Opinion ID: 204137
Heading Depth: 2
Heading Rank: 2

Heading: Appropriate Weight Given to the Conflict of Interest

Text: Although the presence of a conflict of interest does not change the standard of review in this case, the conflict itself can, under certain circumstances, be accorded extra weight in the court's analysis. In Glenn, the Supreme Court held that [t]he conflict of interest at issue ... should prove more important (perhaps of great importance) where circumstances suggest a higher likelihood that it affected the benefits decision, including, but not limited to, cases where an insurance company administrator has a history of biased claims administration. 128 S.Ct. at 2351. On the other hand, the conflict should prove less important (perhaps to the vanishing point) where the administrator has taken active steps to reduce potential bias and to promote accuracy. Id. We have interpreted this language from Glenn to mean that courts are duty-bound to inquire into what steps a plan administrator has taken to insulate the decisionmaking process against the potentially pernicious effects of structural conflicts. Denmark III, 566 F.3d at 9. Although Cusson argues that it is Liberty's burden to show that the conflict did not affect its decision, the Supreme Court explicitly declined to specify a burden-of-proof rule for determining the weight that a conflict should be given. See Glenn, 128 S.Ct. at 2351 (Neither do we believe it necessary or desirable for courts to create special burden-of-proof rules, or other special procedural or evidentiary rules, focused narrowly upon the evaluator/payer conflict.). We therefore apply the same burden of proof to the conflict issue that we do to any other aspect of an ERISA claim for improper denial of benefits; hence, Cusson bears the burden of showing that the conflict influenced Liberty's decision. See Terry v. Bayer Corp., 145 F.3d 28, 34 (1st Cir.1998) (Here, [claimant] bears the burden of making a showing sufficient to establish a violation of ERISA, namely, that the benefit termination was unreasonable. (internal quotation marks omitted)). Cusson has not raised (and, thus, the parties have not briefed) the issue of the adequacy of Liberty's internal procedures to insulate the review process from the conflict. Instead, Cusson argues that certain alleged flaws in the way the review was conducted prove that Liberty's decision was influenced by its conflict. As discussed below, we do not find that these alleged flaws show that Liberty was improperly influenced by its conflict. Firstly, Cusson argues that Liberty relied exclusively on Millstein's report, including his inaccurate statements about the surveillance results, rather than relying on the totality of the record. Cusson correctly points out that in its initial denial letter, Liberty quoted language that it claimed was from the surveillance reports, but that was actually from Millstein's interpretation of the surveillance. Liberty also claimed that it relied on its TSA, but the record indicates that the TSA was based solely on Millstein's report. We find nothing wrong with the degree of Liberty's reliance on Millstein's report. Although the denial letter from Liberty quoted Millstein's summary of the surveillance data, and not the surveillance reports themselves, the record also indicates that Liberty's case manager did review the tapes. Moreover, as the district court noted, even though Millstein made inaccurate statements about the surveillance data in his report, Millstein's main substantive point about the surveillance that it showed Cusson engaged in activities that she claimed she could not dowas accurate. Many of the activities that Cusson was observed doing were activities that she specifically reported being unable to do, such as bending at the waist and lifting objects heavier than ten pounds. Moreover, when Cusson was seen outside, she did not appear to show any signs of fatigue or impaired physical capabilities. While this is by no means ironclad proof of ability to work, it is evidence that Liberty was entitled to consider. We read Liberty's decision as being based not simply on the amount of activity observed, but also on the nature of the activity observed, and Millstein's report contained no errors with respect to the latter. Next, Cusson argues that Liberty improperly relied on Liebermann's hearsay testimony about his conversation with Figueroa. Liebermann claimed that he spoke with Figueroa and that Figueroa understood that there was a significant discrepancy between the claimant's reported functionality and what was seen on the surveillance tapes. Liebermann further claimed that Figueroa indicated that he had told Cusson that he no longer wished to be involved in the disability aspect of her case. However, Cusson noted that Figueroa never responded to Liebermann's request to sign off on Liebermann's account of their conversation. Thus, Cusson argues, Liebermann's entire account of the conversation is hearsay that neither Liberty nor the district court should have relied on in its decision. However, [a] plan administrator is not a court of law and is not bound by the rules of evidence. Speciale v. Blue Cross & Blue Shield Ass'n, 538 F.3d 615, 622 n. 4 (7th Cir.2008). Because Figueroa never responded to Liebermann's request to comment on his account of the conversation, it was not an abuse of discretion for Liberty to assume that Liebermann's account of the conversation was accurate. Since Cusson never presented Liberty with any evidence to challenge directly Liebermann's account of the conversation, we find nothing inappropriate about Liberty's reliance on that account. Cusson next argues that Liberty's reviewing physicians were biased against patients with fibromyalgia. Although Liebermann's report mentions some of the evidence submitted by Cusson, Cusson alleges that Liebermann reached his conclusion about her ability to work without actually analyzing the medical evidence in her file. In his report, Liebermann stated: This claimant has a diagnosis of [f]ibromyalgia. As such, she should be able to perform the duties of light or sedentary occupations. Cusson argues that this statement indicates that Liebermann had a preconceived notion that fibromyalgia could never be a disabling diagnosis, and thus did not fairly consider her file. Similarly, Millstein cited a 1986 study of fibromyalgia patients that indicated that most of them were eventually able to return to work. Cusson points out that the Seventh Circuit has held that [t]he fact that the majority of individuals suffering from fibromyalgia can work is the weakest possible evidence that [an individual claimant] can. Hawkins v. First Union Corp. Long Term Disability Plan, 326 F.3d 914, 919 (7th Cir.2003). If Liebermann or Millstein had said that fibromyalgia patients are never disabled, those statements would be clearly wrong. However, although Liebermann and Millstein made statements that might be interpreted as improper generalizations, it does not necessarily follow that they relied on such generalizations when issuing their reports. Had either doctor concluded that Cusson was not disabled because fibromyalgia is never or not always disabling, that conclusion would have been inappropriate. However, both doctors' reports indicate that they reviewed the surveillance footage and based their conclusions on the apparent contradiction between the footage and Cusson's reported impairments. Cusson also argues that Liberty's reliance on paper file reviews instead of direct medical examinations shows that it was influenced by its conflict. Cusson acknowledges that this court has found a nonexamining physician's review of a claimant's file [to be] ... reliable medical evidence. Gannon, 360 F.3d at 214. However, Cusson argues that the particular circumstances of this case warrant a preference for reports by examining physicians. She notes that fibromyalgia is a disease that can only be diagnosed by a clinical examination of a patient based on subjective reports of pain. Certain circuits have held that in such cases some deference to examining physicians is appropriate. See, e.g., Kalish v. Liberty Life Assurance Co., 419 F.3d 501, 509-10 (6th Cir.2005); Hawkins, 326 F.3d at 919 (the gravest problem with the opinion offered by an ERISA plan administrator's paper-reviewing doctor was his refusal to accept subjective symptoms of pain and fatigue known to be associated with fibromyalgia). Moreover, Cusson notes that Liberty's reviewing physicians were paid for their reports by Liberty, whereas Cusson's treating physicians were paid by her health insurance company. The Supreme Court has recognized that physicians repeatedly retained by benefits plans may have an incentive to make a finding of `not disabled' in order to save their employers money and to preserve their own consulting arrangements. Black & Decker Disability Plan v. Nord, 538 U.S. 822, 832, 123 S.Ct. 1965, 155 L.Ed.2d 1034 (2003) (internal quotation marks omitted). We see no reason why the nonexamining physicians' reports in this case are unreliable. We recognize that fibromyalgia is a disease that is diagnosed primarily based on a patient's self-reported pain symptoms. However, Liberty's reviewers did not question the diagnosis of fibromyalgia; instead, they questioned the effect of the disease on Cusson's ability to work. [T]his court draws a distinction between requiring objective evidence of the diagnosis, which is impermissible for a condition such as fibromyalgia that does not lend itself to objective verification, and requiring objective evidence that the plaintiff is unable to work, which is allowed. Denmark v. Liberty Life Assurance Co. ( Denmark II ), 481 F.3d 16, 37 (1st Cir.2007), vacated on other grounds, 566 F.3d 1 (1st Cir.2009). Because it is permissible to require documented, objective evidence of disability, it was not inappropriate for Liberty's reviewers to rely on the lack of such documented evidence, or on the footage that contradicted Cusson's reports of limitations, in making their recommendations. The fact that Liberty's reviewers were paid for their reports does not, by itself, lead us to believe that Liberty was influenced by its conflict, since Cusson has provided no evidence that Liberty retained its reviewers specifically because they have a record of denying claims. Next, Cusson claims that Liberty failed to provide her complete medical record to its reviewers. Liberty's internal files indicated that [a]ll medical records had been sent to its reviewers. However, the reviewers did not list certain documents that were favorable to Cusson such as various medical records, her activity log, and portions of the surveillance reports that showed no activityin their reports. The district court held that under our holding in Tsoulas v. Liberty Life Assurance Co., it would be improper for the court automatically to assume that unless the medical report lists each item the examiner reviewed, he or she did not review it. See 454 F.3d 69, 77 (1st Cir.2006). However, Cusson argues that the district court's reliance on Tsoulas was incorrect. Cusson points out that in Tsoulas, the plaintiff's claim that Liberty failed to provide certain documents to the reviewers was obviously incorrect because some of the documents that the plaintiff said were missing were explicitly listed in those same reviewers' reports. Id. In contrast, the documents that Cusson claims were not provided are not listed in any of Liberty's reviewers' reports. [2] Cusson's attempt to distinguish Tsoulas from this case fails. Contrary to Cusson's position, the reviewing physician reports in Tsoulas did not explicitly mention certain reports that the claimant said were missing; rather, the district court inferred that those documents were provided because the physicians' reports listed some, but not all, of the documents. See id. Likewise, in this case, each of the reviewing physicians' reports list at least some of the supplementary material provided by Cusson. Hence, in this case, as in Tsoulas, we find no reason to believe that Liberty did not supply the entire record. Finally, Cusson argues that Liberty's failure to credit the SSA's award of disability benefits shows that Liberty was influenced by its conflict. Cusson notes that Liberty insisted that she apply for SSDI benefits, which she was awarded, but now seeks to benefit financially from that award by claiming the right to reimbursement for overpayment. Cusson notes that in Glenn, the Supreme Court treated this behavior as evidence that a conflict influenced the plan administrator's judgment. In Glenn, the plan administrator encouraged the claimant to apply for SSDI benefits and then recovered the bulk of those benefits by virtue of the reimbursement provision. The administrator then turned around and denied benefits for the same disability that it had encouraged the claimant to plead to the SSA. The Court held: This course of events was not only an important factor in its own right (because it suggested procedural unreasonableness), but also would have justified the court in giving more weight to the conflict (because MetLife's seemingly inconsistent positions were both financially advantageous). Glenn, 128 S.Ct. at 2352. We find nothing suspicious about Liberty's failure to credit Cusson's successful application for SSDI benefits, because Cusson was not awarded SSDI benefits until after Liberty denied her LTD benefits. We have held that when reviewing an insurer's decision to deny benefits, we determine whether the insurer's eligibility determination was unreasonable in light of the information available to it when it made its decision. Denmark II, 481 F.3d at 39 (internal quotation mark omitted). Because the SSA's award of benefits had not yet occurred when Liberty made its decision, that fact could not have been known to Liberty. In summary, as discussed above, we do not find that Liberty's decision was improperly influenced by its structural conflict of interest. We therefore do not accord any special weight to the conflict in our analysis of whether Liberty's decision was proper, but rather consider it along with all of the factors present in this case to determine if Liberty's ultimate conclusion regarding Cusson's benefits was reasoned and supported by substantial evidence. Gannon, 360 F.3d at 213. We turn to this question below.