18 F.4th 18
1st Cir.2021Background
- Karen Jette, a long‑term disability (LTD) beneficiary under an ERISA plan administered by United of Omaha, had significant lumbar spine problems and was approved for LTD in 2014 but benefits were later terminated effective January 15, 2016.
- During Jette's administrative appeal United required an independent medical examination (IME) by Dr. Donald Thomson and obtained a written IME report on October 6, 2016.
- United did not disclose Dr. Thomson's report (or allow Jette to respond to it) before issuing its final adverse benefit determination on October 18, 2016; United later provided the IME report only after upholding termination.
- Jette sued under ERISA § 502(a)(1)(B), arguing United violated the "full and fair review" requirement in 29 C.F.R. § 2560.503‑1(h) by withholding the IME report during the appeal and that the denial lacked substantial evidence.
- The district court granted summary judgment to United, but the First Circuit held United violated § 2560.503‑1(h) by failing to disclose documents generated during the appeal that were relevant to the claim, found Jette was prejudiced, vacated summary judgment, and remanded for a proper administrative review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 29 C.F.R. § 2560.503‑1(h) required disclosure of IME reports generated during the administrative appeal upon request | § 2560.503‑1(h) requires disclosure of all documents relevant to the claimant's claim for benefits, including evidence generated during the appeal; Jette requested the report and the right to respond | Disclosure requirement applies only to documents relevant to the initial adverse benefit determination; documents generated during appeal need be produced only after the final decision | The regulation requires production of all documents relevant to the claim (including those generated/considered during the appeal) upon request; United violated the rule by withholding Dr. Thomson's report during appeal |
| Whether the Department of Labor's later statements (Preamble, amicus) merit Auer deference supporting claimant's reading | DOL Preamble and amicus say claimants must be allowed to review/respond to new evidence developed by the plan during appeal; seek Auer deference | Preamble published after United's decision; cannot retroactively impose new duties | Court found the 2002 regulation unambiguous and resolved the issue on its text; noted it would have deferred to DOL if ambiguity existed but did not need to apply Auer |
| Whether Jette must show prejudice and whether she was prejudiced by non‑disclosure | Prejudice shown because she could not review or rebut the IME that United relied upon to uphold denial | No meaningful prejudice; denial consistent with prior grounds | Court found prejudice: United relied at least in part on the undisclosed IME in upholding termination |
| Whether the substantive denial should be reviewed now on the present record | Jette: substantive denial unsupported; but administrative record was incomplete because she lacked chance to respond to IME | United: administrative record supports termination | Court declined to resolve substantive sufficiency because the record was incomplete; remanded for a new, full and fair administrative review allowing Jette to respond |
Key Cases Cited
- Auer v. Robbins, 519 U.S. 452 (1997) (agency interpretation of its own regulation may merit deference)
- Kisor v. Wilkie, 139 S. Ct. 2400 (2019) (limits and conditions on Auer deference)
- Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666 (9th Cir. 2011) (plan denied full and fair review by withholding consultant reports generated during appeal)
- Midgett v. Wash. Group Int'l Long Term Disability Plan, 561 F.3d 887 (8th Cir. 2009) (contrary circuit decision interpreting disclosure obligations under the 2002 regulation)
- Orndorf v. Paul Revere Life Ins. Co., 404 F.3d 510 (1st Cir. 2005) (judicial review typically limited to the administrative record)
- Juliano v. Health Maint. Org. of N.J., Inc., 221 F.3d 279 (2d Cir. 2000) (purpose of full and fair review is to provide claimants adequate information to pursue administrative review or judicial appeal)