02-2668 | 3rd Cir. | Sep 13, 2004
Celeslie Epps-M alloy, BECKER, Circuit Judge .
Plaintiff Celeslie Epps-Malloy is a Appellant former employee of defendant Merck & Co. (“Merck”), who participated in
__________________ Merck’s ERISA-based Long Term Disability Plan for Union Employees (the
On Appeal From The United States “Plan”). [1] At times relevant, Merck, as District Court For The District Of New overall plan administrator, had delegated Jersey responsibility for claims administration to (D.C. No. 98-cv-03571) defendant U N UM Life Insurance District Judge: Honorable Mary Little Cooper Argued June 28, 2004 Before: AMBRO, BECKER, and GREENBERG, Circuit Judge [1] Michaleen Kosiba, the other named plaintiff in this case, settled her case against the defendants in the District
(Filed September 13, 2004 ) Court, and is not participating on appeal. (“UNUM”). [2] Company of America ERISA plan fiduciaries’ discretionary Following an at-work injury and a decisions regarding benefits. Turning to diagnosis of sarcoidosis and fibromyalgia, the merits of Epps-Malloy’s claim, the Epps-Malloy applied for and received District Court found, principally because long-term disability (LTD) benefits from of Dr. Dev’s report, that the defendants’ the defendants in 1993. During a periodic denial of benefits was not arbitrary and review conducted in 1996, the defendants capricious. terminated Epps-Malloy’s benefits, finding
On appeal, we concentrate on the that she was no longer totally disabled District Court’s first conclusion. We agree under the terms of the Plan. During the with the District Court that the record in course of the Plan’s administrative appeals this case does not support finding a process, Merck requested that Epps- financial conflict of interest (which, under Malloy undergo an independent medical Pinto ’s “sliding scale” approach, would e x a m i n a ti o n , a n d d e s i g n a te d a warrant a standard of judicial review less pulmonologist, Dr. Gautam Dev, to deferential than arbitrary and capricious evalu ate her. Dr. Dev’s report review), and that delegation by Merck to contradicted Epps-M alloy’s treating UNUM of claims administration would physicians’ diagnoses, and on this basis ordinarily preclude heightened review. the defendants upheld their denial of However, there is evidence of procedural continued benefits. Epps-M alloy then bias in Merck’s intervention in the appeals filed this suit under 29 U.S.C. § process to request an independent medical 1132(a)(1)(B), seeking benefits allegedly exam. This is especially problematic due her under the terms of the Plan. because the record before the defendants Epps-M alloy’s c la im surviv ed prior to Dr. Dev’s examination provided summary judgment, and the District Court reasonably sound as well as unequivocal held a Fed. R. Civ. P. 52(a) bench trial on support for Epps-Malloy’s claim for a stipulated documentary record. The benefits; the choice to request a third Court concluded that under Pinto v. medical opinion therefore strongly Reliance Standard Life Insurance Co. , 214 suggests a desire to generate evidence to F.3d 377 (3d Cir. 2000), and its progeny, counter Epp s-M alloy’s physicians’ the structural arrangement among Merck, diagnoses. Because Merck’s intervention, the Plan, and UNUM did not warrant a notwithstanding its delegation of claims departure from the traditional “arbitrary administration to a large and experienced and capricious” standard of review over carrier, undermines the defendants’ claim
to the deference normally accorded an ERISA plan fiduciary with discretionary [2] We shall refer to Merck, the Plan, and authority, we conclude that the District UNUM collectively as “the defendants” Court should have applied a moderately except where it is necessary to heightened arbitrary and capricious distinguish them. standard of review. Additionally, with granted short-term disability benefits by respect to the merits, the District Court the defendants in October 1992. In fa iled to ad dr es s E pp s-M all oy’ s October 1993, she was approved for LTD fibromyalgia diagnosis, an omission which benefits, but was reminded that periodic itself alone would require a new trial. For requests for medical information would be these reasons, we will reverse the made in the future to ensure continued judgment of the District Court and remand eligibility (i.e., to determine that she for a new trial. continued to be completely disabled under
the Plan). Around the same time, Epps- Malloy applied for Social Security
I. Factual Background and Procedural disability benefits. In 1994, an History administrative law judge overruled the Social Security Administration’s (SSA) Although the District Court, which initial determination denying her Social rendered its opinion following a Fed. R. Security benefits, and awarded her Social Civ. P. 52(a) bench trial on a stipulated Security long-term disability benefits, documentary record, gave a lengthy finding her permanently disabled. account of the parties’ factual contentions, it by and large did not make findings of Epps-M alloy’s benefits were provided fact as required by Rule 52(a). As such, under the terms of the Merck & Co. Long what follows is not so much the District Court’s factual findings as it is our own summary of the record before us.
stiffness of muscles and associated connective tissue structures.”
A. Epps-Malloy’s Medical History Merriam-Webster Medical Dictionary Epps-Malloy was employed by Merck (2002), at http://www.dictionary.com. as a cook and food-service attendant. She The cause is unknown. Sarcoidosis is “a suffered an injury at work in 1991, and disease of unknown origin marked by was diagnosed with fibromyalgia, chronic formation of granulomatous lesions that pain syndrome, and sarcoidosis. [3] She was appear especially in the liver, lungs, skin, and lymph nodes.” American Heritage Stedman’s Medical Dictionary (2002), at [3] It is unclear from the record whether http://www.dictionary.com. A there was any causal relationship granuloma, in turn, is a “[c]hronic between the injury—a stack of food inflammatory lesion characterised by service trays falling on Epps- large numbers of cells of various types Malloy—and the ailments that form the (macrophages, lymphocytes, fibroblasts, basis of her claim. Fibromyalgia (also giant cells), some degrading and some referred to as fibromyositis) is “any of a repairing the tissues.” On-line Medical group of nonarticular rheumatic disorders Dictionary, at http://cancerweb.ncl.ac.uk/ characterized by pain, tenderness, and omd/index.html. Term Disability Plan fo r Un ion In May 1996, as part of a periodic Employees, an ERISA plan. By the Plan’s review of Epps-Malloy’s benefits, UNUM terms, “[Merck] shall pay the cost of the requested information from her treating benefits provided under the Plan,” though physicians, Dr. Panullo and Dr. David the Plan gives discretion to the Williams. Dr. Panullo was Epps-Malloy’s M a n a g e m e n t P e n s i o n I n v e s t m e nt gynecologist. Epps-M alloy’s disability is Committee to choose “any funding not related to any gynecological condition, method, or combination of funding s o D r . P a n u l l o ’ s r e p o r t s a r e methods which are permissible under irrelevant—though they seem to have been ERISA.” The District Court found that no misunderstood by UNUM, at some points, evidence was introduced on how Merck to indicate that Epps-M alloy was entirely actually funded the plan, and the parties do able to work, when they in fact say only not dispute this on appeal. The Plan that no gynecological problems prevented allocates fiduciary responsibility among a Epps-Malloy from working. We therefore committee of Merck’s Board of Directors say no more about Dr. Panullo. ( w h i c h h a s c e r ta i n po w e r s o f
Dr. Williams’s notes from January 16, appointment); the Merck Management 1996, refer to Epps-Malloy’s sarcoidosis Pension Investment Committee (which is and her fibromyalgia. According to his responsible for the investment and notes, the sarcoidosis had been diagnosed management of Plan funds); and Merck by a 1989 bronchoscopy; the record does itself, which is the plan administrator. As not disclose when the initial fibromyalgia plan administrator, Merck has the power to diagnosis was made. Dr. Williams’s June appoint a claims administrator, who “shall 14, 1996, notes state that “[s]arcoidosis is determine claims for benefits by her diagnosis as well as fibromyalgia,” and Participants under the Plan.” At the time he indicated that she was being medicated Epps-M alloy’s LTD benefits were first for fibromyalgia. In response to an granted, Thomas L. Jacob & Associates UNUM questionnaire dated October 28, (“TLJ”) was Merck’s appointed claims 1996, Dr. Williams stated that Epps- administrator; later, appellee UNUM was Malloy was “disabled to light activity the claims administrator. Notwithstanding because of shortness of breath” and that this appointment, the Plan confers on his prognosis for her to return to gainful Merck (as plan administrator) the powers employment on a part-time basis or full- “to construe the Plan”; “to decide all time basis was “never.” questions of eligibility”; and “to request and receive from all Participants such UNUM informed Epps-Malloy on information [as is] necessary for the proper December 31, 1996 that it was terminating administration of the Plan.” her benefits. The letter explained that a
review of medical documentation, B. Termination of Epps-Malloy’s LTD including information from Drs. Panullo Benefits and Williams, led UNUM to conclude that she no longer met the definition of being “unable to perform any and every duty” of her occupation, as required by the Plan.
non-productive and worse upon laying The letter also stated that “there is no down. The patient also has post-nasal evidence to support that you are medically drip and chronic sinus problems. Her incapable to perform the duties of your exercise tolerance is minimal, and she is occupation.” The letter further informed barely able to achieve her day-to-day Epps-Malloy that she would have to come activities. The patient was treated in the forward with objective medical evidence past with steroids; however, could not of her disability. tolerate them because of what appears to be psychosis and marked degree of
Epps-Malloy administratively appealed weight gain. She has a history of this decision. She provided additional smoking one pack per day for six years. information to UNUM, including the name of her new treating physician, Dr. Fred
[Physical exam reveals nothing McQueen. Dr. McQueen repeated the amiss; pulmonary function was fibromyalgia diagnosis, stated “[s]he normal; blood gases were near cannot return to gainful employment,” and normal] that he did “not feel it in her best interest to be under any stress due to triggering her
My impression of Mrs. Epps- sarcoid remission.” Dr. McQueen Malloy is that her concluded: “Permanently & totally symptomatology is not disabled. Suffers with severe anxiety. She commensurate with her clinical cannot cope with stress.” presentation. Considering the normal pulmonary function test
Upon receiving Dr. McQueen’s report, and near normal arterial blood UNUM wrote to Epps-Malloy stating that gas, I have a difficult time “Merck & Company has requested an ascribing sarcoidosis as a cause of Independent Medical Exam.” The her symptomatology. She appears defendants designated Dr. Dev to perform to be somewhat emotional and I the examination. We rescribe Dr. Dev’s cannot reliably exclude t h e m a r g i n ; [4] r e p o r t i n malingering behavior. On the contrary, the endobronchial [4] I saw Celeslie Epps-M alloy on 5/8/97. sarcoid may be leading to a The patient is a 47 year old female with a persistent cough and dyspnea. history of sarcoidosis reportedly Chronic sinusitis can also diagnosed by a transbronchial biopsy in exacerbate a respiratory condition 1987. The patient currently presents for and lead to some degree of medical evaluation for her complaints of shortness of breath. The patient’s shortness of breath on minimal exertion impaired cardiac status is also a and also complains of cough, which is possibility and an exercise stress in sum, Dr. Dev concluded that a diagnosis F.3d 377 (3d Cir. 2000), and its progeny, of sarcoidosis was “incompatible with her the District Court first concluded that an clinical presentation”—i.e., that he “arbitrary and capricious” standard of disagreed with the sarcoidosis diagnosis. review applied to its judicial review of the He did not opine on her fibromyalgia defendants’ denial of benefits. The Court diagnosis. Based on Dr. Dev’s report, then concluded that their denial of benefits UNUM upheld its decision denying was not arbitrary and capricious. It benefits. therefore entered judgment for the
defendants. C. Proceedings Before the District Court Epps-Malloy filed this suit, seeking benefits allegedly due her under the terms II. Our Standard of Review Over the of the Plan under 29 U.S .C. § District Court’s Decision 1132(a)(1)(B), and other relief. Merck
In the post- Pinto era, we appear to counterclaimed to recoup, under the terms have had only one case in the same of the Plan, the Social Security disability procedural posture as this one, i.e., an benefits Epps-M alloy had received. The appeal from a bench trial. In Goldstein v. counterclaim was settled, and the District Johnson & Johnson , 251 F.3d 433" date_filed="2001-05-25" court="3rd Cir." case_name="Goldstein v. Johnson & Johnson">251 F.3d 433, 441 (3d Court denied summary judgment on Epps- Cir. 2001), we stated (without further Malloy’s § 1132(a)(1)(B) claim. The case elaboration or citation) that in such an therefore proceeded to a trial on the merits, appeal “[w]e have plenary review over a which was conducted as a Fed. R. Civ. P. district court’s conclusions of law, and we 52(a) bench trial on a stipulated review its factual conclusions for clear documentary record. Canvassing Pinto v. error.” This is, of course, the usual Reliance Standard Life Insurance Co. , 214 standard of review on appeal from a bench trial. See In re Unisys Savings Plan Litig. , 173 F.3d 145, 149 (3d Cir. 1999).
test might be able to help Determining the proper standard of answer some of the judicial review under Pinto is a question of unanswered questions. applying law to fact; accordingly, our I feel, based on her pulmonary review is plenary, though we review a function tests and arterial blood district court’s underlying factual findings gas information, that her present only for clear error. Because we conclude diagnosis is incompatible with her the District Court applied too deferential a clinical presentation. standard of judicial review, we do not reach the merits of Epps-Malloy’s claim.
Dr. Dev’s description of when and how Epps-Malloy’s sarcoidosis was first diagnosed conflicts with that of Dr.
III. Standard of Judicial Review over Williams; it is not clear whether this Unum’s Determination of Epps-Malloy’s inconsistency is significant. Claim relevant is “the current status of the
fidu ciary,” id. , i.e., whethe r the Our principal task is to determine decisionmaker is a current employer, whether the District Court applied the former employer, or insurer. Our cases appropriate standard of judicial review to have addressed various combinations of the defendants’ decision to deny LTD these factors. In Pinto itself, we benefits to Epps-Malloy. We begin with a concluded that “heightened arbitrary and discussion of Pinto and our cases capricious review,” id. at 393, or review following it, and then turn to the proper “on the far end of the arbitrary and standard of judicial review in this case. capricious ‘range,’” id. at 394, was A. Pinto and Its Progeny appropriate because Pinto’s insurer both made benefits determinations and funded We held in Pinto that, in reviewing an the benefits, and because of various ERISA plan fiduciary’s discretionary procedural anomalies that tended to determination regarding benefits, a court suggest that “whenever it was at a must take into account the existence of the crossroads, [the insurer defendant] chose structural conflict of interest present when the decision disfavorable to Pinto.” Id. a financially interested entity also makes benefit determinations. Specifically, we Turning to Pinto ’s progeny, we first adopted a “sliding scale” approach, in note that in some cases the parties stipulate which district courts must “consider the to the applicable standard of judicial nature and degree of apparent conflicts review, or at least do not contest the with a view to shaping their arbitrary and District Court’s choice of a standard of capricious review of the benefits review. See, e.g. , McLeod v. Hartford Life d e t e r m in a t i o n s o f d i s c re t i o n a r y & Accident Ins. Co. , 372 F.3d 618" date_filed="2004-06-22" court="3rd Cir." case_name="McLeod v. Hartford Life & Accident Insurance">372 F.3d 618, 623-24 decisionmakers.” Pinto , 214 F.3d at 393. & nn.3-4 (3d Cir. 2004); Orvosh v. This “sliding scale” method “intensif[ies] Program of Group Ins. for Salaried the degree of scrutiny to match the degree Employees of Volkswagen of Am., Inc. , of the conflict.” Id. at 379. 222 F.3d 123" date_filed="2000-07-28" court="3rd Cir." case_name="Orvosh v. Program of Group Insurance for Salaried Employees of Volkswagen of America, Inc.">222 F.3d 123, 129 (3d Cir. 2000). Other
cases, though they cite Pinto , are factually Pinto offered a nonexclusive list of too far removed from the facts of this case factors to consider in assessing whether a to provide meaningful guidance. See, e.g. , structural conflict of interest warranting Goldstein , 251 F.3d 433 (unfunded heightened review exists. The sliding- executive deferred compensation, or “top scale approach “allows each case to be hat,” plan). examined on its facts.” Id. at 392. Among the factors we identified were “the While Pinto addressed the case of an sophistication of the parties, the i n s u r e r b o t h m a k i n g b e n e f i t s information accessible to the parties, and determinations and paying claims, it did the exact financial arrangement between not definitively decide whether any form the insurer and the company.” Id. Also of heightened review applies to employers both making benefits determinations and and capricious standard.” Id. at 199. Most paying claims. When an employer pays recently, we approved a district court’s claims out of its general operating holding that the unfunded and self- funds—the situation most likely to administered benefit plan in Stratton v. E.I. introduce a structural conflict because the DuPont de Nemours & Co. , 363 F.3d 250" date_filed="2004-04-06" court="3rd Cir." case_name="Melanie Stratton Jeffrey Stratton, Her Husband v. E.I. Dupont De Nemours & Co">363 F.3d 250, employer feels an immediate “sting” from 255 (3d Cir. 2004), warranted only a paying a claim—the plan is referred to as “slightly heightened form of arbitrary and “unfunded” or sometimes “self-funded.” capricious review.” This is in contrast to “the typical
As we noted in Pinto itself, the employer-funded pension plan” which “is financial and administrative relationship set up to be actuarially grounded, with the between the employer and the benefit plan company making fixed contributions to the is not the only relevant consideration. For pension fund.” Pinto , 214 F.3d at 388. example, in Stratton , we observed that We confronted (but were ultimately while an employer administering an able to avoid) ruling on the issue of unfunded plan may have a financial whether heightened review applies to incentive to deny the claims of its employers making benefits determinations employees, it thereby risks “the loss of and paying claims in Skretvedt v. E.I. morale and higher wage demands that DuPont de Nemours & Co. , 268 F.3d 167" date_filed="2001-10-09" court="3rd Cir." case_name="Skretvedt v. E.I. DuPont De Nemours & Co.">268 F.3d 167 could result from denials of benefits.” 363 (3d Cir. 2001). That case concerned F.3d at 254 (quoting Nazay v. Miller , 949 (among other things) an employer- F.2d 1323, 1335 (3d Cir. 1991)); see also administered unfunded benefit plan, and Smathers , 298 F.3d at 198; Pinto , 214 F.3d noted that “a heightened standard of at 389. We have recognized the inverse as review might be applicable to the well: When a former employee seeks [employer-controlled] Board’s denial of b e n e f it s , t h i s c o n f l ic t-mitiga tin g Skretvedt’s claim for the unfunded . . . consideration is not present. See benefits, because of the potential conflict Smathers , 298 F.3d at 198 (“Since under Pinto .” Id. at 175. We reached this Smathers was no longer an employee when question less than a year later, in Smathers Multi-Tool made its decision to deny his v. Multi-Tool, Inc./Multi-Plastics, Inc. claims, the counterbalancing of its Employee Health & Welfare Plan , 298 monetary self-interest by possible concerns F.3d 191 (3d Cir. 2002). In Smathers , we about the impact of its decision on morale concluded that an employer’s unfunded and wage demands would thereby be and self-adminstered benefits plan lessened.”). presented a conflict that, though “not
Indeed, we made the general point extraordinary,” did warrant “somewhat about the short-circuiting of incentives by heightened” scrutiny, requiring “a more imperfect information flow in Pinto itself: penetrating review of [the] administrator’s decisionmaking process than would [M]any claims for benefits are normally be conducted under the arbitrary made after individuals have left
active employment and are her insurer’s financial conflict of interest. seeking pension or disability See Pinto , 214 F.3d at 393 (“[L]ooking at benefits. Details about the the final decision, we see a selectivity that handling of those claims, appears self-serving in the administrator’s w h e t h e r r e s p o n s ib l e o r use of [one doctor’s] expertise.”); id. irresponsible, are unlikely to (“[i]nconsistent treatment of the same seep into the collec tive facts”); id. at 394 (suggesting that knowledge of still-ac tive “whenever it was at a crossroads, Reliance employees. If Pinto’s claim is Standard chose the decision disfavorable denied, few at Rhone-Poulenc to Pinto”). Though no case since Pinto will learn of it, and Reliance appears to have turned on evidence of Standard will have little motive procedural bias or unfairness, the to heed the economic advice of corresponding negative pregnant appears the Seventh Circuit that “it is a in several of our cases. See Skretvedt , 268 poor business decision to resist F.3d at 175-76 (considering but rejecting paying meritorious claims for allegations of decisionmaker bias in the benefits.” benefits review system); Goldstein , 251
F.3d at 435-36 (noting that heightened 214 F.3d at 388 (quoting Mers v. Mariott review would be required when “the Int’l Group Accidental Death & beneficiary has put forth specific evidence Dismemberment Plan , 144 F.3d 1014, of bias or bad faith in his or her particular 1020 (7th Cir. 1998)); see also id. at 392 case”); Bill Gray Enters., Inc. Employee (noting the relevance of the current Health & Welfare Plan v. Gourley , 248 relationship between the fiduciary and F.3d 206, 216 (3d Cir. 2001) (“[U]nless beneficiary). In short, our precedents specific evidence of bias or bad-faith has recognize that the situation of an been submitted, plans . . . are reviewed individual claiming benefits from her under the traditional arbitrary and former employer may, for Pinto purposes, capricious standard.”); id. at 216 n.8 be more akin to that of an insured claiming (“Gourley has failed to allege bias on the benefits from an insurance company than part of the plan administrator . . . .”). that of an employee claiming benefits from her current employer. B. The Appropriate Standard of Review
in This Case Our precedents establish at least one more cause for heightened review: We begin with the financial and demonstrated procedural irregularity, bias, administrative arrangement between or unfairness in the review of the Merck and the Plan. The District Court claimant’s application for benefits. The found that Epps-M alloy had offered no Pinto panel’s decision to apply heightened evidence on the mechanism by which review turned almost as much on the Merck funds the Plan beyond the bare procedures afforded to Pinto as it did on statement in the Plan itself that “[M erck] shall pay the cost of the benefits provided conclusion above that Epps-M alloy’s under the Plan.” By the Plan’s terms, status as a former employee might well Merck is the plan administrator, and even trigger some heightened level of review if, though it ha s dele ga ted claim s for example, Merck pays Plan benefits out administrative authority to UNUM , it of its general operating funds. exercises ultimate administrative authority
Ep ps -M all oy’ s a r g u m e n t f or as evidenced by its request that Epps- heightened review draws more support Malloy be examined by Dr. Dev. But from our discussion in Pinto of procedural since Epps-Malloy has not excluded the bias. As described above, Merck possibility that Merck pays for the benefits intervened in Epps-Malloy’s appeal it administers through fixed contributions process, requesting that she submit to an to an actuarially grounded fund, thereby “Independent Medical Exam,” ultimately leaving Merck with no immediate financial conducted by Dr. Dev. Merck surely has conflict of interest, we do not impose a the authority under the plan to require such heightened standard of review on this an exam—the Plan empowers Merck as ground. [5] We reiterate, however, our Administrator “to request and receive from all Participants such information [as is] necessary for the proper administration of [5] The District Court may, of course, the Plan.” But the circumstances under allow the parties on remand to which Merck made this request necessarily supplement the record to introduce raise an inference of bias: At the time of evidence of the Plan’s actual funding the request, every piece of evidence in mechanism. While we have held that, in Epps-M alloy’s record—the opinions of general, the record for arbitrary-and- two doctors ( D rs. Williams and capricious review of ERISA benefits McQueen), a consistent medical history, denial is the record made before the plan and an SSA determination that she was administrator, and cannot be totally disabled— supported her contention supplemented during litigation, see that she was disabled. [6] The District Mitchell v. Eastman Kodak Co. , 113 F.3d 433, 440 (3d Cir. 1997), when a court is deciding what standard of review to employ—arbitrary-and-capricious
deciding on a level of review); Skretvedt , review, or some higher standard under 268 F.3d 167" date_filed="2001-10-09" court="3rd Cir." case_name="Skretvedt v. E.I. DuPont De Nemours & Co.">268 F.3d at 174-75 (same). We leave Pinto —it may consider evidence of of this decision to the sound discretion of potential biases and conflicts of interest the District Court. that is not found in the administrator’s [6] We express no view on the relevance record. The Plan’s funding mechanism might well be evidence of this sort. See, vel non in the ERISA benefits context of e.g. , Stratton , 363 F.3d 250" date_filed="2004-04-06" court="3rd Cir." case_name="Melanie Stratton Jeffrey Stratton, Her Husband v. E.I. Dupont De Nemours & Co">363 F.3d at 254-55 an SSA finding of total disability. It is (considering an ERISA plan’s funding enough for our purposes here to note that and decisionmaking mechanisms in the SSA ruling gives at least some Court’s discussion is consistent with this faith belief that Epps-Malloy’s application view: It recognized that Epps-Malloy’s was a close call, and that it could resolve physician’s reports uniformly supported perceived ambiguities with a third her contentions (though they were, in some physician’s opinion. Independent medical aspects, incomplete), and that the examinations are not uncommon in the defendants’ denial of benefits was claims administration world, and this is grounded on Dr. Dev’s report, augmented responsible plan administration that we by medical opinions offered by one Nurse would not wish to deter. At this stage, Girardo based on a review of Epps- however, we are considering only how Malloy’s file. searching a review of the defendants’
benefits determination to undertake. Epps- It is in this light that we must view Malloy’s suit will rise or fall with the Merck’s request for an independent merits of her underlying claim (including medical examination. We have a claimant Dr. Dev’s opinion), modulated by the seeking continued LTD benefits whose deference owed to the defendants’ treating physicians offer unequivocal decision. For a responsible fiduciary, we support for her claims, and a plan trust that the incentive to collect enough administrator that has delegated claims information to make a responsible claims administration to a large insurance determination will outweigh the incentive company intervening—not at the initial to avoid requesting more information in determination stage, but at the appeal the hopes of maintaining the most stage— with a request for an additional deferential standard of review. And we medical examination to be performed by a trust that courts will not penalize plan physician of its own choosing. This administrators for seeking independent situation arguably has a quality to it that medical examinations at appropriate stages undermines the administrator’s claim to of the claims determination process. the deference normally owed to plan fiduciaries. Given how favorable the We conclude that the procedural bias record was to Epps-Malloy prior to Dr. we have described in Epps-Malloy’s Dev’s examination, the most natural appeals process warrants a moderately inference is that by intervening and heightened arbitrary and capricious ordering the retention of Dr. Dev, thus standard of review. Naturally, a seeking evidence to counter Epps-Malloy’s significantly heightened arbitrary and physicians’ evaluation, Merck was not capricious standard of review would be being a disinterested fiduciary. warranted if Merck also acted under a
financial conflict of interest, but, as noted That said, we acknowledge the above, the record before us does not possibility that Merck acted with a good demonstrate such a conflict. Because the District Court applied an unmodified arbitrary and capricious standard of review
support for Epps-Malloy’s claim for to the defendants’ actions, we will set ERISA benefits. aside the judgment and remand for a new a rheumatologist. trial on the merits under an appropriate
It would be premature to hold that, standard of judicial review. Because the given the record on Epps-M alloy’s alleged question whether the de fend ants’ fibromyalgia, the defendants’ denial of determination can stand is essentially an benefits to her was impermissible as a ultimate issue of fact, it is appropriate for matter of law. Doctor Dev did, in fact, the District Court to undertake that inquiry apparently perform a musculo-skeletal in the first instance. See Fed. R. Civ. P. examination, finding “unremarkable” 52(a); cf. Pullman-Standard v. Swint , 456 results; this may be evidence that Epps- U.S. 273, 287 (1982) (holding that clearly Malloy was not disabled by fibromyalgia. erroneous review applies to ultimate issues But it is plain that the District Court did of fact as well as subsidiary findings of not adequately address the defendants’ fact). treatment of Epps-M alloy’s fibromyalgia diagnosis. On remand, the District Court should separately consider the defendants’
IV. The District Court’s Conclusion on determinations regarding the two distinct the Merits infirmities from which Epps-Malloy Even if we were not setting aside the allegedly suffers. District Court’s conclusion on the merits That Court’s review of these because of the standard of review it determinations should be based on the applied, we would be constrained to do so record available to the plan administrator because it did not adequately address the in making its own decision; if there is not defendants’ denial of LTD benefits to sufficient evidence in the defendants’ Epps-Malloy in light of her diagnosis of record to support their decision as to the fibromyalgia. While one diagnosis in fibromyalgia claim, then it must be Epps-M alloy’s records is sarcoidosis, she reversed. See Mitchell v. Eastman Kodak was also diagnosed with fibromyalgia. Co. , 113 F.3d 433 (3d Cir. 1997); cf. Not only did her doctors ascribe aspects of Sandoval v. Aetna Life & Cas. Ins. Co. , her disability to fibromyalgia, the ALJ 967 F.2d 377, 381 (10th Cir. 1992) (“In appears to have granted SSA benefits to effect, a curtain falls when the fiduciary Epps-Malloy principally on the basis of completes its review, and for purposes of her fibromyalgia. As noted above, Dr. determining if substantial evidence Dev’s report is the defendants’ best supported the decision, the district court counter to Epps-Malloy’s physicians’ must evaluate the record as it was at the diagnoses, but, as the District Court itself time of the decision.”). While the District found, “[Dr. Dev] did not address the Court may take further evidence to aid in previous diagnosis of fibromyalgia or any its understanding of the medical issues other condition.” This is hardly surprising, involved, it must base its ultimate as Dr. Dev is a pulmonologist, and determination on the record before the fibromyalgia is most commonly treated by plan administrator, not its own judgment of whether Epps-Malloy was disabled. We leave it to the District Court to determine whether the defendants’ treatment of Epps- Malloy’s fibromyalgia claims met the moderately heightened arbitrary and capricious standard that we have identified.
V. Conclusion Because the original bench trial proceeded on too deferential a standard of review, we will reverse the judgment of the District Court and remand for a new trial on the merits.