FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

TERRI GATTI, 

Plaintiff-Appellee,

No. 03-15562

v.  D.C. No.

RELIANCE STANDARD LIFE CV-01-00175-FRZ

INSURANCE COMPANY,

Defendant-Appellant. 

TERRI GATTI, 

No. 03-16183 Plaintiff-Appellee,

D.C. No.

v.  CV-01-00175-FRZ

RELIANCE STANDARD LIFE AMENDED INSURANCE COMPANY,

OPINION Defendant-Appellant. 

Appeal from the United States District Court

for the District of Arizona

Frank Zapata, District Judge, Presiding

Argued and Submitted October 6, 2004

Submission Deferred October 8, 2004

Resubmitted May 31, 2005

San Francisco, California

Filed May 31, 2005

Amended Opinion and Concurrence

Filed July 22, 2005

Before: Pamela Ann Rymer, Richard C. Tallman, and

Carlos T. Bea, Circuit Judges.

8599
Opinion by Judge Tallman;

Concurrence by Judge Rymer

8600 GATTI v. RELIANCE STANDARD LIFE
COUNSEL

Joshua Bachrach, Rawle & Henderson, LLP, Philadelphia,

Pennsylvania, for the appellant. 

Barry Kirschner, Waterfall, Economidis, Caldwell, Hanshaw

& Villamana, P.C., Tuscon, Arizona, for the appellee. 

8602 GATTI v. RELIANCE STANDARD LIFE
OPINION

TALLMAN, Circuit Judge: 

Reliance Standard Life Insurance Company (“Reliance”)

appeals the district court’s summary judgment in favor of

Terri Gatti in her action brought under the Employee Retirement Income Security Act (“ERISA”) for reinstatement of

long term disability benefits. The district court reviewed Reliance’s decision to terminate Gatti’s benefits de novo, because

it interpreted an ERISA regulation as placing a temporal limitation on the administrator’s discretion and because it found

Reliance to have a serious conflict of interest. The district

court erred in applying de novo review. We reverse and

remand. 

I

Appellant Reliance, which provided long term disability

coverage for employees of Paine Webber Group, approved

appellee Gatti for long term disability benefits effective May

24, 1993, based on complications related to Hepatitis B.

Almost seven years later, in April 2000, Reliance concluded

that Gatti was no longer suffering from complications related

to Hepatitis B, but that her disability was caused by a mental

disorder. Reliance apparently based this determination on

tests indicating that Gatti’s Hepatitis B was inactive as of

1997, and on physicians’ reports that she suffered from bipolar disorder and chronic fatigue syndrome. Disability benefits

for mental illness were limited to twenty-four months under

Gatti’s policy, so Reliance determined that Gatti had already

received the maximum amount of benefits to which she was

entitled and discontinued her disability payments. 

Gatti administratively appealed Reliance’s decision. Reliance then had Dr. Stephen Feagin review Gatti’s medical

records. Based on his review, and without actually examining

Gatti, Dr. Feagin concluded that any disability suffered by

GATTI v. RELIANCE STANDARD LIFE 8603
Gatti was caused by her psychiatric issues. On October 27,

2000, 177 days after it received Gatti’s request for administrative review, Reliance reaffirmed its decision to discontinue

benefits. 

Following that decision, Reliance gave Gatti an additional

opportunity to present “any additional medical evidence

which she believes might allow [Reliance] to reinstate her

benefits.” Gatti did present new evidence, including a December 7, 2000, letter from Dr. Nicholas H. Rice stating that a

new HBV DNA test had been performed on Gatti which confirmed that she still had Hepatitis B. On February 6, 2001,

279 days after it received Gatti’s request for administrative

review, Reliance concluded that the additional submissions

were insufficient to warrant reversing its decision to discontinue Gatti’s benefits. 

Gatti filed a complaint against Reliance, and the district

court ruled for her on summary judgment. The court reviewed

Reliance’s decision to terminate benefits de novo because the

court reasoned that the termination of Gatti’s benefits was not

an act of discretion as Gatti’s claim was “deemed denied”

when Reliance violated the time deadlines for processing

administrative appeals established in the ERISA regulations.

The court also justified de novo review with its finding that

Reliance had an actual conflict of interest, demonstrated by

Reliance’s failure to follow the treating physician rule. The

district court concluded that Gatti was entitled to benefits

based on the treating physician rule. 

II

We review de novo whether the district court applied the

appropriate standard of review. See Alford v. DCH Found.,

311 F.3d 955, 957 (9th Cir. 2002). 

District courts review a decision to deny or terminate benefits under an ERISA plan “under a de novo standard unless

8604 GATTI v. RELIANCE STANDARD LIFE
the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to

construe the terms of the plan.” Firestone Tire & Rubber Co.

v. Bruch, 489 U.S. 101, 115 (1989). When the plan gives the

administrator or fiduciary discretionary authority to determine

eligibility for benefits, that determination is reviewed for

abuse of discretion. Taft v. Equitable Life Assurance Soc’y, 9

F.3d 1469, 1471 (9th Cir. 1993); see also Firestone, 489 U.S.

at 114-15. 

A

[1] The regulations implementing ERISA establish minimum requirements for employee benefit plan procedures pertaining to beneficiary claims. 29 C.F.R. § 2560.503-1 (1998).

These regulations include a sixty-day time limit for making a

decision on review, which may, under certain circumstances,

be extended to 120 days. 29 C.F.R. § 2560.503-1(h). If a decision has not been made within these time limits, the claim is

deemed denied on review. 29 C.F.R. § 2560.503-1(h)(4).1

1The pertinent regulation was amended in 2000; the alterations apply to

claims filed on or after January 1, 2002. See 65 Fed. Reg. 70,246 (Nov.

21, 2000); 29 C.F.R. § 2560.503-1(o) (2002). These alterations shorten the

time allowed for initial responses to forty-five days (from sixty) and

remove the language that says that violations of the time limitations will

result in the claim being “deemed denied.” 29 C.F.R. § 2560.503-1(f)(3)

(2002). At the same time, the new regulation provides that if plan administrators fail “to establish or follow claims procedures consistent with [the

new regulation], a claimant shall be deemed to have exhausted the administrative remedies available under the plan and shall be entitled to pursue

any available remedies . . . on the basis that the plan has failed to provide

a reasonable claims procedure . . . ,” including suing for benefits. 29

C.F.R. § 2560.503-1(l). We do not address the question of whether, under

the new regulation, claimants who can establish a failure to comply with

the claims procedures established by ERISA regulations are entitled to de

novo consideration of their claims. The earlier version of the regulation

applies to Gatti’s claim because her claim was made prior to 2002. All further citations to the Code of Federal Regulations are to the 1998 regulations unless otherwise noted. 

GATTI v. RELIANCE STANDARD LIFE 8605
[2] Relying upon Jebian v. Hewlett-Packard Co., 310 F.3d

1173 (9th Cir. 2002),2 the district court found that “because

Reliance failed to comply with the time limitations in 29

C.F.R. § 2560.503-1(h) when it decided Gatti’s request for

review, its decision was not an exercise of discretion.” We

conclude that Jebian does not control the issue presented here,

and hold that violations of the time limits established in 29

C.F.R. § 2560.503-1(h) are insufficient to alter the standard of

review. 

The Jebian panel was presented with, but did not decide,

the issue of whether violating the ERISA regulation time limits alters the standard of review. 349 F.3d at 1103. Factually,

Jebian was very similar to this case — both involve an

ERISA beneficiary’s claim that was denied more than 120

days after the date of appeal. 349 F.3d at 1102. However, one

factual distinction is critical: the language of the plan being

administered in Jebian contained the same time limits as are

found in the ERISA regulation, whereas Gatti’s plan with

Reliance did not include time limits. Id. at 1103-04. Gatti

relies on the ERISA regulation alone to establish that her

claim was “deemed denied” and not denied as an act of discretion. 

[3] The Jebian opinion discusses the time limits established

by the plan and those imposed by regulation in tandem, but

the court’s ultimate holding was based solely on the time limitation language in the plan. Noting that “[w]e are just as

bound by the Plan language deeming denial in the event that

time limits are exceeded as we are bound by the Plan lan2The Jebian decision on which the district court relied, and on which

the parties’ briefs were based, was withdrawn and superceded by Jebian

v. Hewlett-Packard Co., 349 F.3d 1098 (9th Cir. 2003), cert. denied, No.

03-1202, 2005 WL 1499770 (U.S. 2005). Although the latter opinion contains some clarifying dicta, the holding that “deemed denied” language in

a benefits plan cuts off an administrator’s discretion remains the same.

References to Jebian in this Opinion are to the amended opinion published

at 349 F.3d 1098. 

8606 GATTI v. RELIANCE STANDARD LIFE
guage that grants discretion to the Plan administrator[,]” the

Jebian court held that “we will not defer when a decision is,

under the Plan, necessarily the mechanical result of a time

expiration rather than an exercise of discretion.” 349 F.3d at

1104-05; see also id. at 1106 n.6 (distinguishing Judge Tashima’s dissent on the basis that the majority opinion relied on

the language of the plan). The Jebian decision recognizes that

there will be cases where benefits decisions are made in violation of the regulations alone, and explicitly leaves this issue

open. Id. at 1105-06. 

[4] We reject Gatti’s suggestion that once a benefits administrator has violated the regulation’s time limitation, the

“deemed denied” language operates to cut off the administrator’s discretion, making de novo review appropriate.3

 Instead,

we read the “deemed denied” language to provide beneficiaries with a “final decision” from which to appeal if the administrator has not made a decision within the timelines

established in the regulation. Because a claimant must exhaust

her plan’s administrative review procedures before she may

bring suit in federal court, Amato v. Bernard, 618 F.2d 559,

566-68 (9th Cir. 1980), a mechanism is necessary to allow

claimants access to the courts in the event that their plan

never makes a decision. Thus, the “deemed denied” language

gives claimants the ability to access the courts if the administrator does not exercise its discretion within a reasonable time

(as established by the regulations).4

3This is the approach that has been taken in other contexts; we have

interpreted a statute that sets deadlines for action by the U.S. Fish and

Wildlife Service to prevent the Service from having additional time to

make discretionary findings. See Biodiversity Legal Found. v. Badgley,

309 F.3d 1166, 1178 (9th Cir. 2002) (“The exercise of discretion is foreclosed when statutorily imposed deadlines are not met.”). 

4

It appears that the beneficiary in Jebian took advantage of this protection. The 120-day time limit for the administrator to respond to Jebian’s

appeal expired on March 16, 1999. 349 F.3d at 1102. Over six months

later, Jebian had still not received a final decision on his appeal, so he filed

a complaint in district court on September 29, 1999. Id.

GATTI v. RELIANCE STANDARD LIFE 8607
[5] Significantly, this is the way the U.S. Supreme Court,

Stevens J., read this regulatory provision:

This provision [29 C.F.R. § 2560.503(1)(h)(4)]

therefore enables a claimant to bring a civil action to

have the merits of his application determined, just as

he may bring an action to challenge an outright

denial of benefits.

Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 144 (1985)

(reversing a Ninth Circuit decision that held that the beneficiary had a cause of action against the fiduciary administering

her benefits plan because it took the plan 132 days to respond

to the beneficiary’s appeal, which was ultimately successful).

[6] This interpretation is also consistent with the way

“deemed denied” is used in other parts of this ERISA regulation. For example, 29 C.F.R. § 2560.503-1(e)(2) states in relevant part:

If notice of the denial of a claim is not furnished in

accordance with paragraph (e)(1) of this section

within a reasonable period of time, the claim shall be

deemed denied and the claimant shall be permitted

to proceed to the review stage . . . . 

29 C.F.R. § 2560.503-1(e)(2).5 We have previously found that

the purpose of this language was “to aid claimants in avoiding

the obstacles a plan may place in their paths to the appeals

board.” White v. Jacobs Eng’g Group, 896 F.2d 344, 351 (9th

Cir. 1989). 

5The administrative history indicates that when this rule was promulgated, the deemed denied language was added to provide access to review.

42 Fed. Reg. 27,427 (1977) (“If the plan fails to act on the claim within

these periods of time, paragraph (e) provides that the claim is deemed

denied and the claimant may proceed to the review stage, described

below.”). 

8608 GATTI v. RELIANCE STANDARD LIFE
Further support for interpreting “deemed denied” to allow

claimants to seek judicial review, rather than to cut off administrators’ discretion, is provided by the amendments that were

made to the regulation in 2000. The current version of the relevant regulation does not include the deemed denied language. Instead, the regulation specifies that if a plan fails to

follow the requirements of the regulation:

[A] claimant shall be deemed to have exhausted the

administrative remedies available under the plan and

shall be entitled to pursue any available remedies

under section 502(a) of the Act on the basis that the

plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the

claim. 

29 C.F.R. § 2560.503-1(l) (2002). The Department of Labor

did not explain its reasons for this change, but did note, in

explaining other changes, that section 503 of ERISA was

intended “to assure that claimants whose claims are denied

have the ability to take their claims to court without undue

delay.” 65 Fed. Reg. 70,246, 70,253 (Nov. 21, 2000). 

Finally, this interpretation is the most consistent with the

way Gatti herself must have understood the regulation — she

continued to submit documentation to Reliance well after the

120 day deadline, suggesting that she did not believe her

claim to have been deemed denied. 

[7] Nothing in the history of ERISA or its regulations, nor

in the precedent that binds us, indicates that the “deemed

denied” language is a temporal restriction on the administrator’s discretion. We reject the interpretation of “deemed

denied” advanced by Gatti and accepted by the district court

and interpret the “deemed denied” language to mean only that

Gatti could have brought her lawsuit after the time limits

expired. Instead, she chose to continue participating in ReliGATTI v. RELIANCE STANDARD LIFE 8609
ance’s claims review process until, as an act of discretion,

Reliance denied her appeal. 

B

Another question left open in Jebian was “whether procedural violations influence the standard of review.” 349 F.3d

at 1105. Although Jebian clarified that a claimant will only be

entitled to substantive remedies for procedural violations of

ERISA if the claimant can establish that the violation resulted

in “substantive harm,” we have not previously decided

whether procedural violations of ERISA regulations justify a

non-deferential standard of review. 

[8] The case most relevant to this question is Blau v. Del

Monte Corp., 748 F.2d 1348 (9th Cir. 1984). In Blau, an

ERISA benefits administrator “made no attempt to comply”

with ERISA’s procedural requirements. Id. at 1352. The Blau

opinion recognized that “[o]rdinarily, a claimant who suffers

because of a fiduciary’s failure to comply with ERISA’s procedural requirements is entitled to no substantive remedy.” Id.

at 1353. However, the Blau panel found an exception to this

rule:

When procedural violations rise to the level that they

have in this case, they alter the substantive relationship between employer and employee that disclosure, reporting and fiduciary duties sought to balance

somewhat more equally. The quantity of defendants’

procedural violations may then work a substantive

harm. Thus, in reviewing an administrator’s decision, a court must consider continuing procedural

violations in determining whether the decision to

deny benefits in a particular case was arbitrary and

capricious. 

Id. at 1354. Under Blau, procedural violations of ERISA’s

requirements are evidence of arbitrary and capricious deci8610 GATTI v. RELIANCE STANDARD LIFE
sionmaking, and can result in substantive remedies if they

caused the beneficiary substantive harm. Id. 

The Blau panel explicitly left open the question at issue

here, but Blau’s language offers some guidance:

Despite its failure to assume any of ERISA’s obligations, [the plan administrator] urges upon us the deferential standard of review generally applicable to

administrator’s decisions under ERISA . . . . We do

not decide that this is the only applicable standard of

review when ERISA’s provisions have been flouted

in such a wholesale and flagrant manner.

Id. at 1352-53 (internal citations and quotation marks omitted). In Blau, it was the “wholesale and flagrant” nature of the

benefits administrator’s violations that caused the panel to

decide that the violations altered the substantive relationship

between the employer and employee such that ERISA’s purposes were defeated. Id. at 1354. 

[9] It would be inconsistent with the opinion in Blau to

alter the standard of review on the basis of technical violations of ERISA’s requirements. It would also be inconsistent

with what has previously been assumed, but not discussed, in

our prior decisions which have applied deferential review

even when the plan has committed procedural violations. See,

e.g., Bogue v. Ampex Corp., 976 F.2d 1319, 1324-26 (9th Cir.

1992) (applying the abuse of discretion standard even though

the plan had admitted to procedural violations). 

[10] The district court interpreted Jebian to allow de novo

review any time a benefits administrator violates the procedural requirements in ERISA’s regulations, no matter how

small or inconsequential the violation. This interpretation of

Jebian is inconsistent with Blau, and we reject it. Instead, as

a corollary to Blau, we hold that procedural violations of

ERISA do not alter the standard of review unless those violaGATTI v. RELIANCE STANDARD LIFE 8611
tions are so flagrant as to alter the substantive relationship

between the employer and employee, thereby causing the beneficiary substantive harm. 

III

[11] De novo review of a plan administrator’s decision is

justified where the plan administrator has a serious conflict of

interest that the beneficiary can demonstrate with “material,

probative evidence, beyond the mere fact of an apparent conflict, tending to show that the fiduciary’s self-interest caused

a breach of the administrator’s fiduciary obligations to the

beneficiary.” Atwood v. Newmont Gold Co., 45 F.3d 1317,

1323 (9th Cir. 1995). The district court found that a serious

conflict was evidenced by Reliance’s failure to follow the

treating physician rule, which required that a treating physician’s medical opinion be given controlling weight as long as

it is well supported and consistent with other substantial evidence. Although we once applied this rule to ERISA cases, it

is no longer good law. Black & Decker Disability Plan v.

Nord, 538 U.S. 822, 834 (2003) (holding that “courts have no

warrant to require administrators automatically to accord special weight to the opinions of a claimant’s physician; nor may

courts impose on plan administrators a discrete burden of

explanation when they credit reliable evidence that conflicts

with a treating physician’s evaluation”). Because the district

court’s conclusion that a serious conflict existed was based on

the discredited treating physician rule, de novo review is not

justified on this basis. 

IV

We remand this case for reconsideration under the appropriate standard of review, given that procedural violations of

ERISA should not alter the standard of review unless the beneficiary suffers substantive harm, and that the treating physician rule is no longer good law. Unless the district court

concludes that de novo review is nonetheless justified based

8612 GATTI v. RELIANCE STANDARD LIFE
on other evidence of substantive harm, the court should

review Reliance’s decision for abuse of discretion. See Firestone, 489 U.S. at 114-15. 

When considering the merits, the district court may properly consider anything that was part of the administrative

record before February 6, 2001, the date that Reliance made

its final decision. See Kearney v. Standard Ins. Co., 175 F.3d

1084, 1090 (9th Cir. 1999) (“If a court reviews the administrator’s decision, whether de novo as here, or for abuse of discretion, the record that was before the administrator furnishes

the primary basis for review.”). The district court should also

reconsider its award of fees and costs depending on the results

of the merits determination. See Barns v. Indep. Auto. Dealers

Ass’n of Cal., 64 F.3d 1389, 1397 (9th Cir. 1995); 29 U.S.C.

§ 1132(g). 

VACATED, REVERSED and REMANDED.

RYMER, Circuit Judge, concurring in part and in the judgment: 

I agree that we must reverse because of the intervening

reversal of the “treating physician rule” in Black & Decker

Disability Plan v. Nord, 538 U.S. 822 (2003). However, while

I understand the majority’s basis for distinguishing Jebian v.

Hewlett-Packard, 349 F.3d 1098 (9th Cir. 2003), I am hardpressed to say that “deemed denials” can mean one thing if

embedded in a Plan and another if established by regulation.

I therefore part company on this issue.

GATTI v. RELIANCE STANDARD LIFE 8613