FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DANIEL G. DEMER,

Plaintiff-Appellant,

v.

IBM CORPORATION LTD PLAN;

METROPOLITAN LIFE INSURANCE

COMPANY,

Defendants-Appellees.

No. 13-17196

D.C. No.

4:11-cv-00441-JGZ

OPINION

Appeal from the United States District Court

for the District of Arizona

Jennifer G. Zipps, District Judge, Presiding

Argued and Submitted December 11, 2015

San Francisco, California

Filed August 26, 2016

Before: Jay S. Bybee and Morgan Christen, Circuit Judges,

and Edward M. Chen, District Judge.*

Opinion by Judge Chen;

Partial Concurrence and Partial Dissent by Judge Bybee

* The Honorable Edward M. Chen, United States District Judge for the

Northern District of California, sitting by designation.
2 DEMER V. IBM CORP. LTD PLAN

SUMMARY**

Employee Retirement Income Security Act

The panel reversed the district court’s summary judgment

in favor of the defendants in an action under the Employee

Retirement Income Security Act, challenging the denial of a

claim for long-term disability benefits.

The panel held that Metropolitan Life Insurance Company

(“MetLife”), the ERISA plan’s claims administrator and

insurer, had a conflict of interest such that the court’s abuseof-discretion review should be tempered by some skepticism

because of the financial conflict of the independent physician

consultants (“IPCs”) upon whom MetLife relied.

The panel held that MetLife abused its discretion because

it did not find that the plaintiff’s mental capacity was affected

in any way by the medications he was taking for his physical

pain, and improperly rejected the credibility of his complaints

of fatigue and difficulty concentrating based on the opinions

of two IPCs who did not examine him and did not explain

why they rejected his credibility. The panel held that in light

of the totality of the circumstances, including the financial

conflict of interest of the IPCs and substantial evidence of the

plaintiff’s physical limitations, MetLife abused its discretion

in denying the plaintiff’s claim for benefits.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
DEMER V. IBM CORP. LTD PLAN 3

The panel remanded the case to the district court, with

instructions to remand to MetLife to re-evaluate the merits of

the plaintiff’s long-term disability claim.

Judge Bybee dissented from Part II.B of the majority

opinion, addressing the financial conflict of the IPCs. 

Because that section was not otherwise necessary to the

majority’s opinion, he concurred in the judgment. Judge

Bybee wrote that MetLife should not be penalized for

following the court’s prior case law instructing ERISA plan

administrators to mitigate structural conflicts of interest by

walling off their claims administrators from their financial

offices and seeking medical evaluations from outside,

independent physicians.

COUNSEL

Michelle L. Roberts (argued), Roberts Bartolic LLP,

Alameda, California; Barry Kirschner (argued), Waterfall,

Economidis, Caldwell, Hanshaw & Villamana, P.C., Tucson,

Arizona; for Plaintiff-Appellant.

Michelle McAloon Constandse (argued), Metropolitan Life

Insurance Company, Irvine, California; James K. Mackie,

Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Tucson,

Arizona, for Defendants-Appellees.
4 DEMER V. IBM CORP. LTD PLAN

OPINION

CHEN, District Judge:

Plaintiff-Appellant Daniel G. Demer filed suit, pursuant

to the Employee Retirement Income Security Act of 1974

(“ERISA”), against Defendants-Appellees IBM Corporation

LTD Plan (the “Plan”) and Metropolitan Life Insurance

Company (“MetLife”). Mr. Demer claimed that MetLife, the

claim administrator and insurer for the Plan, improperly

denied his claim for long-term disability (“LTD”) benefits. 

See 29 U.S.C. § 1132(a)(1)(B) (providing that “[a] civil

action may be brought . . . by a participant or beneficiary . . .

to recover benefits due to him under the terms of his plan, to

enforce his rights under the terms of the plan, or to clarify his

rights to future benefits under the terms of the plan”). The

district court denied Mr. Demer’s motion for summary

judgment, granted Defendants’ cross-motion, and entered

judgment in favor of Defendants.

We reverse the district court’s entry of judgment in

Defendants’ favor and remand to the district court with

instructions to remand this case to MetLife to re-evaluate the

merits of Mr. Demer’s LTD claim.

I.

A. Mr. Demer’s Claim for LTD Benefits

Mr. Demer was an employee of IBM Corporation and a

participant in the Plan. MetLife is the claim administrator for

and insurer of the Plan. The parties agree that the Plan gives

MetLife, as the administrator, discretionary authority to

interpret the Plan and determine benefits eligibility. Where,
DEMER V. IBM CORP. LTD PLAN 5

as here, an ERISA plan confers discretionary authority on the

plan administrator as a matter of contractual agreement, then

the standard of review is abuse of discretion rather than de

novo. See Tapley v. Locals 302 & 612 of the Int’l Union of

Operating Eng’rs-Employers Constr. Indus. Ret. Plan,

728 F.3d 1134, 1139 (9th Cir. 2013) (“Where an ERISA Plan

grants ‘discretionary authority to determine eligibility for

benefits or to construe the terms of the plan,’ ‘a plan

administrator’s interpretation of a plan’ is reviewed for abuse

of discretion. We review the district court’s application of

this standard de novo.”); Abatie v. Alta Health & Life Ins.

Co., 458 F.3d 955, 963 (9th Cir. 2006) (en banc) (“[I]f the

plan does confer discretionary authority as a matter of

contractual agreement, then the standard of review shifts

[from de novo] to abuse of discretion.”) (emphasis omitted).

The Plan provides that a participant is disabled and

eligible for LTD benefits if,

during the elimination period and the first 12

months after you complete the elimination

period, you cannot perform the important

duties of your regular job [i.e., your own

occupation] with IBM because of a sickness

or injury. After expiration of that 12 month

period, disabled means that, because of a

sickness or injury, you cannot perform the

important duties of any other gainful

occupation for which you are reasonably fit

by your education, training or experience.

“[G]ainful occupation” means “occupations [for which] you

are reasonably qualified based on your education, training,

experience, and functional ability” and further, in Mr.
6 DEMER V. IBM CORP. LTD PLAN

Demer’s case, “provides gainful wages of $4,240.48 per

month or $24.46 hourly,” i.e., the equivalent of a yearly

salary of approximately $50,000.

Mr. Demer stopped working at IBM on January 9, 2009,

because of a disability. At the time, he was a Lead Internal

Auditor at IBM. He began receiving short term disability

(“STD”) benefits. In March 2009, he filed a claim for LTD

benefits pursuant to the Plan (because his STD benefits were

due to expire soon). In his application for LTD benefits, Mr.

Demer stated: “I am unable to do my job duties due to severe

recurrent depression and spinal stenosis, chronic headaches.” 

Symptoms included “chronic headaches, chronic back and

neck pain, myalgia, severe depression, [and] sciatica.”

On July 28, 2009, MetLife approved Mr. Demer’s claim

for LTD benefits under the “own occupation” test for

disability articulated in the Plan. MetLife noted that the test

for disabilitywould eventuallyswitch to the “anyoccupation”

test on July 11, 2010. MetLife further noted that it was

limiting Mr. Demer’s benefits to a period of twenty-four

months because his primary diagnosis was a mental or

nervous disorder.

Subsequently, in November 2009, MetLife sent a letter to

Mr. Demer, reminding him that, for his benefits to continue

(beyond July 11, 2010), he would have to be disabled under

the “any occupation” test for disability.

Mr. Demer thereafter submitted statements and medical

records from numerous treating physicians, including but not

limited to his primary care doctor, Dr. Stephen Moore; a

treating neurologist, Dr. David Weidman; and a treating pain

management physician, Dr. Robert Osborne. These doctors
DEMER V. IBM CORP. LTD PLAN 7

discussed not only mental impairments suffered by Mr.

Demer but also physical impairments. For example:

• In a statement from February 2010, Dr. Weidman referred

to “chronic osteoarthritic pain and depression

interact[ing] with each other.” Dr. Weidman also

indicated that Mr. Demer’s physical condition had

deteriorated since April 2009 – e.g., in April 2009, Dr.

Weidman had concluded that Mr. Demer could

intermittently sit for 4–5 hours, intermittently stand for

4–5 hours, and occasionally lift 11–20 pounds; but, in

February 2010, Dr. Weidman determined that Mr. Demer

could only intermittently stand for 1–2 hours and never

lift 11–20 pounds.

• In a medical record dated February 2010, Dr. Osborne

referred to severe cervical and lumbosacral spine disease

with radiculopathy and chronic depression. Notably, Dr.

Osborne found that Mr. Demer had severe limitations as

a result of his physical impairments – e.g., able to

intermittently sit for 1 hour, intermittently stand for 0–1

hour, and intermittently walk for 0–1 hour and never able

to lift up to 10 pounds.

• Dr. Moore, Mr. Demer’s primary care physician, had a

similar, albeit slightlymore positive, view with respect to

Mr. Demer’s physical limitations, opining, e.g., that Mr.

Demer could continuously sit for 1 hour and continuously

stand and walk for 0–1 hour and could occasionally lift

21–50 pounds.

On October 1, 2010, MetLife denied Mr. Demer’s claim

for LTD benefits under the “any occupation” test for

disability. In its denial, MetLife relied in large part on the
8 DEMER V. IBM CORP. LTD PLAN

opinion of an independent physician consultant (“IPC”), Dr.

Elyssa Del Valle, internal medicine, who conducted only a

paper review of Mr. Demer’s file – i.e.,she did not personally

perform a physical or mental examination of Mr. Demer. Dr.

Del Valle concluded that “[t]he medical information does

support functional limitations . . . due to severe degenerative

disc disease, degenerative vertebral disease with numerous

levels of the cervical, thoracic and lumbar spine associated

with neural foraminal narrowing as well as spinal stenosis.” 

She also stated that “[t]he condition is associated with chronic

pain necessitating narcotic analgesics despite trigger point

injections, cervical and lumbar epidural injections and

physical therapy.” But Dr. Del Valle disagreed with the

physical capacity assessments of Dr. Moore and Dr. Osborne

because they “would indicate that [Mr. Demer] is bedridden

for more than 20 hours a day.” Dr. Del Valle also indicated

that she agreed with an older assessment made by Dr.

Weidman (from April 2009),1noting that, although it was

more than a year old, “there are no clinical data/findings to

indicate any change in his overall condition” (opining, inter

alia, that Mr. Demer could walk 3–4 hours intermittently and

that he “should avoid any prolonged periods of sitting,

standing or walking more than 30 minutes”). In its decision,

MetLife determined that, even with the limitations identified

by Dr. Del Valle, Mr. Demer “should be able to perform at

the sedentary to light level of physical exertion as defined by

the U.S. Department of Labor” and therefore denied Mr.

Demer LTD benefits.

 

1 As indicated above, Dr. Weidman submitted a more recent statement

from February 2010, indicating that Mr. Demer’s condition had worsened

after April 2009.
DEMER V. IBM CORP. LTD PLAN 9

B. The Appeal

In March 2011, Mr. Demer appealed MetLife’s denial of

LTD benefits. In his appeal, Mr. Demer asserted that he “has

severe degenerative disc disease (‘DDD’) of the cervical and

lumbar spine,” for which there was “further progression [as]

reflected in the cervical MRI performed June 21, 2010.” He

also claimed that he “suffers radiculopathy,” “has a history of

significant headaches,” and has “ongoing nerve

compression.” Finally, he pointed out that he “takes powerful

narcotic and other medications” which “have known side

effects causing fatigue and reduced ability to concentrate.” 

As noted above, MetLife’s own IPC, Dr. Del Valle,

acknowledged that Mr. Demer had chronic pain that

necessitated narcotic analgesics.

In support of his appeal, Mr. Demer provided, e.g.,

additional information from Dr. Osborne. Dr. Osborne stated,

inter alia, that

the overall picture is one of a gentleman with

severe spinal deterioration at all components

of the spine as well as neurophysiological

evidence of a delayed conduction (spine cord

problem) of the bilateral Posterior Tibial

Nerves to the cerebral cortex as well as a

separate focal left L5 nerve root lesion

(diagnostic SSEP and diagnostic L5

radiculopathy).

Dr. Osborne further stated that “[t]he overall treatment plan

has included chronic narcotic medication in attempt to control

his overall pain” which has side effects that “limit the ability

to complete productive mental functions.” Mr. Demer also
10 DEMER V. IBM CORP. LTD PLAN

provided third-party witness statements from his brother

(Frank Demer) and a friend (Shirley Piel) and a personal

statement in support of his appeal. Both Ms. Piel’s statement

and Mr. Demer’s personal statement addressed, inter alia, the

impact Mr. Demer’s medications had on his mental ability to

function.

MetLife denied the appeal, this time relying on the

opinions of two different IPCs, namely, Dr. Marcus Goldman,

Board Certified in psychiatry, and Dr. Dennis S. Gordan,

Board Certified in physical medicine and rehabilitation. Like

Dr. Del Valle, Dr. Goldman and Dr. Gordan conducted only

paper reviews of Mr. Demer’s file without any personal

examination.

With regard to mental functional limitations, Dr.

Goldman stated that, “[g]iven the lack of recent data and the

paucity of any compelling objective findings, as well as the

lack of serial mental status examinations, this reviewer would

be unable to establish the presence of an impairing mental

condition.”

With regard to physical functional limitations, Dr. Gordan

acknowledged that there was “documented anatomical

cervical spinal stenosis, degenerative disc disease, and

degenerative facet disease of the spine, as well as

degenerative arthritis of the left hip.” He disagreed, however,

that Mr. Demer suffered from a radiculopathy based on his

interpretation of the medical evidence. Dr. Gordan also

indicated that Dr. Osborne’s impressions may have been

colored by Mr. Demer’s “dire” account of his history, “a

reversal of his prior positive attitude . . . about the

effectiveness of the previous interventional procedures and

medications.” In addition, Dr. Gordan relayed a conversation
DEMER V. IBM CORP. LTD PLAN 11

he had with Dr. Moore (Mr. Demer’s primary care physician)

in which Dr. Moore said “he thought it was likely that [Mr.

Demer] could do a very sedentary job, but . . . felt that he

would have to see him again to say that definitively.” Dr.

Gordan ultimately concluded that Mr. Demer “likely had a

modicum of discomfort” from, inter alia, “neck and back

pain related to spinal degeneration, and referred pain down

the limbs from those degenerative changes,” but Mr. Demer

retained the physical functional capacity to, e.g., “sit[] for an

hour at a time . . . and up to 7 hours a day, stand[] and walk[]

for 15 minutes at a time and up to 2 hours a day, lift[] up to

10 pounds frequently, 20 pounds occasionally.”

In addition to the above, both Dr. Goldman and Dr.

Gordan addressed the specific issue raised by Mr. Demer in

his appeal that the medications prescribed for his physical

condition affected his ability to mentally function. According

to Dr. Goldman, “there clearly are no objective or other

compelling or convincing data to establish functional

impairment as a result of Mr. Demer’s psychotropic

medications.” Dr. Gordan stated: “There is no specific

information about medications taken or effects from them

during the period in question. Although Dr. Osborne asserted

that the claimant’s needed narcotic medication caused

cognitive side effects, there was never any evidence of that.”

In denying Mr. Demer’s appeal, MetLife appears to have

accepted Dr. Gordan’s physical capacity assessment. 

MetLife also appears not to have placed any mental

limitations on Mr. Demer as a result of his medications. 

Based on the physical capacity assessment and lack of any

cognitive limitation, and an occupation assessment conducted

by a vocational rehabilitation consultant based thereon,

MetLife concluded that Mr. Demer could work in certain
12 DEMER V. IBM CORP. LTD PLAN

sedentaryoccupations,such as Project Director and Computer

Security Coordinator.2

C. District Court Proceedings

Following MetLife’s denial of LTD benefits, Mr. Demer

initiated this lawsuit. In reviewing MetLife’s denial of

benefits, the district court applied the abuse-of-discretion

standard and rejected Mr. Demer’s contention that the abuseof-discretion review must be tempered with skepticism

because of a conflict of interest on the part of MetLife. See

Demer v. IBM Corp., 975 F. Supp. 2d 1059, 1076–77 (D.

Ariz. 2013). The district court found that

 

2 After MetLife denied his appeal, Mr. Demer sent a letter to MetLife,

claiming that there was additional information from Dr. Weidman and Dr.

Moore that had been sent to MetLife prior to the decision on appeal but

that had not been addressed in the decision on appeal. Mr. Demer

attached that information to his letter. That information included, inter

alia, a treatment note from Dr. Weidman indicating that Mr. Demer was

on a higher amount of opiate analgesics which seemed to cause a slight

change in hisspeech and a treatment note from Dr. Moore stating that Mr.

Demer was taking opiates which affected his cognition and executive

functioning, including memory. The documentation was reviewed by a

MetLife appeals nurse consultant. “The nurse consultant opined that

while some current clinical exam changes were noted, no additional

clinical findings were submitted relating to the appeal period in question

. . . .” MetLife also noted that the Plan had only “one level of appeal” and

that appeal had already been denied on May 6, 2011.

At the trial level, the district court refused to consider Mr. Demer’s

post-appeal evidence. Mr. Demer now argues that this refusal was

erroneous. For purposes of this appeal, we need not decide the issue of

whether the post-appeal evidence should have been considered. Even

without the post-appeal evidence, Mr. Demer is entitled to a remand, as

discussed below.
DEMER V. IBM CORP. LTD PLAN 13

the record taken as a whole establishes that

MetLife reasonablyrelied on its IPCs’ reports. 

Every doctor agreed that Plaintiff suffered

from a combination of depression and chronic

pain syndrome, but every doctor also had a

different opinion as to Plaintiff’s future

functionality. MetLife was required to choose

between divergent opinions. MetLife’s

decision to rely on its IPCs’ findings was

reasonable.

Id. at 1083.

II.

We first address whether MetLife had a conflict of

interest such that our review should be tempered by

skepticism. See Harlick v. Blue Shield of California,

686 F.3d 699, 707 (9th Cir. 2012). A conflict of interest is a

factor in the abuse-of-discretion review, the weight of which

depends on the severity of the conflict. See id.; see also

Renfro v. Funky Door Long Term Disability Plan, 686 F.3d

1044, 1048 (9th Cir. 2012) (noting that, “if the plan gives

discretion, but the administrator operates under a conflict of

interest, then ‘the conflict of interest must be weighed as a

factor in determining whether there is an abuse of

discretion’”) (quoting Met. Life Ins. Co. v. Glenn, 554 U.S.

105, 110–11 (2008)); Stephan v. Unum Life Ins. Co. of

America, 697 F.3d 917, 929 (9th Cir. 2011) (noting that

degree of skepticism in determining whether administrator

abused its discretion varies based on extent of conflict of

interest); Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d

623, 630–31 (9th Cir. 2009) (stating that the extent of a
14 DEMER V. IBM CORP. LTD PLAN

conflict of interest affects its weight in the overall analysis of

whether an abuse of discretion occurred).3

In the instant case, the evidence of a conflict of interest on

which Mr. Demer relies consists of the following: (1) MetLife

is both the claim administrator for the Plan and its insurer and

(2) at least two of the IPCs that MetLife hired to review the

medical record (Dr. Del Valle and Dr. Gordan) have

performed a significant number of reviews for MetLife and

have received significant compensation for their services.

“‘We review de novo a district court’s choice and

application of the standard of review to decisions by

fiduciaries in ERISA cases.’” Prichard v. Metro. Life Ins.

Co., 783 F.3d 1166, 1168 (9th Cir. 2015).

A. Structural Conflict of Interest

In its opinion, the district court acknowledged that

MetLife has a structural conflict of interest because MetLife

both evaluates claims made against the Plan and funds claims. 

3 The dissent is critical of our review for abuse of discretion with

skepticism because, inter alia, the term skepticism is “not descriptive in

some useful way,” and even less so when “modified by a raft of

adjectives.” However, the framework employing abuse of discretion

review subject to some degree of skepticism (where warranted) is well

established under both Glenn and Ninth Circuit law. See Glenn, 554 U.S.

at 117 (noting that requiring consideration of a conflict of interest as a

factor “is no stranger to the judicial system” as “[n]ot only trust law, but

also administrative law, can ask judges to determine lawfulness by taking

account of several different, often case-specific, factors, reaching a result

by weighing all together”); Abatie, 458 F.3d at 969 (noting that “abuse of

discretion review, with any ‘conflict . . . weighed as a factor,’ is

indefinite” but “trial courts are familiar with the process of weighing a

conflict of interest”).
DEMER V. IBM CORP. LTD PLAN 15

See Montour, 588 F.3d at 630 (noting that, when “the same

entity that funds an ERISA benefits plan also evaluates

claims, . . . the plan administrator faces a structural conflict

of interest: since it is also the insurer, benefits are paid out of

the administrator’s own pocket, so by denying benefits, the

administrator retains moneyfor itself”). However, the district

court applied no skepticism as a result of the structural

conflict because “MetLife has taken affirmative steps to

reduce potential bias and promote accurate claim

determinations.” Demer, 975 F. Supp. 2d at 1076; see also

MetLife, 554 U.S. at 117 (noting that a conflict of interest

“should prove less important (perhaps to the vanishing point)

where the administrator has taken active steps to reduce

potential bias and to promote accuracy, for example, by

walling off claims administrators from those interested in

firm finances, or by imposing management checks that

penalize inaccurate decisionmaking irrespective of whom the

inaccuracy benefits”).

Mr. Demer objects to the district court’s reliance on the

declarations from two employees, Gregory Hafner and Laura

Sullivan, who describe the affirmative steps taken byMetLife

to reduce its structural conflict, on the ground that neither Mr.

Hafner nor Ms. Sullivan was disclosed as a witness in

MetLife’s initial disclosures as required by Federal Rule of

Civil Procedure 26. MetLife did not explain its failure to

identify witnesses in its mandatory initial disclosures; on the

other hand, Mr. Demer did not explain his failure to take a

30(b)(6) deposition on the structural conflict issue. See

James v. AT&T West Disability Benefits Program, 41 F.

Supp. 3d 849, 871 (N.D. Cal. 2014) (finding defendant’s

failure to disclose conflict-of-interest declarations harmless

because “plaintiff had ample time to seek discovery, but did

not do so – [thus] she cannot credibly claim prejudice.”).
16 DEMER V. IBM CORP. LTD PLAN

We need not resolve this issue because, even assuming

there is no residual structural conflict (i.e., because of

affirmative steps taken by MetLife to insulate its claims

department), some skepticism is warranted here because of

the financial conflict of the IPCs upon whom Met Life relied.4

B. Financial Conflict of Independent Physician Consultants

Mr. Demer claims MetLife operated under a conflict of

interest because two of the IPCs that MetLife hired to review

the medical record, Dr. Del Valle and Dr. Gordan, have done

a substantial number of reviews for Metlife and received

significant compensation from MetLife for their services. For

2009 and 2010, Dr. Del Valle performed more than 250

reviews/addendums each year and earnedmore than $125,000

each year; for the same time period, Dr. Gordan performed

between 200–300 reviews/addendums each year and earned

more than $175,000 each year. Based on the number of

reviews and the amount of compensation, Mr. Demer asserts

that the opinions of Dr. Del Valle and Dr. Gordan should be

questioned because the doctors had financial incentives to

render opinions favorable to MetLife. Mr. Demer further

argues that, because MetLife relied on the doctors’ opinions

4 The district court did not err in considering the Social Security

Administration’s (“SSA”) denial of Mr. Demer’s claim for disability

benefits as additional evidence that MetLife did not have a conflict of

interest. See Demer, 975 F. Supp. 2d at 1077 (stating that, “[a]lthough not

a decision by an administrative law judge, the SSA’s findings support the

objectivity of MetLife’s review of the medical evidence”). Contrary to

what Mr. Demer suggests, the district court did not rely on the SSA

decision to support MetLife’s ruling on the merits. See Harlick, 686 F.3d

at 719–20 (stating that “[t]he general rule . . is that a court will not allow

an ERISA plan administrator to assert a reason for denial of benefits that

it had not given during the administrative process”).
DEMER V. IBM CORP. LTD PLAN 17

in denying him relief, the doctors’ conflict is, in effect,

imparted to MetLife.

As a preliminary matter, we note that Mr. Demer’s

argument here is comparable to conventional approaches to

discrediting the testimony of retained experts whose

objectivity may be challenged based on, e.g., the number of

times he or she has served as an expert in support of a party

and the amount of compensation received. This alleged

conflict of interest is distinct from the purported structural

conflict of interest discussed above. The lack of any

structural conflict of interest on the part of MetLife does not

preclude MetLife from having a conflict of interest based on

an IPC’s financial interests; the factors that raise the

possibility of a structural conflict relate to the incentives

applicable to MetLife’s claims department, whereas the

factors that raise the possibility of a financial conflict relate

to the incentives applicable to MetLife’s retained experts. 

Even if MetLife operated with no structural conflict, reliance

on the reports of its retained experts who have a financial

incentive to make findings favorable to MetLife may warrant

skepticism.

We further take note that it is Mr. Demer’s burden, as the

party claiming a conflict, to produce evidence of a financial

conflict sufficient to warrant a degree of skepticism. Placing

the burden on Mr. Demer, as an initial matter, makes sense

given that he is asking for a departure from the otherwise

applicable standard of review for abuse of discretion. Once

such evidence is produced, however, the burden then shifts to
18 DEMER V. IBM CORP. LTD PLAN

MetLife to produce evidence that there is no conflict.5 Cf.

Muniz v. Amec Constr. Mgmt., 623 F.3d 1290, 1295 (9th Cir.

2010) (in discussing a structural conflict of interest, stating,

“when a claimant produces evidence that a plan

administrator’s self-interest caused a breach of the

administrator's fiduciary obligations to the claimant, a

rebuttable presumption arises in favor of the claimant and the

plan bears the burden of proving that a conflict of interest did

not affect its decision to deny or terminate benefits”); see also

Estate of Barton v. ADT Sec. Servs. Pension Plan, 820 F.3d

1060, 1065–66 (9th Cir. 2016) (indicating that a plaintiff

fairly bears the burden of proving entitlement to ERISA

benefits where he or she has better or at least equal access to

the evidence needed to prove entitlement; in certain cases,

however, the defending entity solely controls the information

that determines entitlement).

We conclude that Mr. Demer has satisfied his burden of

production. Mr. Demer has offered evidence that the IPCs

have earned a substantial amount of money from MetLife

($125,000–$175,000 each year) and have performed a

substantial number of reviews for the company as well

(200–300 reviews/addendums each year). The magnitudes of

5

In so ruling, we acknowledge the Supreme Court’s statement in Glenn

that that it did not “believe it necessary or desirable for courts to create

special burden-of-proof rules, or other special procedural or evidentiary

rules, focused narrowly upon the evaluator/payor conflict.” Glenn,

554 U.S. at 116. However, we do not read this language as barring the

burden approach articulated above. Glenn’s statement was directed at the

issue, once a conflict is identified, “‘how’ the conflict . . . should ‘be taken

into account on judicial review of a discretionary benefit determination.’” 

Id. at 115 (citation omitted). The Supreme Court did not consider and

hence did not foreclose an articulation of the burdens in determining

whether there is a cognizable conflict in the first place.
DEMER V. IBM CORP. LTD PLAN 19

these numbers, particularly when combined, raise a fair

inference that there is a financial conflict which influenced

the IPCs’ assessments, and thus such conflict should be

considered as a factor in reviewing MetLife’s decision for

abuse of discretion. See Montour, 588 F.3d at 634 (“how

frequently [the insurance company] contracts with the file

reviewers it employed in this case” is relevant to ascertaining

conflict); Nolan v. Heald College, 551 F.3d 1148, 1152 & n.3

(9th Cir. 2009) (evidence that the outside medical reviewers

“received substantial work and monies from MetLife in the

three-to-four years preceding and including [the claimant’s]

benefits denial” could be a factor tempering abuse of

discretion review). Here, the evidence of the IPCs’ financial

conflict of interest, in the absence of contrary evidence from

MetLife, warrants some skepticism in reviewing MetLife’s

decision.

To be sure, the lack of more powerful evidence that, e.g.,

the IPCs had “‘some specific stake in the outcome’” of Mr.

Demer’s case, McDonald v. Hartford Life Group Ins. Co.,

361 Fed. Appx. 599, 610 (5th Cir. 2010),6or of statistics

6

See also Davis v. Unum Life Ins. Co. of Am., 444 F.3d 569, 575–76

(7th Cir. 2006) (rejecting contention that “in-house doctors have an

inherent conflict in every case”; noting lack of evidence of “any specific

incentive [for the in-house doctors] to derail [a] claim” – e.g., giving the

doctors “some specific stake in the outcome of [a] case, such as paying the

doctors more if [the] claim were denied”). While such a stake would be

strong evidence of conflict, as a practical matter, this seems a highly

unlikely scenario. It is hard to imagine that a plan administrator would

explicitly tie compensation to results, as clearly such a practice would be

viewed disapprovingly by courts. To the extent the dissent suggests that

no financial conflict of interest may be found absent evidence that an IPC

has a specific stake in the outcome of the case, such a rule, if adopted,

would render review for financial conflict of interest toothless. Nothing

we said in Montour suggests such a categorical rule.
20 DEMER V. IBM CORP. LTD PLAN

showing a parsimonious pattern of assessments disfavorable

to claimants, see Montour, 588 F.3d at 634,7 minimizes the

“weight [assigned] to the conflict of interest as a factor in the

overall analysis of whether an abuse of discretion occurred.” 

Id. at 631. But that lack of such specific evidence does not

mean that there is no conflict of interest. Here, we have

evidence of not only the frequency of reviews for MetLife but

also the significant dollar amounts earned by the reviewers.

Furthermore, that Mr. Demer could have, but did not,

develop a stronger record of the IPCs’ conflict of interest

does not mean that there is no conflict. Because Mr. Demer

did provide evidence of a financial conflict warranting an

inference of bias, the burden shifted to MetLife to counter

that evidence. As we noted in Montour, both the plaintiff and

the administrator ran a risk in not developing evidence of bias

or lack thereof. See id. at 634 (before addressing plaintiff’s

failure to submit extrinsic evidence of bias such as statistics

of rate of claims denied or frequency of file reviews, court

took note of administrator’s “failure to present extrinsic

evidence of any effort on its part to ‘assure accurate claims

assessment’”). Here, MetLife could have maintained records

of its reviewers’ findings on claims to show their neutrality in

practice,8but it did not. While MetLife therefore missed an

 

7

See, e.g., Caplan v. CNA Fin. Corp., 544 F. Supp. 2d 984, 992 (N.D.

Cal. 2008) (noting that a doctor “stood to benefit financially from the

repeat business that might come from providing [defendant] with reports

that were to its liking”; adding that “[t]he history of [the doctor’s]

conclusions provides evidence of this conflict”).

8 For example, MetLife could have provided but did not proffer evidence

that the IPCs being challenged do not in fact have a parsimonious pattern

of assessment unfavorable to claimants. Nor did MetLife submit

evidence, e.g., that the fees paid to the IPCs constitute only a small
DEMER V. IBM CORP. LTD PLAN 21

opportunity to negate any inference of a financial conflict of

interest, Mr. Demer failed as well to develop more powerful

evidence that could have established enhanced skepticism in

reviewing MetLife’s decision. Thus, we find there is neither

a lack of conflict of interest (justifying no skepticism) nor a

substantial conflict of interest (warranting enhanced

skepticism). Instead, the financial conflict – modest but

extant – warrants some, but not substantial, weight under

Abatie and Montour.

The dissent argues that MetLife “listened very carefully”

to our instruction in Abatie that plan administrators may

reduce conflicts by“refer[ring] medical evaluations to outside

experts, such as doctors, who also have no interest in firm

finances,” and that for its trouble we give MetLife additional

scrutiny. But the dissent fails to acknowledge that Abatie

considered an administrator’s use of “truly independent

medical examiners or a neutral, independent review process.” 

Abatie, 458 F.3d at 969 & n.7 (emphasis added). The dissent

mistakenly equates outside experts with independent experts,

but the former does not guarantee the latter. We do not

quarrel with the notion that using outside medical evaluators

can be an important step toward the goal of obtaining neutral

assessments, but it is not hard to imagine an outside medical

examiner who does not engage in a neutral, independent

review, such as where the examiner receives hundreds of

thousands of dollars from a single source and performs

hundreds of reviews for that source every year.

Despite the dissent’s suggestion that the majority

disapproves of outside reviewers, we imply no such

fraction of their income or that the high number of reviews conducted by

an IPC in a particular year was an aberration.
22 DEMER V. IBM CORP. LTD PLAN

disapproval; we simply apply the unremarkable proposition

that the number of examinations referred and the size of the

professional fees paid to a reviewer may compromise the

neutrality of an expert. See Montour, 588 F.3d at 634; Nolan,

551 F.3d at 1152, n.3. The extra-circuit decisions the dissent

cites do not stand for the proposition that outside experts are

immune from judicial scrutiny for possible bias. While the

formulation in determining whether a financial conflict of

interest exists may be stated in various ways, we think it is

clear under the facts in this case where MetLife paid

substantial monies for a high volume of repeat work to the

IPCs involved and there is no evidence rebutting an inference

of bias, there is sufficient evidence of a financial conflict to

temper abuse of discretion review.9

C. Evidence of Mental Limitations

Having concluded that the abuse-of-discretion review

should be tempered with some skepticism, we now turn to

Mr. Demer’s contention that MetLife abused its discretion in

denying his claim for benefits because it did not find his

mental functional capacity was affected in any way by the

 

9 Contrary to what the dissent seems to suggest, bias of an IPC may be

inferred even where the IPC is not entirely “financially dependent” on

income received from an administrator. Obtaining even, e.g., 30% of

one’s income from one administrator could be sufficiently influential as

to give rise to a reasonable inference of bias. See, e.g., Nolan, 551 F.3d

at 1152 n.3 (30% of reviewer’s income came from administrator). 

Moreover, were claimants required to show financial dependence in order

to establish lack of neutrality, the personal financial circumstances and

needs of each IPC could be subjected to routine inquiry in ERISA cases,

a result hardly conducive to the recruitment of competent reviewers or to

the efficient and expeditious review of benefit decisions contemplated by

ERISA.
DEMER V. IBM CORP. LTD PLAN 23

medications he was taking for his physical pain. As indicated

above, MetLife did not ask its vocational rehabilitation

consultant to consider any limitation on Mr. Demer’s mental

ability to function. We conclude that MetLife abused its

discretion in denying Mr. Demer’s claim.

In reaching this conclusion, we first take note of three

points that are essentially undisputed:

(1) Mr. Demer “takes powerful narcotic and other

medications, prescribed in attempts to manage his pain.” 

These medications included morphine.

(2) These medications were medically necessary to address

Mr. Demer’s pain arising from physical impairments. 

(MetLife’s IPC Dr. Del Valle noting that Mr. Demer’s

physical problems “necessitat[e] narcotic analgesics”).

(3) The “prescribed narcotic and neurological oriented

medications have known side effects” on an individual’s

mental functioning. (Mr. Demer’s treating physician Dr.

Osborne stating that “[t]he side effects with dosing of

narcotics, limit the ability to complete productive mental

functions[;] [t]hey are to be expected and are limits of the

only treatment available for this gentleman”).

Moreover, in a personal statement, Mr. Demer claimed

that he did, in fact, suffer side effects as a result of his

medications, including fatigue and difficulty with

concentration (e.g., the medications “cause me to fatigue and,

and they help confuse me in my thinking and ability to

communicate”; “I can no longer read complex materials

because I cannot concentrate to comprehend them”; and “I
24 DEMER V. IBM CORP. LTD PLAN

also have memory lapses after having read the pages I may

still be looking at”).

Mr. Demer corroborated his claim with a statement from

a friend, Ms. Piel (e.g., she “know[s] [Mr.] Demer”; “[t]here

has been a sharp decline in his well being during the past ten

years”; she has viewed his physical pain; Mr. Demer has side

effects from the prescribed medication which makes him

“consistently appear[] to be in a haze, unable to cope with

what were once routine matters”; and Mr. Demer “has

repeatedly demonstrated his inability to safely drive because

of the inability to focus”).10

He also pointed to supporting contemporaneous evidence

from his treating physicians. For example, Dr. Osborne

expressed agreement that his physical examinations and

medical records indicated that Mr. Demer was suffering from

side effects of his medications, “which infringe on [his]

ability to concentrate and tend to diminish [his] energy.” Dr.

Moore commented that Mr. Demer “has cognitive limitations

[secondary to] pain as well as analgesics.”

Despite this evidence, MetLife rejected any mental

limitations based on the opinions of two IPCs, Drs. Goldman

and Dr. Gordan, neither of whom actually examined Mr.

Demer. (Dr. Goldman stated that, “[b]eyond October 29,

2010, there clearly are no objective or other compelling or

convincing data to establish functional impairment as a result

of Mr. Demer’s psychotropic medications.” Dr. Gordan

stating that “[t]here is no specific information about

10 Similarly, a medical record indicated that Mr. Demer’s father told him

“he was ‘druggy’” after being prescribed certain medication (medical

record from treating physician, Dr. Debra Weidman (anesthesiologist)).
DEMER V. IBM CORP. LTD PLAN 25

medications taken or effects from them during the period in

question[;] [a]lthough Dr. Osborne asserted that the

claimant’s needed narcotic medication caused cognitive side

effects, there was never any evidence of that.”) Implicit in

each doctor’s opinion – and therefore MetLife’s decision –

was a conclusion that Mr. Demer’s complaints of fatigue and

difficulty concentrating were not credible.

But the IPCs had little basis for rejecting Mr. Demer’s

credibility. In addition to the fact that the IPCs never

examined Mr. Demer, they never explained specifically why

they rejected Mr. Demer’s claim of mental function

limitations when (1) he was taking what are undisputedly

powerful narcotic medications and (2) his subjective

complaints were corroborated by his treating physicians as

well as a friend (Ms. Piel).11See Godmar v. Hewlett-Packard

Co., 631 Fed. Appx. 397, 406 (6th Cir. 2015) (stating that

“there is ‘nothing inherently objectionable about a [paper]

review,’” but such “reviews are particularly troubling when

the administrator’s consulting physicians – who have never

met the claimant – discount the claimant’s limitations as

subjective or exaggerated”; adding that “‘we will not credit

a file review to the extent that it relies on adverse credibility

findings when the files do not state that there is reason to

doubt the applicant’s credibility’”); Montour, 588 F.3d at

634–35 (indicating that a plan should not require a claimant

to provide objective proof of his pain level and that a plan

should not reject subjective claims of excess pain based

solely on a paper review’s observation that a physical

11 Because Ms. Piel’s statement was submitted only on the appeal to

MetLife, Dr. Del Valle was not able to consider it. However, Dr. Gordan

should have taken into account Ms. Piel’s statement as he was the IPC on

appeal.
26 DEMER V. IBM CORP. LTD PLAN

impairment should not cause the claimant as much pain as he

was reportedly suffering); cf. Rollins v. Massanari, 261 F.3d

853, 857 (9th Cir. 2001) (in the Social Security context,

noting that “subjective pain testimony cannot be rejected on

the sole ground that it is not fully corroborated by objective

medical evidence”).

We acknowledge that the district court’s order suggests

possible grounds for questioning Mr. Demer’s credibility –

i.e., that his activities of daily living indicated some ability to

engage in mental functioning. See Demer, 975 F. Supp. 2d at

1081 (stating that “Dr. Osborne’s opinion that Plaintiff could

not operate a vehicle was directly contradicted by Plaintiff’s

conversations with MetLife on January 14, 2010 and May 18,

2010, where he stated that he had been driving a vehicle[;]

[f]urther, while receiving disability payments, Demer told a

MetLife claims representative that ‘he was just completing

online courses’”); (MetLife’s electronic diary notes). But

neither MetLife nor its IPCs rejected Mr. Demer’s credibility

on this basis. See Harlick, 686 F.3d at 719–20 (stating that

“[t]he general rule . . . is that a court will not allow an ERISA

plan administrator to assert a reason for denial of benefits that

it had not given during the administrative process”). 

Moreover, it is not clear that these activities of daily living

necessarily establish an ability to work within the meaning of

the Plan. Notably, under the terms of the Plan, Mr. Demer is

eligible for LTD benefits if he cannot engage in a “gainful

occupation,” which in Mr. Demer’s case is a job that has a

yearly salary of approximately $50,000. A job that

commands such a salary may well require higher levels of

mental functioning, including concentration and memory,

both of which are areas where Mr. Demer has claimed

impairment as a result of his medications.
DEMER V. IBM CORP. LTD PLAN 27

D. Evidence of Physical Limitations

There is an additional factor weighing in favor of finding

an abuse of discretion by MetLife. In denying Mr. Demer’s

appeal, MetLife effectively adopted the physical functional

capacity assessed by Dr. Gordan – i.e.,

that Mr. Demer would be capable of sitting

for an hour at a time, with short breaks for

stretching, up to seven hours a day; standing

and walking for 15 minutes at a time and up to

two hours a day; lifting up to 10 pounds

frequently, 20 pounds occasionally and 35

pounds rarely; occasionally twisting, bending,

stooping, and reaching above shoulder level,

driving, and doing repetitive movements with

either hand and occasionally climbing stairs.

Similar to above, Dr. Gordan was implicitly rejecting Mr.

Demer’s credibility based solely on a paper review without

having physically examined him and without explaining why

Mr. Demer’s credibility was lacking, particularly, in light of

some medical records conflicting with Dr. Gordan’s physical

functional capacity assessment. Most notably, Dr. Gordan’s

assessment conflicted with the more restrictive assessment

adopted by MetLife’s other IPC, Dr. Del Valle, which

MetLife had previously adopted in initially denying Mr.

Demer benefits. For instance, with respect to lifting capacity,

Dr. Gordan found that Mr. Demer could lift up to 10 pounds

frequently, but previously, MetLife found (as part of its initial

denial) that Mr. Demer could not frequently lift more than 10

pounds. Also, whereas Dr. Gordan found that Mr. Demer

could sit with breaks up to seven hours a day, MetLife

previously found (based on Dr. Del Valle’s initial
28 DEMER V. IBM CORP. LTD PLAN

assessment) that he could only sit “4–6 hours per 8 hour work

daywith proper ergonomics and the ability to change position

as needed.” MetLife never explained why it concluded that

Dr. Gordan’s assessment was more appropriate over Dr. Del

Valle’s earlier assessment, particularly since the record

indicated that Mr. Demer’s condition did not improved (and

may have deteriorated) over time.12

E. Conclusion

Taking into account the totality of the circumstances –

i.e., the financial conflict of interest of the IPCs on whom

MetLife relied (which warrants some skepticism in reviewing

the IPCs’ conclusions), the substantial evidence of Mr.

Demer’s mental limitations due to pain medication and

physical limitations, and the IPCs’ reviews of Mr. Demer’s

condition, without having examined him and without

explaining why they rejected his credibility, particularly in

light of evidence corroborating his credibility (both medical

and nonmedical) – MetLife abused its discretion in denying

Mr. Demer’s claim for LTD benefits.

F. Remedy

The question remaining is what remedy should issue. See

Cook v. Liberty Life Assurance Co. of Boston, 320 F.3d 11,

12 We acknowledge that Dr. Gordan did consult with Mr. Demer’s

treating physician, Dr. Moore, and Dr. Moore indicated to Dr. Gordan that

“it was likely that Mr. Demer could do a very sedentary job.” Dr. Moore,

however, added that “he felt that he would have to see [Mr. Demer] again

to say that definitively.” Yet Dr. Gordan never physically or mentally

examined Mr. Demer for confirmation one way or the other; nor did Dr.

Moore. Hence, any reliance by MetLife on Dr. Moore’s statement is

misplaced.
DEMER V. IBM CORP. LTD PLAN 29

24 (1st Cir. 2003) (“Once a court finds that an administrator

has acted arbitrarily and capriciously in denying a claim for

benefits, the court can either remand the case to the

administrator for a renewed evaluation of the claimant’s case,

or it can award a retroactive reinstatement of benefits.”). We

hold that a remand to the district court, with instructions to

remand to MetLife, is appropriate. An award of benefits is

not a proper remedy because the record does not clearly

establish that MetLife should necessarily have awarded Mr.

Demer benefits. Cf. Grosz-Salomon v. Paul Revere Life Ins.

Co., 237 F.3d 11549, 1163 (9th Cir. 2001) (“[R]etroactive

reinstatement of benefits is appropriate in ERISA cases where

. . . ‘but for [the insurer’s] arbitrary and capricious conduct,

[the insured] would have continued to receive the benefits’ or

where ‘there [was] no evidence in the record to support a

termination or denial of benefits.’”).

To be clear, on remand, MetLife may re-open the record

to consider additional evidence regarding mental limitations. 

The record as it stands does not show precisely what Mr.

Demer’s limitations were as a result of the medications. 

While a retrospective evaluation may be difficult given the

passage of time, a retrospective evaluation of Mr. Demer’s

limitations is not necessarily impossible. Indeed, in the

Social Security context, retrospective evaluations are not

uncommon. Historical records, data and trends may be

relevant and useful in rendering a retrospective evaluation. 

See, e.g., Smith v. Bowen, 849 F.2d 1222, 1225 (9th Cir.

1988) (in Social Securitycase, stating that “reports containing

observations made after the period for disability are relevant

to assess the claimant’s disability[;] [i]t is obvious that

medical reports are inevitably rendered retrospectively and

should not be disregarded solely on that basis”). 

Furthermore, a current evaluation of Mr. Demer may be
30 DEMER V. IBM CORP. LTD PLAN

particularly useful because his benefit period may have

extended beyond the date of the appeal, see 2ER 130, 217

(addressing Maximum Benefit Period), such that a current

examination may be closer in time to the assessment period

than it would otherwise appear.

III.

Accordingly, we REVERSE and REMAND with

instructions to the district court to remand this case to

MetLife so that it may re-evaluate the merits of Mr. Demer’s

LTD claim.

BYBEE, Circuit Judge, dissenting from Part II.B, but

concurring in the judgment:

An ERISA plan administrator has a structural conflict of

interest where it “both funds the plan and evaluates the

claims.” Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105,

112 (2008); see also Abatie v. Alta Health & Life Ins. Co.,

458 F.3d 955, 965 (9th Cir. 2006) (en banc). The federal

courts have offered at least two ways that such conflicts

“should prove less important (perhaps to the vanishing

point).” Metro. Life, 554 U.S. at 116. First, administrators

may “wall[] off claims administrators from those interested

in firm finances.” Id.; Abatie, 458 F.3d at 969 & n.7 (an

administrator may show that “any conflict did not influence

its decisionmaking process” by showing that “its employees

do not have incentives to deny claims”); Davis v. Unum Life

Ins. Co. of Am., 444 F.3d 569, 575–76 (7th Cir. 2006)

(holding that absent evidence of “any specific incentive [for

the in-house doctors] to derail [a] claim,” such as giving the
DEMER V. IBM CORP. LTD PLAN 31

doctors “some specific stake in the outcome of [a] case,” the

theoretical argument that “in-house doctors have an inherent

conflict in every case” is insufficient to change the standard

of review). Second, plan administrators may refer medical

evaluations to outside experts, such as doctors, who also have

no interest in firm finances. Abatie, 458 F.3d at 969 & n.7

(“[T]he administrator might demonstrate that it used truly

independent medical examiners or a neutral, independent

review process”).

MetLife listened very carefully to what we said. It

employed both of these methods: First, it walled off its claims

administrators from its financial offices. And then, second, 

the claims office sought medical evaluations from outside,

independent physicians who have no interest in MetLife’s

finances. For its trouble, the majority is going to give

MetLife additional scrutiny—the majority is “skeptical” of

MetLife precisely because it did what we told it to. Maj. Op.

at 21. The majority’s new skepticism has been rejected by

every other circuit to have considered it. When companies

structure their operations in response to our opinions and then

we penalize them for doing exactly as we have suggested, we

sow uncertainty into both law and business. I dissent from

Section II.B of the majority’s opinion. Because that section

is not otherwise necessary to the majority’s opinion, I concur

in the judgment.

I

The problems with the majority’s new concept of

skepticism are at least three fold. First, nothing in our

decisions supports the majority’s new concept of skepticism. 

Our relevant cases stand for two propositions: (1) a claims

administrator has an internal conflict of interest when it
32 DEMER V. IBM CORP. LTD PLAN

stands to profit from the claims it denies; and,

(2) administrators can cleanse this conflict by taking steps

such as creating ethical walls, making sure that claim denials

are not rewarded, and hiring outside physician reviewers. 

The majority takes these rules about internal conflicts of

interest for which “some skepticism” is warranted, and

discovers an external conflict in outside reviewers that is

deserving of “modest but . . . some, but not substantial”

skepticism—something between “no skepticism” and

“enhanced skepticism.” Maj. Op. at 21. The majority has

taken a mechanism we gave administrators for cleansing their

conflicts—hiring independent reviewers—and turned it into

a new source of conflicts. Second, there is no basis for

inferring a conflict of interest in the outside reviewers simply

because they reviewed multiple files for MetLife and were

compensated for their work. Finally, I have great

reservations about the use of “skepticism” as a standard of

review.

A

In Abatie, we considered the problem with “an insurer

that acts as both the plan administrator and the funding source

for benefits,” and explained that the insurer thus “operates

under what may be termed a structural conflict of interest.” 

Abatie, 458 F.3d at 965. We discussed this sort of structural

conflict only, and then commented that it could be remedied

by, for example, using “independent medical examiners.” Id.

at 969 n.7 (emphasis added).

MetLife has an internal conflict of interest in this case. It

both pays the benefits and evaluates the claims. No one

disputes it. And no one disputes that MetLife has addressed

this internal conflict by walling off its financial department
DEMER V. IBM CORP. LTD PLAN 33

from its claims department. See Maj. Op. 16 (assuming that

“there is no residual structural conflict . . . because of

affirmative steps taken by MetLife to insulate its claims

department”). But the Majority then finds that an external

conflict exists because MetLife refers files to outside

physician reviewers.

The majority says that we are to view this relationship

with skepticism, but I can find no basis in our decisions for

this conclusion. Our cases simply hold that a structural

conflict of interest may warrant skepticism, nothing more. 

See, e.g., Glen, 554 U.S. at 112 (holding that an ERISA

conflict emerges where the same administrator “both funds

the plan and evaluates the claims,” because “every dollar

provided in benefits is a dollar spent by . . . the

[administrator]; and every dollar saved . . . is a dollar in [the

administrator’s] pocket”) (quotation omitted); Abatie,

458 F.3d at 965. The majority claims that in Montour v.

Hartford Life & Accident Insurance Co., we “assumed that a

relevant piece of extrinsic evidence would be ‘how frequently

[the insurance company] contracts with the file reviewers it

employed in this case.’” 588 F.3d 623, 634 (alteration in

Montour). With respect, the majority overstates Montour. In

Montour, we found that the Hartford Insurance Company,

like MetLife, had a structural conflict of interest. But in

Montour we also cited to extensive district court findings that

caused us to conclude that “Hartford’s bias infiltrated the

entire administrative decisionmaking process, which leads us

to accord significant weight to the conflict.” Id. We then

observed that Hartford had failed to show any efforts that it

had made “to ‘assure accurate claims assessment,[]’ such as

utilizing procedures to help ensure a neutral review process.” 

Id. (quoting Metro. Life, 554 U.S. at 117). Notice what we

said next: “To the contrary, in fact, Hartford’s nurse case
34 DEMER V. IBM CORP. LTD PLAN

manager took an advocacy position in her letters to

Montour’s physicians soliciting their agreement with her

disability conclusion.” Id. (emphasis added). Not only had

Hartford failed to present any evidence to show its neutrality,

the evidence suggested that Hartford was telling Montour’s

doctor what it wanted to hear. We then faulted the claimant,

Montour—and here is the passage the majority relies on—for

“not submit[ting] any extrinsic evidence of bias, such as

statistics regarding Hartford’s rate of claims denials or how

frequently it contracts with the file reviewers it employed in

this case.” Id. Far from demonstrating that we should be

suspicious of outside reviewers, Montour stands for nothing

more remarkable than the proposition that it would be

relevant to have known in that case where Hartford “took an

advocacy position” in its letters to Montour’s doctor what the

relationship, if any, was between Hartford’s rate of claims

denials and its reliance on outside reviewers. Here, without

the predicate for our comment in Montour, the majority

simply assumes that the evidence that MetLife used and paid

outsider reviewers is sufficient to show bias.1 The majority

calls this a “financial conflict[],” Maj. Op. at 16, but we have

1 Montour cited to Nolan v. Heald College, 551 F.3d 1148 (9th Cir.

2009), where, in a footnote, we suggested that there might be some

relationship between an outside reviewer’s regular contract with the

insurance company and the reviewer’s bias. Id. at 1152 n.3. We offered

no explanation why this was a problem. We later commented that “This

is not to say that [the insurance company] was not entitled to rely on the

opinions of its independent physicians,” but we assumed that it was

evidence of bias that the district court might have viewed “with

skepticism.” Id. at 1155.
DEMER V. IBM CORP. LTD PLAN 35

no explanation why an outside reviewer has a conflict of

interest by virtue of being compensated for her time.2

I don’t see the conflict at all. The Supreme Court in

Firestone found that “ERISA abounds with the language and

terminology of trust law,” and that we should be “guided by

principles of trust law.” Firestone Tire & Rubber Co. v.

Burch, 489 U.S. 101, 111, 112 (1989). The trust analogy is

an important one, because a trustee is under a dual obligation:

It must ensure that trust funds are paid to those who are

eligible; at the same time, it must ensure that trust funds are

not paid to those who are not eligible. A trusteeadministrator as surely violates its obligation by violating the

one charge as the other. MetLife knows that, as trustee, it has

an internal conflict of interest and must compensate for that

conflict in some way, and perhaps in several ways. Going to

outside consulting physicians—literally, getting a second

opinion—is one way of compensating for the conflict. But

where is the conflict in the outside consulting physicians?

Reliability, not bias, is the incentive for the outside reviewer. 

In the long run, it doesn’t do a company like MetLife any

good to get bad medical advice because just as it has a duty

2 The majority contends that I have “mistakenly equate[d] outside

experts with independent experts.” Maj. Op. at 21. Not so. I have simply

equated better-paid outside experts with slightly-lesser-paid outside

experts. The question in this case is not whether there is any circumstance

in which an outside expert could lose her independence—of course there

is. The question here is whether paying a board-certified physician an

amount that strikes the majority as a lot, on its own, makes that physician

no longer “independent.” And to me, the answer must be no.
36 DEMER V. IBM CORP. LTD PLAN

to pay deserving claims, it has a duty to avoid paying

undeserving claims.3

I recognize that there could be a cognizable conflict of

interest where an independent physician is so dependent on

an administrator that it effectively becomes an employee of

the administrator, see McDonald v. Hartford Life Grp. Ins.

Co., 361 F. App’x 599, 609 (5th Cir. 2010), but this would

simply bring the reviewer within the administrator’s internal

umbrella. And in that case, the outside reviewer would be

subject to the same conflict of interest as the administrator’s

own employees; the outside reviewer cannot be more

conflicted than the administrator’s own claim processors

(assuming the administrator has not given the reviewer some

additional incentive tied to results). See Armstrong v. Aetna

Life Ins. Co., 128 F.3d 1263, 1265 (8th Cir. 1997) (insurer

provided incentives and bonuses to claims reviewers for

“claims savings”). What is so odd about the majority’s

3

It is far from clear from the cases (including the record in this case)

what files we think the outside physicians are reviewing. Are the

reviewers looking at all files, including files the claims department is

inclined to pay? Ifso, why would the reviewing physicians offer anything

other than their best view?

But what if the claims department is only sending outside reviewers

the files of claims it is inclined to deny? In that case the outside reviewers

still have little incentive to shade their views in favor of the claims

department. This is not advocacy, it is medical opinion, and the claims

department, after all, is asking the reviewers for a second opinion before

denying the claim.

If there were evidence an administrator was signaling to its outside

reviewers what result it wanted them to reach, that would be a serious

problem. In such a case, the signaling would be direct evidence that the

administrator had not addressed its structural conflict of interest.
DEMER V. IBM CORP. LTD PLAN 37

analysis is that if the outside consultants were MetLife’s own

internal employees, we would find that they were not

conflicted—or at the least that any conflict had been

neutralized by MetLife’s claims-handling practices. But for

the majority, because the reviewers are independent, suddenly

they are untrustworthy. Yet there is not one hint in the record

that these outside reviewers are given financial incentives

based on their results or in any other way biased.

The principle the majority adopts has profound

implications for other areas of the law—notably Social

Security claims. The SSA, and its state partners, frequently

rely on outside medical sources to review a claimant’s file

and offer a second opinion. The views of these reviewing

physicians are given significant weight under SSA

regulations and our decisions. See 20 C.F.R. § 404.1519a–q

(SSA rules governing the hiring and use of physician

reviewers); Reed v. Massanari, 270 F.3d 838, 842 n.1 (9th

Cir. 2001) (noting the “important role played by independent

medical specialists” in SSA cases, and overturning the ALJ’s

decision not to order an outside physician review); Kish v.

Colvin, 552 F. App’x 650, 651 (9th Cir. 2014) (overturning

the ALJ’s determination because he failed to order an outside

physician review); see also Standards For Consultative

Examinations and Existing Medical Evidence, 56 Fed. Reg.

36932, 36949 (Aug. 1, 1991) (“[The SSA] spend[s]

considerable sums annually to obtain consultative

examinations.”). Sometimes the SSA uses outside physician

reviewers, and sometimes it uses physicians employed full

time by the SSA’s state-partner agencies. See Wilson v.

Comm’r of Soc. Sec., 280 F. App’x 456, 462 (6th Cir. 2008)

(relying in part on evaluation conducted by psychologist

employed by state agency); Patty v. Barnhart, 189 F. App’x

517, 519 (7th Cir. 2006) (relying on both state-employed and
38 DEMER V. IBM CORP. LTD PLAN

outside physician reviewers); see also 20 C.F.R. § 404.1519g

(stating the SSA may purchase an outside examination from

any qualified provider, including the claimant’s own

physicians or “another source”). So far as I know, we have

never questioned the bona fides of reviewing physicians’

views on the grounds that SSA or state agencies are sending

them lots of business and paying them well, or, even worse,

employing them full time. It will turn our cases upside down

if we start down that road.

B

Even if we considered Demer’s evidence on the outside

reviewers in this case, there is “no there there.” The

majority’s new skepticism is based on two facts: First, the

majority thinks that Metlife’s outside reviewers are doing a

lot of work for MetLife and, second, the majority thinks the

outside reviewers are getting paid a lot of money for their

work. Maj. Op. at 18–19 (referring to the “magnitudes of

these numbers”). Neither of these reasons will bear scrutiny.

Let’s start with the idea that the two doctors in question

here—both of whom were board-certified in internal

medicine—are doing a lot of work for MetLife. The record

discloses that Dr. Del Valle reviewed some 250 files per year;

Dr. Gordan, some 200–300 files. We have no basis for

judging the significance of these numbers. The majority has

just decided that these numbers are big. Let’s indulge the

assumption: so what? Even if MetLife decided to stop paying

these two doctors as outside consultants and brought them inhouse, it wouldn’t implicate a conflict. MetLife has followed

our directions and walled off its claim processors—including

any medical personnel—from its financial people. Its claim

processors have not been given any incentives to deny claims. 
DEMER V. IBM CORP. LTD PLAN 39

That is precisely what we said would cleanse MetLife’s

conflicts. Abatie, 458 F.3d at 969 n.7. So whether the

doctors are doing a little bit of work for MetLife or a lot of

work is irrelevant because there is no smidgen of evidence in

the record that MetLife will compensate the doctors based on

the results of their evaluations. The majority has no basis

whatsoever for impugning the reputations of these medical

professionals.

The majority’s second theory—that the doctors are well

compensated—doesn’t hold any more water than the first. 

Dr. Gordan was compensated $175,000/year for his work; Dr.

Del Valle, $125,000. Based on nothing more than its own

ipse dixit, the majority declares this to be “significant

compensation.” Maj. Op. at 14. We have nothing in the

record to tell us how doctors are compensated, whether as

practicing physicians or as outside consultants.4I could opine

that this doesn’t seem like a lot of money for an experienced

medical professional, but I have no more basis than the

majority for saying so. And perhaps there is some

professional jealousy at work here, but if these doctors were

lawyers, they aren’t even making first-year associate wages.5

4 The majority’s approach to the burdens here makes little sense. If the

claimant bears the burden, as Montour suggests, 588 F.3d at 634, then

gaps in the record—as we have here—should weigh against Demer. The

majority fails to explain how pointing to two numbers (the number of files

received and the sum of payments received) establishes that the outside

reviewers were biased.

5

See David Lat, Breaking: NY to $180K!!! Cravath Raises Associate

Base Salaries!!!, June 6, 2016, http://abovethelaw.com/2016/06/breakingny-to-180k-cravath-raises-associate-base-salaries/.
40 DEMER V. IBM CORP. LTD PLAN

Would we feel better if MetLife found physicians who

were willing to be poorly compensated? Does it get better

advice? Does it avoid the conflict? The doctors’

compensation tells us nothing about how the doctors make

their medical judgments. And if we are going to indict the

medical profession for understanding the potential interests

of its clients, do we get to be skeptical of Demer’s personal

physician because Demer’s insurance is paying for his

opinions? What if the doctor knows that Demer will go get

a second opinion (and perhaps leave his personal physician

and give him a poor review on Yelp) unless the doctor finds

that Demer is disabled? Does Demer’s family doctor have a

financial incentive to reach a particular medical judgment?

What if Demer’s doctor refers him to a second physician for

an opinion? Does the second doctor have a conflict of

interest because he fears that if he doesn’t corroborate the

referring doctor’s opinion he won’t get referrals in the future?

There is no end to the gamesmanship that can be played here.

C

That brings me to the question of “skepticism.” The

majority, of course, should not be faulted for relying on our

prior decisions and this “skepticism” scheme. We first used

the term in Abatie. 458 F.3d at 968 (referring to the “level of

skepticism” with which we view a “structural conflict of

interest”). In Montour, we picked up on the “skepticism”

comment and amplified it, finding that courts should “adjust

the level of skepticism” “in accordance with the facts and

circumstances of the case” and that where “the conflict may

have tainted the entire administrative decisionmaking

process,” the courts should view the administrator’s decision

with “enhanced skepticism.” 588 F.3d at 631. We have

continued to solidify and elevate Montour’s scheme. See
DEMER V. IBM CORP. LTD PLAN 41

Stephan v. Unum Life Ins. Co. of America, 697 F.3d 917, 934

(9th Cir. 2012); Salomaa v. Honda Long Term Disability

Plan, 642 F.3d 666, 675 (9th Cir. 2011); Nolan, 551 F.3d at

1155. Even as we acknowledge that it is not “easy to decide

how manymetaphorical grams should go on the metaphorical

scale,” we have added additional qualifiers to “skepticism” to

give us a range of skepticism, including “special skepticism,”

“additional skepticism,” and a “higher degree of skepticism.” 

Salomaa, 642 F.3d at 675–76.

I question the usefulness of “skepticism” as a standard of

review. Standards of review are, necessarily, not “rules” and

are subject to the vagaries of language. In Justice

Frankfurter’s memorable phrase, standards of review capture

a “mood,” but a “mood [that] must be respected, even though

it can only serve as a standard for judgment and not as a body

of rigid rules assuring sameness of applications.” Universal

Camera Corp. v. NLRB, 340 U.S. 474, 487 (1951). We are

burdened with a variety of “word formulas,” FTC v. Sun Oil

Co., 371 U.S. 505, 527 (1963), to describe amorphous

concepts such as evidence, error, and discretion. And we

(and Congress) have developed lists of adjectives to qualify

those concepts. Thus, we have at least six different kinds of

“evidence”: a “scintilla of evidence,” “some evidence,”

“substantial evidence,” a “preponderance of evidence,” “clear

and convincing evidence,” and “evidence beyond a

reasonable doubt.” It isn’t enough to commit an “error,” we

must know whether it was “harmless error,” “clear error,”

“plain error,” or “invited error.” When a court or agency

exercises discretion, we need to know whether it was “an

abuse of discretion” or merely “arbitrary and capricious.” 

And I won’t even go down the road of constitutional

“scrutiny.”
42 DEMER V. IBM CORP. LTD PLAN

The problem with “skepticism” is not that it is not

descriptive in some useful way, but that we don’t need

another noun modified by a raft of adjectives to capture our

mood when we review decisions under ERISA. We know

that the standard of review for ERISA plans in which some

discretion is conferred on the plan trustee is the wellestablished “abuse of discretion.” Firestone, 489 U.S. at 115;

Abatie, 458 F.3d at 962–63. That standard is hard enough to

apply without adding a layer of “skepticism” on top of it. We

are trained in the law, and we are, either by nature or by

avocation, skeptical. It’s what we do. We are skeptical of

what defendants, witnesses, and even lawyers tell us. We

question their memories, reliability, and motives. And we

have developed our own ranges of skepticism, from ordinary

eyebrow-raising skepticism to the more ambiguous

harumphing skepticism to full-blown, exasperated snorting

skepticism. In terms of expressing a mood, we are much

better off with the facial expressions and the occasional snort

than with trying to define the difference between “some

skepticism,” “special skepticism,” “enhanced skepticism,”

and “high-degree skepticism.” Iwould abandon “skepticism”

as a separate standard of review in ERISA cases and try to

deal with run-of-the-mill “abuse of discretion.”

II

These are problems of our own making. Every circuit

that has considered the use that MetLife made of outside

reviewers here has approved the practice, and they have

managed to do so without invoking the standard of

“skepticism.” The courts not only don’t apply even a

modicum of skepticism, they often reject the claim that there

is any conflict in the first place. For example, in Davis v.

Unum Life Insurance Company of America, the Seventh
DEMER V. IBM CORP. LTD PLAN 43

Circuit noted the absurdity of turning “an administrator’s

decision to seek independent expert advice [which] is

evidence of a thorough investigation” into grounds for

criticizing the administrator. 444 F.3d 569, 575–76 (7th Cir.

2006) (quotation omitted). The court explained that “[p]aying

for a legitimate and valuable service in order to evaluate a

claim thoroughly does not create a review-altering conflict.” 

Id. at 575. This was true even where the reviewers’ entire

salary came from a single administrator.6 The Fifth, Sixth,

and Tenth Circuits have adopted similar rules. See Hagen v.

Aetna Ins. Co., 808 F.3d 1022, 1029 (5th Cir. 2015) (holding

that the relationship between the administrator and reviewer

was not enough, on its own, to show bias; there must be some

evidence of specific stake in the claim); Hunt v. Metro. Life

Ins. Co., 587 F. App’x 860, 862 (6th Cir. 2014) (requiring

more than mere evidence of payments between the

administrator and reviewer); Benson v. Hartford Life & Acc.

Ins. Co., 511 F. App’x 680, 685 (10th Cir. 2013) (rejecting

claim of reviewer conflict because “[n]othing in the record

suggest[ed] a specific bias on the part of the . . . reviewing

physicians.”); Christoff v. Ohio N. Univ. Employee Ben. Plan,

495 F. App’s 710, 712 (6th Cir. 2012) (declining to find

conflict of interest because the administrator used

“independent reviewers” to deny claims).

6 The majority suggests that its approach to analyzing outside experts is

unremarkable, and points out that other circuits do not hold “that outside

experts are immune from judicial scrutiny for possible bias.” Maj. Op. at

22. We can (and should) scrutinize outside experts when there are facts

that demonstrate that their judgment is not independent. But that is not

where I and our sister circuits depart fromthe majority. Our disagreement

is with the majority’s contention that the bare fact of compensating an

outside expert for her opinion makes her biased.
44 DEMER V. IBM CORP. LTD PLAN

Where the plan administrator is operating under a

structural conflict of interest, courts have often concluded that

the conflict is mitigated by the administrator’s decision to

“reduce its inherent bias by hiring . . . independent

physicians.” Holcomb v. Unum Life Ins. Co. of Am., 578 F.3d

1187, 1193 (10th Cir. 2009); see also Fite v. Bayer Corp.,

554 F. App’x 712, 717 (10th Cir. 2014) (“Bayer took active

steps to reduce any potential bias and to promote accuracy: it

sought an independent review of Ms. Fite’s medical records

by a different psychiatrist . . . and it obtained an independent

psychiatric evaluation of Ms. Fite from a fourth psychiatrist

before reaching its final decision. We therefore give the

conflict-of-interest factor limited weight in determining

whether Bayer abused its discretion.”); Menge v. AT & T,

Inc., 595 F. App’x 811, 814 (10th Cir. 2014) (holding that an

administrator had mitigated its “inherent conflict of interest”

by “rel[ying] on the medical opinions of independent

physician advisors”); Keith v. Prudential Ins. Co. of Am.,

347 F. App’x 548, 552 (11th Cir. 2009) (holding that an

administrator’s use of three independent physician reviewers

showed the administrator was not “influenced by [its]

[structural] conflict”). Indeed, it is more likely that courts

will hold it against an administrator who doesn’t use

independent reviewers. As the First Circuit explained, it is

“difficult to fault a plan administrator for seeking expert

assistance (indeed, it probably would be easier to fault a plan

administrator for notseeking such assistance). . . . [C]ommon

sense dictates that retaining outside physicians to assist in

evaluating disability claims,withoutmore, does not constitute

a conflict of interest.” Leahy v. Raytheon Co., 315 F.3d 11,

16 (1st Cir. 2002); see also Loan v. Prudential Ins. Co. of

Am., 370 F. App’x 592, 598 (6th Cir. 2010) (“Prudential did

not seek the opinion of an outside expert who was not

operating under Prudential's conflict-of-interest. . . . 
DEMER V. IBM CORP. LTD PLAN 45

Prudential’s in-house doctor had less incentive than an

independent outside doctor to conduct a thorough and

accurate review of the record and address the arguments

Plaintiffs raised on appeal.” (emphasis added)).

III

The majority takes the remedies we offered to

administrators for cleansing conflicts—walling off its claim

processors and hiring independent reviewers—and turns it

into a sword to punish administrators with skepticism. After

today’s decision, we cannot fault administrators for their

confusion over what they can rely on in our decisions. And

we can predict with near certainty how they will respond: at

least in our circuit, administrators will stop using outside,

independent reviewers; instead, they will try to bring them in

house where, they hope, we will still respect the

administrator’s efforts to wall them off. Today’s decision

injects confusion and change for no reason. We are not likely

to end up with better decisions in ERISA claims.

Count me skeptical. I respectfully dissent from Section

II.B.