Opinion ID: 171456
Heading Depth: 1
Heading Rank: 7

Heading: Standard of review to be applied in reviewing MetLife's decision

Text: In her first issue on appeal, Kellogg contends that the district court erred in applying a modified abuse of discretion standard, rather than a de novo standard, in reviewing MetLife's denial of benefits. A denial of benefits under an ERISA plan 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). If the benefit plan gives the administrator such discretion, then, absent procedural irregularities, the denial of benefits is reviewed under an arbitrary and capricious standard. Fought v. UNUM Life Ins. Co., 379 F.3d 997, 1003 (10th Cir.2004). Such review is limited to determining whether [the] interpretation [of the plan] was reasonable and made in good faith. Id. The Plan at issue here named Pfizer as the Plan Administrator and MetLife as the Claims Administrator. App. at 78. Further, the Plan afforded discretion to both Pfizer and MetLife: Benefits under these Plans will be paid only if the Plan Administrator or the Claims Administrator, as applicable, decides in its discretion that you are entitled to them. The Plan Administrator or the Claims Administrator, as applicable, shall make, in its sole discretion, all determinations arising in the administration, construction, or interpretation of these Plans, including the right to construe disputed or doubtful Plan terms and provisions, and any such determination shall be conclusive and binding on all persons, to the maximum extent permitted by law. Id. Kellogg acknowledges that these Plan provisions afforded MetLife discretionary authority to interpret the terms of the insurance policy and to determine eligibility for benefits. Aplt. Br. at 18. She argues, however, that MetLife's failure to comply with the claims procedures set forth in the regulations implementing ERISA triggers de novo review. More specifically, she argues that MetLife's failure to ever issue a decision on her appeal results in there being no timely discretionary act...to which [this] court can defer. Id. at 22. Defendants, in response, contend that Kellogg's arguments are based on an inaccurate assumption that there was an appeal on which MetLife could render a decision. Aplee. Br. at 24. In fact, they contend, Kellogg never submitted her final appeal. Id. In support of this contention, defendants note that [i]n their letters, Kellogg's counsel state that they would submit Kellogg's appeal 60 days after they received the requested claim file documents, yet Kellogg's counsel submitted neither the final appeal document nor any new evidence to support the appeal.... Id. Thus, defendants argue, there was no appeal or new evidence before MetLife that required any action. Id. at 25. We readily reject defendants' arguments. The January 13, 2006 letter that Kellogg's counsel sent to MetLife very clearly stated, in its opening paragraph: We received Metropolitan Life's ... November 17, 2005, letter and are appealing the decision to deny payment of benefits to Ms. Kellogg. App. at 134 (italics added). The letter then proceeded to outline the general basis for Kellogg's appeal: Having reviewed MetLife's November 17, 2005, letter, it appears that MetLife is basing its denial on an exclusion to coverage in the insurance policy. The letter references a police report in MetLife's possession which contains a witness statement to the effect that Mr. Kellogg appeared to be having a seizure. However, Mr. Kellogg had no history of seizure activity and there is no reason, other than the witness's statement, to believe that a seizure was the cause of the accident. It is our position that there is simply insufficient factual and legal basis for MetLife to invoke the exclusion it refers to in the November 17, 2005, letter. Id. To be sure, the letter also stated that Kellogg's counsel were not in a position to intelligently appeal MetLife's denial because the cause for Mr. Kellogg's accident [was] less than obvious, and because they d[id] not know what information MetLife relied on in coming to its conclusion that Ms. Kellogg's claim [wa]s not valid. Id. at 134-35. On those points, however, Kellogg's counsel specifically requested that MetLife send them a copy of MetLife's entire claim file, including a complete copy of the accidental death and dismemberment policy in place for Mr. Kellogg at the time of his death, a copy of the AD & D Certificate of Coverage, Summary Plan description, plan documents, and any reviews or reports prepared for MetLife from individuals with medical training or other non-medical expertise. Id. at 135. In addition, Kellogg's counsel requested that they be given sixty days following receipt of these documents and information to evaluate them and present additional information to MetLife regarding Ms. Kellogg's claim. Id. (italics added). Considered as a whole, there can be no doubt that the January 17, 2006 letter provided MetLife with notice that Kellogg disagreed with and was appealing MetLife's decision to deny her AD & D benefits, and was also requesting from MetLife relevant documentation, including the SPD, Certificate of Insurance, and relevant medical and non-medical reports, in order to support her appeal. Thus, MetLife clearly had a responsibility under ERISA to provide Kellogg's counsel with a copy of the latest SPD and plan documentation, see 29 U.S.C. § 1024(b)(4), and, ultimately, to issue a decision on Kellogg's appeal, see 29 C.F.R. §§ 2560.503-1(i)(1)(i) (requiring a plan administrator to issue a decision on an appeal within sixty days after receipt of the claimant's request for review), and 2560.503-1(i)(4) (For purposes of paragraph (i) of this section, the period of time within which a benefit determination on review is required to be made shall begin at the time an appeal is filed in accordance with the reasonable procedures of a plan, without regard to whether all the information necessary to make a benefit determination on review accompanies the filing.). According to the record on appeal, MetLife did neither. Nor did MetLife make any attempt to contact Kellogg or her attorneys to determine if they were going to submit any additional evidence or arguments. Although defendants do not acknowledge, much less attempt to justify, MetLife's failure to respond in any manner to Kellogg's January 17, 2006 letter, they suggest that MetLife's failure effectively prevented Kellogg's appeal from ripening. That suggestion, however, clearly ignores the substance of Kellogg's January 17, 2006 letter, and is inconsistent with both the letter and spirit of ERISA and its implementing regulations. To conclude otherwise would provide plan administrators with an incentive to violate the provisions of ERISA by ignoring requests by plan participants and beneficiaries for plan documentation and other relevant information. The question, then, is what impact, if any, MetLife's failure to respond has on the standard of review to be applied by this court. When a plan administrator fails to exercise its discretion and render a decision within the requisite administrative review period set forth in ERISA's implementing regulations, we have, to date, applied a substantial compliance rule. Finley v. Hewlett-Packard Co. Employee Benefits Org. Income Protection Plan, 379 F.3d 1168, 1173 (10th Cir.2004) (internal quotation marks omitted). Pursuant to this rule, a plan administrator is in substantial compliance with th[e] deadline if the delay is (1) `inconsequential'; and (2) in the context of an on-going, good-faith exchange of information between the administrator and the claimant. Id. at 1173-74 (quoting Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 635 (10th Cir.2003)). If the plan administrator is not in substantial compliance with the deadline, we have applied a de novo standard of review. Id. We note, however, that our substantial compliance rule was issued in light of the then-controlling 1998 federal regulations implementing ERISA. See id. at 1176 n. 6 (discussing history of substantial compliance rule). In January 2002, amendments to the regulations took effect that have called into question the continuing validity of the substantial compliance rule. Id. At least one district court in this circuit has since held that the substantial compliance doctrine is not applicable under the revised regulations, Reeves v. UNUM Life Ins. Co., 376 F.Supp.2d 1285, 1293 (W.D.Okla. 2005), and that `a decision made in the absence of the mandated procedural protections should not be entitled to any judicial deference.' Id. at 1294 (quoting 65 Fed.Reg. 70246, 70255 (Nov. 21, 2000)). We find it unnecessary to conclusively decide the continuing validity of the substantial compliance rule because, even assuming its continued existence, there can be little doubt that MetLife was not in substantial compliance with the ERISA deadlines. Indeed, there was no compliance at all on MetLife's part; as noted, MetLife wholly ignored Kellogg's counsel's request for documentation and review of MetLife's decision to deny AD & D benefits. Thus, we shall proceed to apply a de novo standard in reviewing MetLife's initial decision.