F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

D A N I E L G

. D E M E R ,

Plaintiff-Appellant

,

v.

I B M C O R

P O R A T I O N L TD P L

A N ; M E T R O P O L I T A

N L I F E I N S U R A N C E C O M P A N Y , D efendants-Appellees. No. 13-17196

D.C. No. 4:11-cv-00441-J GZ

OPI NI ON

A ppeal from the United States District Court for the District of Ariz o na J ennifer G. Z ipps, District J udg e, Presiding

Arg ued and Submitted December 11, 2015 San F rancisco, California

F iled Aug ust 26, 2016

B efore: J ay

S. B y bee and Morg an Christen, Circuit J udg es,

a nd Edward M. Chen, District J udg e. *

Opinion by

J udg e Chen; Partial Concurrence and Partial Dissent by J udg e B y bee

* T h e Ho n o rab le Ed w ard M. Ch en , Un ited States District J u d g e f o r th e No rth ern District o f

Calif o rn i a, sittin g b y

d esig n atio n

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SUMMARY * *

Em ployee Retirem ent Incom e Security Act

The panel reversed the district court’s summary judg ment i n f a v o r of the defendants in an action under the Employ ee Retirement I ncome Security Act, challeng ing the denial of a claim for long -term disability benefits.

The p anel h e l d that Metropolitan L ife I nsurance Company (“Met L i f e ” ), the ERI SA plan’s claims administrator a nd insurer, h ad 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 phy sician consultants (“I PCs”) upon whom MetL ife relied.

The panel held that MetL ife abused its discretion because it did n ot find that the plaintiff’s mental capacity w as affected in a ny way by the medications he w as taking for his phy sical pain, and improperly r ejected the credibility of his complaints of fatig ue a

nd difficulty concentrating based on the o p inions of two I PCs w h o d id not ex amine h im and did not e x plain why they rejected his credibility

. The panel held that in lig ht of the totality of t h e c i rcumstances, including the financial conflict of interest of the I PCs a nd substantial evidence of the plaintiff’s phy sical limitations, MetL ife a bused its discretion in deny ing the plaintiff’s claim for benefits.

** T h is su m m ary co n stitu

t es n o p ar t o f t h e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.D E M E R V

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The p an el remanded the case to the district court, with instructions to remand to MetL ife to re-evaluate the merits o f the plaintiff’s long -term disability claim.

J udg e B y bee d issented from Part I I .B of the majority opinion, addressing the financia l conflict of the I PCs. B ecause that section was n ot otherwis e n e cessary to the majori t y ’s opinion, he concurred in the judg ment. J udg e B y bee w rote that MetL ife should n ot b e penaliz ed for following t he court’s prior case law instructing ERI SA p lan administrat o r s to mitig ate structural conflicts of interest b y walling off their clai m s a dministrators from their financial offices a nd seeking medical evaluations from outside, independent phy sicians.

COUNSEL

Michelle L

. Roberts ( arg ued), R o berts B artolic L L P, Alameda, California; B a rry Kirschner (arg

ued), W aterfall, Economidis, Caldwell, Hanshaw & Villamana, P.C., Tucson, Ariz ona; for Plaintiff-Appellant.

Michelle McAloon Co n s t andse (arg ued), Metropolitan L ife I nsurance Company
, I rvin e , California; J ames K. Mackie, Og letree, Deakins, Nash, Smoa k & Stewart, P.C., Tucson, Ariz ona, for Defendants-Appellees.D E M E R V

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OP INION

CHEN, District J udg e:

Plaintiff-Appellant Daniel G. Demer filed suit, p ursu a nt to the Emp l o y ee Retirement I ncome Security Act of 1974 (“ERI SA”), ag ainst Defendants-Appellees I B M Corporation L TD Plan ( t he “Plan”) a nd Metropolitan L ife I nsurance Company (“MetL ife”). Mr. Demer claimed that MetL ife, the claim a dmini s t r at or and insurer for the Plan, improperly denied h i s claim for long -term disability (“L T D”) benefits. See 29 U .S.C. § 11 3 2 (a)(1)(B ) (providing that “[ a] civil action may be broug ht

. . . by a participant or beneficiary

. . . to r ecover benefits due to him under the terms of his p lan, to enforce his rig hts under the terms o f the plan, or to clarify his rig hts to futu r e b e nefits under the terms of the plan”). The district court denied Mr. Demer’s motion for summary judg ment, g ranted D efendants’ cross-m o t i on, a nd entered judg ment in favor of Defendants.

W e r e verse the district court’s en t r y o f judg ment in De f e n d an ts’ favor a

nd remand to the district court with instructions to remand this case to MetL ife to re-evaluate the merits of Mr. Demer’s L TD claim.

I.

A. Mr. Demer’s Claim for LTD Benefits

Mr

. D em er was an employ ee of I B M Corporation and a participant in the Plan. MetL ife is the claim administrator for and insurer of the Plan. The parties ag ree that the Plan g ives MetL ife, as the administrator, discretionary a uthori t y to interpret the Plan and determine benefits elig ibility . W h ere,D E M E R V

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as here, an ERI SA plan confers discretionary authority on the plan administrator as a matter of contractual ag reement, then the sta n d ar d o f review is abuse of discretion rather than de

novo. See Tapley v. Locals 3 0 2 & 612 of the Int’l Union of Operating Eng’rs-Employers Constr. Indus. Ret. Plan

, 728 F .3d 1134, 1139 (9th Cir. 2013) (“W here an ERI SA Plan
g rants ‘discretionary a

uthority to determine el i gi b ility for benefits or to construe the terms o f the p l a n , ’ ‘a p lan administrator’s interpretation of a p lan’ is reviewed for abuse of discretion. W e r eview the district court’s applicati o n o f this st a n dard de novo .”); A batie v. Alta Health & Life Ins. Co.
, 458 F .3d 955, 963 (9th Cir. 2006) (en banc) (“[ I ] f the plan does co n fer discretionary a uthority as a matter o f contractual a g reement, then the standard of review shifts [ from de novo] to abuse of discretion.”) (emphasis omitted).

The Plan provides that a p articipant is disabled a nd elig ible for L TD benefits if,

during the e limination period and the first 12
mont h s after y ou complete the elimination period, y ou cannot perform the important duties of y our r e g u l ar job [ i.e.
, y our own

occup a tion] with I B M because o f a sickness

or i njury

. After ex piration of that 12 month perio d

, disabled means that, because of a sickness or i n

j ury , y ou cannot perform the important duties of any other g ain f ul occupation for which y ou are reasonably fit by y our education, training

or ex perience.

“[ G] ainful occupation” means “occupations [ for which] y ou

a re reasonably qualified based o n y our education, training

, ex p erie n c e , a

nd f unctional a

bility ” a nd further, in Mr.D E M E R V

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Demer’s case, “provides g ainf u l wag es of $4,240.48 per month or $24.46 hourl y , ” i

. e. , the e quivalent of a y e arly salary of approx imately

$50,000.

Mr. Demer stopped working at I B M on J anuary 9, 2009, because of a disability

. At the time, he was a L ead I nternal Auditor at I B M. He beg an r e c e i ving short term d isability (“STD”) benefits. I n March 2009, he filed a claim for L TD benefits p ursuant to the Plan (because his STD benefits were due to ex pire soon). I n his application for L TD benefits, Mr. Demer stated: “I am unable to d o my job duties d ue to severe recurrent depression and spinal stenosis, chronic headaches.” Sy mptoms included “chronic headaches, chronic b ack a nd neck pain, my alg ia, severe depression, [ and] sciatica.”

On J u ly 2 8, 2009, MetL ife approved Mr. Demer’s claim for L TD benefits under the “own occupatio n ” test for disability articulated in the Plan. MetL ife noted that the test for disability w ould eventually switch to the “ any o ccupation”
test on J uly 11, 2010. MetL ife further n o t ed that it was limiting Mr. Demer’s benefits to a p eriod of t w en ty -four months because his primary d iag nosis was a m e n t al o r nervous disorder.

Subsequently

, in November 2009, MetL ife sent a letter to Mr. Demer, reminding h im that, for his benefits to continue (bey ond J uly 11, 2010), h e woul d h a ve to be disabled under the “any occupation” test for disability

.

Mr. D emer thereafter submitted statements and medical records from numerous treating phy sicians, including but not limited to his primary c a re doctor, Dr. Stephen Moore; a treating neurolog ist, D r. David W eidman; and a treating p ain
manag ement phy sician, Dr. Robert Osborne. These d octorsD E M E R V

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discussed not only mental impairments suffered b y M r. Demer but also phy sical impairments. F or ex ample:

• I n a statement from F ebruary 2010, Dr. W eidman referred
t o “c h r o n i c o s t e o a r t h r i t i c p ai n a n d d e p r e s s i o n interact[ ing ] with each other.” Dr. W eidman also i ndicated that Mr. Demer’s phy sical condition h a d deteriorated since April 2009 – e.g. , in Apr i l 2 0 0 9
, Dr. W e idman had conclud ed that Mr. Demer could intermittently sit for 4–5 hours, intermittently stand for 4–5 hours, and o ccasionally lift 1 1–20 pounds; but, in F ebruary 2010, Dr. W eidman determined that Mr. D emer

c o u l d only intermittently stand for 1–2 hours and ne v e r lift 11–20 pounds.

• I n a medical record dated February 2010, Dr. Osborne referred to severe cervical and lumbosacral spine disease with radiculopathy and chronic depression. N otably

, Dr. Osborne found that Mr. Demer had severe limitations as

a result of his p h y s ical impairments – e.g. , a ble to intermitt e n t ly sit for 1 h our, intermittently stand for 0–1 hour, a nd intermittently walk for 0–1 hour and never able to lift up to 10 pounds.

• D r. Moore, Mr. D emer’s primary care phy sician, had a similar, albeit slig htly more positive, view with respect to Mr. Demer’s phy sical limitations, opining

, e.g. , that Mr. Demer could continuously sit for 1 hour and continuously stand and walk for 0–1 h our and could occasionally lift 21–50 pounds.

On O ctober 1, 2010, MetL ife denied Mr. Demer’s claim for L TD b enefits u nder the “any occupation” test for disability

. I n its denial, MetL ife r elied in larg e part on theD E M E R V

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opinion of an independent phy sician consultant (“I PC”), Dr. Ely ssa Del Valle, int e r n a l medicine, w ho conducted only a paper review of Mr. Demer’s file – i.e.
, she did not personally perform a phy sical or mental ex amination of Mr. Demer. Dr. Del Valle concluded that “[ t] he medical information d o e s support functional limitations

. . . due to severe d eg enerative disc d isease, deg enerative vertebral disease with numerous levels o f the cervical, thoracic and lumba r s p ine associated with neural foraminal narrowing as we l l a s spinal stenosis.” She also stated that “[ t] he condition is associated with chronic pain necessitating narcotic analg e sics d espite trig g er point injections, cervical and lumbar epidural injections a nd phy sical therapy .” Bu t Dr. Del Valle disag r eed with the phy sical capacity assessments of Dr. Moore and Dr. Osborne because they

“would indicate that [ Mr. Demer] is bedridden fo r more than 20 hours a day .” Dr. Del Valle also indicated that she ag reed w ith an older assessment m a de by Dr. W e idman (from April 2009), 1 n oting tha t , a l t h o ug h it was

more than a y ear o ld, “there a re no clinical data/find ing s to indicate any chang e in his overall condition” (opining

, inter alia

, that Mr. Demer could walk 3–4 hours intermittently a nd th a t he “should avoid any prolong ed periods o f sitting

, standing or walking more than 30 minutes”). I n its decision, MetL ife determined that, e ven with the limitations identified by Dr. Del Valle, Mr. Demer “should be able t o p e r f o rm at the sedentary to lig h t level of phy sical ex ertion as defined b y t he U.S. Department o f L abor” and therefore denie d M r. Demer L TD benefits.

1 A s i n d icated ab o v e, Dr. W eid m an su b m itted a m o re recen t statem en t f ro m Feb ru ary 20 1 0
, in d icatin g t h at Mr. Dem er’ s co n d itio n h ad w o rsen ed af ter A p ril 2 0 0 9.D E M E R V

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B

. The Appeal

I n March 2011, Mr. D emer a ppealed MetL ife’s denial o f L TD benefits. I n his appeal, Mr. Demer asserted that he “has

severe deg enerative disc disease (‘DDD’) of the cervical a nd lumbar spine,” for w hich there was “ f urther prog ression [ as] reflected in the cervical MRI performed J une 21, 2010.” He also claimed that he “suffers radiculopathy ,” “has a history o f

s i g n i f i c a n t h e a d a c h e s , ” a n d h a s “ o n g o i n g n e r v e compression.” F inally

, he pointed out that he “takes powerful narcotic and other medications” w hich “have known side effects c ausing fatig u e a n d reduced ability to concentrate.” A s n oted above, MetL ife’s own I PC, Dr. Del Valle, acknowledg ed that Mr. Demer had chronic pain that necessitated narcotic analg esics.

I n support of his appeal, Mr. Demer provided, e. g. , a d d i tional information from D r. O sborne. Dr. Osborne stated, inter alia , that

the overall picture is one of a g entleman with

severe spinal det e rioration at a ll components of the spine as well a s neurophy siolog ical evidence of a delay

ed conduction (spine cord problem) of the b ilateral Posterior Tibial Nerves to the cerebral c o r t e x a s well as a separate focal left L 5 n erv e r oot lesion ( d i a g n o s t i c S S E P a n d d i a g n o s t i c L 5 radiculopathy

).

Dr. Osborne f

urther stated that “ [ t] he overall treatment p lan has included chronic n arcotic medication in attempt to control his overall pain” which has side effects that “limit the ability
t o complete productive mental functions.” Mr. Demer a l s oD E M E R V

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provided third-party witness statements from his brother (F rank Demer) and a friend (Shirley Piel) an d a personal
statement in support o f his appeal. B oth Ms. Piel’s statement and Mr. Demer’s personal statement addressed, inter alia

, the impact Mr. Demer’s medications had o n his mental ability to function.

MetL ife denied the appeal, this t i m e r ely ing on the opinions of t

wo different I PCs, namely

, Dr. Marcus G oldman, B oard Certif

i e d i n psy chiatry

, a

nd Dr. Dennis S. Gordan, B oard Certified in phy sical medicine and rehabilitation. L ike Dr. Del Valle, Dr. Goldman and Dr. Gordan conducted only
paper r eviews of Mr. Demer’s file without any personal

ex a mination.

W i th reg ard to mental f unctional limitations, Dr. Goldman stated that, “[ g ] iven the lack of recent data and the paucity of any compelling objective finding s, as wel l a s the lack o f serial mental status ex aminations, this reviewer would be unable to establish the presence of a n i m p airing mental condition.”

W ith r eg ard to p hy sical functional l i m i t ations, D r. Gordan acknowledg ed that there was “documented anatomical cervical spinal stenosis, deg enerative disc d isease, a nd deg enerative facet disease of the spine, a s well a s deg enerative arthritis of the left hip.” He disag reed, however, that Mr. Demer suffered from a radiculopathy ba s e d o n his interpretatio n o f the medical evidence. D r. Gordan also indicated that D r

. O s borne’s impressions may h ave been colored by Mr. Deme r ’ s “dire” account of his history

, “a

r e versal of his prior p ositive a ttitude

. . . about t h e

e f fectiveness of the previous interventional procedures a nd medications.” I n addition, Dr. Gordan relay ed a conversationD E M E R V

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he had with Dr. Moore ( Mr. D emer’s primary care phy sician) in which Dr. Moore said “he thoug h t it was likely that [ Mr. Demer] could do a very sedentary job, but

. . . f elt that he would have to see him a g ain t o s a y that definitively .” Dr. G o r d an ultimately concluded that Mr. Demer “likely h a d a modicum of discomfort” from, int e r a lia

, “neck a nd back pain related to spi nal deg eneration, and referred pain down the limbs from those deg enerative chang es,” but Mr. D emer retained the p hy sical functional c apacity to, e.g. , “sit[ ] f or an hour at a time

. . . a

n d up to 7 hours a day

, stand[ ] and walk[ ] for 15 minu tes at a time a n d up to 2 hours a day

, lift[ ] up to 10 pounds frequently , 20 pounds occasionally

. ”

I n addition to the above, both Dr. Goldman and Dr. Gordan a ddressed the specific issue raised b y Mr. Demer in his appeal that the medications prescribed for his p hy sical condition affected his ability to mentally function. A ccording
to Dr. G oldman, “there clearly are n o o bjective or other compelling or convincing data to establish functional impairment as a result of Mr. Demer’s psy chotropic

m e dications.” Dr. Gordan stated: “ There is no speci fi c information about medications taken or effects f r o m t h em during the period in question. Althoug h Dr. Osborne asserted that the claimant’s needed narcotic medication c a used
cog nitive side effects, there was never any evidence of that.”

I n deny ing Mr. Demer’s appeal, MetL ife appears to have accepted Dr. G ordan’s phy sical c a pacit y assessment. MetL ife also appears not to have plac e d a n y mental limitations on Mr. Demer as a result of his medications. B ased on the p hy sical capacity assessment and lack o f any cog nitive limitation, and an occupation as s e s s m ent conducted by a v ocational rehabilitation consultant based thereon, MetL ife concluded that Mr. Demer c ould work in c ertainD E M E R V

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sedentary occupat i o n s , s u c h a s Project D irector and Computer Security Coordinator. 2

C. District Court Proceedings

F ollowing MetL ife’s denial o f L TD benefits, Mr. D emer initiated this lawsuit. I n reviewing MetL ife’s denial o f benefits, the d istrict court applied the a b u s e-of-discretion standard and rejected Mr. Demer’s contention that the abuseof-discretion review must b e t empered with skepticism because of a c onflict of interest o n the part of MetL ife. See Demer v. IBM Corp.
, 975 F

. Supp. 2d 1059, 10 76–77 (D. Ariz . 2013). The district court found that

2 A f ter MetL if

e d en i ed h is ap p eal, Mr. Dem er sen t a letter to MetL if e, claim in g t h at th ere w as ad d itio n al in f o rm atio n f

ro m Dr. W eid m an an d Dr. Mo o r e t h a t h ad b een sen t to MetL if e p rio r t o th e d ecisio n o n ap p eal b u t th at h ad n o t b een ad dressed in th e d ecisio n o n ap p e a l

. Mr. Dem er attach ed th at in f

o rm atio n to h is letter. T h at i n f o rm at i o n i n c l u d ed

, in ter

a lia , a treatm en t n o te f

ro m Dr. W eid m an

in d icatin g th at Mr. Dem er w as

o n a h ig h e r a m o u n t o f o p iate an alg esics w h ich seem ed to cau se a slig h t ch an g e i n h i s sp eech an d a treatm en t n o te f ro m Dr. Mo o re statin g th at Mr. Dem er w as tak i n g o p iat e s w h ich af f ected h is co g n itio n an d ex ecu tiv e f u n ctio n in g , in clu d in g m em o ry

. T h e do cu m en tatio n w a s r e v iew ed b y a MetL if e ap p eals n

u rs e c o n su ltan t. “ T h e n u rse co n su ltan t o p in ed th at

w h ile so m e cu rren t clin i cal ex am ch a n g e s w ere n o ted

, n o ad d itio n al clin ical f i n d in g s w ere su

bm itted relatin g to t

h e ap p eal p erio d in

q u estio n

. . . .” MetL if

e also n o t ed th at th e P lan h ad o n ly “ o n e lev el o f ap p eal” an d th at ap p eal h ad alread y

b een d en ied o n

May 6 , 2 0 1 1

.

A t th e trial lev el, th e d istrict co u rt ref u sed to co n si d e r M r

. D em er’ s p o st- ap peal ev id en ce. Mr. D em er n o w arg u es th at th is ref u sal w as

erro n eo u s. F or p u rp o ses o f th is ap p eal, w e n eed n o t d ecid e th e i ssu e of

w h e t h e r th e p o s t- ap p eal ev id en ce sh o u ld h av e b een co n sid ered

. Ev en

w ith o u t th e p o s t-a p peal ev id en ce, Mr. Dem er is en titled to a rem an d

, as d iscu ssed b elo w

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the record taken as a whole e s tablishes that MetL ife reasonably relied on its I PCs’ reports. Every doctor ag reed that Pl a intiff suffered from a combination of d epression and chronic pai n sy ndrome, but every doctor also had a different opinion as to Plaintiff’ s future functionality

. MetL ife was required to choose betw e en diverg ent opinions. MetL ife’s d e c i s ion to rely on its I PCs’ f inding s was reasonable.

Id. at 1083.

II.

W e first address w hether MetL ife had a con f l i ct o f i nterest such that our review should be tempered b y skepticism. See Harlick v. Blue S hield of California

, 686 F .3d 699, 707 (9th Cir. 2012). A conflict o f interest is a factor in the abuse-of-discretion review, the w eig ht of which depends o n the severity of the conflict. See id. ; see also Renfro v. F

unky Door Long Term Disability Plan

, 686 F .3d 1044, 1048 ( 9th Cir. 2012) (no t i n g that, “if the plan g ives discretion, but the administrator operates under a conflict o f interest, th e n ‘t h e conflict of interest must be weig hed a s a factor in determining whether there is an a buse o f discret i o n ’ ” ) (quoting Met. Life Ins. Co. v. Glenn

, 554 U.S. 105, 1 10–11 (2008)); Stephan v

. U n u m Life Ins. Co. of America
, 6 97 F .3d 917, 9 29 (9th Cir. 2011) ( noting that deg ree of skepticism in determining whether admin istrator abused its discretion varies based o n ex tent of conflict o f interest); Montour v. Hartford Life & Acc. Ins. Co.
, 588 F .3d 623, 630–31 (9th Cir. 2009) (stating that the ex tent o f aD E M E R V

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conflict o f interest affects its weig ht in the overall analy sis o f whether an abuse of discretion occurred). 3

I n the instant case, the evidence of a conflict of interest on which Mr. Demer r elies consists of the following : ( 1) MetL ife is both the claim administrator for the Plan and its insurer a nd (2) at least two o f t he I PCs that MetL ife hired to r e view the medical record (Dr. De l Valle a nd Dr. Gordan) have performed a sig nificant numb er o f reviews for MetL ife a nd have received sig

nificant compensation for their services.

“‘W e review d e novo a district c o urt’s choice a nd application of the standard of r eview to decisions b y f iduciaries in ERI SA cases.’” P richard v. Metro. Life In s

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

A. Structural Conflict of Interest

I n its opinion, the d istrict court acknowledg ed that MetL ife has a structural conflict of interest because MetL ife both evaluates claims made ag a inst the Plan a nd funds claims.

3 T h e d issen t is critical o f ou r rev iew f o r ab u se o f d iscretio n w i th sk ep ticism b eca us e , in ter a lia

, th e term sk ep ticism is “ n o t d escrip tiv e in

so m e u s ef

u l w ay ,” an d ev en less so w h en “ m o d if

ied b y a raf

t of ad j ectiv es.” Ho w ev er, th e f ram ew o rk e m

p lo y in g ab u se o f d iscretio n

rev iew s u b j ect t o so m e d eg ree o f sk ep ticism (w h ere w arran ted ) i s w ell estab lish ed u n d er b o th Glen n an d Nin th Circu it law

. S ee Glen n , 5 5 4 U .S.
at 1 1 7 (n o tin g th at req u irin g co n sid eratio n o f a c o n fl i c t o f in terest as a f acto r “ is n o stran g er to th e j u d i cial sy stem ” as “ [n ]o t o n l y tru st law

, b u t also ad m in istrativ e law

, can ask j u d g es to d eterm in e law f u ln ess b y tak in g

acco u n t o f sev eral d if

f eren t , o f ten case- sp ecif

i c, f acto rs, reach in g a resu l t b y w eig h in g all to g eth er”); Ab a tie
, 4 58 F.3 d at 9 6 9 (n o tin g th at “ ab u se of d i s c r e t i o n rev iew

, w ith an y ‘ co n f lict

. . . w eig h ed as a f acto r, ’ i s in d ef i n ite” b u t “ trial co u

rts are f am iliar w ith th e p ro cess o f w eig h in g a

co n f lict o f in terest”).D E M E R V

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See Montour
, 588 F

. 3 d a t 630 (noting that, when “the same entity that funds an ERI SA benefits plan also evaluates claims,

. . . the plan administrator fa c es a structural conflict of interest: since it is also the insurer, benefits are paid o ut o f the administrator’s own p o c ket, so by d eny ing benefits, the administrator retains money for itself”). However, the district
court applied no skepticis m as a result of the structural confli c t b ecause “ MetL ife has taken a ffirmative steps to reduce potential bias and promote accurate claim determinations.” Demer
, 975 F

. Supp. 2d at 1076 ; s e e also MetLife

, 554 U.S. at 117 (noting that a conflict of interest “should prove less important (perhaps to the v anishing point) where the administrat o r has taken active steps to reduce potential bias an d t o promote accuracy , for e x ample, b y walling o ff c laims administrators from thos e interested in firm finances, or by imposing m a n ag ement checks that penaliz e inaccurate decisionmaking irrespective of whom the inaccuracy

benefits”).

Mr. Demer objects to the district court ’ s r eliance on the declarations from two e mploy ees, Greg o ry Hafner and L aura Sullivan, who d escribe the affirmative steps taken by MetL ife
to reduce its structural conflict, on the g round that neither Mr. Hafner nor Ms. Sullivan was disclosed as a w it n e s s in MetL ife’s initial d isclosures as required by F ederal Rule o f Civil Procedure 26. MetL ife did not e x plain its failure to identify witnesses in its mandatory initial disclosures; on the other hand, Mr. Demer did n ot ex plain his failure to take a 30(b)(6) deposition on the structural conflict issue. See James v. AT& T W

est Disability Benefits Program
, 41 F

. Supp. 3d 8 49, 871 (N.D. Cal. 2014) (finding def e n d an t’s failure to disclose c onflict-of-interest declarations harmless because “plaintiff had a mple time to seek discovery , but did not do so – [ thus] she cannot credibly claim prejudice.”).D E M E R V

. I B M C O R P

. L T D P L

A N 16

W e need not resolve this issue because, even assumi ng there is no residual structural c onflict ( i.e.
, b e cause o f affirmative steps take n b y MetL ife to insulate its c laims department), some skept i c ism is warranted here because o f the f inancial conflict of the I PCs u pon whom Met L ife relied. 4

B

. Financial Conflict of

Independent P h

ysician Consultants

Mr. Demer claims M e t L ife o perated under a conflict o f interest because two of the I PCs that MetL ife hired to r eview the medical record, Dr. Del Valle and D r. Gordan, have done

a substantial numb e r of reviews for Metlife and received sig nificant compensation from MetL ife f o r their services. F o r 2009 and 2 010, Dr. Del Valle performed more than 250 reviews/addendums each y ear and ea r n e d m o r e than $125,000 each y ear; for the same time period

, D r

. Gordan performed between 200–300 reviews/addendums e a ch y ear and earned

more than $175,000 each y ear. B ased on the number o f reviews a nd the amount o f compensation, Mr. Demer asserts that the opinions of Dr. Del Valle and Dr. Gordan should be questioned b ecause the doctors had fi nancial incentives to render o pinions favorable to MetL ife. Mr. Demer f u rther
arg ues that, because MetL ife relied on the doctors’ opinions

4 T he d istrict co u rt d id n o t err in co n sid erin g th e S o cial Secu ri t y A d m i n i s tratio n ’ s (“ SSA ”) d en ial o f Mr. Dem er’ s claim f o r disab ility b en ef its as ad d itio n al ev i d en ce th at MetL i f e d i d n o t h av e a c o n fl i c t of in terest. S

ee Demer
, 9 7 5 F. Su

p p

. 2 d at 1 07 7 (statin g th at, “ [a]lth o u g h n o t

a d ecisio n b y an ad m in istrativ e law j u d g e, th e SSA ’ s f in d in g s su pp o rt th e

o b j ectiv ity o f MetL if

e’ s rev iew o f th e m ed i cal ev id en ce”). Co n trary to

w h at Mr. De m e r s u g g ests, th e d i strict co u rt d id n o t rely o n th e SSA d ecisio n to su

p p o rt MetL if

e’ s ru lin g o n th e m erits. S ee Ha rlick

, 68 6 F.3 d at 7 1 9

– 2 0 (statin g th at “ [t]h e g en eral ru le

. . is th at a co u rt w ill n o t allo w

an ERISA p lan ad m in istrato r to assert a reaso n f o r d en ial of b en ef

its th at it h ad n o t g iv en d u rin g th e ad m in istrativ e p ro cess”).D E M E R V

. I B M C O R P

. L T D P L

A N 17

in deny ing him relief, the doctors’ c o n f l i ct is, in effect, imparted to MetL ife.

As a preliminary matter, we note that Mr. Demer’s
arg ument here is compara b l e to conventional approaches to discrediting the testimo n y o f retained ex perts whose objectivity may be c h a l l eng ed based on, e.g. , the number o f times he o r s h e has served as an ex pert in support of a party and the amount of c o mpensation received. This alleg ed conflict o f interest i s distinct from the purported structural conflict of interest discussed above. The la c k o f any structural conflict of interest on the p art of MetL ife does not preclude MetL ife from having a conflict of interest based on

an I PC’s f

inancial inter e s t s ; the f actors that raise the possibility of a stru c t u r a l conflict relate to the incentives applicable to MetL ife’s cl a ims department

, whereas the factors that raise the possibility of a financial conflict relate
to the incentives applicable to MetL ife’s ret a i n ed experts

. Even if MetL ife operated with no structural conflict, reliance

on the reports of its retained ex perts who have a financial incentive to make finding s favorable to MetL ife may warrant skepticism.

W e further take note that it is Mr. Demer’s burden, as the party c laimi n g a conflict, to produce e vidence of a financial conflict sufficient to warrant a deg ree of skepticism. Placing the burden on Mr. Demer, as an i n i t i al matter, makes sense g iven that he is asking for a d e p a r t u re from the otherwise applicable standard o f review for a buse of discretion. Once such evidence is p r oduced, however, the burden then shifts toD E M E R V

. I B M C O R P

. L T D P L

A N 18

MetL ife to produce evidence that there i s n o conflict. 5 Cf. Muniz v. Amec Constr. Mgmt.
, 623 F .3d 1290, 1295 (9th Cir. 2010) (in discussing a structural confl i c t of interest, stating

, “when a claimant produces evidence that a p lan administrator ’ s s elf-interest c aused a breach o f the administrator' s fiduciary oblig a tions to the claimant, a rebuttable presumption arises in favor of the claimant and the plan bears the b urden of p roving 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

, 8 2 0 F .3d 1060, 1065–66 (9th Cir. 2 016) ( indicating that a p laintiff fairly b ears the burden of proving entitlement to ERI SA benefits where he or she has better or a t least equal access to t he evidence n eeded to prove entitlement; in certain c ase s , however, the defending entity solely controls the information that determines entitlement).

W e conclude that Mr. Demer has satisfied h i s burden o f production. Mr. Demer has offered e vi d e n c e that the I PCs have earned a substantial amount of money f rom MetL ife ($125,000–$175,00 0 e ach y ear) a nd have performed a substantial number of review s for the company as w ell (200–300 reviews/addendums each y ear). The mag nitudes o f

5 In so ru l in g , w e ack

n o w l ed g e th e S u

p rem e Co u rt’ s statem en t in Glen n th at th at it did n o t “ b eliev e it n ecessary o r d esirab le f o r co u rts to create sp ecial b u rd e n -o f

- p ro o f ru l es, o r o th er sp ecial pro ced u ral o r ev i den tiary

ru les, f ocu sed n arro w l y u

p o n th e ev alu ato r/p ay o r co n f lict.” Glen n , 5 5 4 U.S. at 1 16

. Ho w ev er, w e d o n o t read t h is lan g u ag e as b arrin g th e b u rd en ap pro ach articu l ated ab ov e. Glen n ’ s s tatem en t w as d i rected at th e issu e, o n ce a co n f

lict is id en tif

i ed

, “ ‘ h o w ’ th e co n f

lict

. . . sh o u ld ‘ b e tak en in to acco u

n t o n j u d icial rev iew o f a d iscretio n ary b en ef it d eterm in atio n .’ ” Id

. at 1 15 (citatio n o m itted ). T h e Su p rem e Co u rt d id n o t co n si d e r an d h en ce d id n ot f

o rec l o s e a n articu latio n o f th e b u rd en s i n d eterm in in g wh eth er th ere i s a co g n izab le co n f

lict in th e f irst p lace.D E M E R V

. I B M C O R P

. L T D P L

A N 19

these numbers, particularly when combined, raise a fair inference that there is a financial c o nflict which i n fluenced the I PCs’ assessments, and thus such conflict should be

c o n sidered a s a factor in reviewing MetL ife’s decision f o r

a b u s e of discretion. See M ontour , 588 F .3d at 634 (“ h o w frequently [ the insurance company ] contracts with th e f i l e reviewers it employ ed in this case” is relevant to ascertaining conflict); Nolan v. Heald College

, 5 51 F .3d 1148, 1152 & n.3 (9th Cir. 2 009) (evidence that the outside medical reviewers “received substantial work an d monies from MetL ife in the three-to-four y ears precedi n g and including [ the claimant’s] benefits denial” could be a f actor tempering abuse o f discretion review). Here, the e vidence of the I PCs’ financial conflict of interest, in the absence of contrary evidence from MetL ife, warrants some skep t i cism in reviewing MetL ife’s decision.

To be sure, the lack of more p owerful evidence that, e.g. , the I PCs had “‘some specific stake in t h e o u t come’” of Mr. Demer’s case, McDonald v. Hartford Life Group I n s

. C o. , 361 F ed. Appx

. 599, 6 10 (5th Cir. 2 010), 6 or of statistics

6 S ee a l so Da vis v. Un u m Life In s

. Co

. o f Am.
, 4 4 4 F.3 d 5 6 9
, 5 7 5

– 7 6 ( 7 th Cir. 20 0 6 ) (rej ectin g co n ten tio n th at “ i n

- h o u s e d o cto rs h a v e a n in h eren t co n f

lict in ev ery case”; n o tin g lack

o f ev id en ce o f

“ an y sp ecif ic in cen tiv e [f

o r th e in

- h o u se d o cto rs] to d erail [a] claim ” – e.g

. , g iv in g th e d o cto rs “ s o m e sp ecif

ic stak e in th e o u tco m e o f [a] case, su ch as p ay in g th e d o cto rs m o re if [th e] claim w ere d en ied ”). W h ile su ch a stak e w o u ld b e stro n g ev id e n ce o f co n f

lict, as a p ractical m atter, th is seem s a h ig h ly

u n lik ely scen ario

. It is h ard to im ag in e th at a plan ad m i n i st r a t o r w ou ld

ex p licitly tie co m

p en satio n to resu lts, as clearly su ch a p ractice w o u ld b e

v iew ed d isap p ro v in g ly

b y co u rts. T o th e ex ten t

th e d issen t su g g ests th at

n o f in an cial co n f

lict o f in terest m ay b e f

o u n d ab sen t ev id en ce th at an IP C h a s a sp ecif

ic stak e in th e o u tco m e o f th e case, su ch a ru le, if ad o p ted

, w o u ld ren d er rev iew f

o r f in an cial co n f

lict o f i n terest to o th less. N o th in g

w e said in Mo n to u r su g g ests su ch a categ o rical ru le.D E M E R V

. I B M C O R P

. L T D P L

A N 20

showing a parsimonious pattern of assessments disfavorable
to claimants

, s ee Montour
, 588 F .3d a t 634, 7 minimiz es the “weig ht [ assig ned] to the conflict of interest as a factor in the overall analy sis of whether an abuse of discretion occurred.” Id. at 631. B ut that lack of s u c h s p ecific evidence does not

m e a n that there is no conflict of interest. Here, w e h a v e evidence o f not only the f

requency of reviews for MetL ife but also the sig nificant dollar amounts earned by the reviewers.

F urthermore, tha t Mr. D emer could have, but did not, develop a s trong er record of the I PCs’ conflict of interest does not mean that there is no conflict. B ecause Mr. Demer did provide evidence o f a financial conflict w a rranting an i n ference of b ias, the burden shifted to MetL ife to count e r that evidence. As we noted in M ontour , b oth the plaintiff a nd the administrator ran a risk in not developing evidence of bias

or lack thereof. See id. a t 6 34 ( b e fore addressing plaintiff’s failure to submit ex tr insic evidence of bias such as statistics of rate of claims denied or frequency of file r e v i ews, court took note o f administrator’s “failure t o p r esent e x trinsic evidence of a

ny effort o n its part to ‘a s s u r e a c curate c laims assessment’”). Here, MetL ife could have maintained records of its reviewers’ f

inding s on claims to show their neutrality in practice, 8 but it d i d n o t. W h ile MetL ife therefore missed an

7 S ee, e.g

. , Ca

pla n v. CNA Fin

. Co rp

. , 5 4 4 F. Su p p . 2 d 9 8 4, 9 92 (N.D. Cal. 2 0 0 8) (n o tin g th at a do cto r “ sto o d to b en ef it f in a n c i a l l y f

ro m th e rep eat b u sin ess th at m ig h t co m e f ro m p ro v id in g [d ef

en d an t] w ith rep o rts th at w ere to its lik in g ”; a d d i n g t h at “ [t]h e h isto ry o f [th e d o cto r’ s]

co n clu sio n s p ro v id es ev id en ce o f th is co n f lict”).

8 Fo r ex am

p le, MetL if

e co u ld h av e p ro v id ed b u

t d id n o t p ro f

f er ev id en ce th at t h e IP Cs b ein g ch allen g ed d o n o t i n f act h av e a p arsim o n i o u s p attern

o f assessm e n t u n f

av orab le t o claim an ts. No r d id MetL i f e su b m i t

ev id en ce, e.g

. , th at th e f ees p aid to th e I P C s c o n s titu te o n ly a sm allD E M E R V

. I B M C O R P

. L T D P L

A N 21

opportunity

to neg a te 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 MetL ife’s decision. Thus, we find there is neither

a lack o f conflict of interest (justify i n g no skepticism) nor a substantial conflict of interest (warranting enhanced skepticism). I nstead, the financial conflict

– modest but

ex tant – w arrants some, but n o t s ubstantial, weig ht under Abatie and Montour

.

The dissent arg u es that MetL ife “listened very carefully ”
to our instruction in Abatie th a t p l a n administrators may reduce conflic t s b y “ r e fer[ ring ] medical evaluations to outside

e x p e rts, such as doctors, who a lso have no interest in fi r m finances,” and that for its trouble we g ive MetL ife additional scrutiny

. B u t the dissent fails to a cknowledg e tha t A batie considered an administrator’s us e of “ truly independent medical ex aminers or a neutral, independent review process.” Abatie

, 458 F .3d at 969 & n .7 (emphasis added). The dissent mistakenly e quates outside ex perts with independent ex p erts, but the former does not g uarantee the latter. W e d o not quarrel w ith the notion that using outside medical evaluators

can be an important step toward the g o al of obtaining neutral assessments, but it is not hard to imag ine an outside medical

ex a miner who does not eng ag e in a n eutral, independent review, such as where t h e e x aminer receives hundreds o f thousands of dollars from a sing le source and per fo r m s hundreds of reviews for that source every y ear.

De spite the dissent’s sug g e stion that the majority disapproves of ou t s i d e reviewers, we imply no such

f ractio n o f t

h eir in co m e or th at th e h ig h n u m b er o f rev iew s co n d u cted b y

an IP C in a p articu lar y ear w as an ab erratio n

.D E M E R V

. I B M C O R P

. L T D P L

A N 22

disapproval; w e simp ly apply the unremarkable proposition that the num b e r of ex aminations referred and the siz e of the professional fees p a i d to a reviewer may compromise the neutrality of an ex pert. See Montour
, 588 F .3d a t 634; Nolan

, 551 F .3d a t 1152, n.3. T h e ex tra-circuit decisions the dissent cites do not stand f

or the proposition that outside e x perts a re immune from judicia l scrutiny for possible bias. W hile the formulation in determining whether a financial conflict o f in t e r e s t ex ists may be stated in various way s, we think it is clear under the facts in t h i s case where MetL ife p aid substantial monies for a hig h volume o f repeat w o r k to the I PCs involved and there is no evidence rebutting an inference of bias, there is sufficient evidence o f a financial conflict to temper abuse of discretion review. 9

C. Evidence of Mental Limitations

H av ing concluded that the abuse-of-discretion review should be tempered with some skepticism, w e now turn to Mr. Demer’s contention that MetL ife abused its discretion in deny ing his claim for benefits becaus e i t did not find his mental functional capacity was affected i n any way by the

9 Co n trary to w

h at th e d issen t seem s to su g g est, b ias o f an IP C m ay

b e i n fe rred ev en w

h ere th e IP C is n ot en t irely “ f in an cially d ep en d en t” o n in co m e r eceiv ed f

ro m an ad m i n istrato r. Ob tain in g ev en , e.g

. , 3 0 % of

o n e’ s in co m e f

ro m on e ad m in istrato r co u ld b e s u f f icien tly in f

lu en tial a s to g iv e rise to a reaso n ab le in f eren ce o f b ias. S

ee, e.g

. , No la n , 5 5 1 F.3 d
at 1 1 52 n .3 (3 0 % o f rev i ew er’ s i n co m e c a m e f ro m ad m in istrato r). Mo reo v er, w ere claim an ts req u ired to sh o w f in an cial d ep en d en ce in o rd er to estab lish l ack o f n eu trali t y , t he p erso n al f in an cial circu m stan ces an d

n eed s o f each IP C co u ld b e su b j ected to ro u tin e in q u iry in ERISA cases,

a resu lt h ard l y co n d u civ e to th e recru itm en t o f co m p eten t rev iew ers o r to th e ef f icien t an d ex p ed itio u s rev iew o f ben ef it d ecisio n s co n tem

p lated b y ERISA

.D E M E R V

. I B M C O R P

. L T D P L

A N 23

medications he was taking f or his phy sical pain. As indicated above, MetL ife did not ask its vocational re habilitation consultant to consider a

ny limitation on Mr. Demer’s mental ability to function. W e c o nclude that MetL ife abused its discretion in deny

ing Mr. Demer’s claim.

I n r e aching this conclusion, we first take note of three points that are essentially undisputed:

(1) Mr. Deme r “ takes powerful narcotic and other medications, prescribed in attempts to manag e his pain.” These medications included morphine.

(2) These med i c a tions were medically necessary to address Mr. Demer’s p ain ar i s i ng from p hy sical impairments. (MetL ife’s I PC Dr. D el V alle noting that Mr. Demer’s phy sical problems “necessitat [e] narcotic analg esics”).

(3) The “prescribed narcotic and neurological oriented medications have known side effects” on an individual’s mental functioning

. (Mr. Demer’s treating p h y sician Dr. Osborne stating that “[ t] he side e ffects w i t h d osing o f narcotics, limit the a

b ility to complete productive mental functions[ ;] [ t] h ey a

re to be ex pected and are limits of the only treatment available for this g entleman”).

M oreover, in a personal statement, Mr. Demer cl a i m e d th a t he d id, in f

act, suffer side effects as a result of his

m e d i c a t i o n s , i n c l u d i n g f a t i gu e a n d di f

f i c u l t y w i t h concentration ( e.g. , the medications “ cause me to fatig ue and, and they h elp confuse m e in my thinking a nd ability to communicate” ; “ I can no long er read complex materials because I cannot concentr a t e to comprehend them”; and “ID E M E R V

. I B M C O R P

. L T D P L

A N 24

also have memory lap s e s after having read the pag es 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
y ears”; she h as viewed his phy sical pain; Mr. D emer has side effects from the prescri b e d medication which makes him “consistently a p p e ar[ ] to be in a haz e , unable to cope with what wer e o n ce routine matters”; and Mr. Demer “has repeatedly demonstrated his inability to safely drive because of the inability

to focus”). 1 0

He also pointed to supporting contemporaneous evidence from his treating p hy s i cians. F or ex a mple, Dr. Osborne

ex p ressed ag reement that h i s p hy sical ex aminations a nd medical records indicated that Mr. Demer was suffering from side effects of his medications, “whi ch infring e o n [ his] ability to c oncentrate and tend to diminish [ his] e nerg y .” Dr. Moore commented that Mr. Demer “has c og nitive limitations [ secondary

to] pain as well as analg esics.”

Despite this evidence, MetL ife rejected any men t al limitations based on the opinions of two I PCs, Drs. Goldman

an d Dr

. Gordan, neither of whom actually ex amined Mr. Demer. (Dr. Goldman stated that, “[ b] ey ond October 29, 2010, there clearl y a re no objective or other compelling o r convincing data to establish functional impairment a s a result of Mr. Demer’s psy chotropic medication s

. ” Dr. Gordan stating that “[ t ] h er e is no specific information about

10 Sim ilarly

, a m ed i cal reco rd in d icated t h at Mr. Dem er’ s f

ath er to ld h im

“ h e w as ‘ d ru g g y ’ ” af

t er b ein g p rescrib ed certain m ed icatio n (m ed i cal

reco rd f ro m treatin g p h y sician , Dr. Deb ra W eid m an (an esth esio lo g ist)).D E M E R V

. I B M C O R P

. L T D P L

A N 25

medications taken o r effects from the m during the period in question[ ;] [a] lthoug h Dr. Osbor ne asserted that the claimant’s needed narcotic medication caused cog nitive side effects, there w as never any evidence of that.”) I mplicit in each doctor’s opinion

– and therefore MetL ife’s decis i o n

–
was a conclusion that Mr. Demer’s complaints of fatig ue a nd difficulty concentrating

were not credible.

B u t the I PCs had little b asis for rejecting Mr. D e mer’s credibility

. I n addition to t h e fact that the I PCs never

ex a mined Mr. Demer, they never ex plained specifically why they rejected Mr. Demer’s claim o f m ental function limitations when (1) he was taking what are undisputedly powerful n arcotic medications and (2) his subjective complaints were corroborated by his treatin g phy sicians a s well as a friend (Ms. Piel). 1 1 See Godmar v. H ewlett-Packard Co.
, 631 F ed. Appx

. 397, 406 (6th Cir. 2015) (stating that “there is ‘nothing inherently o bjectionable ab o u t a [ paper] review,’” b ut such “reviews are particular l y t roubling when the administrator’s consulting phy sici a n s – who have never met the claimant – discount the claimant ’ s limitations a s subjective or ex ag g erated”; addin g that “‘we will not credit a file review to the ex tent that it relies on adverse credibility finding s when the file s d o n ot state that there is reason to doubt the applicant’s credibility ’ ”); Montour
, 588 F .3d at 634–35 ( indi ca ting that a plan should not require a claimant
to prov i d e o b

jective proof of h is pain level and that a p lan should not re

j e c t subjective claims of ex cess p ain based solely on a paper review’s observation that a phy sical

11 Becau se Ms. P iel’ s statem en t w a s s u b m i t t ed o n ly o n th e ap p eal to MetL if e, Dr. Del Valle w as n ot ab le to co n sid er i t. Ho w ev er, Dr. Go rd an sh o u ld h av e t ak en in to acco u n t Ms. P iel’ s statem en t as h e w as th e IP C on ap p eal.D E M E R V

. I B M C O R P

. L T D P L

A N 26

impairment should not cause the claimant as much pain as he

was reportedly suffering ); cf. Rollins v. M assanari
, 261 F .3d 853, 857 (9th Cir. 200 1 ) ( i n the Social Security contex t, noting that “subjective pain testimony cannot be rejected on the s o l e g round that it is not fully corroborated by objective medical evidence”).

W e acknowledg e that the district court’s o r d e r sug g ests possible g rounds for questioning Mr. Demer’s cred i b i lity

– i.e.
, that h is activities of d aily living indicated some ability to eng ag e in mental functioning

. See Demer
, 975 F

. Supp. 2d at 1081 (stating that “Dr. Osborne’s o pinion that Plaintiff could not operate a vehicle was directly contradicted by

Plaintiff’s conversations with MetL ife on J anuary 1 4, 2010 and May 18, 2010, where he stated that he had been driving a v ehic l e [ ;] [ f ] urther, while receiving disability p ay ments, Demer told a MetL ife claims representative that ‘he wa s j u st completing online courses’”); ( MetL ife’s electronic diar y notes). B ut neither MetL ife nor its I PCs r ejected Mr. Demer’s credibility

on this basis. See Harlick

, 686 F

. 3d at 719–20 ( stating that “[ t] he g e neral rule

. . . is that a c ourt will not allow an ERI SA plan administrator to assert a reason f or denial of benefits that it had not g iven during the a dministr at i v e process”). Moreover, it is not c l ea r t hat these activities of daily living necessarily establish a

n ability to work within the meaning o f the Plan. Notably

, under the terms of the Plan, Mr. Demer is elig ible for L TD b e n e f

i t s if he c annot e ng ag e in a “g a inful occupation,” which in Mr. Deme r’ s c ase is a job that has a y e a rly salary of approx imately $ 50,000. A job that commands such a s a l ar y may w ell require hig her levels o f mental functioning

, including concentration and m e mory , both o f which are areas where Mr. Demer has claimed impairment as a result of his medications.D E M E R V

. I B M C O R P

. L T D P L

A N 27

D. Evidence of Physical Limitations

There is an additional factor weig hing in favor of finding

a n abuse of discretion by MetL ife. I n deny ing Mr. Dem e r’ s appeal, MetL ife effective l y adopted the phy sical functional capacity assessed by Dr. Gordan – i.e.
,

that M r

. D e mer would b e capable of sitting for an hour at a time, with short breaks for stretching

, up to seven hours a d ay ; standing and walking for 15 minutes at a time a nd u p to two hours a day ; lifti n g up to 10 pounds frequently

, 20 pounds occas i o n ally and 35 pounds rarely ; occasionally twisting

, b ending

, sto o p i ng , and reaching above shoulder level, driving

, and doing r epetitive movements with either hand and occasionally climbing stairs.

Similar to above, Dr. G ordan was implicitly rejecting Mr. Demer’s c redibility based solely o n a p ap er r eview without having p hy sically ex amined him and without ex plaining why Mr. Demer’s credibility

was lacking , particularly

, in lig ht o f

some medical records conflicting with Dr. Gordan’s phy sical functional capacity assessment. Most notably

, Dr. Gordan’s
assessment conflicted with the mo r e r estrictive a ssessment adopted by MetL ife’s other I PC, Dr. D e l V a lle, which MetL ife had previously adop ted in initially deny ing Mr. Demer benefits. F o r instance, with respect to lifting capacity

, Dr. G ordan found that Mr. Demer could lift up to 10 pounds frequently

, but previously

, MetL ife found (as part of its initial denial) that Mr. Demer could not frequently lift more than 10 pounds. Also, whereas Dr. Gor d a n f ound that Mr. D emer could sit w ith breaks up to seven h ou r s a day

, MetL ife previously f

o u n d (based on Dr. Del Valle’s initialD E M E R V

. I B M C O R P

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assessment) that he could only sit “ 4–6 hours per 8 h our work day with proper erg onomics and the ability to chang e position

as needed.” MetL ife never ex plained why it concluded t h at Dr. G ordan’s assessment w as more appropriate over D r. D el Valle’s earlier assessme n t , particularly since the record indicated that Mr. Demer’s condition did not improved (and
may have deteriorated) over time. 1 2

E. Conclusion

Ta k i n g i nto account the totality of the circumstances

– i.e.
, the f inancial co n flict o f interest of the I PCs on whom MetL ife relied (which w arrants some skepticism in reviewing the I PCs’ conclus i o ns), the substantial evidence of Mr. Demer’s mental lim i t ations due to pain medication a nd phy sical limitations, and the I PCs’ r eview s of Mr. Demer’s conditi o n , without having ex a mined him a nd without

e x plaining why they rejected his credibility

, particularly in lig ht of evidence corroborating his c redibility ( both m e d ical and nonmedical) – MetL ife a bused its d i s c retion in deny ing Mr. Demer’s claim for L TD benefits.

F

. Remedy

The question remaining is what remedy should issue. See Cook v. Liberty Life Assurance C o. of Boston
, 320 F .3d 11,

12 W e ack

n ow led g e th at Dr. Go rd an d id co n su lt w ith Mr. D em er’ s treatin g p h y sician

, Dr. Mo o re, an d Dr. Mo o re in d icated to Dr. G o rd an th at

“ i t w as lik ely t

h at Mr. D em er co u l d d o a v ery s ed en tary j o b .” D r. Mo o re, h o w ev er, ad d ed th at “ h e f elt th at h e w o u ld h av e to see [Mr. Dem er] ag ain
to s ay th at def

in itiv ely .” Yet Dr. Go r d a n n e v e r p h y sically o r m en tally

ex am in ed Mr. D em er f

o r co n f irm atio n o n e w ay o r th e o th er; n o r d i d Dr. Mo o re. Hen ce, an

y relian ce b y MetL ife o n Dr. Mo o re’ s statem en t is

m isp laced

.D E M E R V

. I B M C O R P

. L T D P L

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24 (1st Cir. 2003) (“Once a court finds that an administrator has acted arbitrarily and capriciously in deny ing a claim for benefits, the co u r t c a n either remand the case to the administrator f

or a renewed evaluation of the claimant’s c ase,

or it can award a retroactive reinstatement of benefits.”). W e h o ld that a remand to the district court, with instructi o n s t o remand to MetL ife, i s a p propriate. An award of benefits is
not a proper r emedy because the record doe s n o t clearly establish that MetL ife should necessarily have awarded Mr. Demer benefits. Cf. Grosz-Salomon v. Paul Revere Life Ins. Co.
, 237 F .3d 11549, 1 163 (9th C i r. 2001) (“[ R] etroactive reinstatement of b enefits is a p propriate in ERI SA cases where

. . . ‘but for [ the insurer’s] arbitr a r y and capricious conduct, [ the insured] w ould h a v e continued to receive the benefits’ o r where ‘there [ was] n o evidence in t h e record to support a termination or denial of benefits.’”).

To be clear, on remand, MetL ife may re-open the record
to consider additional evidence reg arding mental limitations. The record as it stands does not show prec i sely what Mr. Demer’s limitations were as a result o f the m ed i c ations. W h ile a retrospective evaluation m a y be difficult g iven the
passag e of time, a retrospective ev a luation of Mr. Demer’s limitations is not n ecessarily imp o s s i b l e. I n deed, in the Social Security contex t, retrospe c t i v e evaluations a re not

uncommon. H i s torical records, data and trends may be relevan t and useful in rendering a retrospective evaluation. See, e.g. , S

m i th v. Bowen
, 849 F .2d 1222, 1225 (9th Cir. 1988) (in Social Security case, stating that “reports c ontaining observations made after the p eriod for d isability are relevant
to assess the claimant’s disability [ ;] [ i] t is obvious that med i c al reports are inevitably rendered retrospectively a nd should not be disreg arded solely on that basis ”). F urthermore, a c urrent evaluat i o n of Mr. Demer may beD E M E R V

. I B M C O R P

. L T D P L

A N 30

particularly useful b ecause his benefit period may have

ex tended b ey ond the date of the appeal, see 2 ER 1 30, 217 (addressing Max imum B e nefit Period), such that a current

e x amination may be closer in time to the assessment pe r i o d than it would otherwise appear.

III.

According ly

, we REVERSE and REMAND with instructions to the d istrict c o urt to remand this case to MetL ife so that it may re-evaluate the merits of Mr. Demer’s L TD claim.

B YB EE, Circuit J udg e, dissenting from Part I I

. B, b ut concurring

in the judg ment:

An ERI SA plan administrator has a structural conflict o f 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 & Lif e I n s

. Co.
, 4 5 8 F. 3 d 955, 965 (9th Cir. 2006) (en banc). The federal

c ourts have offered at least two way s that such conflicts “should p rove less important (perhaps to the vanishing point).” Metro

. L i

f e , 5 54 U.S. at 116. F irst, administrators
may “wall[ ] off claims administra t ors from those interested in firm finances.” Id. ; Abatie

, 458 F .3d at 9 69 & n.7 (an administrator may show that “ a ny conflict did not influence its decisionmaking process” by showing that “its employ ees do not have incentives to deny claims”); Davis v. Unum Life Ins. Co. of Am.
, 444 F .3d 5 6 9
, 5 7 5 –76 (7th Cir. 2 006) (holding that absent e v idence o f “any specific incentive [ for the in-house doctors] to derail [ a] claim,” such as g iving theD E M E R V

. I B M C O R P

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doctors “some specific stake in the o utcome of [a] case,” the theoretical arg ument that “in-house d octors have a n inherent conflict in every case” is insufficient to chang e the standard

o f review). Second, plan administrators may refer med i c al evaluations to outside ex perts, such as doctors, w ho also have

n o interest in firm finances. Abatie

, 458 F .3d at 9 6 9 & n

. 7 (“[ T] he a dministrator mig ht demonstrate that it use d t r uly independent medical ex aminers or a neutral

, i ndependent review process”).

MetL ife listened very caref u l l y to what we said. I t employ e d both of these methods: F irst, it walled o ff its c laims administrators from its financial o f f i c e s

. And then, second, the claims office soug ht medical evaluations from outside, independent phy sicians who h a v e no interest in MetL ife’s finances. F or its trouble, the maj o rity is g oing to g ive MetL ife additional scrutiny —the majority is “skeptical” o f MetL ife precisely because it d id what we told it to. Maj. Op.
at 21. The majority ’s n ew skepticism h a s been rejected b y every other circuit to have considered i t

. W hen companies
structure their operations in response to our opinions and then

we penaliz e them for doing ex actly as we have sug g ested, we

sow uncertainty into both law a n d business. I dissent from Section I I .B of the m a

j ority ’s o pinion. B ecause that section is not otherwise n ecessary to the majority ’s opinion, I c oncur in the judg ment.

I

The problems w ith the majority ’s new con cept o f skepticism a

re at least thr e e f

o l d. F irst, nothing in our decisions supports the majority ’s new concept o f skepticism. O u r relevant cases stand for two propositions: (1) a claims administrator has a

n int ernal conflict of interest when itD E M E R V

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stands to profit f

r o m the c laims it denies; and, (2) administ r a t o rs can cleanse this conflict by taking steps such as creating ethical walls, making sure that claim denials

are not rewarded, and h i ri n g outside phy sician reviewers. The majority takes these rules about internal conflic t s o f interest for which “ some skepticism” is warranted, a nd discovers an e

xtern a l c o nflict in outside reviewers that is deserving of “modest but

. . . some, but not substantial” skepticism—something between “no skepticism” a nd “enhanced skepticism.” Maj. O p

. a t 2 1. The majority has taken a mechanism we g ave administrators for cleansing their conflicts—hiring independent re v iewers—and turned it into

a new source of conflicts. Seco n d

, there is no b asis for inferring a conflict of interest in the o utside reviewers simply because they reviewed multiple f il e s for MetL ife a

nd were compensated for their work. F inally

, I ha v e g reat reservations about the use of “skepticism” as a s t a n d ard o f review.

A

I n Abatie

, we considered the p r o b l em with “an insurer that acts a s both the plan administrator and the funding source for benefits,” and ex p l ained that the insurer thus “operates under what may be t e r m ed a structural conflict of interest.” Abatie

, 458 F .3d at 965. W e discussed this sort of structural conflict only , and then commented that it could be remedied by

, f or ex a mple, u sing “independent medical examiners .” Id. at 969 n.7 (emphasis added).

MetL ife has a

n internal conflict o f interest in this case. I t both pay s the benefits a n d evaluates the claims. No o ne disputes it. And no one disputes that MetL ife has addressed this internal conflict by walling off its financial departmentD E M E R V

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

“ t h e re is no r esidual structural c o nflict

. . . because o f affirmative steps take n b y MetL ife to insulate its c laims department”). B ut the Major i t y then finds that an external conflict ex ists because Met L i f e r efers files to outside phy sician reviewers.

The majority say s that we are to view this r el at i onship wi t h skepticism, but I can find no basis in our decisions for this c onclusion. Our cases s i m p l y h old that a structural conflict of interest may warrant skepticism, no t h i n g more. See, e.g. , Glen

, 554 U.S. at 112 ( holding that an ERI SA conflict emerg es where the same administrator “both funds the plan and evaluates the claims ,” b ecause “every d ollar provided in benefits i s a d o l l a r spent by

. . . the [ administrator] ; and every dollar saved . . . is a dollar in [ the administrator’s] p ocket”) (quotat i on omitted); Abatie

, 458 F .3d at 965. The majority claims t h at in Montour v

. Hartford Life & A ccident Insurance Co.
, we “assumed that a relevant p iece o f ex trinsic evidence would be ‘how f requently [ the insurance company ] contracts w it h t h e f ile reviewers it employ e d in this case.’” 588 F .3d 623, 634 (alteration in Montour ). W ith respect, the majority overstates M o ntour

. I n Montour
, we found that the H a r t f o rd I nsurance Company
, like MetL ife, had a s t ructural c o n flict of interest. B u t in Montour we also cited to e x tensive district court finding s that caused us to concl u d e that “Hartford’s bias infiltrated the entire a dministrative decisionmaking p rocess, which leads us t o a c c ord sig nificant weig ht to the conflict.” Id. W e t h e n observed that Hartford had f ailed to show any efforts that it had made “to ‘assure accurate claims assessment,[ ] ’ such a s utiliz ing procedures to help ensure a neutral review process.” Id

. (quoting Metro. Life

, 554 U.S. at 117). Notice what we said nex t: “ To the contrary , in fact, Hartford’s nurse caseD E M E R V

. I B M C O R P

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manag er took an advocacy position in her let t e r s to Montour’s phy sicians soliciting their ag reem e n t with her disabil i t y c o nclusion.” Id. (emphasis added). Not o nly h ad Hartford failed to present any e vidence to show its neutrality

, the evidence sug g e sted that Hartford was telling Mont o u r ’s doctor what it wanted to hear. W e then faulted the c laimant, Montour—and here is the passag e the majority relies on—for “not submit[ ting ] any ex tri n s i c evidence of bias, such a s st a t i s tics reg arding Hartford’s rate of claims denials or h ow frequently it contracts with the f ile reviewers it e mploy ed in this case.” Id. F ar from demonstrating that w e s h o u l d be suspicious of outside reviewers, Montour stands for nothing

m o r e r emarkable 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 o f c laims denials a n d its reliance on outside reviewers. Here, without the predicate for our comment in Montour
, t h e majority simply a ssumes that the evidence that MetL ife used and p aid

o u t s i d er reviewers is sufficient to show bias. 1 The majority calls this a “financial conflict[ ] ,” Maj. Op. at 16, but we have

1 Mo n to u r cited to No la n v. Hea ld Co ll e g e , 5 5 1 F

. 3 d 1 1 48 (9 th Cir. 2 0 0 9 ), w h ere, in a f

oo tn o te, w e su g g ested th at th ere m ig h t b e so m e relatio n sh ip b etw een a n o ut sid e rev iew er’ s reg u lar co n tract w ith th e in su ran ce co m

p an y an d th e rev iew er’ s b i as. Id

. at 1 1 5 2 n .3

. W e o f f ered

n o ex plan atio n

w h y th is w as a p ro b lem . W e l ater co m m en ted th at “ T h is is n o t to s ay th at [th e in su ran ce co m

p an y ] w as n o t en titled to rely o n th e

o p i n io n s of its in d ep en d en t ph y sician s,” bu t w e assu m ed th at it w as

e v i d en ce o f b ias t

h at t h e d istrict co u rt m ig h t h av e v iew ed “w i t h sk ep ticism .” Id

. at 1 1 5 5

.D E M E R V

. I B M C O R P

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no ex planation why an o utside reviewer ha s a c o n f lict o f interest by

virtue of being compensated for her time. 2

I don’t see the conflict at all. The Supreme Cour t in Firestone found that “ERI SA abounds with the lang uag e a nd terminolog y

of trust law,” and that we should b e “g uided by principles of trust law.” F irestone Tire & Rubber Co. v

. Burch

, 489 U.S. 1 0 1, 111, 112 (1989). The trust analog y is

an important one, because a trustee is under a dual oblig ation: I t must ensure that trust fun d s a r e p a id to those who a re elig ible; at the same time, it must e n sure that trust f u nds a re not paid to those w ho are not eligi b l e

. A trusteeadministrator as surely violates its oblig ation by violating the

one charg e as the other. MetL ife knows that, as trustee, it has

an internal conflict of interest and must compensate for that conflict in some way , and perhaps in several way s. Going to outside c onsulting phy sicians—litera lly

, g e tting a second opinion—is one way of c o mpensating fo r the conflict. B ut where is the conflict in the outside consu l t i n g phy sicians? Reliability

, not bias, is the incentive for the o u tside r eviewer. I n the long run, it doesn’t do a company l i ke MetL ife any g ood to g et bad medical advice because just as it has a duty

2 T h e m aj o rity co n ten d s th at I h av e “ m i stak en ly eq u ate[d ] o u t s id e

ex p erts w ith in d ep en d en t ex p erts.” Maj

. Op

. at 2 1

. N o t so

. I h av e s im p ly
eq u ated b etter- paid o u tsid e ex p erts w i th slig h tly

- lesser- p aid o u tsid e

ex p erts. T h e q u estio n in th is case i s n o t w h eth er th ere is an

y circu m stan ce in w h i ch an o u

tsid e ex p ert co u ld lo se h er in d ep en d en ce—o f co u rse th ere is. T h e q u estio n h ere i s w h eth er p ay in g a b oard

- certif ied p h y si c i an an

am o u n t th at strik es th e m aj o rity as a lo t, on its o w n , m ak es th at p h y sician

n o lo n g er “ i n d ep en d en t.” A n d to m e, th e an sw er m u st b e n o

.D E M E R V

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to pay deserving c laims, it h as a duty to avoid pay ing undeserving claims. 3

I recog niz e that there could be a c o g niz able confl i c t o f interest where an independent phy sician is so depende n t on

an administrator that it effectively b ecomes an employ ee o f the administrator, see McDonald v

. Hartford Life Gr p

. Ins. Co.
, 361 F

. App’ x 599, 609 (5th Cir. 2010), but this would simply b ring the reviewer within the administrator’s internal umbrella. And in that c ase, the outside reviewe r would be subject to the same conflict of interest as the administrator’s

own employ ees; the outside revie w er cannot be more conflicted than the a d m i n istrator’s own claim p rocessors (assuming the administrator h as n ot g iven the reviewer some additional incentive tied to r esults). See Armstrong v. Aetna Life Ins. Co.
, 1 28 F .3d 1263, 1265 (8th Cir. 1997) ( i n s u r e r provided incentives and bonuses t o claims reviewers for “claims saving s”). W hat is so odd ab o u t the majority ’s

3 It is f ar f ro m clear f

ro m th e cases (in clu d in g th e rec o rd in th is case)

w h at f iles w e t h in k t he o u tsid e ph y sician s are rev i ew in g

. A re th e

re v iew ers lo ok in g at all f iles, in clu d in g f

iles th e claim s d ep artm en t is in clin ed to p ay ? If so , w

h y w o u ld th e rev iew in g p h y sician s o f f er an y th in g

o th er th an th eir b est v iew ?

B u t w h at if th e claim s d ep artm en t is o n ly sen d in g ou tsid e rev iew ers th e f iles o f claim s it is i n clin ed to d en y ? In t h at case th e o u t sid e rev iew ers still h av e little in cen tiv e to sh ad e th eir v iew s in f av o r o f th e claim s d ep artm en t. T h is is n o t ad v o cacy , i t i s m ed ical o p in io n , an d th e claim s d ep artm en t, af

ter all, is ask in g th e rev iew ers f o r a seco n d o pin io n b ef

ore d en y in g th e claim

.

If t h ere w ere ev id en ce an ad m in istra t o r w as sig n alin g to its o u tsid e

rev iew ers w

h at resu lt it w an ted th em to reach

, th at w o u ld b e a s e r io u s p ro b l em

. In su ch a case, th e sig n alin g w ou ld b e d irect ev id en ce t h at th e ad m i n istrato r h ad n o t ad d ressed its stru ctu ral co n f lict o f in terest.D E M E R V

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analy sis is that if the o utside c onsultants were MetL ife’s o wn internal employ ees, we would fin d t h a t they were not conflicted—or a t the least that any conflict had been neutraliz ed b y MetL ife’s claims-handling practices. B u t for the majority

, because the revi e w e rs are independent, suddenly they a re untrustworthy

. Y et there is n ot one h int in the record that these outside reviewers are g iven financial incentives based on their results or in any other way

biased.

The principle the majority adopts has profound implications for other a reas of the law—notab l y S o c ial Security claims. The SSA, and its state p a rtners, f requently

r e l y on outside medical sources to review a claimant’s file and offer a second o p inion. The v i e ws of these reviewing phy sicians are g iven sig nificant w e ig ht under SSA
reg ulations and our d e c isions. See 20 C.F .R. § 404.1519a–q (SSA rules g overning the hiring and use o f p h y sician reviewers); Reed v. Massanari
, 270 F

. 3 d 8 38, 842 n.1 (9th Cir. 2001) (noting the “important r ole play ed by independent medical specialists” in SSA cases, and overturning the AL J ’s decision n ot to order an outside phy s i c i a n review); Kish v

. Colvin

, 5 52 F

. App’x 650, 651 ( 9th Cir. 2014) (overturning the A L J ’s determination because he f ailed to order an outside phy sician review); see also S tandards F or Consultative Ex aminations and Ex isting Medical Evidence, 56 F ed. Reg

. 36932, 36949 ( Aug

. 1
, 1991) (“[ The SSA] spend[ s]

c o n s i d e r a b l e s u m s a n n u al l y t o o btain consu l t a t i v e

ex a minations.”). Sometimes the SSA uses outside phy sician reviewers, and sometimes it uses phy sicians empl oy ed full time b y the SSA’ s state-partner ag encies. S ee W ilson v

. Comm’r of Soc. Sec. , 280 F . App’x 456, 462 (6th Cir. 2008) (rely ing in part on e v aluation conducted b y psy cholog ist employ e d by state ag ency ) ; P atty v

. Barnhart

, 189 F . App’x 517, 519 ( 7th Cir. 2006) (rely ing on both state-employ ed a ndD E M E R V

. I B M C O R P

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outside phy sician reviewers); see also 20 C.F .R. § 404.1519g (stating the SSA may

purchase an outside ex amination from
any q ualified p rovider, including the claim an t ’s o wn phy sicians o r “another sourc e ” )

. So far as I k n ow, w e have

never q uestioned the bona fides of reviewing phy sicia n s’ views on the g rounds that SSA or state ag encies are sending them lots of busine s s a nd p ay ing them well, or, even worse, employ ing them full time. I t will turn our cases upside down if we start down that road.

B

E v en if we considered Demer’s evidence on the outside reviewers in this case, there is “no there there.” The majorit y ’s n e w skepticism is based on two facts: F irst, the

ma j o rity thinks that Metlife’s outside reviewers are doing a l o t o f work for MetL ife a n d

, second, the majority thinks t h e outside reviewers are g etting paid a lot of m o n e y for their work. Maj. Op. at 18–19 (referring to t h e “ m ag nitudes o f these numbers”). Neither o f these r easons will bear scrutiny

.

L et’s start with the idea that the t w o d o ctors in question here—both of whom were board-certified in internal medicine—are doing a lot of w ork f or MetL if e

. The record discloses that Dr. Del Valle reviewed some 250 files per y ear; Dr. Gordan, s o m e 2 00–300 f iles. W e have no basis for judg ing the sig nificance of these numbers. The majority has just decided th a t t h e s e numbers are big

. L et’s indulg e the assumption: so what? E ven if MetL ife decided to stop pay ing these two doctors as outside consultants and broug ht them inhouse, it wouldn’t implicate a conflict. MetL ife has followed

our directions a

nd w alled off its claim processors—including
any medical personnel—from its financial people. I ts claim
processors have not been g iven any incentives to d e ny claims.D E M E R V

. I B M C O R P

. L T D P L

A N 39

That is precisely what we sai d w o u ld cleanse MetL ife’s conflicts. Abatie

, 458 F .3d at 969 n .7. So w h e t h e r the doctors are doing a l i ttle bit of w ork for MetL ife or a lot o f work is irrelevant because there is no smidg en of evidence in the r ecord that MetL ife will compensate the doctors based on the results of their evaluations. The majority h as n o b a s is whatsoever for impug n ing t h e reputations of these medical professionals.

The majority ’s second theory —that the d o ctors are w ell

co mpensated—doesn’t hold any more water than the f irst. Dr. Gordan was compensated $175,000/y ear f or his work; Dr. Del V alle, $125,000. Based on nothing more than its o wn ipse dixit

, the majority declares t h i s to be “sig nificant compensation.” Maj. O p

. at 14. W e have nothing in the record to tell us how doctors are c o m p e n s a ted, whether a s practicing p hy sicians or as outside consultants. 4 I could opine that this doesn’t seem like a lot of money for an e x p erienced medical professional, but I have no more b a sis than the

ma j o r i t y for say ing so. And p erhaps there is some professional jealousy

at work here, but if these doctors were lawy ers, they a

ren’t even making first-y ear associate wag es. 5

4 T h e m aj o rity ’ s ap p ro ach to th e b u rd en s h ere m ak es little sen se. If th e claim an t b ears th e b u rd en , as Mo nto u r s u g g ests, 5 8 8 F.3 d at 6 3 4
, th en g ap s in th e reco rd

—as w e h av e h ere—sh o u ld w eig h ag ain st Dem er. T h e

m aj o rity f ails t o ex p lain h o w p o in tin g to tw o n u m b ers (th e n

u m b er o f f iles receiv ed an d th e su

m o f pay m en ts receiv ed ) estab lish es th a t th e o u tsid e

rev iew ers w ere b iased

.

5 S ee Dav id L at, Brea kin g: NY to $1 8 0K!!! Cra va th Ra ises As s o c i a t e Ba se S ala ries!!!
, J

u n e 6
, 2 0 1 6
, h

t t p : / / a b o v eth elaw .co m

/2 0 1 6 /0 6 /b reak in g

n y

- to

- 1 8 0 k

- crav ath

- raises- asso ciate- base- salaries/.D E M E R V

. I B M C O R P

. L T D P L

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W o uld we feel b e tter i f MetL ife f ound phy sicians w ho

w e r e willing to b e poorly compensated? Does it g e t bett e r

a d v i ce? Does it avoid the conflict? T h e docto rs ’ compensation tells us nothing about how the doctor s make their medical judg ments. A n d if we are g oing to indict the medical profession for understanding the potential i n terests of its clients, do we g et to be skeptical of Demer’s personal phy sicia n b e c ause Demer’s insurance is pay ing for his

o pinions? W hat if the doctor k nows that Demer wi l l go ge t

a second opinion (and perhaps leave his personal phy sician and g ive h im a poor review on Yelp) unless the doctor finds that Demer is disabled? Does Demer’s f amily doctor have a f i n ancial incentive to reach a p articular medical judg ment? W h at if Demer’s doctor refers him to a second phy sician for

an opinion? Does t h e s econd doctor have a conflict o f interest because he fears that if he doesn’t corroborate the referring doctor’s o pinion he won’t g et referrals in the f uture? There is no end to the g a mesmanship that can be play ed h ere.

C

That bring s me to the q uestion of “skepticism.” The majority

, of course, shoul d n o t be faulted for rely ing on our prior decisions and this “skepticism” scheme. W e first used the term in Abatie

. 458 F .3d at 968 (referring to the “level o f skep t i c i s m ” with which w e view a “structural conflict o f interest”). I n Montour
, we picked up on the “s k e pticism”
comment and a mplified it, finding that courts should “adjust the level of skepticism” “ in a c cordance with the facts a nd circumsta n c e s of the case” and that where “the conflict may hav e tainted the entire a dministrative d ecisionmaking process,” the courts should view the administrator’s decision with “enhanced skepticism.” 588 F .3d at 631. W e have continued to solidify and el e v ate Montour ’s scheme. SeeD E M E R V

. I B M C O R P

. L T D P L

A N 41

Stephan v. Unum Life Ins. Co. of America
, 697 F .3d 9 1 7, 934 (9th Cir. 2012); Salomaa v. H onda Lo n g Term Disability Plan

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

, 551 F

. 3d at 1155. Even as we acknowledg e that it is not “easy to decide how many metaphorical g rams should g o on the metaphorical scale,” we have added additional qualifiers to “skepticism” to g ive u s a rang e of skepticism, including “ special skepticism,” “additional skepticism,” and a “ hig her deg ree of skepticism.” Salomaa , 642 F .3d at 675–76.

I question the usefulness of “skepticism” as a standard o f review. Standards o f review are, necessarily

, not “rules” a nd

a r e subject to the vag a ries of lang uag e. I n J ust i c e F rankfurter’s memorable phrase, standards of r eview capture

a “mood,” but a “mood [ that] must be r espected, even thoug h it can only serve as a standard for judg ment and not as a body of rig id rules assuring sameness of applications.” Universal Camera Corp. v. NLRB
, 340 U .S. 474, 4 8 7 ( 1 9 51). W e a re burdened with a variety

of “word formulas,” FTC v. Sun Oil Co.
, 371 U.S. 505, 527 ( 1 963), to describe a morphous concepts such as evidence, error, and d i s c retion. And we (and Cong r ess) have developed li s t s of adjectives to qualify those concepts. Thus, we have at least six different kinds o f

“ e v idence”: a “scintilla of e vidence,” “some evidence

, ” “substantial e v idence,” a “preponderance of evidence,” “ clear and c onvinci n g evidence,” and “evidence b e y ond a reasonable doubt.” I

t isn’t enoug h to commit an “error,” we
must know w hether it was “harmless e rror,” “cle a r error,” “plain error,” or “invited er r o r

. ” W hen a court or ag ency

ex e r cises discre t i o n , w e need to know whether it was “an abuse of discretion” or mer ely “arbitrary and capricious.” And I won’t even g o down the road of co n s t i t utional “scrutiny .”D E M E R V

. I B M C O R P

. L T D P L

A N 42

The problem with “skepticism” is not that it i s not descriptive in some useful way , but t h a t w e d on’t need another n o u n modified by a raft of adjectives to capture our mood when we r eview decisions under ERI SA. W e know that the standard of rev i e w fo r E RI SA plans in which some discretion is conferred on the p lan trustee is the wellestablished “abuse of discretion.” F irestone
, 489 U.S. at 115; Abatie

, 458 F .3d at 962–63. That standard is hard enoug h to apply without a dding a lay er of “skepticism” on top of it. W e

are trained in the law, and we are, either by na t u r e o r b y avocation, skeptical. I t’s what we do. W e are skeptical o f what d efendants, w itnesses, and e v e n lawy ers tell us. W e question their memories, reliability

, and mot i ves. A nd we have developed o ur own rang e s of skepticism, from ordinary
ey ebrow-raising skepticism to the more ambig uous harumphing skepticism to full-blown

, e x asperated snorting skepticism. I n terms of ex p ress i n g a m ood, we are much better off with the facial ex pressions and the occasional snort than with try ing to define the difference between “some skepticism,” “special skepticism,” “enhanced skepticism,” and “hig h-deg ree skepticism.” I would abandon “skepticism”

as a separate standard o f review in E R I S A c a ses and try to deal with run-of-the-mill “abuse of discretion.”

I I

These are problems of our own making

. Every c i r cuit that has c o n s i d e red the use that MetL ife made of outside reviewers here has approved the p ract i c e , a nd they have
manag ed to do so without invoking the standa r d o f “skepticism.” The courts not only don’t apply even a modicum of skepticism, they often reject the claim that there is a ny conflict i n the f

irst place. F or ex ample, in D avis v

. Unum Life Insu r a n c e Company of America
, the SeventhD E M E R V

. I B M C O R P

. L T D P L

A N 43

Circuit n oted the absurdity of turning “an administrator’ s decisio n to seek independent ex pert advice [ w hich] is evidence of a thoroug h investig ation” into g rounds for criticiz ing the administrator. 444 F .3d 569, 5 75–76 ( 7th Cir. 2006) (quotation omitted). The court ex plained that “[ p] ay ing for a leg itimate and valuable service in order to ev a l u a te a claim thoroug hly

does not c r eate a review-altering conflict.” Id. at 575. Thi s w a s true even where the reviewers’ entire salary came from a sing le administrator. 6 The F ifth, Six th, and Tenth Circuits have adopted similar rules. S ee H agen v

. Aetna Ins. Co.
, 808 F .3d 1022, 1029 (5th Cir. 2015) (holding that the relationship between the administrator and reviewer

was not enoug h

, o n its own, to show bias; there must be some evidence of specific stake i n the c laim); Hunt v. Metro. Life Ins. Co.
, 587 F

. App’x 860, 862 (6th Cir. 2014) (requiring

more than mere evidence of pay ments between the administrator and reviewer); Benson v. Hartford Life & Acc. Ins. Co.
, 5 11 F

. App’x 680, 685 (10th Cir. 20 1 3 ) (r ejecting claim of reviewer conflict because “ [n] othing in the record

s u g g e st[ ed] a specific bias on the part o f the

. . . r e v i ew i n g phy sicians.”); Christoff v. Ohio N. U niv. Employee Ben. Plan

, 495 F

. App’s 710, 712 (6th Cir. 2012) (declining to find conflict of interest b ec ause the a dministrator used “independent reviewers” to deny claims).

6 T h e m aj ority su g g ests th at its ap p ro ach to an aly zin g o u tsid e ex p erts is

u n rem ark ab l e, an d p o in ts o u t th at oth er circu its do n o t h o ld “ t h at o u tsid e

ex p erts are im

m u n e f ro m j u d icial scru tin y f

o r po ssib le b ias.” Maj

. Op

. at 2 2

. W e can (an d sh o u ld ) s cru tin i ze o u tsid e ex p erts w h en th ere are f

acts th at d em on strate th at th eir j u d g m en t is n o t i n d ep en d en t. B u t th at is n o t

w h ere I an d o u r sister circu its dep art f ro m th e m aj o rity

. Ou r d isag reem en t is w ith th e m aj o r i t y ’ s co n ten t io n t h at th e bare f

act o f co m

p en satin g an

o u tsid e ex pert f

or h er o p i n io n

m ak es h er b iased

.D E M E R V

. I B M C O R P

. L T D P L

A N 44

W h ere the plan administrator is operating under a structural conflict of interest, courts h ave often concluded that the con f l i ct is mitig a ted by the administrator’s decision to “reduce its inherent bias b y h i r ing

. . . independent phy sicians.” 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 7 12, 7 17 (10th Cir. 2014) (“B ay er took a ct ive steps to reduce any potential b ias and to promote accuracy : it
soug h t a n independent review of Ms. F ite’s medica l records by a different psy chiatrist

. . . a nd it o btained an independent
psy chiatric evaluation of Ms. F ite from a fourth p sy c hiatrist before reaching its final decis ion. W e therefore g ive the conflict-of-interest f

actor limited weig ht in d etermining whether B ay er abused its d i scretion.”); Menge v. A T & T, Inc
., 595 F

. A pp’x 811, 814 ( 10th Cir. 2014) (holding that an administrator had mitig ated its “inherent conflict of interest” by “rel[ ying ] on the medical o pinions of i n dependent phy sician advisors”); Keith v. Prudentia l In s

. Co. of Am.
, 347 F

. App’x 548, 552 (11th Cir. 2009) (holding that an administrator’s use of three independent phy sician r eviewers showed the administ r a t o r was not “influenced by [ its] [ structural] conflict”). I ndeed, it is m o re likely that courts will hold it ag ainst an administrator w h o doesn’t use independent r eviewe rs

. A s the F irst Circuit e x plained, it is “difficult to fault a pl a n a dministrator for seeking ex pert assistance (indeed, it probably would be easier to fault a p lan administrator f

or not seeking such assistance).

. . . [ C] ommon

sense dictates that retaining outside p hy sicians to as s i s t in evaluating disability claim s , w i t h o u t m o re, does n o t constitute

a conflict o f interest.” Leahy v. R a y t h e o n Co.
, 315 F .3d 11, 16 (1s t C i r

. 2 002); see also Loan v. Prudential Ins. Co. of Am ., 370 F

. App’x 592, 598 (6th Cir. 2 010) (“Prudential did
not seek the opinion o f an outside ex pert who w as not operating under Prudential' s conflict-of-interest.

. . .D E M E R V

. I B M C O R P

. L T D P L

A N 45

Prudential’s in-house doctor had less incentive than an independent o utside doctor to c o n duct a thorough and
accurate review o f the record and address the arg uments Plaintiffs raised on appeal.” (emphasis added)).

I I I

The majority takes the remedies we offered t o administrators for cleansing conflict s

— w alling 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

c o n f u s i o n over what they can rely o n in our decisions. A nd

we can predict with near certainty how they w ill respond: at least in our circuit, a d m inistrators will stop using outside, independent reviewers; instead, they will try to bring them in house where, they h o p e , we will still respect the administrator’s e fforts to wall them off. To d a y ’ s decision injects confusion and chang e for no reason. W e are not likely to end up with better decisions in ERI SA claims.

Count me skeptical. I respectfully dissent from Section I I .B

.