Source: https://casetext.com/case/gilbertson-v-allied-signal-inc
Timestamp: 2020-07-05 14:54:01
Document Index: 40385301

Matched Legal Cases: ['§ 2560', '§ 2560', '§ 1132', '§ 1132', '§ 2560', '§ 2560', '§ 187', '§ 2560', '§ 1133', '§ 2560', '§ 2560']

Gilbertson v. Allied Signal, Inc., 328 F.3d 625 | Casetext Search + Citator
Gilbertson v. Allied Signal, Inc.
This court has on several occasions reviewed a benefits denial de novo, notwithstanding the fact that the…
Raymond M. v. Beacon Health Options, Inc.
In sum, ERISA's procedural regulations establish that at the initial denial stage, "the administrator must…
Full title:Louise GILBERTSON, Plaintiff-Appellant, v. ALLIED SIGNAL, INC. and Life…
Date published: May 6, 2003
328 F.3d 625 (10th Cir. 2003)
holding that "when substantial violations of ERISA deadlines result in the claim's being automatically deemed denied on review, the district court must review the denial de novo, even if the plan administrator has discretionary authority to decide claims."
Summary of this case from Torres v. Pittston Co.
No. 01-2324.
Carol Lisa Smith of Krehbiel, Bannerman Williams, P.A., Albuquerque, NM, for Defendant-Appellee Allied Signal Inc.; Tracy M. Jenks of Rodey, Dickason, Sloan, Akin Robb, P.A., Albuquerque, NM, for Defendant-Appellee Life Insurance Company of North America.
Before SEYMOUR and McCONNELL, Circuit Judges, and KRIEGER, District Judge.
The Honorable Marcia S. Krieger, United States District Judge for the District of Colorado, sitting by designation.
Louise Gilbertson began working for AlliedSignal as an Administrative Support Coordinator in 1992. In March, 1998, Mrs. Gilbertson consulted her family physician, Dr. Gwen Robinson, complaining of chronic pain in her neck, shoulders, and arms, as well as frequent headaches, sleep disturbance, and difficulty concentrating. Based on these symptoms, and on the discovery of certain "pressure points" in Mrs. Gilbertson's neck, shoulders, arms, and legs, Dr. Robinson rendered a diagnosis of fibromyalgia. Mrs. Gilbertson took short-term disability leave, which lasted through September 30, 1998. On that date, AlliedSignal terminated her employment.
"A group of common nonarticular disorders characterized by achy pain, tenderness and stiffness of muscles, areas of tendon insertions and adjacent soft-tissue structures." The Merck Manual 481 (17th ed. 1999). Since fibromyalgia only manifests itself through clinical symptoms, there are no laboratory tests that can confirm the diagnosis. See Dorsey v. Provident Life and Accident Insurance Co. 167 F.Supp.2d 846, 855 (E.D.Pa. 2001), citing Harrison's Principles of Internal Medicine 1706-07 (Kurt J. Isselbacher et al. eds. 13th ed. 1994).
On December 9, 1998, LINA denied Mrs. Gilbertson's application for long term disability benefits on the ground that she had failed to provide adequate objective medical evidence demonstrating that she was disabled according to the Plan's definition. In the denial letter, LINA explained that, though Mrs. Gilbertson's supporting documentation indicated symptoms of fibromyalgia, it did not adequately address how those symptoms affected her capacity to perform her work. LINA also noted that the documentation did not explain how symptoms of more than fifteen months' duration had suddenly rendered her unable to work and that Dr. Robinson's notes actually indicated some improvement from exercise and other treatments.
[A]ny physical or mental condition which, in the judgement [ sic] of the Plan Administrator, based on evidence satisfactory to the Plan Administrator —
29 C.F.R. § 2560.503-1(h) (1999).
We refer to the Code of Federal Regulations as of 1999. The quoted regulation, 29 C.F.R. § 2560, was amended in 2000, but the amendments apply only to claims filed on or after January 1, 2002. The amendments, among other changes, cut the deadline for review of denials of disability claims to 45 days.
Mrs. Gilbertson's complaint arises under 29 U.S.C. § 1132(a), which provides that a beneficiary may bring suit "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." Although ERISA does not explicitly specify the standard of review that district courts should employ in reviewing such claims, the Supreme Court has held that "a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). Where the Plan grants such discretionary authority to the administrator, the court reviews the administrator's denial according to an "arbitrary and capricious" standard. Chambers v. Family Health Corp., 100 F.3d 818, 825 (10th Cir. 1996).
The parties' positions as to when Mrs. Gilbertson's claim could be "deemed denied" as provided in ERISA regulations are somewhat unclear. Mrs. Gilbertson seems to argue that the claim should be deemed denied as of 60 days after LINA's receipt of the appeal on January 14. This, however, is not necessarily the proper date. The regulations provide for an additional 60 days if the administrator articulates a special need. 29 C.F.R. § 2560.503-1(h) (1999). Mrs. Gilbertson requested and was granted an extension of the deadline by which she was required to submit supporting medical documentation to March 31. LINA's grant of the extension could be construed either as notice to Mrs. Gilbertson that LINA would need the extra 60 days or as a tacit agreement between both parties to re-start the clock on March 31 (the deadline) or April 7 (the date of Mrs. Gilbertson's final submission). This latter interpretation is supported by Mrs. Gilbertson's written request for review, in which she states, "I understand that I will receive a decision on my claim no later that [ sic] 120 days after I provide you with the additional information that is being gathered." Appellant's App. 278. The deemed denied date could therefore be as late as late July or August.
The old ERISA regulations that govern this case are silent as to whether the time limits for a decision on review should be tolled until the claimant has finished submitting additional information. The new, amended regulations provide that "the period for making the benefit determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information." 29 C.F.R. § 2560.503-1(h)(4) (2002).
The underlying rationale articulated by the Supreme Court in Firestone also supports this holding. Because ERISA is silent with respect to the standard of review, the court looked to applicable common law principles to decide the question. Firestone held that ERISA's language, legislative history and interpretive precedents required that "[in] determining the appropriate standard of review . . ., we are guided by principles of trust law." Firestone, 489 U.S. at 110, 109 S.Ct. 948 (citations omitted). Thus, the Firestone decision was essentially an application of the common law of trusts to judicial review of ERISA claim denials. Trust law traditionally did not sanction judicial interference with a trustee's discretion when the original parties, by means of the trust instrument, authorized the trustee to exercise discretionary powers. Id. at 111, 109 S.Ct. 948 ( citing Restatement (Second) of Trusts § 187 (1959)). The purpose of this principle is evident: trust settlors and trustees may, for a number of reasons, prefer that the trustee render individualized, discretionary-type decisions without a court second-guessing the trustee's judgments. The most obvious reason for such an arrangement is that the trustee's or administrator's expertise and familiarity with the overall scheme, as well as the details of each case, make him more likely to get the decision right than a court.
Our holding is in harmony with a recent decision of the Ninth Circuit, Jebian v. Hewlett Packard Company, 310 F.3d 1173 (9th Cir. 2002). In Jebian, a plan administrator denied an employee's claim for long term disability benefits after the claim had already been "deemed denied" under the terms of the plan and applicable ERISA regulations. The district court reviewed the denial under the arbitrary and capricious standard because the plan vested the administrator with the discretionary authority that, under Firestone, triggers arbitrary and capricious review. Jebian, 310 F.3d at 1176-77. The Ninth Circuit reversed, holding that where "a claim is `deemed . . . denied' on review after the expiration of a given time period, there is no opportunity for the exercise of discretion and the denial is reviewed de novo." Id. at 1177.
Another recently-decided, analogous case, this one in the Third Circuit, supports the principle that "deemed denied" decisions should be reviewed de novo. In Gritzer v. CBS, Inc., 275 F.3d 291 (3rd Cir. 2002), a plan administrator with discretionary authority failed to respond to a claim until after it was deemed denied. The Third Circuit reversed the district court's application of the arbitrary and capricious standard, holding that, under Firestone's application of trust law principles to ERISA cases, if "a trustee fails to act or to exercise his or her discretion, de novo review is appropriate because the trustee has forfeited the privilege to apply his or her discretion; it is the trustee's analysis, not his or her right to use discretion or a mere arbitrary denial, to which a court should defer." Id. at 296.
We note that the district court did not have the benefit of the decisions in Jebian or Gritzer, as both were decided after the district court granted summary judgment in this case.
Other circuits, however, have decided the issue differently. The Fifth Circuit has held that "the standard of review is no different whether the claim is actually denied or deemed denied." Southern Farm Bureau Life Ins. Co. v. Moore, 993 F.2d 98, 101 (5th Cir. 1993). The court, however, provided no explanation or authority for this statement. In McGarrah v. Hartford Life, the Eighth Circuit reviewed a plan administrator's denial of benefits for abuse of discretion, even though the administrator never responded to the claimant's appeal. 234 F.3d 1026, 1030-31 (8th Cir. 2000). The court acknowledged that the plan administrator's failure to respond was "a serious procedural irregularity," but nevertheless held that "the mere presence of a procedural irregularity is not enough to strip a plan administrator of the deferential standard of review." Id. at 1031. Because the plan administrator's initial decision thoroughly explained the basis for the adverse decision and the claimant's submissions on appeal contained "no new medical evidence" contradicting the initial decision, the court held that the claimant's appeal "required no response by [the administrator] to permit meaningful judicial review." Id. McGarrah, then, holds that even "deemed denied" decisions can be afforded judicial deference if the reviewing court determines that the administrator's initial denial and statement of reasons can effectively be applied to the claimant's appeal. Id. That is, the court should interpret the administrator's silence on the claimant's appeal as implicitly affirming the original denial for the reasons set forth therein. LINA urges us to adopt a similar interpretation of its non-response to Mrs. Gilbertson's appeal and insists that the reasons it provided in the initial denial are clearly applicable to and dispositive of the appeal.
This argument is not wholly without merit. The Supreme Court has held that the "deemed denied" provision allows the claimant to "bring a civil action to have the merits of his application determined, just as he may bring an action to challenge an outright denial of benefits," but that an administrator's delay is not necessarily a substantive violation giving rise to a private right of action. Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 144, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985). See also Heller v. Fortis Benefits Ins. Co., 142 F.3d 487, 492 (D.C. Cir. 1998), cert. denied, 525 U.S. 930, 119 S.Ct. 337, 142 L.Ed.2d 278 (1998). Courts have also been willing to overlook administrators' failure to meet certain procedural requirements when the administrator has substantially complied with the regulations and the process as a whole fulfills the broader purposes of ERISA and its accompanying regulations. See, e.g., Sage v. Automation, Inc. Pension Plan and Trust, 845 F.2d 885, 895 (10th Cir. 1988) ("[n]ot every procedural defect will upset the decision of plan representatives"); Halpin v. W.W. Grainger, Inc., 962 F.2d 685, 690 (7th Cir. 1992) ("In determining whether a plan complies with the applicable regulations, substantial compliance is sufficient."); Kent v. United of Omaha Life Ins. Co., 96 F.3d 803, 807-08 (6th Cir. 1996) (upholding denial that violated procedural requirements because, despite violations, claimant was notified of reasons and was given fair opportunity for review); Donato v. Metro. Life Ins. Co., 19 F.3d 375, 382-83 (7th Cir. 1994) (substantial compliance with regulations is sufficient when claimant received enough information to allow effective review); Sheppard Enoch Pratt Hosp., Inc. v. Travelers Ins. Co., 32 F.3d 120, 127 (4th Cir. 1994) (plan's decision that violated applicable deadlines of 29 C.F.R. § 2560.503-1 substantially complied with regulation because the claimant was not prejudiced).
In order to determine when an administrator who fails to render a timely decision might nevertheless be in "substantial compliance" with the regulatory requirements, we must consider the purpose of the mandated deadlines in the context of other ERISA procedural requirements. Donato, 19 F.3d at 382 ("In determining whether there has been substantial compliance, the purpose of 29 U.S.C. § 1133 and its implementing regulations, 29 C.F.R. 2560.503-1(f), serves as our guide"). Fortunately, the broader purpose of the relevant ERISA regulation seems fairly clear. The regulation requires that plan administrators follow certain procedures within the specified deadlines when they deny claims. Among other things, the administrator must provide the claimant with a comprehensible statement of reasons for the denial, including "[a] description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary" and "[a]ppropriate information as to the steps to be taken if the participant or beneficiary wishes to submit his or her claim for review." 29 C.F.R. § 2560.503-1(f)(3), (4) (1999). The regulation also requires that the decision on review "shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, as well as specific references to the pertinent plan provisions on which the decision is based . . . The decision on review shall be furnished to the claimant within the appropriate time. . . ." 29 C.F.R. § 2560.503-1(h)(3), (4) (1999). In Judge Kozinski's felicitous formulation:
We therefore REVERSE the district court and REMAND for reconsideration according to the appropriate standard of review. We do not hold that Mrs. Gilbertson is entitled to damages or other substantive remedies because of LINA's violation of the deadline, nor do we decide that she is entitled to receive benefits under the Plan. Rather, we instruct the district court to conduct a de novo review of Mrs. Gilbertson's claim of eligibility for LTD benefits under the Plan based on the record before LINA at the time she filed suit.
The district court need not allow the parties to submit additional evidence, unless it determines that supplementation of the record is necessary to conduct an adequate de novo review. See Hall v. Unum Life Ins. Co. of Am., 300 F.3d 1197, 1202 (10th Cir. 2002).
The circuits are split on this. See Regula v. Delta Family-Care Disability Survivorship Plan, 266 F.3d 1130, 1139 (9th Cir. 2001) (holding that the treating physician rule applies to ERISA plan decisions); Nord v. Black Decker Disability Plan, 296 F.3d 823 (9th Cir. 2002), cert. granted ___ U.S. ___, 123 S.Ct. 817, 154 L.Ed.2d 766 (2003) (applying treating physician rule in ERISA context); Darland v. Fortis Benefits Ins. Co., 317 F.3d 516, 532 (6th Cir. 2003) (same); Donaho v. FMC Corp., 74 F.3d 894, 901 (8th Cir. 1996) (same). But see Connors v. Conn. Gen. Life Ins. Co., 272 F.3d 127, 136 n. 4 (2d Cir. 2001) (concluding that the treating physician rule serves no purpose in de novo review of ERISA cases); Jett v. Blue Cross Blue Shield of Ala., Inc., 890 F.2d 1137, 1140 (11th Cir. 1989) (holding treating physician rule inapplicable to ERISA plan administrator's decision); Salley v. E.I. DuPont De Nemours Co., 966 F.2d 1011, 1016 (5th Cir. 1992) (doubting whether rule applies to ERISA cases). The Supreme Court has recently granted certiorari on the issue. See Black Decker Disability Plan v. Nord, ___ U.S. ___, 123 S.Ct. 817, 154 L.Ed.2d 766 (2003).
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