UNTIED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

SANDRA MCCANDLESS,

Plaintiff, 

v.

STANDARD INSURANCE COMPANY,

Defendant.

_______________________ __________/

CASE NO. 2:08-cv-14195

HON. MARIANNE O. BATTANI

AMENDED OPINION AND ORDER DENYING PLAINTIFF’S AND DEFENDANT’S

MOTIONS FOR JUDGMENT ON THE ADMINISTRATIVE RECORD 

AND REMANDING THE CASE TO THE PLAN ADMINISTRATOR 

I. INTRODUCTION

This matter is before the Court on Plaintiff Sandra McCandless’ Motion for Summary 

Judgment (Doc. 155) and Defendant Standard Insurance Company’s (“Standard’s”) 

Motion for Judgment on the Administrative Record (Doc. 156). McCandless brought 

suit under the Employee Retirement Income Security Act (“ERISA”) and seeks review of 

Standard’s denial of long term disability benefits. The parties previously filed cross 

motions for judgment on the administrative record, and on February 15, 2011, this Court 

granted Standard’s motion and denied McCandless’ motion. (Doc. 115.) On appeal, 

the Sixth Circuit reversed and remanded for the completion of an independent medical 

evaluation (“IME”) and for further consideration of McCandless’ claim. After evaluation

of the IME, Standard denied the claim for a second time. Because McCandless was

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denied the opportunity at this stage to offer evidence in rebuttal of the IME, this Court 

granted her motion to supplement the administrative record and remanded again to the 

plan administrator. (Doc. 148.) After review, Standard denied McCandless’ claim for a 

third time. For the reasons that follow, the court DENIES McCandless’ and Standard’s 

motions and REMANDS the case to the plan administrator.

II. STATEMENT OF FACTS

Plaintiff Sandra McCandless worked for Countrywide Home Loans as a manager. 

Countrywide provided a Group Long Term Disability Insurance Policy (“the Policy”) for 

its employees pursuant to ERISA. Standard administered the Policy, both determining

eligibility for benefits and paying benefits. In February 2005, McCandless went on 

medical leave for major depression. In April 2005, McCandless applied for and received 

disability benefits for the period covering February 2, 2005, to July 31, 2007, the 

maximum time period allowed under the Policy for mental health claims. 

Standard notified McCandless in January 2006 that her long-term disability 

(“LTD”) benefits for her mental disorder would expire on July 31, 2007, and encouraged 

her to submit a claim for disability by a physical condition. In response, McCandless 

requested that Standard consider a LTD claim based on her ankylosing spondylitis 

(“AS”), an inflammatory disease that causes back pain, progressive stiffness of the 

spine, arthritis, and fusing of certain joints. McCandless submitted supporting records 

from her treating physician, as well as MRI and x-ray reports. After multiple reviews of

the medical documentation, including reviews by a neurologist and a rheumatologist, 

Standard denied McCandless continuation of LTD benefits in March 2008. (AR 00126.) 

In the denial letter, Standard emphasized that McCandless’ failure to see a 

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rheumatologist significantly contributed to her failure to satisfy the Policy’s “Care of a 

Physician” provision, which mandates that claimants receive care from a medical 

specialist. (Id.)

After exhausting her administrative remedies, McCandless filed the present suit 

in September 2008. The parties filed cross-motions for judgment on the administrative 

record, and this Court granted Standard’s motion, affirming the denial of LTD benefits. 

McCandless appealed to the Sixth Circuit, which reversed and remanded the matter in 

order for Standard to have McCandless evaluated by a rheumatologist. The Sixth 

Circuit found that Standard “never told McCandless that she would be ineligible for 

benefits if she did not see a rheumatologist.” McCandless v. Standard Ins. Co., 509 F. 

App’x 443, 448 (6th Cir. 2012). In addition, Standard “did not exercise its authority 

under the Policy to have a rheumatologist conduct an independent medical evaluation 

of McCandless.” Id. Thus, the decision was arbitrary and capricious because Standard 

knew McCandless suffered from AS and failed to base its decision on an IME from a 

rheumatologist. Id. Finally, the Sixth Circuit instructed that the case be remanded to 

“the plan administrator for a full and fair review of McCandless’ claim, which presumably 

will include a rheumatology evaluation.” Id. at 449. 

On April 10, 2013, McCandless was evaluated by Lewis Rosenbaum, M.D., a 

rheumatologist hired on behalf of Standard. (AR 00993.) Based on his examination, 

Dr. Rosenbaum diagnosed McCandless with chronic pain syndrome secondary to major 

depressive disorder; AS limited to fusion of the sacroiliac joints and associated uveitis;

sinus tachycardia; major depressive disorder; alleged history of myopericarditis; and 

alleged history of restrictive lung disease. Standard received the IME report on May 9, 

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2013. On June 10, 2013, Standard issued its decision denying benefits. (AR 00955.) 

Shortly thereafter, McCandless underwent a series of consults with medical specialists, 

such as a rheumatologist, pulmonologist, and cardiologist. (See AR 0001438-66.) She 

then filed a motion, which the Court granted on October 28, 2013, to open the 

administrative record in order to submit this evidence to rebut Dr. Rosenbaum’s IME. 

(Doc. 148.) Standard issued another denial on March 3, 2014, stating that many of 

these records post-dated the expiration of McCandless’s benefits on July 31, 2007. (AR 

0001389.) The parties now seek review of this latest denial and have filed crossmotions for judgment on the administrative record.

III. STANDARD OF REVIEW

A district court reviews an ERISA plan administrator's denial of benefits de novo, 

unless the plan gives the administrator discretionary authority to determine eligibility for 

benefits. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Cox v. 

Standard Ins. Co., 585 F.3d 295, 299 (6th Cir. 2009). If the plan gives the administrator 

discretionary authority, the Court applies the highly deferential “arbitrary and capricious” 

standard of review. Cox, 585 F.3d at 299. “When it is possible to offer a reasoned 

explanation, based on the evidence, for a particular outcome, that outcome is not 

arbitrary or capricious.” Schwalm v. Guardian Life Ins. Co. of Am., 626 F.3d 299, 308 

(6th Cir. 2010) (quoting Shields v. Reader's Digest Ass'n, Inc., 331 F.3d 536, 541 (6th 

Cir. 2003)). That is, even where a claimant has introduced evidence that might be 

sufficient to support a finding of disability, the decision is neither arbitrary nor capricious 

if it is the result of a deliberate, principled reasoning process and is supported by 

substantial evidence. Id. 

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“Deferential review is tempered, however, when an important conflict of interest 

consideration requires that benefits decisions be closely scrutinized.” Cox, 585 F.3d at 

299. When the plan administrator both determines eligibility for benefits and also pays 

those benefits, an inherent conflict of interest arises that must be weighed as a factor in 

the court's determination. Id. The existence of such a conflict does not heighten the 

standard of review but rather is “one factor among many that a reviewing judge must 

take into account.” Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 116 (2008). Here, the 

Policy contains language sufficient to grant discretion to Standard. Further, Standard

both grants eligibility for benefits and pays benefits. Therefore, the Court reviews this 

case under the highly deferential “arbitrary and capricious” standard, while bearing in 

mind that a structural conflict of interest exists.

IV. DISCUSSION

In accordance with the Court’s previous order, McCandless supplemented the 

administrative record with evidence in rebuttal of the IME performed by Dr. Rosenbaum. 

McCandless visited rheumatology specialist Bernard Rubin, D.O., on July 2, 2013. His 

assessment indicates a diagnosis of AS based on marked kyphosis of the thoracic 

spine, flattening of the lower lumbar spine, abnormal Schober’s test, and a markedly 

decreased Patrick-Fabere test. (AR 0001442-44.) Dr. Rubin ordered x-rays and 

consults with other specialists. The x-rays, dated July 16, 2013, demonstrate that 

McCandless’ AS has progressed to the lumbar and thoracic spine. (AR 0001438-40.) 

McCandless consulted with pulmonologist Michael Eichenhorn, M.D., on July 17, 

2013. Based on his examination and the results of a spirometry test, Dr. Eichenhorn 

concluded that McCandless suffers from severe airflow restriction and shortness of 

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breath caused by very limited thoracic expansion due to her AS. (AR 0001446-47.) 

McCandless also consulted on July 23, 2013, with cardiologist Deirdre Mattina, M.D., 

who observed mild respiratory distress and tachycardia with no ectopy or murmurs. 

(AR 0001450-53.) Although Dr. Mattina was concerned about prior evidence of 

pericardial effusion, she felt that McCandless’ symptoms were largely attributable to her 

restrictive lung disease. (Id.) A second cardiologist, Marc Lahiri, M.D., rendered a 

similar opinion. (AR 0001461-62.) In light of these consults, Dr. Rubin opined, “[t]here 

is no doubt that she has severe ankylosing spondylitis complicated by cardiac, eye, and 

lung abnormalities.” (AR 0001465-66.)

These findings and opinions directly contradict some of Dr. Rosenbaum’s April 

20, 2013, IME findings. Specifically, Dr. Rosenbaum doubted progression of AS 

beyond the sacroiliac joint, given a preserved lumbar lordosis and a normal Schober’s 

test. (AR 01005.) These observations, he wrote, would argue against significant 

involvement of the lumbar spine, and AS does not typically “skip over” the lumbar spine 

and then become severe in the thoracic and cervical spine. (Id.) However, as noted 

above, McCandless’ recent x-rays demonstrate progression of her AS to the lumbar and 

thoracic spines, as evidenced by fusion of the bilateral sacroiliac joints, interspinous 

calcification, and ossification along the anterior longitudinal ligament. (AR 0001438-40.) 

Dr. Rosenbaum was also skeptical of an alleged restrictive pulmonary disorder related 

to thoracic cage ankylosis. (AR 01006.) He noted the lack of radiological evidence and

speculated that the limited thoracic expansion on examination may have been caused 

by McCandless’ failure to take a deep breath. (Id.) In contrast, Dr. Eichenhorn found a 

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very limited thoracic expansion attributable to AS and did not note any intentionally poor 

effort on McCandless’ part. (AR 0001447.)

In denying McCandless’ claim in June 2013, Standard primarily relied on Dr. 

Rosenbaum’s IME. (See AR 00955-58.) Standard’s March 2014 denial dismissed 

much of the newly submitted evidence in a rather conclusory fashion because it postdates the closure of McCandless’ claim by more than a year and therefore “do[es] not 

provide evidence of a condition of a severity to cause disability” during the relevant 

insured period. (AR 0001390.) However, it is possible that the x-ray evidence and 

physician interpretations could shed light on McCandless’ condition prior to the closure 

of her claim on July 31, 2007. Standard did not submit this evidence to its medical 

experts for consideration of this matter. Nor did Standard provide any rationale in its 

decision resolving inconsistencies between the new evidence and the IME or explaining

why it finds the IME more credible than the new evidence. Standard’s briefing before 

this Court provides rationale discrediting the new evidence. Such post hoc rationale, 

however, is not entitled to deference. See Univ. Hosps. v. Emerson Elec. Co., 202 F.3d 

839, 849 n.7 (6th Cir. 2000). According to University Hospitals:

[I]t strikes us as problematic to, on one hand, recognize an administrator's 

discretion to interpret a plan by applying a deferential "arbitrary and 

capricious" standard of review, yet, on the other hand, allow the 

administrator to "shore up" a decision after-the-fact by testifying as to the 

"true" basis for the decision after the matter is in litigation, possible 

deficiencies in the decision are identified, and an attorney is consulted to 

defend the decision by developing creative post hoc arguments that can 

survive deferential review. The concerns inherent in this scenario are even 

more pronounced where, as here, the administrator has a financial 

incentive to deny benefits. To depart from the administrative record in this 

fashion would, in our view, invite more terse and conclusory decisions 

from plan administrators, leaving room for them -- or, worse yet, federal 

judges -- to brainstorm and invent various proposed "rational bases" when 

their decisions are challenged in ensuing litigation. At a minimum, if we 

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permit such rehabilitation of the administrative record, there no longer is 

any reason why we should not apply a more searching de novo review of 

the administrator's decision.

Id. (emphasis in original). Additionally, as McCandless argues, it is contradictory that 

Standard affords weight to Dr. Rosenbaum’s IME, performed in April 2013, while it 

refuses to consider the reports submitted by McCandless, which were also rendered in 

2013.

Standard also fails to address in its denials McCandless’ award of Social Security 

disability benefits. The Social Security Administration found McCandless to be disabled 

as of February 1, 2005, based on a combination of physical and mental impairments. 

(Doc. 102, Ex. 1.) While the Sixth Circuit has upheld denials of ERISA benefits 

although the claimant had been declared disabled by the Social Security Administration, 

failure by an insurer to consider a favorable Social Security decision has been a factor 

supporting the finding of an arbitrary and capricious denial. See Cox, 585 F.3d at 302-

03. Failure to explain adequately the grounds of a decision, including a failure to 

address evidence, is grounds for remand. See Shelby County Health Care Corp. v. 

Majestic Star Casino, LLC, 581 F.3d 355, 373 (6th Cir. 2009); Caldwell v. Life Ins. Co. 

of N. Am., 287 F.3d 1276, 1285-86 (10th Cir. 2002).

“Where a district court determines that the plan administrator erroneously denied 

benefits, a district court ‘may either award benefits to the claimant or remand to the plan 

administrator.’” Shelby, 581 F.3d at 373 (citing Elliott v. Metro. Life Ins. Co., 473 F.3d 

613, 621 (6th Cir. 2006). If the deficiency is the decision-making process, rather than 

the claimant being clearly entitled to benefits, the appropriate remedy is remand to the 

plan administrator. Elliott, 473 F.3d at 622. Here, the evidence is not so one-sided as 

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to entitle McCandless undoubtedly to benefits. Therefore, remand to the plan

administrator for further consideration of the new evidence is warranted and proper. 

Lastly, the Policy provisions guarantee that “[t]he person conducting the review 

will be someone other than the person who denied the claim and will not be subordinate 

to that person. The person conducting review will not give deference to the initial denial 

decision.” (AR 00044.) McCandless observed that the same benefits review specialist, 

Sandra Johnson, reviewed and prepared the previous two denials – on June 10, 2013, 

after the IME, and on March 3, 2014, after submission of new evidence to the 

administrative record. (AR 00955-58, 0001389-91.) On remand, Standard must comply 

with the terms of the Policy and assign review of the case to a different benefits review 

specialist.

IV. CONCLUSION

Because of the identified defects in the procedural decision-making process, the 

Court DENIES both parties’ motions and REMANDS this case to the plan administrator

for further consideration consistent with this opinion and the plan administrator is hereby 

ordered to render its decision within 90 days.

IT IS SO ORDERED.

Date: September 19, 2014 s/Marianne O. Battani 

MARIANNE O. BATTANI

United States District Judge

CERTIFICATE OF SERVICE

The undersigned certifies that the foregoing Order was served upon counsel of record via the Court's 

ECF System to their respective email addresses or First Class U.S. mail to the non-ECF participants on 

September 19, 2014.

s/ Kay Doaks 

Case Manager

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