Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-07-01997/USCOURTS-ca8-07-01997-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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1

The Honorable Richard W. Goldberg, United States Court of International

Trade, sitting by designation. 

United States Court of Appeals

 FOR THE EIGHTH CIRCUIT 

_________

No. 07-1997

_________

Steven Menz, *

 *

Plaintiff-Appellant, *

 *

v. * Appeal from the United States

 * District Court for the Eastern

Procter & Gamble Health Care Plan; * District of Missouri.

The Procter & Gamble Company; *

The Procter & Gamble *

Manufacturing Company; Healthlink, * 

Inc.; Healthlink HMO, Inc.; D.A. *

Tiersch; J.G. Hagopiang; J.P. *

Dierkes, Trustees; Procter & Gamble * 

Benefit Plan Trust; The Epoch *

Group, L.C., *

 *

Defendants-Appellees. *

_________

 Submitted: January 18, 2008

 Filed: March 27, 2008

 _________

Before COLLOTON and SHEPHERD, Circuit Judges, and GOLDBERG,1

 Judge. 

_________

GOLDBERG, Judge.

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The Honorable Frederick R. Buckles, United States Magistrate Judge for the

Eastern District of Missouri, sitting by consent of the parties pursuant to 28 U.S.C. §

636(c). 

3

The plaintiff’s wife, Jennifer Menz, is an employee of Procter & Gamble.

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Plaintiff Steven Menz filed this action to review the denial of benefits under an

employee benefits plan. Menz seeks benefits for a secondary or “back-up” prosthetic

left arm and hand. The defendants filed motions for judgment on the administrative

record which were granted by the district court.2

 For the reasons that follow, we

affirm.

I. BACKGROUND

A. Relevant Facts

Steven Menz, a self-employed rancher, was injured in a work-related accident,

resulting in the amputation of his left arm above the elbow. Menz is a beneficiary of

The Procter & Gamble Health Care Plan (“The Plan”),3

 which is an employee benefits

plan governed by the Employee Retirement Income Security Act (“ERISA”). The

Plan provides health benefits to the employees of The Procter & Gamble Company

and The Procter & Gamble Manufacturing Company (collectively “Procter &

Gamble”) and their beneficiaries. Procter & Gamble is the Plan Administrator, and

it retained The EPOCH Group, L.C. (“EPOCH”), Healthlink, Inc., and Healthlink

HMO, Inc. (collectively “Healthlink”) to process claims for benefits submitted to the

Plan. 

After Menz’s accident, his physician recommended that Menz receive benefits

for two prostheses to replace his amputated arm–one myoelectric arm for primary use,

and one body-powered arm to be used as a back-up. (J.A. 197-98.) On January 29,

2004, the Plan determined that benefits would be allowed for one myoelectric

prosthetic arm. Menz then sought benefits for a second myoelectric arm (instead of

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Healthlink declined to certify benefits for two myoelectric arms. At the time

of the non-certification, Healthlink had not yet been informed that the Plan had

approved benefits for one arm on January 29, 2004. 

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a body-powered arm) to be used as a back-up. Healthlink, one of the Plan’s claim

processors, denied certification of the back-up myoelectric arm on February 13, 2004.4

(J.A. 284.)

Menz continued to seek a secondary myoelectric prosthesis through

administrative procedures. On April 22, 2005, EPOCH, on behalf of the Plan, sent a

letter to Menz denying his claim. The Plan denied the claim for a back-up prosthesis

because (1) the Plan does not cover items of comfort or convenience; (2) the Plan does

not cover back-up items; (3) Menz failed to obtain pre-certification/pre-authorization;

(4) the Plan does not cover work-related injuries; and (5) the Plan does not cover

items owed by third parties. (J.A. 279-83.) 

Next, Menz appealed the Plan’s denial of benefits. The Plan conferred with an

independent medical reviewer to determine if a back-up myoelectric prosthesis was

“medically necessary” pursuant to the Plan’s terms. The medical reviewer advised

that the back-up prosthesis was not medically necessary. The day after the reviewer

made this determination, Menz submitted a physician’s letter and a prescription for

the myoelectric arm for the Plan’s consideration. The Plan forwarded these

documents to the independent reviewer, but the reviewer advised that the additional

information did not alter her original determination concerning medical necessity. As

a result, the Plan denied Menz’s first appeal.

Menz filed a second appeal of the Plan’s determination. The Plan sought the

advice of a second independent medical reviewer to determine if a back-up prosthesis

was medically necessary for Menz. The second reviewer, while suggesting that a

back-up prosthetic would be “appropriate,” ultimately concluded that it was not

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The Plan, Procter & Gamble, the Plan trustees and EPOCH jointly filed a

motion for judgment on the administrative record. Healthlink filed a separate motion,

asserting that the Plan did not abuse its discretion and that Healthlink was not a proper

party to the lawsuit. The district court granted both motions in separate opinions on

the same day.

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medically necessary under the terms of the Plan. The Plan denied Menz’s second

appeal, but permitted him an additional 45 days to submit supplemental information

for the Plan’s reconsideration of its decision. Menz submitted a letter from his

physician. On April 11, 2006, after reviewing the letter, the Plan informed Menz that

it would not amend its previous denial of benefits. Menz then filed the present cause

of action against the Plan, Procter & Gamble, Procter & Gamble Benefit Plan Trust,

D.A. Tiersch, J.G. Hagopiang, and J.P. Dierkes (trustees of the Procter & Gamble

Benefit Plan Trust), EPOCH and Healthlink.

In the proceedings below, the defendants moved for judgment on the

administrative record, which the district court granted.5

 Menz now raises three issues

in this appeal: (1) the Plan’s denial of benefits was an abuse of discretion because the

Plan applied the wrong version of the Summary Plan Description when determining

“medical necessity,” (2) the district court erred when it applied the abuse of discretion

standard of review, because serious procedural irregularities in the claims process

warranted a less deferential standard of review, and (3) the district court erred when

it held that Healthlink was not a proper party.

B. Waiver

As an initial matter, many of the issues that Menz raises on appeal are

foreclosed due to waiver. In his second issue on appeal, Menz argues that the district

court should have reviewed the Plan’s denial of benefits with less deference because

of the cumulative effect of several “serious procedural irregularities” in the

administrative process. Several of the alleged irregularities were never brought to the

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The issues that Menz failed to raise before the district court are the following:

(1) that the district court should not have applied the abuse of discretion standard of

review because the Plan has a “per se conflict of interest,”(2) that the Plan failed to

conduct an independent medical examination of Menz; (3) that the Plan failed to

provide the credentials of the independent reviewers; (4) that the Plan failed to

consider a primary medical issue.

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attention of the district court and are therefore waived.6

 See Woods v. Perry, 375 F.3d

671, 674 n.2 (8th Cir. 2004). The only remaining issues relating to Menz’s procedural

irregularity claim are (1) that Menz was subjected to excessive levels of administrative

review, and (2) that the administrative record was incomplete. 

Additionally, the portion of Menz’s appeal disputing the reasonableness of the

Plan’s denial of benefits rests entirely on the premise that the Plan and the district

court relied on the wrong version of the Summary Plan Description. Menz never

argued before the district court that a different Summary Plan Description should have

governed his claim. As such, this issue is waived. 

Due to the fact that most of Menz’s arguments on appeal are waived, we will

only address the following remaining issues: (1) whether the district court should have

applied a less deferential review because Menz’s claim was subjected to excessive

levels of review, (2) whether the administrative record is incomplete, (3) whether

Healthlink is a proper party to this action. 

II. DISCUSSION

A. Excessive Levels of Review

Menz appeals the district court’s grant of judgment on the administrative

record, which we treat as a form of summary judgment and review de novo. See

Ridell v. Unum Life Ins. Co. of Am., 457 F.3d 861, 864 (8th Cir. 2006).

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Essentially, Menz appealed Healthlink’s February 2004 denial of certification,

and then twice appealed EPOCH’s denial of benefits.

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We also review de novo the district court’s determination of the appropriate

standard of review to apply to a denial of benefits under ERISA. See Barham v.

Reliance Standard. Life Ins. Co., 441 F.3d 581, 584 (8th Cir. 2006). When a plan

grants the administrator discretionary authority to determine eligibility for benefits or

to construe the terms of the plan, a denial of benefits is reviewed under an abuse of

discretion standard. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115

(1989). In the present case, it is undisputed that the Plan grants discretionary authority

to its administrator (Procter & Gamble) to determine eligibility and to interpret the

terms of the plan. However, even where the administrator has discretionary authority,

a less deferential standard of review may be warranted if a plaintiff shows that a

“serious procedural irregularity existed” which caused a “serious breach of the plan

trustee’s fiduciary duty to the plan beneficiary.” Buttram v. Cent. States, Se. & Sw.

Areas Health & Welfare Fund, 76 F.3d 896, 900 (8th Cir. 1996). 

Menz believes that a serious procedural irregularity occurred because his claim

was subjected to excessive levels of review. An employee benefits plan has an

obligation to establish and maintain reasonable claims procedures. See 29 C.F.R. §

2560.503-1(b) (2007). Claims procedures are reasonable if they, inter alia,“do not

contain any provision, and are not administered in a way, that requires a claimant to

file more than two appeals of an adverse benefit determination prior to bringing a civil

action under section 502(a) of [ERISA.]” Id. § 2560.503-1(c)(2). 

It appears that Menz did participate in more than two appeals of his denial of

benefits,7

 but “the mere presence of a procedural irregularity is not enough to strip a

plan administrator of the deferential standard of review.” McGarrah v. Hartford Life

Ins. Co., 234 F.3d 1026, 1031 (8th Cir. 2000). A less deferential standard is only

warranted when a beneficiary shows that the plan administrator, “in the exercise of its

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power, acted dishonestly, acted from an improper motive, or failed to use judgment

in reaching its decision.” Neumann v. AT&T Commc’ns, Inc., 376 F.3d 773, 781 (8th

Cir. 2004). Additionally, the irregularity “must have some connection to the

substantive decision reached . . . .” Buttram, 76 F.3d at 901. 

The Plan admits that certain “procedural mistakes were made” during the

processing of Menz’s claim, and that there was some confusion as to which entity was

responsible for handling the claim–Healthlink or EPOCH. See Appellee Procter &

Gamble’s Br. 33. The Plan attempted to remedy any errors or confusion by allowing

him a new appeal process to give him the opportunity to demonstrate the validity of

his request for benefits. Menz fails to demonstrate how permitting an additional

appeal had any connection to the substantive decision reached or that the Plan acted

with an improper motive. On the contrary, Menz had further opportunity to

supplement the record in support of his claim. Menz has not raised “serious doubts as

to whether the result reached was the product of an arbitrary decision or the plan

administrator’s whim,” and he has not demonstrated that “the actual decision was

reached without reflection and judgment . . . .” Buttram, 76 F.3d at 900-01.

Accordingly, the district court did not err when it reviewed the Plan’s decision for

abuse of discretion, despite the fact that Menz’s claim was subject to more than two

appeals.

B. Completeness of Administrative Record

Menz argues that the case must be remanded because the Plan did not submit

a complete administrative record. Specifically, he claims he did not receive policy,

procedures and handling guidelines that are relevant to the denial of his claim

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 In relevant part, this regulation states that:

A document, record, or other information shall be considered

“relevant” to a claimant’s claim if such document, record, or other

information 

(i) Was relied upon in making the benefit determination;

(ii) Was submitted, considered, or generated in the course of making the

benefit determination, without regard to whether such document, record,

or other information was relied upon in making the benefit

determination;

(iii) Demonstrates compliance with the administrative processes and

safeguards required pursuant to paragraph (b)(5) of this section in

making the benefit determination; or

(iv) In the case of a group health plan or a plan providing disability

benefits, constitutes a statement of policy or guidance with respect to the

plan concerning the denied treatment option or benefit for the claimant’s

diagnosis, without regard to whether such advice or statement was relied

upon in making the benefit determination.

29 C.F.R. § 2560.503-1(m)(8).

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pursuant to 29 C.F.R. § 2560.503-1.8

 The district court correctly noted that Menz has

“not established with any specificity what evidence he believes was omitted, or what

role such evidence may have played in the Adminstrator’s decision to deny his claim.”

Menz v. Procter & Gamble Health Care Plan, 2007 U.S. Dist. LEXIS 25854, at *10

(E.D. Mo. Mar. 22, 2007). Menz makes no further effort on appeal to specify what

documents he lacks or their relevance. As such, Menz’s contention is meritless.

Menz also claims that the administrative record was incomplete because it did

not include any “administrative agreements” between the Plan and Healthlink. Menz

does not attempt to demonstrate how these administrative agreements would be

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relevant pursuant to 29 C.F.R. § 2560.503-1. Instead, he claims that they are required

to prove that the Plan denied his claim due to a conflict of interest. If Menz could

prove that a conflict of interest existed that had some connection with the Plan’s

decision to deny the claim, a less deferential standard of review would be warranted.

See Woo v. Deluxe Corp., 144 F.3d 1157, 1160-61 (8th Cir. 1998). To demonstrate

that a less deferential standard should apply, Menz must show that “(1) a palpable

conflict of interest or a serious procedural irregularity existed, which (2) caused a

serious breach of the plan administrator’s fiduciary duty to [him].” Id. at 1160.

Often, a palpable conflict of interest will be apparent from the administrative

record. See Farley v. Ark. Blue Cross & Blue Shield, 147 F.3d 774, 776 n.4 (8th Cir.

1998). If a conflict of interest is not apparent from the record, the district court may

permit discovery and supplementation of the record to establish these facts if the

plaintiff makes a showing of good cause. Cf. Brown v. Seitz Foods, Inc. Disability

Benefit Plan, 140 F.3d 1198, 1200 (8th Cir. 1998). Menz never requested that the

court permit limited discovery or supplementation of the record, and he did not make

any showing of good cause to do so. He cannot for the first time on appeal argue that

he was unable to prove a palpable conflict of interest existed when he did not even

attempt to reopen discovery or request supplementation of the record. A less

deferential standard of review is not warranted under these circumstances.

C. Healthlink

In the proceedings below, Healthlink filed a separate motion for judgment on

the administrative record. The district court granted Healthlink’s motion on two

grounds: (1) Healthlink is not a proper party and (2) the Plan’s denial of benefits was

not an abuse of discretion. Because Menz fails to demonstrate that the Plan abused

its discretion in its denial of benefits, it is unnecessary to address whether Healthlink

is a proper party.

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III. CONCLUSION

In light of the foregoing, the district court’s grant of summary judgment on the

administrative record is AFFIRMED. The appellees’ motion to strike portions of the

appellant’s addendum is DENIED AS MOOT.

______________________________

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