Court Opinion

ID: 9494411
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:37:20.36464+00
Date Added: 2024-06-11T17:56:23.996926
License: Public Domain

BRUNETTI, Senior Circuit Judge,
dissenting:
I dissent from part III of the majority’s opinion.
I.
In this case, the district court reviewed the decision terminating Regula’s disability benefits, by Delta’s ERISA Plan Administrator, for an abuse of discretion. The abuse of discretion standard was applied for good reason — the parties stipulated to this standard of review. Nowhere in the briefs- does either party argue that a different standard should apply. In fact, Re-*1148gula’s opening brief states that “Plaintiff conceded in the District Court that it reviews factual determinations for abuse of discretion.” Opening Brief at 11. The parties’ stipulation is in complete accord with the Plan’s language, which states that:
The Administrative Committee shall have the broadest discretionary authority permitted under the law in the exercise of all its functions, including, but not limited to, deciding questions of eligibility, interpretation, and the right to benefits hereunder but shall act in an impartial and non-discriminatory manner with respect thereto.
The Administrative Committee is also granted “the exclusive power to interpret” the Plan, its interpretation and decisions being “final and conclusive.” However, the majority now holds that before applying this standard of review in accordance with the stipulation, the district court should have determined whether the Plan was operating under a conflict of interest.
There is no doubt that where a conflict of interest is found to exist, the plan administrator’s decision is afforded less deference. See Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); Tremain v. Bell Indus., Inc., 196 F.3d 970, 976 (9th Cir.1999). But that is not the factual record in this case. Regula made no such claim, offered no such proof, and has stated to the contrary by stipulation to the abuse of discretion standard of review. See Atwood v. Newmont Gold Co., Inc., 45 F.3d 1317, 1323-23 (9th Cir.1995) (“We ultimately apply a traditional abuse of discretion standard to the decisions of apparently conflicted employer or insurer-fiduciaries unless the affected beneficiary comes forward with further evidence indicating that the conflicting interest caused a breach of the administrator’s fiduciary duty to the beneficiary.”). The majority opinion has reached out and created a new case for Regula that never existed. I do not agree with the majority’s determination that although the parties’ stipulation to abuse of discretion review acts as a waiver, this court is under an obligation to, sua sponte, order an evidentiary hearing to see whether there was indeed a conflict of interest.
The majority cites Estate of Sanford v. Comm’r of Internal Revenue, 308 U.S. 39, 60 S.Ct. 51, 84 L.Ed. 20 (1939) and U.S. v. Alameda Gateway Ltd., 213 F.3d 1161 (9th Cir.2000) for the proposition that we are not bound to accept the parties’ stipulation as to the abuse of discretion standard. I disagree. In Estate of Sanford, 308 U.S. at 50, 60 S.Ct. 51, the parties stipulated to an interpretation of the gift taxing statutes at issue. The Supreme Court refused to be bound by the stipulation, holding that “[w]e are not bound to accept, as controlling, stipulations as to questions of law.” Id. at 51, 60 S.Ct. 51. In Alameda Gateway Ltd., in the context of non-compliance with an agency statement that was not binding on the agency, this court stated that “the Supreme Court has recognized that a court of appeals does not abuse its discretion when it raises the validity of a law even when the parties failed to raise the issue in the briefs or before the district court. See id. at 1167 (citations omitted). This Court observed that the Supreme Court carved out an exception to the general rule of waiver, stating ‘that the Court of Appeals acted without any impropriety in refusing to accept what in effect was a stipulation on a question of law.’ ” See id. (citing United States Nat’l Bank of Oregon v. Independent Ins. Agents of Am., 508 U.S. 439, 448, 113 S.Ct. 2173, 124 L.Ed.2d 402 (1993)). Notably, this exception was applied where we found ourselves with the “unsavory prospect of reviewing a regulation that may not have the force of law *1149and which our case law specifically precludes us from reviewing.” See id. at 1168 (emphasis added). Furthermore, in United States Nat’l Bank of Oregon, 508 U.S. at 447-48, 113 S.Ct. 2173, cited by this court in Alameda Gateway Ltd., 213 F.3d at 1167-68, the Supreme Court held that the court of appeals had a duty to, sua sponte, inquire into the validity of a statute that had thought to have been repealed. What all of these cases have in common is that through stipulation or waiver, federal courts found themselves in the precarious position of possibly having to apply a law or an interpretation of a law that by its very nature is invalid.
Our situation is different because the parties did not stipulate to a question of law in its ordinary sense. No one is arguing here that a law is invalid or that a particular meaning should be given to the phrase “abuse of discretion.” Rather, the parties stipulated to a standard of review, which, unlike the cases mentioned, had the effect of waiving questions of fact, not a question of law. The parties could have stipulated before the district court that the Plan Administrator was not operating under a conflict of interest, a factual determination. This, together with the indisputably broad discretionary power granted to the Plan Administrator, would have unquestionably resulted in an abuse of discretion standard of review. By stipulating, instead, to the abuse of discretion standard of review, the parties have implicitly stipulated to the question of fact that the Plan Administrator was not operating under a conflict of interest. Regula has never argued or set forth a contrary position at any point in the proceedings, including his briefs to this Court. See Atwood, 45 F.3d at 1323-23. Thus, I believe that the district court correctly applied the abuse of discretion standard.
II.
A.
Reviewing the Plan Administrator’s decision for an abuse of discretion, I would affirm the district court. Regula first contends that the Plan abused its discretion as a matter of law because it failed to consider vocational evidence in evaluating Re-gula’s claim. However, under the “any occupation” standard, the “consideration of vocational evidence is unnecessary where the evidence in the administrative record supports the conclusion that the claimant does not have an impairment which would prevent him from performing some identifiable job.” McKenzie v. General Tel. Co. of California, 41 F.3d 1310, 1317 (9th Cir.1994). Long-term disability determinations are made according to the “any occupation” standard under the Delta Plan. Thus, under McKenzie, it was unnecessary for the Plan to identify specific jobs within Regula’s specifications in order to reject his claim.
There is ample evidence in the record to support the Administrative Committee’s conclusion that Regula could perform some occupation. As the district court pointed out, “the Plan relied upon the reports of Dr. Kumar, which detailed the restrictions on Plaintiffs ability to work, and Dr. O’Brien who opined that ‘there is no type of work within [Regula’s] job description that he would not be able to do.’ ” Thus, while the Administrative Committee did not rely on vocational evidence that specifically identified potential jobs for Regula, because it was not required to do so under McKenzie, the evidence in the record indicates that Regula does not have an impairment that prevents him from performing “some identifiable job.”
B.
Regula has asked, and the majority has agreed, to import the “treating physician *1150rule” from Social Security disability cases for application to disability determinations under ERISA. I disagree with this holding. The treating physician rule, as applied in Social Security cases, requires that greater, though not conclusive, weight be placed on the opinion of a treating physician. See Magallanes v. Bowen, 881 F.2d 747, 751 (9th Cir.1989). Under the rule, specific reasons based on substantial evidence must support the rejection of a treating physician’s opinion. See Embrey v. Bowen, 849 F.2d 418, 421 (9th Cir.1988). I would reject the application of the treating physician rule in ERISA cases because there are significant differences between Social Security and ERISA that counsel against adoption of the rule in the ERISA arena.
Congress and the Social Security Administration (“SSA”) have created an elaborate statutory and regulatory scheme governing Social Security disability determinations. See 42 U.S.C. §§ 401-433; 20 C.F.R. §§ 404.1-.2127, 416.101-.2227. For instance, the SSA has created a detailed five-step procedure to evaluate which claimants are disabled and therefore entitled to Disability Insurance benefits. See 20 C.F.R. § 404.1520, 416.920; see also Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795, 804, 119 S.Ct. 1597, 143 L.Ed.2d 966 (1999) (describing the SSA’s five-step evaluation process). As part of this sequential procedure, the SSA has created grids to provide guidance about whether a claimant is disabled. See 20 C.F.R. § 404, Subpart P, Appendix 1-2; Reddick v. Cha-ter, 157 F.3d 715, 729 (9th Cir.1998). The SSA has also codified the treating physician rule in the regulations governing disability determinations. See 20 C.F.R. §§ 404.1527(d); 416.927(d). Thus, although this Court reviews Social Security benefits eligibility determinations made by an Administrative Law Judge (“ALJ”) for substantial evidence and application of the correct legal standards (similar to the ERISA context), see Floten v. Sec’y of Health & Human Servs., 44 F.3d 1453, 1457 (9th Cir.1995), an ALJ must follow far stricter guidelines (such as detailed grids) than a plan administrator making the same determination under ERISA.
In contrast to Social Security, a disability determination under ERISA is subject almost entirely to the plan’s language. See Firestone, 489 U.S. at 115, 109 S.Ct. 948 (“[T]he validity of a claim to benefits under an ERISA plan is likely to turn on the interpretation of terms in the plan at issue.”); Bendixen v. Standard Ins. Co., 185 F.3d 939, 944 (9th Cir.1999) (stating that an ERISA plan abuses its discretion when it deviates from the language of the plan). Whereas Social Security sets forth a very elaborate statutory and regulatory scheme, the ERISA implementing regulations only specify minimum requirements for the consideration of claims, see 29 C.F.R. § 2560.503-1, and do not mention whether the treating physician rule should apply under ERISA.
Because of the differences between Social Security and ERISA, the treating physician rule should not apply in ERISA cases unless the plan’s language dictates such a rule. There is no such provision in this case. Accordingly, this Court should not interfere with the contractual terms agreed upon by an employee and employer in forming an ERISA plan. In addition, neither Congress nor the Department of Labor have seen fit to include the treating physician rule within the statutory or regulatory scheme governing ERISA. Thus, unless there is a provision in an ERISA plan that calls for the application of the treating physician rule, we should decline to adopt such a rule as part of the federal common law. This result is consistent with the general view that ERISA should be governed primarily by the language of *1151the plan, and not by an elaborate statutory and regulatory scheme such as that governing Social Security.
As an illustration of the emphasis placed on the language of an ERISA plan, this Court has previously rejected the need for vocational evidence when a plan’s language subjects the claimant’s eligibility for disability benefits to the “any occupation” standard. See McKenzie, 41 F.3d at 1317. The vocational evidence requirement originates from the regulations governing Social Security disability determinations. See 42 U.S.C. § 423(d)(2)(A); 20 C.F.R. §§ 404.1520(f), 416.920(f). Under step five of the SSA’s sequential evaluation procedure, the ALJ bears the burden to show that there are jobs that the claimant can perform (i.e. it requires consideration of vocational evidence). See Smolen v. Chater, 80 F.3d 1273, 1291 (9th Cir.1996). However, under almost identical circumstances, this Court rejected the importation of the vocational evidence rule into ERISA cases when the plain language of the plan does not require the consideration of such evidence. See McKenzie, 41 F.3d at 1317. Thus, this Court’s rule that vocational evidence is unnecessary in ERISA cases, even though it is required in Social Security cases, supports the conclusion that this Court should not read extraneous terms into an ERISA plan.
This result is also consistent with the broad discretion conferred on plan administrators under Firestone. The Supreme Court stated in Firestone that a plan granting an administrator broad discretion over eligibility determinations should be accorded deference by limiting a court’s review of those decisions to an abuse of discretion standard. See Firestone, 489 U.S. at 115, 109 S.Ct. 948. A rule that requires plan administrators to consider certain types of evidence and to weigh that evidence in a compulsory manner would effectively undermine that discretion. See Dowden v. Blue Cross & Blue Shield of Texas, Inc., 126 F.3d 641, 644 (5th Cir.1997) (recognizing that in determining medical necessity under an ERISA plan, granting “conclusive weight to the opinion of the attending physician would vitiate the discretionary authority expressly granted to [the plan] in the contract.”). A plan administrator should be entitled to the same deference it receives on other decisions when it considers how much emphasis to place on the opinion of a treating physician.
Of the four other Circuits that have considered whether the treating physician rule should apply in ERISA cases, three have rejected the rule’s application under ERISA. See Sheppard & Enoch Pratt Hosp., Inc. v. Travelers Ins. Co., 32 F.3d 120, 126 (4th Cir.1994) (rejecting the treating physician rule when an ERISA plan is making a determination about the medical necessity of a prescribed treatment); Salley v. E.I. DuPont de Nemours & Co., 966 F.2d 1011, 1016 (5th Cir.1992) (stating in dicta that the court has “considerable doubt about holding the [treating physician rule] applicable in ERISA cases.”); Jett v. Blue Cross & Blue Shield of Alabama, Inc., 890 F.2d 1137, 1139-40 (11th Cir.1989) (stating that even a plan’s failure to contact a treating physician is not an abuse of discretion). In a recent case, the Fourth Circuit suggested that the treating physician rule is not only inapplicable when determining medical necessity in accordance with Sheppard, but that it was not persuaded to apply it to disability determinations either. See Elliott v. Sara Lee Corp., 190 F.3d 601, 607 (4th Cir.1999). Furthermore, although the fourth case, Donaho v. FMC Corp., 74 F.3d 894, 901 (8th Cir.1996), appears to support the majority’s application of the treating physician rule in ERISA cases, subsequent Eighth Circuit case law has drastically un-*1152dereut its precedential effect. See Delta Family-Care Disability and Survivorship Plan v. Marshall, 258 F.3d 834, 841 (8th Cir.2001) (stating that although a reviewing physician’s opinion is generally accorded less deference than that of a treating physician in reviewing disability cases under ERISA, “a treating physician’s opinion does ‘not automatically control, since the record must be evaluated as a whole.’ ”); Fletcher-Merrit v. NorAm Energy Corp., 250 F.3d 1174, 1180 n. 3 (8th Cir.2001). Both cases emphasize the extreme circumstances at play in Donaho in which two treating physicians and an examining physician contradicted the reviewing physician’s conclusions. See Delta Family-Care, 258 F.3d 834, 841; Fletcher-Merrit, 250 F.3d at 1180 n. 3.
Of particular note, Jett and Salley recognize that the treating physician rule creates an inherent conflict of interest that encourages treating physicians to continue to treat their patients as disabled. See Salley, 966 F.2d at 1016; Jett, 890 F.2d at 1140. An illegitimate conflict exists in ERISA cases because “the treating physician would stand to profit greatly if the court were to find benefits should not be terminated.” Salley, 966 F.2d at 1016. Because an ERISA plan ordinarily requires a claimant to reprove their disability periodically, a disability finding by a treating physician almost guarantees another visit by that claimant. ■ Thus, the rule creates an inherent conflict of interest in the ERISA context that justifies a decision not to place special weight on the opinion of a treating physician. These out-of-circuit cases and their respective rationales provide further support for the conclusion that the treating physician rule should not apply to ERISA cases.
C.
Regula argues that the district court’s decision to deny summary judgment was erroneous because the Plan abused its discretion as a matter of law. Specifically, Regula asserts that the Plan was required to make a finding that Regula’s condition had improved before terminating his benefits. However, the plan states that a beneficiary is entitled to benefits “so long as he remains disabled.” Therefore, according to the plain language of the plan, a determination that Regula was no longer disabled would justify a termination of his benefits. The Plan did not abuse its discretion in terminating his benefits because the Plan’s finding that Regula was no longer disabled is supported by substantial evidence in the record and was based on a reasonable interpretation of the plan’s terms. See Hancock v. Montgomery Ward Long Term Disability Trust, 787 F.2d 1302, 1307 (9th Cir.1986).
For Regula to prevail on appeal, he must show that the Plan abused its discretion when it denied his benefits. “It is an abuse of discretion for an ERISA plan administrator to make a decision without any explanation, or in a way that conflicts with the plain language of the plan, or that is based on clearly erroneous findings of fact.” Atwood, 45 F.3d at 1323-24. This Court should affirm the plan administrator’s decision if it was based upon substantial evidence and complied with the terms of the plan. See, e.g., Meditrust Fin. Servs. Corp. v. Sterling Chemicals, Inc., 168 F.3d 211, 215 (5th Cir.1999); Ellis v. Metro. Life Ins. Co., 126 F.3d 228, 232 (4th Cir.1997). Substantial evidence does not mean that the plan administrator’s decision must be proven correct by a preponderance of the evidence. Rather, substantial evidence “is such relevant evidence as reasonable minds might accept as adequate to support a conclusion even if it is possible to draw two inconsistent conclusions from the evidence.” Gilbrook v. City *1153of Westminster, 177 F.3d 839, 856 (9th Cir.1999).
The Plan relied on the detailed reports of Drs. O’Brien and Kumar, who were hired by the Plan to independently assess whether Regula was still disabled. Dr. Kumar opined in a detailed eight-page report that Regula “is definitely [physically] capable of gainful employment performing some type of work.” Furthermore, Ku-mar’s report specified Regula’s physical limitations and consequently concluded that he could work based on those specifications.
In contrast, most of Regula’s evidence was superannuated by the time the Plan terminated his benefits. With the exception of the report by Dr. Dean Cummings, all of Regula’s evidence was submitted pri- or to March 3, 1993, approximately two years prior to the termination of his benefits. Although Cummings’ report clearly states that Regula was still permanently disabled on December 5, 1994, it was not an abuse of discretion, as a matter of law, for the Plan to reject his opinion and accept Kumar’s more recent report.
Regula also argues that it was an abuse of discretion for the Plan to ignore the report submitted by his treating physician, Dr. Smith, stating that Regula’s combined physical and psychological symptoms rendered him permanently disabled. This argument is without merit for two reasons. First, the Plan relied on an independent opinion submitted by Dr. O’Brien, in which he found that “Mr. Regula can return to work immediately and that there is no type of work within his job description that he would not be able to do.” O’Brien’s report further stated that Regula was a “malingerer” who was “consciously exaggerating his psychological and orthopedic difficulties.” Second, it was reasonable for the Plan to conclude that Smith’s reports were less probative due to the perceived inconsistencies in her report and O’Brien’s opinion that Smith might have been biased. In fact, the letter sent to Regula explaining the Administrative Committee’s decision indicates that it found O’Brien’s opinion more persuasive and expressed concerns about Smith’s lack of objectivity based on comments she made outside of her field of expertise.
Because the Plan’s decision is supported by substantial evidence, is consistent with the language of the plan, and there is no showing of clearly erroneous findings of fact, I believe that the district court correctly concluded that the Plan did not abuse its discretion as a matter of law.
III.
I also believe that the district court did not err when it found that the Plan had met the requirements of “full and fair review.” Regula alleges that the Plan failed to fully comply with several technical notice requirements set forth in the regulations governing ERISA. See 29 C.F.R. § 2560.503 — 1(f). In particular, Regula contends that the Plan failed to include the following requisite information in its denial letter: (1) a specific reason for the denial; (2) a specific plan provision supporting the denial; and (3) specificity regarding how Regula could perfect his claim. The Plan did provide Regula with a “full and fair review” of his claim, however, because it substantially complied with ERISA’s notice requirements. See Terry v. Bayer Corp., 145 F.3d 28, 38-39 (1st Cir.1998); Dade v. Sherwin-Williams Co., 128 F.3d 1135, 1141 (7th Cir.1997).
ERISA requires that employers must “afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.” 29 U.S.C. *1154§ 1133. The Department of Labor has further specified that adequate notice requires that the plan give a specific reason for its denial, refer to a specific plan provision on which its denial is based, provide information about how the claimant can perfect his claim, and inform the claimant about how to submit his claim for further review. See 29 C.F.R. § 2560.503-1®. These notice requirements are designed to provide “a meaningful dialogue between ERISA plan administrators and their beneficiaries.” Booton v. Lockheed Med. Benefit Plan, 110 F.3d 1461, 1463 (9th Cir.1997). Adequate notice is required to allow beneficiaries to adequately prepare for further administrative review, as well as for an appeal in federal court. See Schadler v. Anthem Life Ins. Co., 147 F.3d 388, 394 (5th Cir.1998). Thus, the underlying question is whether the Plan’s initial denial letter afforded Regula the necessary notice allowing him to seek further review of his claim. See Dade, 128 F.3d at 1142.
The Plan’s letter referred to the relevant plan provisions and provided specific reasons for the denial. The letter indicated that the Plan exclusively relied upon the independent medical reports submitted by Drs. Kumar and O’Brien in denying his claim. The letter specifically informed Re-gula that both doctors concluded that he was “able to do some type of work,” justifying the Plan’s conclusion that Regula was no longer disabled. In addition, the letter also referenced the specific provision in the plan that supported the denial — the letter explained that Regula’s condition no longer met the definition of long-term disability found in Section 4.03 of the plan. Where, as here, a denial letter cites to a specific plan provision and the relevant physician reports support the denial, a plan has met the notice requirements of § 2560.503(f)(1)-(2). See Collins v. Cent. States, Southeast and Southwest Areas Health and Welfare Fund, 18 F.3d 556, 561 (8th Cir.1994).
The Plan also provided Regula with the necessary information to perfect his claim. See 29 C.F.R. § 2560.503-l(f)(3). In its denial letter, the Plan notified Regula that in order to perfect his claim, he “must establish by objective evidence that [he is] continuously and totally disabled from engaging in any occupation or work for compensation or profit.” In many situations, a plan is uncertain about what types of additional evidence might perfect a claim. For example, in Kearney v. Standard Ins. Co., 175 F.3d 1084, 1091 (9th Cir.1999) (en banc), this Court recognized that there are situations when a plan does not need to inform a claimant about how to perfect his claim because additional evidence would not change the outcome. Regula did, in fact, submit additional objective evidence, which the Plan found unpersuasive. The notice provided by the Plan and the Plan’s request for “additional objective evidence” substantially complied with the ERISA notice requirements.
Regula also argues that the denial letter sent by the Administrative Subcommittee after his first appeal did not contain instructions regarding how he could perfect his appeal. However, it is unnecessary for a denial letter following an appeal to provide information about how a claimant can perfect his claim. See 29 C.F.R. § 2560.503 — 1(h)(3).
He further contends that a letter sent by the Plan that purportedly cured any defects in the earlier denial letter arrived only six days prior to his final appeal to the Administrative Committee, thereby arriving too late to be of any assistance. However, this contention has no merit because the earlier letter did meet the notice requirements, rendering consideration of that final letter unnecessary.
Regula’s final contention on appeal is that the Plan failed to provide him with a full and fair review because it did not *1155afford him sufficient time to comment on and review pertinent documents prior to his final appeal to the Administrative Committee. Under 29 C.F.R. § 2560.503-1(g)(1), an ERISA plan must allow a claimant to “[r]eview pertinent documents” and “[sjubmit issues and comments in writing.” Id. This requirement means that a benefit plan must “provide claimants with access to ‘the evidence the decisionmaker relied upon’ in denying their claim.” Wilczynski v. Lumbermens Mutual Cas. Co., 98 F.3d 397, 402 (7th Cir.1996). A benefit plan does not need to allow a claimant to review every document in his administrative file, but only those documents that are influential in the plan’s decision. See id. By Regula’s own admission, his attorney was able to review and comment upon the reports provided by Drs. Kumar and O’Brien, which the Plan relied on exclusively in denying Regula’s claim. Therefore, although Regula may not have inspected all the information in his administrative file, he was able to examine and comment upon all the information that formed the basis for the denial of his claim.
The Plan did not deny Regula a full and fair review of his claim because the Plan substantially complied with the procedural requirements found in ERISA’s implementing regulations. See 29 C.F.R. § 2560.503-1.
IV.
For these reasons, I respectfully dissent. The judgment of the district court should be affirmed.