Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_05-cv-01883/USCOURTS-casd-3_05-cv-01883-1/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.-Employee Benefits

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- 1 - 05cv1883

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

TERESA E. NEATHERY,

Plaintiff,

CASE NO. 05 CV 1883 JM (CAB) 

ORDER DENYING PLAINTIFF’S

MOTION TO SUPPLEMENT THE

RECORD ON REVIEW 

[Docket No. 93]

vs.

CHEVRON TEXACO CORPORATION

GROUP ACCIDENT POLICY NO. OK

826458 et al.,

Defendants. 

This is an ERISA case wherein Plaintiff seeks judicial review of Defendants’ denial of

employee benefits. Pending before the court is Plaintiff’s Motion to Supplement the Record on

Review by which Plaintiff requests that the court consider additional evidence, not before Defendants

during administrative review, in deciding whether Defendants’ denial of employee benefits was

proper. Plaintiff contends the court must consider this additional evidence pursuant to Abatie v. Alta

Health & Life Ins. Co., 458 F.3d 955 (9th Cir. 2006) (en banc). Defendants oppose the motion and

have also moved separately to strike the evidence. The court deemed the matter suitable for decision

without oral argument pursuant to Local Rule 7.1.d.1. After considering the parties’ papers and the

authorities cited therein, the court hereby DENIES the motion for the reasons that follow.

I. BACKGROUND

The underlying events are alleged as follows. On May 19, 2004, Plaintiff’s husband, an

employee of Chevron-Texaco, died at work when the truck he was driving veered for some reason to

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As of December 29, 2005, however, the court had not yet ruled that Plaintiff had exhausted

her administrative remedies.

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the side of the road, striking the corner of an oil well pump cage. The airbag of the truck deployed

and the seatbelt pressed against his lap and stomach. At some point either before or after the truck

crashed, the decedent’s stomach contents were forced up into his throat and then back down. He was

pronounced dead at the scene. 

On June 24, 2004, Plaintiff submitted to Defendants claims for accidental death insurance

proceeds pursuant to the two insurance policies at issue in this case. On September 13, 2004,

Defendants denied benefits on the ground that a medical crisis, not a work accident, had caused her

husband’s death. Comp., Ex. H at 4 (Defendants’ letter stating that “Robert Neathery experienced an

illness of unknown etiology that caused him to vomit and aspirate the material causing his

suffocation.”). The insurance policies exclude benefits caused by or resulting from sickness or

physical illness. 

On May 19, 2005, Plaintiff filed an appeal with Defendants. Before the appeal was decided,

Plaintiff filed this lawsuit on September 30, 2005. Thereafter Defendants litigated this lawsuit and

processed Plaintiff’s appeal at the same time.

In connection with the administrative appeal and after Plaintiff filed suit, Defendants provided

to Plaintiff on December 19, 2005 the report of Dr. James Lewis (the “Lewis Report”), who opined

that the decedent’s death was caused by an acute myocardial event. Defendants indicated to Plaintiff

that they would rely on the Lewis Report in deciding the appeal, and asked Plaintiff to submit written

comments thereto which Defendants would then incorporate into the administrative record. See

Horner Decl., Ex. 1, n.1. In a December 29, 2005 response letter, Plaintiff declined to submit

comments, contending that because Plaintiff had exhausted her administrative remedies, the

administrative record was therefore closed and Defendants had no right to continue with the appeal.

Id. at 2 ¶ 1.1

 In the same letter, Plaintiff “reserved her right” to comment on the Lewis Report at a

later time, and have those comments incorporated into the administrative record, should the court

decide to consider the Lewis Report. Id. at 2 ¶ 2.

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2

This is to be contrasted with the reason given for the initial denial of benefits, which was that

the decedent had died from inhaling his own vomit. 

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On December 20, 2005, Plaintiff moved for partial summary judgment on the issue of whether

Plaintiff had exhausted her administrative remedies, thereby entitling her to judicial review. See

Docket No. 10; 29 C.F.R. § 2560.503-1(l) (“In the case of the failure of a plan to establish or follow

claims procedures consistent with the requirements of this section, a claimant shall be deemed to have

exhausted the administrative remedies under the plan and shall be entitled to pursue any available

remedies under section 502(a) of the Act[.]”). 

In a January 12, 2006 letter, Defendants again invited Plaintiff to submit written comments on

the Lewis Report before Defendants would issue a final decision:

Ninth Circuit case law holds that the Administrative Record closes once LINA issues

it [sic] final decision on appeal, irrespective of whether your client has been deemed

to have exhausted her administrative remedies. However, even if this were not the

case your client is not harmed by commenting on Dr. Lewis’ report, as she can always

argue to the Court at a later date the reasons why she believes the report should not be

given any merit . . . 

Accordingly, I urge you to notify me immediately if you and/or your experts would

like to comment on Dr. Lewis’ report. If I do not hear from you, as to your intention

in this regard within the next 10 days, LINA will proceed to close the Administrative

Record and issue a final decision on your client’s appeal without additional comment

from her.

Bernacchi Decl. in Support of Motion to Strike, Ex. 14. at 77-78. Plaintiff declined this second

invitation to comment, again “reserving her rights” to comment later. Horner Decl., Ex. 2.

Defendants continued to process the appeal.

 On January 27, 2006, Defendants denied Plaintiff’s administrative appeal on the ground that

the decedent died from an acute myocardial event2

 and therefore benefits were not due under the

policies’ terms. See Horner Decl., Ex. 4. 

On February 14, 2006, the court granted Plaintiff’s motion for partial summary judgment,

concluding that Plaintiff had exhausted her administrative remedies. See Docket No. 33. 

On May 8, 2006, Plaintiff moved for partial summary judgment on the standard of review

applicable to Defendants’ denial of benefits. On July 31, 2006, the court ruled that the applicable

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standard was abuse of discretion. 

Now comes the present motion. Plaintiff seeks to supplement the administrative record with

all of the evidence contained in the Horner Declaration, which includes among other things (1) the

report of Dr. Miller; (2) the report of Dr. Fred Simon; (3) the report of Dr. C. Kochenderfer; and (4)

Plaintiff’s counsel’s investigation of Dr. Lewis’s professional background. This supplemental

evidence is offered for the purpose of attacking the credibility of the Lewis Report. See Mot. at 23-24.

Plaintiff argues that the Ninth Circuit’s recent en banc decision in Abatie requires this court to

consider her supplemental evidence when it ultimately decides whether Defendants abused their

discretion. The court disagrees. 

II. ERISA: BASIC PRINCIPLES

ERISA requires a plan administrator (“PA”) to provide plan participants with adequate notice

of the reasons for denial and must provide a “full and fair review” of the participant’s claim. 29

U.S.C. § 1133; 29 C.F.R. § 2560.503-1(g)(1), (h)(2). 

This court has already determined that it will review Defendants’ denial of benefits for abuse

of discretion. See Docket No. 63. When the abuse of discretion standard applies, the court’s review

is limited to the administrative record before the PA and the court may not consider extrinsic evidence.

Abatie, 858 F.3d at 970; Jebian v. Hewlett-Packard Co. Employee Benefits Org. Income Prot. Plan,

349 F.3d 1098, 1110 (9th Cir. 2003); McKenzie v. General Tel. Co., 41 F.3d 1310, 1316 (9th Cir.

1994). There are, however, two exceptions to this general rule. First, “the district court may, in its

discretion, consider evidence outside the administrative record to decide the nature, extent, and effect

on the decision-making process of any conflict of interest; the decision on the merits, though, must

rest on the administrative record once the conflict (if any) has been established, by extrinsic evidence

or otherwise.” Abatie, 458 F.3d at 970; see also Tremain v. Bell Indus, Inc., 196 F.3d 970, 976-77

(9th Cir. 1999). The existence of a conflict of interest is one factor to consider in determining whether

the PA abused its discretion, and must be given more or less weight depending on the circumstances:

The level of skepticism with which a court views a conflicted administrator's decision

may be low if a structural conflict of interest is unaccompanied, for example, by any

evidence of malice, of self-dealing, or of a parsimonious claims-granting history. A

court may weigh a conflict more heavily if, for example, the administrator provides

inconsistent reasons for denial, [Lang v. Long-Term Disability Plan of Sponsor

Applied Remote Technology, Inc., 125 F.3d 794, 799 (9th Cir. 1997)]; fails adequately

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3

Although payment for Dr. Lewis’s services could raise a conflict of interest issue, there is no

evidence that Dr. Lewis is paid based on the substance of his opinion or that it is improper for

insurance companies to pay their experts.

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to investigate a claim or ask the plaintiff for necessary evidence, Booton v. Lockheed

Med. Benefit Plan, 110 F.3d 1461, 1463-64 (9th Cir.1997); fails to credit a claimant's

reliable evidence, Black & Decker Disability Plan v. Nord, 538 U.S. 822, 834, 123

S.Ct. 1965, 155 L.Ed.2d 1034 (2003); or has repeatedly denied benefits to deserving

participants by interpreting plan terms incorrectly or by making decisions against the

weight of evidence in the record.

Abatie, 458 F.3d at 968-69.

Under the second exception, extrinsic evidence may be properly considered when procedural

irregularities during administrative review affect administrative review by, for example, preventing

a full development of the administrative record. Id. at 973. This second exception, which may be

invoked even when a defendant’s decision is reviewed for abuse of discretion, allows the court to

“recreate what the administrative record would have been had the procedure been correct.” Id. 

Thus, in order for Plaintiff to prevail, the court must find that her supplemental evidence falls

within one of the two exceptions. As demonstrated below, neither exception applies in this case.

III. DISCUSSION

A. Conflict of Interest Exception

Plaintiff argues that her supplemental evidence will show that the Lewis Report is so medically

unsound that the only possible reason Defendants could have relied on it is to deny benefits, and that

therefore the supplemental evidence is relevant to determining the extent and nature of Defendants’

conflict of interest. See Mot. at 17. In response, Defendants argue that Plaintiff’s evidence is not

relevant to finding a conflict of interest. 

Defendants have the stronger argument. Viewed as a whole, Plaintiff’s supplemental evidence

is offered to show that the Lewis Report is not credible. For example, Plaintiff contends the evidence

shows that Dr. Lewis’s Curriculum Vitae is inaccurate, that he is not a practicing physician or

otherwise licensed or board-certified, and that he is paid to render opinions for Defendants.3 See Mot.

at 17-18; Horner Decl., Exs. 5, 23-25. The focus of the exception, however, is the extent to which the

defendant is operating under a conflict of interest. Any evidence of Dr. Lewis’s alleged professional

incompetency is irrelevant to that determination. In sum, Plaintiff’s supplemental evidence is not

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offered to show “the nature, extent, and effect on the decision-making process of any conflict of

interest” on the part of Defendants and therefore it is not admissible pursuant to this exception.

Abatie, 458 F.3d at 970.

B. Procedural Irregularity Exception 

Under this exception, the court properly considers extrinsic evidence when a procedural

irregularity affects administrative review, such as when the irregularity prevents the full development

of the record. Abatie, 458 F.3d at 973. Plaintiff identifies two procedural irregularities in this case:

(1) Defendants’ rendering of a final decision on her appeal after Plaintiff had already filed suit and

(2) stating a new reason for denying benefits on appeal. See Mot. at 19.

Plaintiff has not shown why the first irregularity, if it is an irregularity, prevented a full

development of the record or otherwise affected administrative review. Although it is unusual for an

ERISA defendant to issue a final decision after the plaintiff has already filed suit, it is not unheard of.

See Jebian, 349 F.3d at 1102 (reviewing merits of defendant’s final denial of benefits even though

final denial was issued after plaintiff filed suit); Gritzer v. CBS, Inc., 275 F.3d 291, 294 (3d Cir. 2002)

(same). More importantly, it is undisputed that Defendants twice offered Plaintiff the opportunity to

respond to the Lewis Report before issuance of a final decision. Plaintiff declined both opportunities

under “reservation of right” to comment later should the court consider the Lewis Report part of the

administrative record. Horner Decl., Exs. 1 at 2, 2 at 2. Plaintiff, however, does not cite, nor is the

court aware of, any authority in support of such a right. Under these circumstances, it cannot

reasonably be said that the alleged procedural irregularity–Defendants’ issuance of a final decision

after Plaintiff initiated litigation–“prevented full development of the administrative record.” Abatie,

458 F.3d at 973; see also Fulayter v. Prudential Ins. Co. of America, 2007 U.S. Dist. LEXIS 8394,

*30-31 (D. Ariz. Feb. 6, 2007) (citing Abatie and providing that defendant’s denial of benefits was

subject to “high level of scrutiny” when defendant relied on new reason for denying benefits on

administrative appeal when the plaintiff-claimant had no opportunity to respond). Rather, it was by

Plaintiff’s conduct that her comments were not incorporated therein.

/ / / 

/ / / 

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4

The parties dispute whether Defendants in fact stated a new reason for denial on appeal.

However, the court need not resolve that dispute because even if Defendants did state a new reason,

Plaintiff’s argument still fails for the reasons provided in this order.

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/ / / 

Additionally, to the extent Plaintiff argues that submitting comments would have created an

undue burden and therefore Plaintiff was somehow excused at the time from hiring experts to

comment on the Lewis Report, Plaintiff has not cited any basis in law or fact for that argument. See

Mot. at 19.

Plaintiff also argues that she was under no legal obligation to comment because her claim was

no longer under administrative review but under judicial review. See, e.g., Mot. at 5 (“Plaintiff

continues to respectfully contend that this constituted improper supplementation of the record by the

claim fiduciary in the middle of litigation and outside the administrative process.”). Again, the

argument must fail because Plaintiff cites no authority in support thereof.

As to the second alleged irregularity–stating a new reason for denial on appeal–Plaintiff’s

arguments are also unavailing.4

 Plaintiff interprets Abatie as requiring the court to consider a plan

participant’s extrinsic evidence anytime a PA states a new reason for denying benefits on appeal. Mot

at 19. The Abatie rule, however, is more refined than that:

Even when procedural irregularities are smaller . . . and abuse of discretion review

applies, the court may take additional evidence when the irregularities have prevented

full development of the administrative record. In that way the court may, in essence,

recreate what the administrative record would have been had the procedure been

correct.

Abatie, 458 F.3d at 973 (emphasis added); see also id. at 971 (“Different concerns arise when the

administrator fails to adhere to the procedural dictates of ERISA and the plan. We must consider

those issues in this case because of the plan administrator’s last-minute reliance on a new ground for

denial of benefits, which afforded Plaintiff no opportunity to present relevant evidence in advance of

the administrator’s final decision.”) (emphasis added). 

Unlike Abatie, here it is undisputed that Plaintiff was furnished with the Lewis Report and two

opportunities to respond before issuance of a final decision. In this case it was Plaintiff’s refusal to

comment, not Defendants’ alleged stating of a new reason for denial on appeal, that prevented full

development of the administrative record. Abatie, 458 F.3d at 973; cf. Orndorf v. Paul Revere Life

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5

The court questions the relevancy of this argument to the present motion, which is whether

Plaintiff’s extrinsic evidence should be considered by the court in deciding whether Defendants

abused their discretion.

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Ins. Co., 404 F.3d 510, 519 (1st Cir. 2005) (rejecting, in ERISA case wherein de novo review applied,

Plaintiff’s argument that district court should have considered his extra-record evidence when “[t]here

is no claim Orndorf was denied an opportunity to present evidence to the administrator.”); Davidson

v. Prudential Ins. Co., 953 F.2d 1093, 1095 (8th Cir. 1992) (finding that district court properly

disregarded ERISA claimant’s additional evidence that was known or should have been known to the

claimant during administrative proceedings). Abatie’s concern justifying admission of extrinsic

evidence–that the participant would otherwise have no opportunity to refute the PA’s new reason for

denial of benefits on appeal–is absent here because Plaintiff was afforded two such opportunities.

Accordingly, the exception has no application and Plaintiff’s supplemental evidence remains excluded

from the record.

Plaintiff also argues that it would be inconsistent for the court to consider the Lewis Report

as part of the administrative record on review when Plaintiff was deemed to have exhausted her

administrative remedies when she filed suit in September 2005, months before the Lewis Report was

brought to her attention.5

 This argument misconstrues the “deemed to have exhausted the

administrative remedies under the plan” language of the regulation. 29 C.F.R. § 2560.503-1(l).

Although this court determined that Plaintiff exhausted her administrative remedies for purposes of

her right to seek judicial review, this does not mean that Plaintiff’s administrative proceedings were

terminated once she filed this suit. Cf. Gatti v. Reliance Standard Life Ins. Co., 415 F.3d 978, 984

(9th Cir. 2005) (providing in dicta that the purpose behind § 2560.503-1(l)’s “deemed to have

exhausted the administrative remedies available under the plan” language is to allow claimants to seek

judicial review, not to cut off an administrator’s discretion to grant or deny benefits absent flagrant

procedural violations). 

In sum, the court has already decided that it will review Defendants’ decision for abuse of

discretion. Under that standard, the court’s review is limited to the administrative record before the

Defendants. Plaintiff’s supplemental evidence was not before Defendants during administrative

review, despite repeated attempts by Defendants to obtain that evidence. Neither exception under

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6

In connection with the related motion to strike, Plaintiff cites Estate of Bratton v. Nat’l Union

Fire Ins., 215 F.3d 516 (5th Cir. 2000) and Vega v. Nat’l Life Ins., 188 F.3d 287 (5th Cir. 1999) for

the proposition that the administrative record closes once litigation has commenced. Not only is

Plaintiff rearguing the standard of review in its citation to these cases, Plaintiff also misinterprets

them. Bratton and Vega permitted supplementation of the administrative record with extrinsic

evidence that was “made available to the administrator prior to the complainant's filing of a lawsuit

and in a manner that gives the administrator a fair opportunity to consider it.” Vega, 188 F.3d at 300;

Bratton, 215 F.3d at 521. That is not the situation here. 

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Abatie for admission of extrinsic evidence applies. Therefore, the motion must be denied.

Finally, Plaintiff reargues the applicable standard of review. Mot at 22. The court, however,

has already decided that issue and the time to bring a motion for reconsideration has expired. CivLR

7.1(I)(2).6

IV. CONCLUSION

For the foregoing reasons, the motion is DENIED. In light of the court’s decision,

Defendants’ Motion to Strike Plaintiff’s Post-ERISA Appeal Expert Reports, see Docket No. 82, is

DENIED as moot.

IT IS SO ORDERED.

DATED: April 9, 2007

 Hon. Jeffrey T. Miller

 United States District Judge

cc: All parties 

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