N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
GREGOR

Y SM ITH, Pla i ntiff-Appe lle e , v. R ELIANC E STANDAR

D LIFE INSUR ANC E C OM PANY, De fe nda n t-Appe l la

nt. No. 16-15319

D.C . No. 4:15-c v-00022-R C C
M EM O R ANDUM *

GREGOR

Y SM ITH, Pla i ntiff-Appe lla

nt,
v. R ELIANC E STANDAR

D LIFE INSUR ANC E C OM PANY, De fe nda n t-Appe l le e . No. 16-15413 D.C . No. 4:15-c v-00022-R C C

Appe a l from

the Unite d

Stat e s Distric t C ourt for the Distric t of Ariz o na R ane r C
. C ollins, C hie f Judge , Pre siding 

# F IL ED
APR 04 2017 M OLLY C. DW Y ER, CLERK U

. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.Pa ge 2 of 5 Argue d a nd Subm itte d M arc h

16, 2017 San Fran c isc o , C a lifornia B e fore : TALLM AN a

n d WATFORD, C irc uit Judge s, a nd GUIR OLA, ** C hie f Distric t Judge
. 1. W e va c ate the distric t c ourt’ s orde r a ffirm ing the de nia l of Gre gory Sm i th’ s re que st for short-te rm disa bility be ne fits. In issuing tha

t de c ision, the distric t c o urt a

ppe are d to a

pply the ordina

ry a buse of disc re tion sta

nda rd of re vie w. In this c a se , howe ve r, a

m ore se arc h ing re vie w of R e lia n c e ’ s de c ision to deny be ne fits is re quire d by

virtue of the fa c t tha

t R e lia nc e wa s re sponsible both for pa y ing be ne fits a

nd for a dm iniste ring the c la im s re vie w proc e ss. Se e Abatie v . Alta He alth &Life Ins. C

o. , 458 F.3d 955, 965–68 (9th C ir. 2006) (e n ba nc ). While this struc tura l c onflic t of inte re st doe s not a lte r the sta n da rd of re vie w, it is a

fa c tor to be we ighe d in de te rm ining whe the r a pla n a dm inistra

tor a buse d its disc re tion. Ste p han v . Unum Life

Ins. C o. of Am. , 697 F.3d 917, 929 (9th C ir. 2012); A b atie , 458 F.3d a

t 967. On re m a

nd, in de t e rm i ning thele ve l of ske ptic ism to a pply to R e lia nc e ’ s de c ision, thedistric t c ourt should ta ke into a c c ount thelike lihood tha t the s truc t ura l c onflic t

of inte re s t a ffe c te d R e lia nc e ’ s de c i sion to de ny

Sm ith’ s
re que s t for short-te rm

disa bility be n e fits, Ste

phan , 697 F.3d a

t 929, a ny re c ord of

* * The Honora

ble Louis Guirola , Jr., C h ie f Unite d State s Distric t Judge for the Southe rn Distric t of M ississippi, sitting by de signa tion.Pa ge 3 of 5

R e lia nc e ’ s se lf-de a ling, A batie , 458 F.3d a t 968, a nd the fa c t tha

t R e lia n c e re lie d
on a pa pe r re v i e w of Sm ith’ s m e dic a l re c ords rathe r tha n a n in-pe rson m e d ic a l
e va luation, Montour v . Hartford Life & Ac c ide n t Ins. C

o. , 588 F.3d 623, 630 (9th C ir. 2009). 2. W e va c ate the distric t c ourt’ s a ward of long-te rm

disa bility be ne fits ba se d sole ly on R e l ia nc e ’ s fa ilure to issuea

de n ia l of the c la im

within the

90-da y lim it im pose d by ER ISA. 29 C .F.R
. § 2650.503-1(f)(1). Re lia nc e ’ s fa ilure to c o m

ply with ER ISA’ s proc e d

ura l re quire m e nts c annot on its own justify an award of be ne fits unde r the polic y , a lthough it m ay a lte r the sta

nda rd of re vie w. Se e Gatti v

. Re lianc e Standard Life

Ins. C o. , 415 F.3d 978, 984–85 (9th C ir. 2005); Mc K e nzie
v . Ge n. Te l. C

o. of C al. , 41 F.3d 1310, 1315 (9th C ir. 1994). On re m and, the distric t

c ourt should de te rm ine whe the r the proc e dura l viola tion c a use d Sm ith substa

ntive ha rm suc h tha t denov o re v ie w of R e lia nc e ’ s be ne fits de te rm i nation is a ppropria te . Se e Gatti , 415 F.3d a

t 984–85. If Sm ith did not suffe r substa

ntive ha rm a s a re sult of theviola

tion, thec ourt should re vie w R e lia nc e ’ s de nia l of long-te rm

disa bility be ne fits unde r the sa

m e a buse of disc re tion sta

nda rd tha t gove rns its re vie w of the de nia l of short-te rm disa bility be ne fits, whilea c c ording theproc e dura l viola tion a ppropria te we ight. Se e Abatie , 458 F.3d a

t 972.Pa ge 4 of 5

Sm ith is inc orre c t

in a rguing tha

t Harlic k v . Blue Shie ld of C

alifornia , 686 F.3d 699 (9th C ir. 2012), supports the distric t c ourt’ s de c ision. In Harlic k, pla n
a dm inistra

tors ga ve one re a son for de ny i ng the c la im ant’ s c la i m during the
a dm inistra

tive proc e ss, but the n a sse rte d a ne w re a son during litiga

tion in fe de ra l
c ourt de fe nding tha

t de c i sion. Id. at 705–06, 719. W e he ld tha t the pla n
a dm inistra

tors c ould not invoke , for the first tim e in litiga tion, grounds he ld in
re se rve a s the ba sis for de ny ing be ne fits. Id. at 719–21. He re , by

c ontra st, R e lia nc e ha s ne ve r a s se rte d

c o nflic ting re a sons for de ny ing be ne fits. R e lia nc e de nie d short-te rm disa

b ility be ne fits on theground tha t Sm i th ha d a pre -e xisting
c ondition. It a sse rts the sam e ba sis for its den ia l of long-te rm disa b ility be ne fits. While R e lia

nc e fa i l e d to issuea

de nia l be fore litiga

tion be ga n, it ha s not a

tte m pte d to invokea

ne wand diffe re nt ground for thede n ia l, he ld in re se rve , for the first tim e in litiga

tion. 3. B e c a use the distric t c ourt c om m itte d c le ar e rror by

fa iling to de t e rm ine whe the r R e lia

nc e ’ s proc e dura l viola

tion c a use d Sm i th substa

n tive ha rm , we va c ate the c ourt’ s de nia l of re c onside ra tion of its a ward of long-te rm

disa bility be ne fits. Se e K ona Ente rs., Inc . v . Estate of Bishop , 229 F.3d 877, 890 (9th C ir. 2000). 4. B e c a use we va c ate the distric t c ourt’ s a w ard of long-te rm

disa bility be ne fits, we a lso va c ate the c ourt’ s a ward of attorne y ’ s fe e s.Pa ge 5 of 5

Ea c h pa rty sha ll be a r its own c osts on a

ppe a l. V ACAT E D and RE M ANDE D .