Opinion ID: 173652
Heading Depth: 3
Heading Rank: 2

Heading: Conflict of Interest Analysis

Text: Appellants argue that the district court erred in its conflict of interest analysis. The first ground for the existence of a conflict of interest cited by the district court concerned Reliance’s letter of April 16, 2003, to Gunn, which referred specifically to the new definition of “disability” applicable after 24 months, but did not specifically note the Plan’s limitation for mental illness. The district court concluded that this deprived Gunn’s physicians of the opportunity to focus on the issue of whether Gunn’s disability stemmed from his multiple sclerosis, his depression, or both. Gunn II, 592 F.Supp.2d at 1261. Gunn argues that Reliance deliberately omitted any reference to the mental illness limitation in the hopes that Gunn would supply only the name of his psychologist so that the mental illness limitation could be applied. However, the letter was not suggestive and imposed no limitations on the type of medical information which could be submitted; it requested “any medical information or vocational information that you would like us to consider in making our decision,” not just information bearing on Gunn’s mental condition. There is no language in the letter or questionnaire which would suggest to Gunn that Reliance was not interested in receiving information concerning his multiple sclerosis symptoms. 15 Gunn argues that Reliance did not comply with the requirements of 29 C.F.R. § 2560.503-1(g), citing Booton v. Lockheed Medical Benefit Plan, 110 F.3d 1461 (9th Cir. 1997).9 The notification requirements of § 2560.503-1(g)(iii) refer only to the contents of a notification of adverse benefit determination. Likewise, this court in Booton did not specifically interpret that regulation as requiring that a request for additional information be made before the initial denial of benefits, but rather stated that “[i]f benefits are denied in whole or in part, the reason for the denial must be stated in reasonably clear language[.]” Booton, 110 F.3d at 1463 (emphasis supplied). However, even assuming arguendo that Reliance should have mentioned the mental illness limitation in the April 16th letter, Reliance’s failure to do so does not give rise to an inference that Reliance acted in bad faith. Neither the regulation nor this court’s decision in Booten would have placed Reliance on clear notice of any obligation to cite all potentially relevant plan provisions in a letter requesting medical information for a benefits eligibility review. In addition, Gunn was given a full and fair review of his claim. He was given notice of the mental illness 9 Section 2560.503-1(g) requires a plan administrator to “provide a claimant with written or electronic notification of any adverse benefit determination.” § 2560.503-1(g). The notification must include “(iii) 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[.]” § 2560.503-1(g)(iii). 16 limitation in the initial denial letter of September 10, 2003, which quoted the Plan provision concerning the limitation for mental or nervous disorders, and, while represented by counsel, he had the opportunity to present additional records specifically addressing that issue in pursuing his appeal. Reliance’s failure to cite the mental illness limitation does not demonstrate the Reliance acted under a conflict of interest. The district court also concluded that Reliance’s use of Dr. Hauptman10 to conduct a records review was further evidence of bias. The district court relied on Conrad v. Reliance Standard Life Insurance Co., 292 F.Supp.2d 233 (D. Mass. 2003), in which the court found that Reliance’s denial of benefits was arbitrary and capricious because Dr. Hauptman’s report indicated a bias on his part in favor of rejecting the plaintiff’s claim. See Gunn II, 592 F.Supp.2d at 1262-63. Dr. Hauptman has been retained by Reliance on numerous occasions to conduct records reviews. Although it is appropriate to consider Dr. Hauptman’s longstanding relationship with Reliance in weighing the degree of any conflict of interest attached to his opinion, that relationship alone does not mandate a finding that Reliance should have completely disregarded his opinion. 10 Gunn argues that Dr. Hauptman, a gastroenterologist, was not qualified to express an opinion in this case. However, Dr. Hauptman is also board-certified in internal medicine. In that capacity, he was qualified to analyze treatment records concerning Gunn’s multiple sclerosis. 17 In commenting on Dr. Hauptman’s review of the records in the instant case, the district court noted that in the assessment section of his report, Dr. Hauptman did not refer to Dr. Brandes’s October 27, 2003, Comprehensive Neurological Evaluation, which noted that Gunn was “totally disabled as a result of multiple sclerosis,”11 but instead focused on Dr. Brandes’s treatment notes of December 23, 2003, where Dr. Brandes stated that Gunn’s multiple sclerosis was “mild.” Gunn II, 592 F.Supp.2d at 1262 n. 12. However, Dr. Hauptman devoted two paragraphs in his report to a discussion of Dr. Brandes’s October 27th evaluation, and specifically noted Dr. Brandes’s statement that Gunn was totally disabled as a result of the multiple sclerosis and due to his cognitive dysfunction and fatigue; thus, he clearly considered the entirety of Dr. Brandes’s report and diagnosis. The fact that Dr. Hauptman relied on Dr. Brandes’s December 23, 2003, assessment that Gunn’s multiple sclerosis was “mild” in concluding that Gunn’s disability was due to his psychiatric illness was not unreasonable in light of the fact that Dr. Brandes himself diagnosed Gunn as having a relapsing-remitting form of multiple 11 Dr. Brandes actually stated in his October 27, 2003, report that “the patient is totally disabled as a result of his multiple sclerosis, due to his cognitive dysfunction, and fatigue, both of these will preclude inability [sic] to work under any situation.” He further indicated that Gunn’s cognitive dysfunction was secondary to relapsingremitting multiple sclerosis and/or severe depression, thus suggesting that Gunn’s depressive illness was possibly a contributing cause of his cognitive dysfunction and inability to work. 18 sclerosis as well as severe depression. The district court also criticized Dr. Hauptman for voicing his agreement with Dr. Orfuss’s conclusions even though he was not specifically asked to comment on the opinion of Dr. Orfuss. Id. However, Reliance did not specifically ask Dr. Hauptman to comment on any of the medical opinions contained in Gunn’s records; the memo simply stated, “Please review & advise if MS alone is impairing.” Dr. Hauptman did not limit his comments to the report of Dr. Orfuss, but also commented on the conclusions of Gunn’s treating physicians in the assessment portion of his report. Since the report of Dr. Orfuss was among the records Dr. Hauptman was given to review, the comment was appropriate.12 Finally, the district court cited as further evidence of bias the fact that “Reliance accepted whole-heartedly the opinions of its own physicians, that plaintiff’s disability was caused 99% by his depression and only 1% by his multiple sclerosis, in spite of all medical evidence to the contrary offered by plaintiff.” Gunn II, 592 F.Supp.2d at 1263. First, there is no evidence that Dr. Orfuss, who performed the independent medical examination, was a Reliance physician or that he ever performed any other evaluation for Reliance. Second, 12 We note that even if the opinion of Dr. Hauptman is disregarded entirely, the record is still sufficient to support Reliance’s conclusion that Gunn was disabled because of mental illness, not because of his multiple sclerosis. 19 Reliance did not ignore the evidence that Gunn suffered from multiple sclerosis. Rather, the issue was whether Gunn met the criteria for disability if only his multiple sclerosis symptoms were considered. The district court’s comment implies that Gunn’s medical evidence on that point was unequivocal, when in fact it was not; Gunn’s physicians never clearly addressed that question in their treatment notes or reports. The fact that Reliance ultimately accepted the opinions of Drs. Orfuss and Hauptman, who concluded that Gunn’s disability was attributable to his mental illness, severe depression, rather than to multiple sclerosis, does not establish that Reliance simply ignored the evidence relating to his multiple sclerosis or reached a biased result. See Jordan v. Northrop Grumman Corp. Welfare Benefit Plan, 370 F.3d 869, 878 (9th Cir. 2004), overruled on other grounds, Abatie v. Atta Health & Life Ins. Co., 458 F.3d 955, 969 (9th Cir. 2006). The reports of Drs. Orfuss and Hauptman as well as Reliance’s decision letters indicate that they did consider the medical records of Gunn’s treating physicians. The fact that Reliance ultimately accepted the opinions of Drs. Orfuss and Hauptman in regard to whether Gunn’s multiple sclerosis symptoms were sufficient in themselves to result in total disability is not sufficient to show bias. See Black & Decker Disability Plan, 538 U.S. at 825. 20 After considering all of the circumstances relied on by the district court as evidence of a conflict of interest or bias on the part of Reliance, we conclude that the district court placed undue weight on these factors. The circumstances cited in support of an alleged conflict of interest on the part of Reliance are insufficient to undermine the reasonableness of Reliance’s decision based on medical evidence in the record or to render that decision an abuse of discretion.