Khalil v. Liberty Life Assurance Co. of Boston

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          For Jamal Khalil, Plaintiff: Bernard P. Healy, LEAD ATTORNEY, Law Offices of Bernard P. Healy, Pawtucket, RI.

         For Liberty Life Assurance Company of Boston, a/k/a Liberty Mutual Insurance Company, Defendant: Guy P. Tully, PRO HAC VICE, Jackson Lewis LLP, Boston, MA; Jonathan R. Shank, Jackson Lewis P.C., Boston, MA.

         MEMORANDUM AND ORDER

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          John J. McConnell, Jr., United States District Judge.

         Jamal Khalil received long-term disability payments from Defendant Liberty Life Assurance Company (" Liberty" ) after suffering shoulder and neck injuries resulting from a go-cart accident in 2009. Liberty terminated those benefits at the end of 2013, finding him capable of working based on outside medical reviews and video surveillance it collected demonstrating Mr, Khalil's activities. Mr. Khalil asserts that he continues to be disabled, is entitled to long-term disability benefits, and that Liberty's decision to deny him benefits is rooted in an impermissible structural conflict because Liberty serves as both plan administrator and benefits payer. Both parties have moved for summary judgment.

         After a thorough review of the record and the law, the Court GRANTS the Defendant's Motion for Summary Judgment (ECF No. 12) and DENIES the Plaintiff's Motion for Summary Judgment (ECF No. 18).

         I. FACTS

         Mr. Khalil's go-cart accident occurred at a work-sponsored event in November 2009. At the time, Mr. Khalil worked in a sedentary position as a finance and insurance executive with Zurich American Insurance Company. He suffered injuries to his upper back, neck, right shoulder, and wrist. He initially received short-term disability benefits through an insurance policy that Liberty administered. An MRI in January 2010 revealed Mr. Khalil had a labial tear of the shoulder. He needed surgery, but it was delayed for a year for several reasons not pertinent to the instant dispute.

         Mr. Khalil's employer also had a long-term disability policy (" LTD" ) for its employees through Liberty. Liberty not only insures the disability with this type of policy, but it also administers any claims on the policy. The policy provides coverage if a participant is disabled from performing the material and substantial duties of his " own occupation" for a twenty-four month period and, thereafter, if he is disabled from performing the material and substantial duties of " any occupation" for which he is reasonably fitted by training, education experience, age, and physical and mental capacity. In June 2010, Liberty approved Mr. Khalil's claim for long-term disability benefits under the " own occupation" definition of the policy. By August 2010, Mr. Khalil's wrist issue was resolved. In December 2010, he had surgery to repair the labral tear in his shoulder. At the beginning of 2011, his shoulder was getting better, but now he had pain in his neck; a cervical neck issue was subsequently identified. He received physical therapy and injections and ultimately

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he had neck fusion surgery in April 2012.

         Because he was still experiencing neck and shoulder pain, Liberty approved his claim for LTD benefits in July 2012 under the " any occupation" definition because he was disabled from performing the material and substantial duties of any other job he is trained, educated and otherwise able to perform. While health professionals discussed other treatment options with Mr. Khalil, including more surgery, Mr. Khalil chose to use ointments and massage therapy to treat his pain.

         During this entire time, Mr. Khalil continually claimed that he was unable to sit, stand or walk for more than several minutes at a time, and that he was unable to use his upper right extremity whatsoever. During the same 2010-2013 timeframe, Liberty periodically commissioned surveillance of his functional activities, the results of which were captured both in written reports and on video. In September 2013, Liberty engaged a doctor to exam Mr. Khalil. Dr. Ajit Mirani concluded that Mr. Khalil could work only in a sedentary capacity and could not lift, pull or push with his right upper extremity. And while Liberty claims that Mr, Khalil's physical activity during the surveillance period was in stark contrast with both his self-reported limitations and the information he was providing to his treating physicians, Dr. Mirani disagreed, concluding that Mr. Khalil was not exaggerating his symptoms, but rather that the activity in the videos could be due to his use of medicine to relieve his symptoms or the time of day when he generally felt well enough to be more active.

         The video surveillance continued in the fall of 2013 and Liberty retained Dr. Gale Brown to review Mr, Khalil's claims. Dr. Brown concluded in a December 2013 report that based on the medical records and the videos, Mr. Khalil's actual functional abilities were better than he reported to Liberty; that he was capable of sedentary work with some restrictions to accommodate for neck and shoulder pain, if he experienced any. Dr. Brown contacted Drs. Fadi Mansourati and Todd Handel, Mr. Khalil's primary care physician and pain doctor respectively, to discuss Mr. Khalil's functioning. Both treating doctors agreed that Mr. Khalil could do sedentary work and therefore was no longer eligible for LTD benefits.

         Liberty terminated Mr. Khalil's long-term disability benefits in December 2013. Mr. Khalil appealed in May 2014. In July 2014, Liberty asked an independent consulting firm to assign a doctor to conduct a peer review of the claim. Dr. Chang concluded that the records and surveillance showed that Mr. Khalil was able to work full time in a sedentary capacity with some restrictions. Liberty upheld its decision to deny benefits and this lawsuit ensued.^[1]

         Mr. Khalil argues that he is entitled to judgment because Liberty's decision to deny his LTD benefits was arbitrary and capricious as it was made through the lens of a structural conflict rooted in Liberty's dual role as plan administrator and benefits payer. Liberty moves for judgment, arguing that its decision was based on substantial evidence from the well-developed record over a three and half year review period (during which it paid Mr. Khalil short-term disability benefits) and was not clouded by its dual role.

         II. ...