United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 99-4315

___________

Mary Glenn; Ernest - Jackson; *

Lori Marshall; Lane Glenn, *

*

Appellants, *

* Appeal from the United States

v. * District Court for the Western

* District of Missouri.

Life Insurance Company of North *

America, a Pennsylvania Stock * [PUBLISHED]

corporation (a part of CIGNA Group *

Insurance), *

*

Appellee. *

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Submitted: November 16, 2000

Filed: February 12, 2001

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Before BOWMAN, FAGG, and BYE, Circuit Judges.

___________

PER CURIAM.

After Robert Jackson died of a self-inflicted gun shot wound, his beneficiaries

sought the proceeds of an accidental death insurance policy covering Jackson and

issued to Jackson's employer by Life Insurance Company of North America. The

policy excludes benefits for intentionally self-inflicted injuries while sane. The

Company denied coverage, concluding there was no evidence Jackson was insane at
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the time of his death or that his suicide was accidental. After the Company again

denied the claim, the beneficiaries brought this action asserting breach of contract,

vexatious refusal to pay, and a claim under the Employee Retirement Income Security

Act of 1974 (ERISA), 29 U.S.C. § 1132(a)(1)(B) . The district court granted summary

judgment to the Company, concluding ERISA preempts the state-law breach of

contract and vexatious refusal to pay claims, and the Company did not abuse its

discretion in failing to pay policy proceeds. 

On appeal, the beneficiaries first argue the district court committed error in

applying the abuse of discretion standard of review. When, as here, the insurance

company that benefits financially from the claim's denial is also the ERISA plan

administrator, a less deferential standard of review may apply. See Woo. v. Deluxe

Corp., 144 F.3d 1157 (8th Cir. 1998). We do not automatically use a heightened

standard of review any time the insurer is also plan administrator, however. See

Barnhart v. UNUM Life Ins. Co. of N. Am., 179 F.3d 583, 587, 588 & n.8 (8th Cir.

1999). To obtain the less deferential standard, the beneficiaries must show, under the

particular facts and circumstances of the case, that a conflict or procedural irregularity

so tainted the process that it caused a serious breach of fiduciary duty. See id. at 588.

The beneficiaries have failed to do so. 

The beneficiaries informed the Company they believed Jackson was not sane at

the time of his death, and hired Dr. William Logan to investigate the circumstances

surrounding Jackson's suicide. Dr. Logan concluded "Jackson could not exercise a

rational judgment on the question of life or death." A doctor hired by the Company's

attorney conducted a thorough investigation and concluded "Jackson was not insane at

the time he took his own life." After considering the doctors reports, as well as other

evidence, the Company denied the claim on administrative review. The beneficiaries

contend the Company should have obtained an independent expert opinion about

Jackson's sanity from legal and mental health professionals. See Woo, 144 F.3d at

1161 (insurer's use of only an in-house medical reviewer amounted to a serious breach
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of fiduciary duty). The mere fact that the Company reached a decision contrary to the

beneficiaries' medical evaluator, when the Company based its decision on substantial

evidence in the record, including the report of a medical reviewer outside of the

Company, does not give rise to serious doubts about whether the denial was arbitrary.

See Sahulka v. Lucent Technologies, Inc., 206 F.3d 763, 768 (8th Cir. 2000). The

beneficiaries have not met their burden of showing the financial conflict was connected

with the denial of their claim. See id. The district court thus properly reviewed the

Company's denial for abuse of discretion.

The beneficiaries also assert ERISA does not apply or preempt the state law

claims. We disagree. In their joint motion to stay the case, the beneficiaries stated,

"The parties agree that the plan at issue is governed by ERISA, . . . and plaintiffs'

claims are regulated by ERISA." Besides, as the district court found, the evidence

shows the claims relate to an employee welfare benefit plan under ERISA, and are thus

preempted. See Molasky v. Principal Mut. Life Ins. Co., 149 F.3d 881, 884 (8th Cir.

1998) (ERISA preempts claim for breach of contract); In re Life Ins. Co. of N. Am.,

857 F.2d 1190, 1194-95 (8th Cir.1988) (ERISA preempts vexatious refusal claim). 

We affirm the district court.

BYE, Circuit Judge, dissenting. 

The majority concludes that the plaintiff-beneficiaries failed to demonstrate

circumstances sufficient to trigger a less deferential standard of review. I disagree.

The Company decided to deny benefits based on the opinion of an expert hired after

litigation commenced, and at the suggestion of defense counsel. Under these

circumstances, I believe that we should apply a less deferential standard of review.

Giving less deference to the conflicted decision to deny benefits, I would remand. The

Company should be required to obtain a truly independent, outside medical opinion

about Robert Jackson's sanity before making a benefits determination.
1The Company initially denied the claim because Jackson's medical records

revealed no treatment for mental health problems. Dr. Logan later opined that the lack

of treatment for Jackson's obsessive/compulsive disorder, avoidant personality disorder,

and depression was what most likely precipitated the suicide. 

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The procurement of independent medical review is a key factor in deciding

whether we should apply a less deferential standard of review in cases where the

insurer is also the ERISA plan administrator (i.e., conflicted administrator). Compare

Woo v. Deluxe Corp., 144 F.3d 1157, 1161-62 (8th Cir. 1998) (applying the sliding

scale standard of review where conflicted administrator did not obtain independent

medical review) with Barnhart v. UNUM Life Ins. Co. of Am., 179 F.3d 583, 586 (8th

Cir. 1999) (refusing to apply the sliding scale approach where conflicted administrator

had both a physical therapist and physician perform independent evaluations of

claimant), and Schatz v. Mut. of Omaha Ins. Co., 220 F.3d 944, 949 (8th Cir. 2000)

(refusing to apply the sliding scale approach where conflicted administrator had an

orthopedic specialist perform an independent medical examination of claimant).

The Company's initial decision to deny benefits was based solely on an in-house

review of Jackson's medical records.1 The Company's ultimate decision was based

entirely on Dr. Harry's opinion. Dr. Harry was hired only after the beneficiaries

initiated litigation in an attempt to obtain benefits. The Company admits it hired Dr.

Harry at the suggestion of defense counsel. The Company acknowledges that it could

have requested Unival, an outside medical consultant group, to review the file and give

an independent opinion about Jackson's sanity, but the Company declined to do so. 

In my view, the majority opinion sets a dangerous precedent. When a conflicted

administrator finds itself in litigation after initially denying an award of benefits, it may

realize that it failed to use proper judgment or thoroughly investigate the claim. In that

situation, the majority's decision allows the conflicted administrator to resort to the

testimony of an adversarial litigation expert to justify the earlier benefits denial. We
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don't normally permit fiduciaries to act like this. In the adversarial context, it would be

naive to believe that a conflicted administrator won't, inevitably, find a litigation expert

to provide the scant evidence required to support a denial. Cf. Schatz, 220 F.3d at 949

(discussing the deferential standard of review). 

I would require "substantial evidence bordering on a preponderance to uphold

[the Company's] decision." Woo, 144 F.3d at 1162. Under that less deferential

standard, I find this record insufficient to support the Company's denial. First, Dr.

Logan opined that Jackson was insane at the time of his suicide, and I find that opinion

sound. Second, I find it significant that Dr. Harry voiced no criticism of Dr. Logan's

conclusions, despite Dr. Harry's adversarial role. Finally, the manner in which Dr.

Harry chose to state his ultimate conclusion raises a red flag. Dr. Harry merely listed

several factors indicating insanity, followed by a longer list of factors indicating sanity.

Dr. Harry then concluded that, "on balance," Jackson wasn't deranged or insane at the

time of his death. I question the legitimacy of what appears to be a purely quantitative

approach to what is undisputedly a qualitative medical issue. 

Under ERISA, a plan administrator must discharge its fiduciary "duties with

respect to a plan solely in the interest of the participants and beneficiaries and for the

exclusive purpose of providing benefits to participants and their beneficiaries." 29

U.S.C. § 1104(a)(1) (emphasis added) (internal punctuation omitted). I realize we

normally view the decisions of ERISA plan administrators with a great deal of

deference. But when the plan administrator doubles as the insurer, and denies benefits,

we must be careful not to render § 1104(a)(1)'s directive nugatory. For this reason, as

well as those expressed above, I would remand this case and require the Company to

obtain and consider a truly independent medical opinion before making a decision

about benefits.
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A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.