Court Opinion

ID: 203805
Source: CourtListenerOpinion
Date Created: 2011-02-07 06:23:25+00
Date Added: 2024-06-11T08:21:14.134310
License: Public Domain

United States Court of Appeals
                       For the First Circuit

No. 05-2877
                           DIANE DENMARK,

                        Plaintiff, Appellant,

                                 v.

              LIBERTY LIFE ASSURANCE COMPANY OF BOSTON,

                        Defendant, Appellee.

          APPEAL FROM THE UNITED STATES DISTRICT COURT

                  FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. Douglas P. Woodlock, U.S. District Judge]

                               Before

                       Lipez, Selya and Howard,
                           Circuit Judges.

     Jonathan M. Feigenbaum, with whom Phillips & Angley was on
brief, for appellant.
     Jay E. Sushelsky and Melvin R. Radowitz on brief for American
Association of Retired Persons, amicus curiae.
     Mala M. Rafik and Rosenfeld & Rafik, P.C. on brief for
Massachusetts Employment Lawyers Association, amicus curiae.
     Richard   Johnston  on   brief   for  Health   Administration
Responsibility Project, amicus curiae.
     Andrew C. Pickett, with whom Matthew D. Freeman, Ashley B.
Abel, and Jackson Lewis LLP were on brief, for appellee.
     Lisa Tate, Teresa L. Jakubowski, Mark J. Crandley, and Barnes
& Thornburg, LLP on brief for American Council of Life Insurers,
amicus curiae.

                             May 6, 2009
             SELYA, Circuit Judge.       This appeal has generated thorny

questions involving the appropriate standard of judicial review

under the Employee Retirement Income Security Act (ERISA), 29

U.S.C. §§ 1001-1461.       It is now before us for a second time.          Our

initial encounter produced a proliferation of views: three separate

opinions from the three panelists, each of which grappled with the

methodological problem facing a reviewing court in regard to an

ERISA   benefit-denial      decision     made   by   a   plan    administrator

operating as both adjudicator and payer of such claims.                    See

Denmark v. Liberty Life Assur. Co., 481 F.3d 16 (1st Cir. 2007)

(Lipez, J.); id. at 39 (Selya, J., concurring); id. at 41 (Howard,

J., dissenting).     For ease in exposition, we refer to the three

constituent     opinions     comprising      that    splintered      decision,

collectively, as "Denmark II."

             Dissatisfied   with   the    outcome,   the   plaintiff    sought

rehearing and rehearing en banc.         See Fed. R. App. P. 35; 1st Cir.

R. 35, 40.    The en banc court withheld action on the petition until

the Supreme Court had decided Metropolitan Life Insurance Co. v.

Glenn, 128 S. Ct. 2343 (2008).         Believing that Glenn had shed new

light on the standard of review, the panel withdrew its earlier

decision and requested supplemental briefing.                   See Denmark v.

Liberty Life Assur. Co., 530 F.3d 1020 (1st Cir. 2008) (per

curiam). By separate order, the petition for rehearing en banc was

denied as moot.

                                       -2-
             The supplemental submissions, together with a welter of

helpful amicus briefs, led to a new round of oral argument.                           We

took the matter under advisement and now reaffirm our existing

abuse   of    discretion        standard    of   review,     albeit     with   certain

refinements. We nonetheless recognize that the ultimate resolution

of   the     case    may    be    informed,         under   Glenn,    both     by    the

aforementioned       refinements         and   by    the    obtaining    of    further

information.        Consequently, we vacate the judgment and remand to

the district court so that it may obtain that information and

reevaluate the case with the guidance supplied by Glenn and by this

opinion.

I.   BACKGROUND

             We presume the reader's familiarity with the facts of the

case as set forth in Denmark II.                    We rehearse here only those

events necessary to put this appeal, in its present posture, into

a workable perspective.

             In 1996, a primary care physician diagnosed plaintiff-

appellant Diane Denmark as suffering from fibromyalgia.                              The

plaintiff,     who    was   a    group     leader    employed   by    GenRad,       Inc.,

nonetheless continued to work.              At the times relevant hereto, she

was covered under two interlocking, ERISA-regulated disability

insurance plans: GenRad's short-term disability plan (the STD Plan)

                                           -3-
and its long-term disability plan (the LTD Plan).1                       Defendant-

appellee Liberty Life Assurance Company (Liberty) administered both

plans, albeit under different arrangements.

               The employer self-funded the STD Plan. Under it, Liberty

provided an initial claims review and benefits determination.                      Its

decisions were appealable to the employer, which paid approved

claims from its own exchequer.

               In contrast, Liberty underwrote the LTD Plan.                  Pursuant

to   its     terms,     Liberty   reviewed       all   claims,   made   the    initial

benefits determinations, adjudicated any appeals, and paid approved

claims from its own coffers.

               The plaintiff stopped working on October 3, 2001, and

applied for STD benefits.             The STD Plan defines "disabled" to

include a person who is "unable to perform all of the material and

substantial duties of [her] occupation . . . because of an Injury

or Sickness."           In an effort to satisfy this definition, the

plaintiff supported her claim with reports from three doctors: her

primary care physician, a cardiologist, and a rheumatologist.

After reviewing the tendered medical records and a job description,

Debra       Kaye,   a   nurse   employed    by    Liberty   as   a   case     manager,

requested that Dr. Clay Miller conduct a peer review.                   Based on Dr.

Miller's assessment, Liberty denied the claim.

        1
       In late 2001, Teradyne, Inc. acquired GenRad, but the
plaintiff's right to coverage remained the same. For simplicity's
sake, we refer throughout to GenRad.

                                           -4-
            The plaintiff appealed this decision to her employer.

The   appeal    papers   included   a    response   from    her   primary   care

physician disputing Dr. Miller's conclusions.              The employer asked

Dr. Peter Schur to perform an independent medical examination

(IME).   When Dr. Schur found the plaintiff disabled, the employer

agreed to pay her STD benefits.

            In June of 2002, the plaintiff filed for long-term

benefits.      An applicant qualifies as disabled under the LTD Plan

if, for the first two years, "as a result of Injury o[r] Sickness,

[she] is unable to perform the Material and Substantial Duties of

[her] Own Occupation" and thereafter "is unable to perform, with

reasonable continuity, the Material and Substantial Duties of Any

Occupation." Nurse Kaye reviewed the file, which contained medical

support for a finding that the plaintiff's symptomatology had

worsened as well as a completed activities questionnaire in which

she claimed to have severe restrictions on her ability to sit,

stand, walk, drive, and concentrate.

            In her second review, Nurse Kaye discounted the IME

report, suggested that the plaintiff's condition was not as grave

as the completed questionnaire implied, and concluded that the

plaintiff did not qualify for LTD benefits.             Thus, Liberty denied

the claim.

            The   plaintiff    requested      further      review.     Liberty

responded by, among other things, determining that her job involved

                                        -5-
light to sedentary work and hiring a private investigator to

surveil the plaintiff's activities.           The sleuth furnished written

reports and photographs showing that the plaintiff was "very

active."

              With this ammunition in hand, Liberty submitted the

entire file to Network Medical Review (NMR), a referral service

furnishing physicians to evaluate the functional abilities of

claimants.        NMR   forwarded    the      assignment   to   one    of    its

correspondents,      Dr.    John   Bomalaski,    who   concluded      that   the

plaintiff was capable of working full-time in her (primarily

sedentary) position.        On December 10, 2002, Liberty reaffirmed its

earlier denial of LTD benefits.

              Nearly fourteen months later, an administrative law judge

ruled   the     plaintiff    entitled    to   social   security    disability

benefits, see 42 U.S.C. § 405, retroactive to her last day of

actual work.       The judge premised this decision on a subsidiary

finding that the plaintiff was disabled within the meaning of the

Social Security Act.          See id. § 423(d); see also 20 C.F.R. §

416.920.      Although the definition of disability under the Act

differed from the definition of disability under the LTD Plan, the

plaintiff transmitted this ruling, along with a further report from

her rheumatologist, to Liberty; based on these documents, she

sought reconsideration of the refusal to pay LTD benefits. Liberty

stood firm.

                                        -6-
II.   TRAVEL OF THE CASE

            On September 17, 2004, the plaintiff sued Liberty in a

Massachusetts state court.            Liberty removed the action to the

federal district court.     See 28 U.S.C. § 1441; see also id. § 1331.

The case proceeded on the plaintiff's claim under 29 U.S.C. §

1132(a)(1)(B).

            The district court permitted the plaintiff to conduct

limited discovery anent Liberty's relationship with NMR and its

correspondent    physicians      as   part   of   an   effort   to    show   that

Liberty's actions were influenced by a conflict of interest.

Liberty acknowledged that it had paid upwards of $2,000,000 to NMR

physicians between 2001 and 2003, and identified 1,204 files that

it had referred to NMR during that interval.            But Liberty refused,

on burdensomeness grounds, to answer interrogatories regarding the

proportion of those files in which claims ultimately had been

allowed.    As a sanction for this recalcitrance, the court drew an

inference that NMR had found against the claimants in all cases

and, thus, applied heightened scrutiny to Dr. Bomalaski's opinion.

Denmark v. Liberty Life Assur. Co. (Denmark I), Civ. No. 04-12261,

2005 WL 3008684, at *11 (D. Mass. Nov. 10, 2005).

            In   due   season,   the    parties    cross-moved       for   summary

judgment.    Noting that the plan documents delegated discretionary

authority to Liberty, qua plan administrator, the court reviewed the

benefit-denial decision under this circuit's historic abuse of

                                       -7-
discretion standard.     Id. at *9.        Although the court acknowledged

the potential conflict of interest posed by Liberty's dual role in

making benefits determinations and paying claims,2 it found no

significantly probative evidence that the conflict had in fact

influenced Liberty's decisionmaking.           Id. at *18.     In discussing

that issue, the court opined that a bare structural conflict, in and

of itself, did not warrant the application of a less deferential

standard of review.     Id. at *9.

            The court proceeded to find the denial of LTD benefits

supported   by   substantial     evidence    and,   thus,   within   the   plan

administrator's discretion.        Id. at *26.      Accordingly, it granted

Liberty's summary judgment motion and denied the plaintiff's.               See

id.

            On appeal, the plaintiff pursued two lines of attack.

First, she contended that the district court had employed an

incorrect standard of review.       Second, she contended that, whatever

the   standard    of   review,     the     denial   of   LTD   benefits    was

insupportable.    We have recounted the rest of the tale above: the

panel, by a divided vote, affirmed the district court's ruling; the

plaintiff petitioned for rehearing; the Supreme Court decided Glenn;

and the litigation then entered its current phase.

      2
        We   call   such   instances   structural   conflicts,   in
contradistinction to actual conflicts (i.e., instances in which the
fiduciary's decision was in fact motivated by a conflicting
interest).

                                     -8-
III.    ANALYSIS

            The focal point of this appeal has become the standard of

judicial review.      For that reason, we think it useful to rehearse

how the case law in that area has evolved.

            Among    its   panoply   of      remedial    devices     for    plan

participants, ERISA provides for suits to enforce rights conferred

under the terms of an ERISA-regulated plan.                   See 29 U.S.C. §

1132(a)(1)(B).      Suits for the recovery of benefits come within the

ambit of this provision.      Congress did not elucidate a standard of

judicial review applicable to such actions.                  The Supreme Court

filled this void when it decided Firestone Tire & Rubber Co. v.

Bruch, 489 U.S. 101 (1989).

            The Firestone Court noted that ERISA "abounds with the

language and terminology of trust law" and that Congress anticipated

the development of a "federal common law of rights and obligations

under   ERISA-regulated    plans."         Id.   at   110.     Invoking    trust

principles, the Court held that when an ERISA-regulated plan vests

discretion in the plan administrator, the latter's resolution of

benefits claims must be reviewed deferentially. Id. at 111. Absent

such a delegation of discretionary authority, a plan administrator's

decisions are to be reviewed de novo.            Id. at 111-12.

            In a brief aside, the Court observed that "if a benefit

plan gives discretion to an administrator or fiduciary who is

operating under a conflict of interest, that conflict must be

                                     -9-
weighed as a 'facto[r] in determining whether there is an abuse of

discretion.'"       Id. at 115 (dictum; quoting Restatement (Second) of

Trusts § 187 cmt. d (1959)).        For the next eighteen years, courts

struggled both with this dictum and with how to handle structural

conflicts of interest in ERISA cases.                  A number of different

approaches emerged.

             This court clung to the classic abuse of discretion model,

taking account of the impact, if any, of a conflict in evaluating

whether a denial of benefits was arbitrary and capricious (and thus,

an abuse of discretion). See, e.g., Leahy v. Raytheon Co., 315 F.3d

11, 15-16 (1st Cir. 2002); Doe v. Travelers Ins. Co., 167 F.3d 53,

57-58 (1st Cir. 1999). Other circuits, however, adopted divergent

approaches.    See Kathryn J. Kennedy, Judicial Standard of Review in

ERISA Benefit Claim Cases, 50 Am. U. L. Rev. 1083, 1135-72 (2001)

(collecting cases).

             This    compendium   included      a    "presumptive    neutrality"

approach, under which abuse of discretion review obtains except in

cases   of   actual    conflict   (that   is,       cases   in   which   the   plan

administrator's decision is shown to be conflict-driven).                      See,

e.g., Kobs v. United Wis. Ins. Co., 400 F.3d 1036, 1039 (7th Cir.

2005); Pulvers v. First Unum Life Ins. Co., 210 F.3d 89, 92 (2d Cir.

2000); Woo v. Deluxe Corp., 144 F.3d 1157, 1160-61 (8th Cir. 1998).

It also included a "combination of factors" approach under which

abuse   of   discretion    review   treats      both    actual    and    potential

                                    -10-
conflicts of interest as relevant factors.      See, e.g., Abatie v.

Alta Health & Life Ins. Co., 458 F.3d 955, 965-69 (9th Cir. 2006);

Calvert v. Firstar Fin. Inc., 409 F.3d 286, 293 (6th Cir. 2005).

Several courts favored a "sliding-scale" approach. See, e.g., Pinto

v. Reliance Standard Life Ins. Co., 214 F.3d 377, 391-92 (3d Cir.

2000); Vega v. Nat'l Life Ins. Servs., Inc., 188 F.3d 287, 296 (5th

Cir. 1999) (en banc); Chambers v. Family Health Plan Corp., 100 F.3d

818, 825-26 (10th Cir. 1996); Doe v. Group Hosp'n & Med. Servs., 3

F.3d 80, 87 (4th Cir. 1993). One court preferred a six-step burden-

shifting approach.   See Williams v. BellSouth Telecomms., Inc., 373

F.3d 1132, 1138 (11th Cir. 2004).    Because our home-grown standard

was central to the decisions in both Denmark I and Denmark II, we

explore its parameters.

          In Doyle v. Paul Revere Life Insurance Co., 144 F.3d 181

(1st Cir. 1998), we acknowledged that the Firestone dictum could be

read to imply a heightening of the standard of review for structural

conflict cases.   Id. at 184.   We noted, however, that market forces

were at work: employers are unlikely to contract with insurers who

acquire reputations for miserliness.    Id.   Thus, it seemed prudent

to adhere to the baseline abuse of discretion standard in cases

involving structural conflicts, but to give that standard "more

bite"; that is, a "special emphasis on reasonableness."     Id.   The

bottom-line inquiry should be "whether [the plan administrator] had

substantial evidentiary grounds for a reasonable decision in its

                                 -11-
favor." Id. This approach left the claimant free to show an actual

conflict — and if she succeeded in doing so, that showing would

influence the decisional calculus.

          In Doe, 167 F.3d at 57-58, we supplied a gloss on Doyle,

explaining that reasonableness "is the basic touchstone" in all

benefit-denial cases.    We again rejected a special standard of

review for structural conflict cases, observing that "gradations in

phrasing are as likely to complicate as to refine the standard."

Id.   In any event, the requirement of reasonableness is flexible;

thus, that requirement may have "substantial bite" when a court is

faced with a specific decision on a specific set of facts.      Id.

(explaining that reasonableness review necessarily takes cognizance

of conflicts).

          In Pari-Fasano v. ITT Hartford Life & Accident Insurance

Co., 230 F.3d 415 (1st Cir. 2000), we stressed two points.      The

first dealt with nomenclature; we made pellucid that the terms

"abuse   of    discretion,"   "arbitrary   and   capricious,"   and

"reasonableness" were functionally equivalent in the ERISA context.

Id. at 419.   None of those terms heralded a heightened standard of

review for structural conflict cases.      Id.    Our second point

remarked the obvious: "the possible existence of a conflict of

interest would necessarily affect the court's determination of what

was reasonable conduct by the insurer under the circumstances." Id.

When Pari-Fasano speaks of the potential for conflict, we understand

                                -12-
that usage as a reference to the existence of a structural conflict,

and not the possibility of finding an actual conflict or "improper

motivation."     Id.3

           Following this trilogy of cases, we consistently have

reviewed   the    resolution    of   benefits    claims   by   structurally

conflicted plan administrators for abuse of discretion, taking into

account both the potential for conflict and the mitigating effect

of market forces.4      See, e.g., Buffonge v. Prudential Ins. Co., 426

F.3d 20, 28 & n.11 (1st Cir. 2005); Wright v. R.R. Donnelley & Sons

Co. Group Benefits Plan, 402 F.3d 67, 74 (1st Cir. 2005); Glista v.

Unum Life Ins. Co., 378 F.3d 113, 125-26 (1st Cir. 2004); Lopes v.

Metro. Life Ins. Co., 332 F.3d 1, 4-5 (1st Cir. 2003); Leahy, 315

F.3d at 16; Dandurand v. Unum Life Ins. Co., 284 F.3d 331, 335-36

(1st Cir. 2002).

           This brings us to Glenn.             There, the Supreme Court

reviewed a denial of benefits by an administrator that both passed

judgment upon and paid claims under an ERISA-regulated plan.            The

     3
       Insofar as our later cases read this language as precluding
consideration of a purely structural conflict in assessing the
existence vel non of an abuse of discretion, that interpretation is
inconsistent with Glenn, 128 S. Ct. at 2351.
     4
       In Leahy, we suggested that when a plan administrator's
determination is actually motivated by a conflict of interest,
"courts may cede a diminished degree of deference — or no deference
at all — to the administrator's determinations." 315 F.3d at 16.
When faced with such a case, we determined that the situation
warranted de novo review. See Janiero v. Urological Surgery Prof'l
Ass'n, 457 F.3d 130, 139-42 (1st Cir. 2006). We need not speculate
here as to whether the holding in Janiero survives Glenn.

                                     -13-
denial had been upheld by the district court but set aside by the

Sixth Circuit under its "combination of factors" standard of review.

             Picking up on the Firestone dictum, the Glenn Court

clarified what sort of relationships might suffice to create a

conflict     of   interest.        It   concluded    that    courts   should   take

cognizance of structural conflicts in ERISA cases; that is, that a

conflict exists whenever a plan administrator, whether an employer

or an insurer, is in the position of both adjudicating claims and

paying awarded benefits. Glenn, 128 S. Ct. at 2348-50. In reaching

that conclusion, the Court rejected the market forces rationale,

explaining       that   "ERISA    imposes    higher-than-marketplace      quality

standards on insurers."            Id. at 2350.       The Court left open the

possibility that market forces might inform the significance of a

structural conflict in a given case.               See id.

             The Court then turned to the question of how best to weigh

structural conflicts.         In charting this course, it held fast to the

standard of review previously announced in Firestone: abuse of

discretion.        Id. (analogizing to trust law, which asks merely

whether a conflicted trustee has abused his discretion either

substantively or procedurally). The Court rejected burden-shifting

rules   as   a    mechanism      for    ensuring   proper    judicial   review   of

decisions made by structurally conflicted plan administrators. Id.

at 2351.

                                          -14-
          On a more affinitive note, the Court commented approvingly

that "when judges review the lawfulness of benefits denials, they

will often take account of several different considerations of which

a conflict of interest is one."         Id.    It likened this multi-factor

approach to that used in the administrative law context.5               Id.   The

Court added that judges should weigh a conflict as they would weigh

any   other    pertinent      factor;    that       is,   when    the   relevant

considerations   are     in   equipoise,      any   one   factor,   including   a

structural conflict, may act as a tiebreaker. Id.                In this regard,

the Court counselled judges to take account of both "the degree of

closeness" and "the tiebreaking factor's inherent or case-specific

importance."    Id.

          The    Court    acknowledged        the   resemblance     between   its

approach and the Sixth Circuit's "combination of factors" approach;

those approaches give a structural conflict some weight but, in the

absence of aggravating circumstances (say, evidence of arbitrariness

or of actual bias), do not treat it as a dispositive influence. Id.

at 2351-52.

      5
       Seizing on this comparison and the Court's use of the term
"lawfulness," the plaintiff suggests that the Court created a new,
less deferential standard of review. But the Court's articulation
of how trust law informs the issue reveals the utter implausibility
of this suggestion.    See Glenn, 128 S. Ct. at 2350 ("Trust law
continues to apply a deferential standard of review to the
discretionary decisionmaking of a conflicted trustee, while at the
same time requiring the reviewing judge to take account of the
conflict when determining whether the trustee, substantively or
procedurally, has abused his discretion.") (emphasis supplied)).

                                    -15-
            The Court also described what kind of evidence might

impact the relative weight of an identified conflict:

            The conflict of interest at issue here, for
            example, 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. It should prove less important
            (perhaps to the vanishing point) where the
            administrator has taken active steps to reduce
            potential bias and to promote accuracy, for
            example, by walling off claims administrators
            from those interested in firm finances, or by
            imposing management checks that penalize
            inaccurate decisionmaking irrespective of whom
            the inaccuracy benefits.

Id. at 2351 (citations and internal quotations marks omitted).

            To complete the picture, the Court applied its newly

refined standard to the case before it.            In so doing, the Court

assessed    a    litany   of   relevant     factors,   including   the   plan

administrator's structural conflict, its inconsistent positions

concerning a social security determination, its unexplained emphasis

on medical opinions favoring a denial of benefits, and its offhand

discounting of contrary medical opinions.          Id. at 2352.    The Court

concluded that "these serious concerns," together with the closeness

of the case and the presence of a structural conflict, supported the

decision    to   set   aside   the   plan   administrator's   discretionary

judgment.    Id.

            The case at bar falls squarely within Glenn's precedential

orbit.     Here, the LTD Plan contains a sufficient delegation of

                                     -16-
discretionary authority to trigger deferential review.    See Denmark

II, 481 F.3d at 29; id. at 40 (Selya, J., concurring); id. at 41

(Howard, J., dissenting).    That brings into play Glenn's baseline

principle, consistent with this circuit's prior precedent, that

judicial review of such a benefit-denial decision is for abuse of

discretion.    See Glenn, 128 S. Ct. at 2350; see also Doe, 187 F.3d

at 56-57; Doyle, 144 F.3d at 184.      In other words, where the plan

documents delegate discretionary authority to the plan administrator

(whether or not structurally conflicted), courts should review

benefit-denial decisions for abuse of discretion, considering any

conflict as one of a myriad of relevant factors.    See Glenn, 128 S.

Ct. at 2351.

          At this point, a red flag appears.    Although the standard

of review articulated in our earlier cases comports generally with

Glenn, two aspects of our original approach require refinement.

First, the market forces rationale no longer allows a reviewing

court to disregard a structural conflict without further analysis.

See Glenn, 128 S. Ct. at 2349-50. That aspect of the Glenn decision

requires that structural conflicts be accorded weight — albeit not

necessarily dispositive weight — in the standard-of-review equation.

With that in mind, 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.

                                -17-
           Second, Glenn makes explicit what was implicit in our

earlier decisions: in cases in which a conflict has in fact infected

a   benefit-denial    decision,   such    a   circumstance   may   justify   a

conclusion that the denial was itself arbitrary and capricious (and,

thus, an abuse of discretion).      See id. at 2351; McCauley v. First

Unum Life Ins. Co., 551 F.3d 126, 138 (2d Cir. 2008).

           To sum up, our preexisting standard of review is largely

but not entirely harmonious with Glenn.          While the refinements are

modest, this case is hair's-breadth close.          Given that precarious

balance, even a slight adjustment in the mix of factors or in the

weight of a single factor may make a decisive difference.             Hence,

we think it incumbent upon us to remand the case and permit the

district court, in the first instance, to reconsider its decision

in light of Glenn.6      Remand will allow full consideration of how

heavily this conflict should weigh in the balance.           That is highly

desirable because, in performing a multi-factor analysis, "any one

factor will act as a tiebreaker when the other factors are closely

balanced."   Glenn, 128 S. Ct. at 2351.        We leave this reweighing to

the district court, and intimate no view as to the outcome.

           Notwithstanding our decision to remand, our journey is not

yet at an end.       The supplemental briefing touched upon discovery

issues, see, e.g., Appellee's Br. on Reh'g at 57-58, and at oral

      6
       In its original decision, the district court mentioned the
structural conflict, but it considered it in only a glancing way.
See Denmark I, 2005 WL 3008684, at *9.

                                   -18-
argument   in    this   court   the    parties    vigorously     debated    the

permissible     scope   of   discovery,      post-Glenn,    in   ERISA   cases.

Denmark's counsel argued that she should be allowed "to engage in

normal discovery" (which he defined by reference to the discovery

that would be permitted in a personal injury suit arising out of a

traffic accident) and that denying such unfettered discovery would

be unfair and contrary to ERISA as seen through the prism of Glenn.

Counsel for Liberty took a markedly less ambitious view of discovery

in ERISA cases.

           Given these disparate appraisals, we have a responsibility

to offer guidance to the parties and the district court.                   That

guidance entails a brief discussion about the scope of discovery in

ERISA cases.

           ERISA benefit-denial cases typically are adjudicated on

the record compiled before the plan administrator.               Because full-

blown discovery would reconfigure that record and distort judicial

review, courts have permitted only modest, specifically targeted

discovery in such cases.        See Liston v. Unum Corp. Officer Sev.

Plan, 330 F.3d 19, 23 (1st Cir. 2003) (noting that "some very good

reason is needed to overcome the strong presumption that the record

on review is limited to the record before the administrator").

           In some cases, a good reason has been found to exist when

a party makes a colorable claim of bias.                   See id.    Targeted

discovery addressed to such an issue may shed new light on the

                                      -19-
motivation   behind   the    plan     administrator's   decision   without

expanding the panoply of materials on which that decision was based.

          The majority opinion in Glenn fairly can be read as

contemplating some discovery on the issue of whether a structural

conflict has morphed into an actual conflict. See, e.g., Glenn, 128

S. Ct. at 2351.   That is consistent with the Liston paradigm.        But

any such discovery must be allowed sparingly and, if allowed at all,

must be narrowly tailored so as to leave the substantive record

essentially undisturbed.

          In future cases, plan administrators, aware of Glenn, can

be expected as a matter of course to document the procedures used

to prevent or mitigate the effect of structural conflicts.           That

information will be included in the administrative record and, thus,

will be available to a reviewing court. Conflict-oriented discovery

will be needed only to the extent that there are gaps in the

administrative record.      If, say, the plan administrator has failed

to detail its procedures,7 discovery may be appropriate, in the

district court's discretion.        Otherwise, discovery normally will be

limited to the clarification of ambiguities or to ensuring that the

documented procedures have been followed in a particular instance.

          The case at hand falls into a special niche.        Because the

denial of benefits and the commencement of suit both predated Glenn,

     7
      These are merely exemplars; we do not pretend to canvass the
entire universe of possibilities.

                                     -20-
Liberty did not include in the administrative record any evidence

with respect to its conflict-ameliorating procedures.     Given these

temporally awkward circumstances, we think that the district court,

in its discretion, may wish to afford         the   parties a limited

opportunity to flesh out the record (even if that entails further,

appropriately circumscribed, discovery).

 IV.   CONCLUSION

           We need go no further.    For the reasons elucidated above,

we vacate the judgment below and remand this case to the district

court for further consideration consistent with Glenn and with this

opinion.   The district court is free to abrogate or modify the

discovery sanction previously imposed if it sees fit to do so.

           One final point comes to mind. This may be an appropriate

time for the parties seriously to consider settlement. The district

court would be wise to explore that possibility.

Vacated and remanded.    No costs.

                    - Concurring Opinion Follows -

                                 -21-
            LIPEZ,   Circuit    Judge,   concurring.     I   agree   with    my

colleagues that the focal point of this appeal was the standard of

judicial review in our circuit in the wake of Glenn.            I also agree

with my colleagues that we should remand to the district court so

that it can evaluate the impact of Glenn on the merits of Denmark's

case.    However, I am concerned that the majority's general comments

about the appropriate scope of discovery post-Glenn reflect a

particularly hostile attitude towards such discovery, and suggest

that the issue has already been resolved in this circuit.            I write

separately to emphasize that it has not been resolved.

            Although it is true, as the majority says, that "at oral

argument . . . the parties argued strenuously about the permissible

scope of discovery, post-Glenn, in ERISA cases," that issue was

raised sua sponte by members of the panel, not the parties.                 The

scope of discovery post-Glenn was never part of this appeal. It was

not briefed by the parties.         They did not seek guidance on the

issue.    Instead, it is the majority that is eager to use this case

to provide that guidance.

            It may be appropriate, in some instances, to venture

beyond what is strictly required to decide a particular appeal and

provide such guidance. But the resort to dicta in this case is ill-

advised for two reasons.       First, the issue of the permissible scope

of   discovery       post-Glenn    is    complex   and       fact-dependent.

Generalizations without context ignore that reality.           Second, there

                                    -22-
are cases on our doorstep from the district courts that will require

us to decide these discovery issues as they should be decided --

with the benefit of district court analysis and briefing by the

parties.

           The majority is correct that "Glenn fairly can be read as

contemplating some discovery on the issue of whether a structural

conflict has morphed into an actual conflict."               The majority's

statement that "in future cases, plan administrators . . . can be

expected . . . to document the procedures used to prevent or

mitigate   the   effect   of   structural   conflicts"      is   a   reasonable

inference from Glenn's observation that the importance of structural

conflicts is lessened where the administrator "has taken active

steps to reduce potential bias and to promote accuracy." 128 S. Ct.

at 2351.   It is also true, as the majority notes, that in this case

"the denial of benefits and the commencement of suit both predated

Glenn."    Therefore,     on   remand,    "the   district    court,     in   its

discretion, may wish to afford the parties a limited opportunity to

flesh out the record" with "appropriately circumscribed" discovery.

           That general reference to "appropriately circumscribed"

discovery is fair enough.       The problem arises with the majority's

characterizations of that appropriately circumscribed discovery.

The majority says that "any such discovery [on the issue of whether

a structural conflict has morphed into an actual conflict] must be

allowed sparingly and, if allowed at all, must be narrowly tailored

                                   -23-
so as to leave the substantive record essentially undisturbed." The

majority adds that

          Conflict-oriented discovery will be needed only
          to the extent that there are gaps in the
          administrative record.     If, say, the plan
          administrator   has  failed   to   detail   its
          procedures, discovery may be appropriate, in
          the district court's discretion.     Otherwise,
          discovery normally will be limited to the
          clarification of ambiguities or to insuring
          that the documented procedures have been
          followed in a particular instance.

          These propositions reflect a grudging approach to post-

Glenn discovery that may not be justified. They are unnecessary for

our decision in this appeal.   They have been fashioned without the

benefit of district court analysis or briefing by the parties.

Under these circumstances, courts "are far more likely . . . to

fashion defective rules, and to assert misguided propositions, which

have not been fully thought through."     Pierre N. Leval, Judging

Under the Constitution: Dicta About Dicta, 81 N.Y.U. L. Rev. 1249,

1263 (2006).   Accepted uncritically as law, such propositions can

skew the decision-making process of the district courts.      It is

simply impossible to know in this case or in future cases the degree

of discovery that may be required to establish "whether a structural

conflict has morphed into an actual conflict." Such discovery might

be sparing or more expansive depending upon the preliminary showing

made by the plaintiff in a particular case.   Decreeing in this case

that such discovery must be allowed sparingly, or confined to

certain categories, is an unwarranted signal that discovery into the

                                -24-
existence of an actual conflict is disfavored.8   The district court

here, and our district courts generally, are fully capable of

sorting through, in the first instance, the complicated discovery

issues raised by Glenn, and they should not feel bound by the

hostile attitude towards discovery that is improvidently reflected

in dicta in the majority opinion.     Those dicta are not binding on

the district courts or future panels of this court.

     8
       This case has its own discovery history. Denmark filed a
motion in the district court seeking discovery related to the
financial relationship between Liberty and its "independent" review
agency, NMR -- specifically, the amount of money that Liberty had
paid NMR, the number of cases Liberty had referred to NMR, and how
many of those claims had been granted. The district court granted
the motion and ordered Liberty to produce the information Denmark
requested. See Denmark v. Liberty Life Assur. Co. of Boston, 481
F.3d 16, 32 (1st Cir. 2007).        Liberty provided information
regarding the amount it had paid NMR between 2001 and 2003 and the
number of files it had referred to them during that time period,
but refused to stipulate the number of cases in which benefits had
been granted on the grounds that such a stipulation would be too
burdensome. Id. As a sanction for Liberty's refusal to comply
with its discovery order, the district court drew the inference
that NMR had not found in favor of a single claimant in all of the
Liberty files it had reviewed during the relevant time period. Id.
The court then stated that, in light of this inference and to
account for the effects of this conflict of interest, it would
review the opinion of NMR's reviewing physician with "more bite."
Id. Liberty protested this sanction in its supplemental briefing.
See, e.g., Appellee's Br. on Reh'g at 57-58.         Aware of this
history, the majority says that the district court is free on
remand to abrogate or modify the discovery sanction it previously
imposed.   I agree.   However, exactly how the district court on
remand should supplement, if at all, discovery already allowed
should be left to the discretion of the district court without the
unwarranted signals of the majority.

                               -25-