 11 | shall submit a proposed judgment and email a copy in Word format to the courtroom 12 | deputy. 13 14 IT IS SO ORDERED. 15 16 | Dated: February 28, 2023 i _ zap) 18 FERNANDO FE. AENLLE-ROCHA 19 United States District Judge

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