Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-05-02485/USCOURTS-ca8-05-02485-0/pdf.json

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

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United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-2485

___________

Barbara Barham, *

*

Appellant, *

*

v. * 

* Appeal from the United States

Reliance Standard Life * District Court for the

Insurance Company, * Eastern District of Arkansas.

*

Appellee, *

*

Arquest, Inc., *

*

Defendant. *

___________

Submitted: December 12, 2005

Filed: March 21, 2006

___________

Before BYE, BEAM, and GRUENDER, Circuit Judges.

___________

BYE, Circuit Judge.

Barbara Barham filed this action in district court challenging Reliance Standard

Life Insurance Company's (Reliance's) denial of her claim for long-term disability

benefits under a plan governed by the Employment Retirement Income Security Act

of 1974 (ERISA), 29 U.S.C. §§ 1001-1461. Applying an abuse-of-discretion

standard, the district court concluded the denial was supported by substantial

evidence. Because the policy included in the administrative record did not grant

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Reliance discretion to determine eligibility for benefits, the district court should have

used a de novo standard. We therefore reverse and remand with instructions to the

district court to apply de novo review.

I

Barbara Barham worked for Arquest, Inc., as a machine operator in a disposable

diaper factory. She had a long history of back problems dating back to 1968,

including back surgery in 1973, stemming in large part from congenital spina bifida

and mild scoliosis. On August 31, 1999, she began treating with Dr. R. Lee Archer,

a neurologist, who concluded she was "permanently and completely disabled because

of her low back problems." App. at 668. 

Barham was covered under an employer-sponsored long-term disability policy

issued by Reliance. Under the policy, she was entitled to disability benefits for

twenty-four months if she could not perform her own job. After the first twenty-four

months, she was entitled to additional disability benefits if she could not perform any

job. Barham applied for and received disability benefits from Reliance for the first

twenty-four months. Reliance also advised Barham to apply for Social Security

disability benefits, presumably because Reliance was contractually entitled to an offset

for any social security benefits Barham received. Barham did, in fact, receive Social

Security disability benefits. On September 7, 2000, Reliance notified Barham it had

received a copy of the Social Security Award certificate and told Barham she owed

Reliance $5280 for the amount Reliance had overpaid her.

On July 16, 2001, Reliance notified Barham it would review her claim to

determine whether she was eligible for disability benefits beyond the initial twentyfour month period. Barham completed disability review questionnaires for Reliance

on July 20, 2001, and March 25, 2002. On September 24, 2002, at Reliance's request,

Barham also participated in a one-day Functional Capacity Evaluation (FCE)

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performed by a registered nurse. According to the nurse who completed the FCE,

Barham was capable of performing sedentary level work. On June 30, 2003, Dr.

Archer responded to the FCE findings and opined Barham was not capable of

performing even sedentary level work because she was restricted by pain due to her

spina bifida.

After initially terminating Barham's claim for long-term benefits, Reliance

asked Dr. William Hauptman, a gastroenterologist, to conduct a paper review of

Barham's file. According to the gastroenterologist, Barham was not impaired from

performing sedentary work. This assessment appeared preliminary, however, as Dr.

Hauptman concluded "it will be important for further evaluation to obtain medical

records from all health care providers including primary physicians and any mental

health care providers." App. at 473. Nonetheless, in a letter dated July 23, 2003,

Reliance upheld its earlier decision to terminate Barham's long-term disability benefits

based on the FCE's determination she was capable of performing sedentary level work

and the paper review conducted by Dr. Hauptman.

In September 2003, Barham brought suit against Reliance in federal district

court challenging the benefits denial. In December 2003, the district court entered an

ERISA Scheduling Order requiring the parties to submit a copy of the administrative

record and to file briefs addressing the appropriate standard of review. The court

indicated it would then decide the case based upon the administrative record and the

parties' briefs.

On February 4, 2004, Thomas Hardy, a Reliance employee "authorized to make

this Declaration of behalf of the company," filed an affidavit with the district court

attaching a "complete and accurate copy of the claim file" and "declar[ing] under

penalty of perjury that the foregoing is true and correct." App. at 123-24. Included

within the administrative record was a copy of the group policy under which Barham

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made her claim for benefits. Notably, the policy did not grant Reliance discretion to

interpret the plan or determine eligibility for benefits.

On April 28, 2004, Reliance's counsel filed its brief on the standard of review

pursuant to the district court's ERISA Scheduling Order. Reliance argued the

appropriate standard of review was abuse of discretion because the policy granted

Reliance discretion to interpret the plan and determine eligibility for benefits. As

support, Reliance's counsel cited to "policy at page 6.0, a copy of which is attached

as Exhibit 'A.'" App. at 49. Exhibit "A" was attached to the brief without an affidavit

verifying its authenticity or accuracy. Unlike the policy included with the Hardy

affidavit, the policy attached as Exhibit "A" included the following provisions:

Reliance Standard Life Insurance Company shall serve as the claims

review fiduciary with respect to the insurance policy and the Plan. The

claims review fiduciary has the discretionary authority to interpret the

Plan and the insurance policy and to determine eligibility for benefits.

Decisions by the claims review fiduciary shall be complete, final and

binding on all parties.

Appellee's App. at 12.

Based upon Exhibit "A" and the representations made in Reliance's counsel's

brief, the district court concluded the plan gave Reliance discretionary authority to

determine eligibility for benefits and consequently reviewed the decision to deny

benefits under an abuse-of-discretion standard. Under the abuse-of-discretion

standard, the district court concluded Reliance's denial was supported by substantial

evidence.

Barham filed a timely appeal with this court contending, in part, the district

court applied the wrong standard of review. In support of that argument, Barham

primarily argued serious procedural irregularities occurred during the administrative

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proceedings which should have triggered a less deferential standard of review. For

the first time in her reply brief, however, Barham supplemented her standard-ofreview argument by noting the policy contained in the administrative record did not

contain any language granting Reliance discretionary authority to interpret the policy

or make eligibility determinations.

II

We have plenary review over the district court's determination of the

appropriate standard of review to apply to an ERISA plan's denial of benefits. See

Tillery v. Hoffman Enclosures, Inc., 280 F.3d 1192, 1196 (8th Cir. 2002) (applying

de novo review).

"[A] denial of benefits . . . should be reviewed under a de novo standard unless

the benefit plan grants the administrator or fiduciary discretionary authority to

determine eligibility for benefits or to construe the terms of the plan." Id. at 1196-97

(citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). Here, the

policy contained in the administrative record did not grant the administrator or

fiduciary discretionary authority to determine eligibility for benefits or to construe the

terms of the plan. Thus, a de novo standard should apply.

The district court applied an abuse-of-discretion standard because Reliance's

counsel represented the policy gave Reliance discretion to determine eligibility for

benefits. The policy which purportedly granted this authority was not the same as the

policy verified by Reliance as the complete and correct copy and included within the

administrative record, however, but an unverified copy attached to Reliance's brief

without any supporting affidavit.

Reliance contends Barham waived the right to rely upon the administrative

record because she waited until her reply brief to note the discrepancy between the

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1

We agree with the dissent a plan need not be in the administrative record to be

considered by the district court. See Farley v. Ark. Blue Cross & Blue Shield, 147

F.3d 774, 776 n.4 (8th Cir. 1998) ("We note, however, that conducting limited

discovery for the purpose of determining the appropriate standard of review does not

run afoul of the general prohibition on admitting evidence outside the administrative

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two policies. As a general rule, we will not consider arguments raised for the first

time in a reply brief. Akeyo v. O'Hanlon, 75 F.3d 370, 374 n.2 (8th Cir. 1996). We

are not precluded from doing so, however, particularly where, as here, the argument

raised in the reply brief supplements an argument raised in a party's initial brief. See

United States v. Head, 340 F.3d 628, 630 n.4 (8th Cir. 2003); see also Parmenter v.

Fed. Deposit Ins. Corp., 925 F.2d 1088, 1093-94 (8th Cir. 1991) (considering an

argument raised for the first time in a reply brief where "the interests of justice"

required a remand to the district court to address the question raised); Stafford v. Ford

Motor Co., 790 F.2d 702, 706 (8th Cir. 1986) ("The matter of what questions may be

taken up and resolved for the first time on appeal is one left primarily to the discretion

of the courts of appeal, to be exercised on the facts of the individual cases.") (quoting

Singleton v. Wulff, 428 U.S. 106, 121 (1976)).

While we do not condone the untimely manner in which Barham noted the

discrepancy between the policy presented to the district court and the policy within

the administrative record, neither do we wish to condone the unorthodox manner in

which Reliance's counsel presented the district court with Exhibit "A" – a policy that

differed in a very material respect from the one within the administrative record.

Under these circumstances, even if Exhibit "A" had been submitted with a supporting

affidavit, it would have been inappropriate for the district court to consider it unless

Reliance also gave a satisfactory explanation for its contradiction with the Hardy

affidavit. See Camfield Tires, Inc. v. Michelin Tire Corp., 719 F.2d 1361, 1364-65

(8th Cir. 1983) (indicating district courts should not consider inherently contradictory

affidavits submitted by the same party in summary judgment proceedings unless the

party explains the inconsistency).1

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record for the purpose of determining benefits."). In this case, however, a plan

verified as authentic and accurate by Reliance was included in the administrative

record, and the conflicting plan was never appropriately put before the district court.

Thus, while we agree the district court should be able to review evidence outside the

administrative record to determine which plan applies, we do not believe that rule

applies or governs in this case.

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There is no evidence in the district court or appellate record contradicting or

explaining the Hardy affidavit, which verified the authenticity and accuracy of the

policy contained within the administrative record. Reliance had ample time to

develop an accurate record in the district court and failed to do so. Cf. Von Kahl v.

United States, 242 F.3d 783, 788 (8th Cir. 2001) (declining to allow a party to

supplement the record where there was ample time to develop an accurate record and

any gaps in the record were likely due to a lack of diligence). Under these

circumstances, we believe it is appropriate to remand this case with instructions for

the district court to review the benefits denial de novo, see McKeehan v. Cigna Life

Ins. Co., 344 F.3d 789, 793 (8th Cir. 2003) (concluding de novo review should be

conducted in the first instance by the district court where record includes conflicting

medical opinions and evidence), as de novo review is consistent with the only policy

verified as accurate in the administrative record or the district court. 

III

We reverse and remand with instructions for the district court to apply a de

novo standard of review to Reliance's denial of Barbara Barham's claim for long-term

disability benefits.

BEAM, Circuit Judge, dissenting.

While I agree this case must be remanded to the district court, I disagree with

this court determining the standard of review for the district court to apply. The

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central issue seized upon by the court is which version of the benefit plan governs:

Plan A, from the administrative record, which would necessitate a de novo review, or

Plan B, which contains language granting Reliance discretion and would permit an

abuse-of-discretion review. Plan B, which the district court used, was not in the

administrative record. However, whether Plan B was in the administrative record

should not be dispositive of the standard of review. The correct inquiry is which plan

was in effect at the time of Barham's claim. After all, the quest of this court should

be a search for the truth, not a search for error.

The court assumes that the administrative record must contain the benefit plan.

I agree that both sides should make an accurate and complete record before coming

to federal court. Vega v. Nat'l Life Ins. Servs., Inc., 188 F.3d 287, 302 n.13 (5th Cir.

1999). When courts review a denial of benefits under an abuse-of-discretion standard,

only the evidence in the administrative record is considered. Sahulka v. Lucent

Techs., Inc., 206 F.3d 763, 769 (8th Cir. 2000). Even under a de novo review, the

introduction of documentation not in the administrative record is discouraged unless

good cause is shown. Ferrari v. Teachers Ins. and Annuity Ass'n, 278 F.3d 801, 807

(8th Cir. 2002). However, the vast majority of case law addresses only whether a plan

participant can add documentation to the record which was not before the

administrator. See, e.g., id. (discussing decision not to expand record to include

financial documentation offered by plan participant).

The issue of whether a plan must be present in the administrative record has not

been squarely addressed by this court. I agree with the Sixth Circuit, which has

addressed this issue and determined that the plan need not be present in the

administrative record to be considered by the district court. Bass v. TRW Employee

Welfare Benefits Trust, 86 F. App'x 848, 851 (6th Cir. 2004) (unpublished). The

reasons for limiting the record before the district court are to provide for expeditious

review and to prevent the district courts from becoming plan administrators. Brown

v. Seitz Foods, Inc., Disability Ben. Plan, 140 F.3d 1198, 1200 (8th Cir. 1998).

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Refusing to admit a benefit plan would not advance either of these goals. So, in my

view, the district court should be able to review evidence outside the administrative

record to determine which plan applies.

The benefit plan which Reliance contends is the correct one was not in the

administrative record and was adopted by the district court from Reliance's brief.

Because this is simply an evidentiary dispute, we should remand to the district court

to determine which plan and which standard of review to apply to Barham's claim.

Accordingly, I respectfully dissent.

______________________________

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