John S. Oates v. Walgreen Company ( 2014 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-12184
Non-Argument Calendar
________________________
D.C. Docket No. 8:12-cv-00908-VMC-TGW
JOHN S. OATES,
Plaintiff-Appellant,
versus
WALGREEN COMPANY,
a foreign profit corporation,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(August 13, 2014)
Before TJOFLAT, JORDAN and ANDERSON, Circuit Judges.
PER CURIAM:
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Plaintiff John S. Oates appeals from the entry of final judgment against him
in a suit to recover benefits allegedly due to him under the terms of the Walgreen
Income Protection Plan for Pharmacists and Registered Nurses (“the Plan”). “We
review de novo a district court’s ruling affirming or reversing a plan
administrator’s ERISA benefits decision, applying the same legal standards that
governed the district court’s decision.” Blankenship v. Metro. Life Ins. Co., 644
F.3d 1350, 1354 (11th Cir. 2011) (per curiam).
I. BACKGROUND
A. Relevant Plan Terms
The Summary Plan Description (“SPD”) states that it “is the official Income
Protection Plan governing document for purposes of describing the various plan
provisions.”1 According to the SPD, defendant Walgreen Company (“Walgreens”)
is the designated Plan Administrator, benefits are paid from Walgreens assets, and
Walgreens is directly responsible for the final adjudication of disability claims.
According to the SPD, a third party called Sedgwick CMS (“Sedgwick”) is the
Claim Administrator who handles initial claims determinations and appeals.
According to the SPD, both Walgreens and Sedgwick have authority to
“construe and interpret the Plan and make benefit determinations, including claims
1
For the first time on appeal, Oates argues that the Summary Plan Description does not
accurately describe the terms of the Plan. We decline to consider this argument made for the
first time on appeal. See infra Part II.
2
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and appeals determinations.” That authority is exercisable “as [Walgreens and
Sedgwick] deem appropriate in their sole discretion.” According to the SPD,
Sedgwick’s benefit determinations are binding on all parties, “except to the limited
extent to which [Sedgwick’s] decisions are subject to further review by
[Walgreens].” The SPD provides for further review by Walgreens if either
Walgreens or Sedgwick “determines that the appeal presents material issues that
are outside the expertise or purview of [Sedgwick] (such as hours worked,
employment status or new or unique procedural or Plan interpretation issues).”
Below, Walgreens submitted a sworn declaration from a Sedgwick
employee stating that, based on the declarant’s personal knowledge and her review
of Sedgwick’s business records, “[u]nder the Plan, Sedgwick performs claims
evaluations and makes determinations on specific claims . . . . Walgreens only
provides information regarding the general eligibility for Plan benefits and
regarding the duties and compensation of Walgreens employees participating in the
Plan.”
Under the terms of the Plan, participants are required both to apply for
Social Security disability benefits and also to appeal any denial of those benefits.
If awarded, the Social Security disability benefits reduce the amount of benefits
awarded under the Plan.
B. Sedgwick’s Determination That Oates Was No Longer Entitled to
Long-Term Disability Benefits
3
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As relevant on appeal, Sedgwick terminated Oates’s long-term disability
benefits claim effective May 22, 2011. Oates twice appealed to Sedgwick, but
both times Sedgwick upheld the termination. 2 Walgreens was not involved with
either the initial benefits determination or the appeals, and Oates never sought
review by Walgreens.
Under the terms of the Plan, Oates was eligible for continued long-term
disability benefits if, inter alia, as a “direct result” of sickness or accidental injury
he was “unable to earn more than 60% of [his] indexed pre-disability earnings
from any employer in [his] local economy at any gainful occupation for which [he
was] reasonably qualified, taking into account [his] training, education, experience,
and pre-disability earnings.” Sedgwick maintains that Oates did not satisfy this
criterion because he was able to work full-time in a sedentary capacity.
On appeal, Oates argues that Sedgwick failed to give due weight to evidence
that he suffers from cognitive problems as a result of his medications, has
problems with his hands, and is unable to sit for long periods of time. See infra
Part IV. Oates also argues that Sedgwick failed to give due weight to the Social
Security Administration’s (“SSA’s”) determination that Oates was entitled to
2
Sedgwick first upheld the termination by letter dated October 11, 2011. Sedgwick upheld
the termination a second time by letter dated February 21, 2012.
4
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Social Security disability benefits. See infra Part V. We summarize a subset of the
evidence relevant to Oates’s contentions on appeal.
1. Dr. Sweeney (Oates’s Treating Physician)
Oates’s treating physician, Dr. Sweeney, opined that Oates had been
permanently and totally disabled since May 2009 and was unable to work safely in
any capacity. Oates submitted letters from Dr. Sweeney, addressed “to whom it
may concern,” and records of multiple office visits between January 2010 and
November 2011. These documents indicate that Oates regularly took multiple
medications for chronic pain, anxiety, and depression. In these documents, Dr.
Sweeney opined that Oates exhibited “[c]ognitive dysfunction secondary to
medication” and was restricted to “no critical thinking due to side effects of
medications.”3
Dr. Sweeney’s letters and records also indicate that Oates had some hand
trouble. For example, Dr. Sweeney described a “trigger finger phenomenon” in
Oates’s right thumb. Elsewhere, Dr. Sweeney stated that Oates “cannot do
repetitive hand motion due to severe spasm and pain of his hands as well.” In
another record, Dr. Sweeney reported that both of Oates’s hands had erythema, 4
3
Elsewhere, Dr. Sweeney described Oates as “[a]lert and oriented” during one particular
office visit.
4
Erythema is “[r]edness due to capillary dilation.” Stedman’s Medical Dictionary (27th
ed. 2000).
5
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that Oates experienced moderate pain in his right hand with motion, and that
Oates’s left hand had a moderately reduced range of motion. 5
2. Dr. Puentes (Oates’s Treating Chiropractor)
In a letter dated November 18, 2011, addressed “[t]o whom it may concern,”
Oates’s treating chiropractor, Dr. Puentes, reported the following.
This office continues to see the above-mentioned patient for his severe
osteoarthritic, [sic] and degenerative conditions of the spine,
neurogenic claudication of the lower extremities, chronic limitations
and swelling of the knees, hands, and feet.
Mr. Oates is unable to perform any type of repetitive movements, long
periods of standing, sitting, or lifting due to the patients [sic]
permanent disability. The patients [sic] mental capacity is also
severely limited due to the side effects of his medication. The patient
becomes very lethargic, forgetful, and unable to perform the most
basic procedures without modification.
The patient is [sic] and never will be able to perform his chosen
profession or any other type of employment in a safe capacity for
himself as well as for the public safety.
[Oates’s] physical condition will continue to worsen with time. He
has been permanently and totally disabled since 2009.
The record also contains notes from two of Oates’s visits to Dr. Puentes’s office
in May 2010.
3. Dr. Kutner (the SSA’s Independent Medical Evaluator)
5
Dr. Sweeney’s records also state that Oates reported drinking beer daily, in the amount of
a few beers per episode.
6
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As required under the terms of the Plan, Oates applied for Social Security
disability benefits. Oates was ultimately awarded monthly Social Security
disability benefits beginning in November 2009. Oates was notified of this award
by a Notice of Award letter dated March 7, 2011. Oates provided the Notice of
Award letter to Sedgwick.
As part of his application for Social Security disability benefits, Oates was
required to visit an independent medical evaluator named Dr. Kutner. In a report
dated January 28, 2011, Dr. Kutner concluded that Oates “would not be able to do
any type of work that requires him to be on his feet for long periods, no frequent
bending, stooping or climbing.”6 Dr. Kutner offered no opinion about Oates’s
capacity to perform sedentary work or work involving light physical exertion. Dr.
Kutner indicated that Oates’s chief complaint was “pain in knees, back pains and
difficulty standing up” and that Oates reported “difficulty doing any activities of
daily living.” Dr. Kutner also observed that Oates had driven to the clinic alone
and was “alert, oriented pleasant and cooperative,” although he “appeare[ed] to be
somewhat depressed over his situation.” Dr. Kutner observed “no evidence of any
6
The record indicates that Sedgwick requested a copy of Dr. Kutner’s report before
terminating Oates’s benefits, but Oates failed to provide a copy. Oates later mailed a copy to
Sedgwick during his first appeal. The record indicates that Sedgwick provided a copy of Dr.
Kutner’s report to every independent physician adviser who reviewed Oates’s file during Oates’s
first and second appeals. See infra Part I.B.4.
7
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arthritis in any of [Oates’s] extremities” and that the range of motion in Oates’s
hands was “within normal limits with no limitations.”
4. Sedgwick’s Seven Independent Physician Advisers
At various points in the process, Sedgwick had Oates’s file reviewed by
multiple independent physician advisers. None of these physicians observed Oates
directly, but some communicated directly with Oates’s treating physicians. Each
independent physician adviser stated in his or her report that he or she was not
operating under a conflict of interest. 7
In a report dated November 13, 2009, an orthopedic surgeon named Dr.
Mendelssohn concluded that, based on then-existing medical documentation, Oates
“can certainly function in a sedentary-to-light physical exertion level provided he
can change positions as needed and does not have to climb ladders, stand for an
extended period of time, or walk long distances.” As part of his review, Dr.
Mendelssohn spoke with Dr. Sweeney by telephone. In his report, Dr.
Mendelssohn rejected Dr. Sweeney’s opinion that Oates “cannot return to any
gainful employment because of pain and the need for medications which may
affect his cognitive ability.” Dr. Mendelssohn asserted that “there is no
documentation provided that [Oates’s] cognitive ability has been hampered.”
7
A Sedgwick employee also stated, in a sworn declaration submitted by Walgreens below,
that “Walgreens has no role in the selection or retention of these reviewing medical personnel.”
8
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In a report dated November 13, 2009, a pain medicine specialist named Dr.
J. Lewis concluded that, from a pain medicine perspective, the then-existing
medical documentation did not support a conclusion that Oates was disabled from
performing sedentary work.
In a report dated September 20, 2011, a specialist in physical medicine and
rehabilitation named Dr. M. Lewis concluded that “[s]edentary type of work may
be applicable in this situation.” Dr. M. Lewis stated that Oates’s primary diagnosis
was severe knee arthritis, which limited “his ability to be able to stand or walk for
prolonged periods of time.” Dr. M. Lewis found no evidence, however, that Oates
was “disabled from any occupation for which he might be qualified by education,
training, or experience during the time period in question.” He specifically
documented, inter alia, his review of Dr. Kutner’s assessment for the SSA, as well
as several failed attempts to reach Dr. Kutner. Dr. M. Lewis also documented his
review of Dr. Sweeney’s statements regarding Oates’s purported cognitive
dysfunction and hand problems, although he did not directly address these
statements in his analysis.
In a report dated September 20, 2011, a specialist in occupational medicine
named Dr. Ayyar concluded that Oates
would not be able to perform prolonged standing and walking and
heavy lifting, kneeling, stooping, squatting, etc. He can, however, do
sedentary work. There is no compelling evidence that Mr. Oates is
disabled from any occupation for which he might be qualified by
9
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education, training, or experience . . . [from May 22, 2011,] through
present.
Dr. Ayyar recounted a conversation with Dr. Sweeney in which Dr. Sweeney
stated that Oates’s principal diagnosis supporting disability was “bilateral knee
osteoarthritis” but that, in Dr. Sweeney’s mind, Oates was “disabled from any
number of conditions.” Dr. Ayyar also specifically documented, inter alia, a
review of Dr. Kutner’s report for the SSA, as well as several failed attempts to
reach Dr. Kutner. Dr. Ayyar specifically documented a review of Dr. Sweeney’s
statements regarding Oates’s purported hand problems and cognitive dysfunction,
although Dr. Ayyar did not address these statements in his analysis.
In a report dated February 7, 2012, a psychiatrist named Dr. Rigaud
concluded that, from a strictly psychiatric perspective, Oates “was not disabled
from the ability to perform any occupation for which he may be qualified by
education, training or experience as of May 22, 2011[,] to return to work date.”
Dr. Rigaud stated that there was “no evidence from the available information to
support a disabling psychiatric diagnoses [sic]” and that “[r]eported cognitive
dysfunctions/limitations and inability to engage in critical thinking are not
validated by findings of a mini mental status examination or direct clinical
observations.” Dr. Rigaud documented a phone conversation with Dr. Puentes,
who
10
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reported observing [that Oates] was lethargic and in [Oates’s] own
words “loopy” at times. [Dr. Puentes] believes this is due to pain
medications and not to alcohol or other illicit substances.[8] . . . Dr.
Puentes stated that [Oates] has no problem driving to the office—that
is a short distance from his home. He noted that [Oates] has difficulty
with his gait and his speech is a “little slurred.” Dr. Puentes has not
observed evidence of problems with concentration such as loss of
train of thoughts. Dr. Puentes has not had to write down instructions
for [Oates]; who seems to retain instructions and directions he
received from Dr Puentes. [Dr. Puentes] emphasized primarily
[Oates’s] physical limitations.
Dr. Rigaud did not specifically address Dr. Kutner’s report for the SSA.
In a report dated February 7, 2012, a specialist in physical medicine and
rehabilitation and pain medicine named Dr. Kaplan concluded, after a thorough
review of the records before him, that they “[did] not validate that this claimant is
disabled from performing any occupation for which he may be qualified from May
22, 2011[,] to return to work date.” 9 According to Dr. Kaplan, Oates had a “partial
impairment, but is not disabled from all work.” Dr. Kaplan opined that “the
records contain very limited objective functional assessment of [Oates’s] physical
8
Dr. Rigaud had before her a Vocational Evaluation Report created by one Ms. Pennachio,
see infra Part I.B.6, which indicates that Oates reported drinking eight to ten beers per day. Dr.
Rigaud specifically referred to this statement in her report.
9
At the time of his review, Dr. Kaplan had before him the Vocational Evaluation Report
created by Ms. Pennachio, see infra Part I.B.6. Dr. Kaplan discounted the Vocational Evaluation
Report to the extent that Ms. Pennachio relied on subjective reports of Oates’s abilities that were
not based on physical examination or functional assessment data. For the first time on appeal,
Oates argues that it was improper to discount Ms. Pennachio’s findings on the basis that she
relied on Oates’s self-reports. See Oliver v. Coca Cola Co., 497 F.3d 1181, 1196 (11th Cir.),
vacated in part on other grounds, 506 F.3d 1316 (11th Cir. 2007). We decline to consider this
argument raised for the first time on appeal.
11
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ability.” Dr. Kaplan also noted that “cognitive deficits from medications are
potentially treatable” and that “the records are unclear regarding the specific cause
of [Oates’s] perceived cognitive symptoms.” He recounted conversations with Dr.
Sweeney and Dr. Puentes in which both reported that Oates often “appears
drowsy” 10 and in which Dr. Sweeney reported that Oates had severe intractable
pain in his, inter alia, hands. Dr. Kaplan referred to Oates’s Social Security
disability benefits award but did not specifically address it in his analysis.
In a report dated February 7, 2012, a specialist in physical medicine and
rehabilitation and pain medicine named Dr. Marion concluded that Oates was “able
to work full time at the sedentary job level.” Dr. Marion recounted a conversation
with Dr. Sweeney in which the latter acknowledged that “he had not specifically
performed a cognitive evaluation or assessment and had not restricted [Oates] from
driving a motor vehicle.” In that conversation, Dr. Sweeney also indicated that
Oates had complaints of severe pain in his, inter alia, hands. Dr. Marion
specifically documented his review of Dr. Kutner’s report for the SSA.
5. Mr. Percic’s (Sedgwick’s) Transferable Skills Analysis
At Sedgwick’s request, a Mr. Percic completed an analysis of Oates’s
“transferable skills.” Mr. Percic’s report is dated May 20, 2011. According to his
report, Mr. Percic reviewed, inter alia, the reports of Dr. J. Lewis and Dr.
10
According to Dr. Kaplan, it appeared from the medical records that Oates had “the
diagnosis of sleep apnea as well as chronic pain.”
12
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Mendelssohn, as well as a letter from Dr. Sweeney dated January 25, 2011, and a
note from Oates’s visit to Dr. Sweeney’s office on January 20, 2011. Mr. Percic
also reviewed a Training, Education, and Experience statement submitted by
Oates, which indicated, for example, that Oates had worked for over twenty years
as a pharmacist and had a Bachelor of Science degree in Pharmacy.
Based on Dr. Mendelssohn’s report, Mr. Percic discounted Dr. Sweeney’s
assertion that Oates was restricted to “no critical thinking due to side effects of
medications.” Mr. Percic also asserted that there was “no additional medical to
support the statement of Dr. Sweeney that Mr. Oates is unable to perform repetitive
hand motions due to severe spasm and pain of his hands.” Mr. Percic consequently
assumed, for the sake of his analysis, that Oates was able to work in a “sedentary
or light physical exertion level occupation in which he is able to change positions
as needed and not require [sic] long distance walking, standing for extended
periods of time, climbing stairs or ladders, or bending, stooping, and kneeling.”
Mr. Percic also concluded—apparently based on Oates’s reports of his own
training, education, and experience—that Oates had demonstrated transferable
skills including, but not limited to, “knowledge of drugs and drug interactions,
basic medical knowledge, customer service skills, good communication skills,
supervisory skills, management skills, good arithmetic skills, organizational
ability, computer skills, typing skills, and good judgment and decision-making
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skills.” Using the SkillTRAN online computer database, Mr. Percic identified
several vocational alternatives for Oates in his geographic area with a mean annual
wage of $113,844.80—substantially more than 60% ($67,392.00) of Oates’s pre-
disability annual earnings, which was the threshold established by the applicable
Plan eligibility standard. See supra.
6. Ms. Pennachio’s (Oates’s) Transferable Skills Analysis
As part of his second appeal, Oates submitted his own Vocational
Evaluation report dated December 12, 2011, which was prepared by one Ms.
Pennachio. The report contains a lengthy review of Oates’s medical records.
According to the report, Ms. Pennachio met with Oates on November 18, 2011,
and recorded his own description of his “perceptions of his physical capabilities,”
including that he could sit for only “1 hour, but . . . must sit forward for comfort.”
The report contains a transferable skills analysis that was conducted using OASYS
software, “taking into account at least sedentary restrictions.” The analysis
produced zero vocational alternatives, let alone any in which Oates could earn at
least 60% of his pre-disability earnings. It is not entirely clear why Ms.
Pennachio’s analysis yielded zero vocational alternatives while Mr. Percic’s
yielded several, but it appears that Ms. Pennachio believed Oates had fewer
transferable skills. In her report, Ms. Pennachio specifically challenged each of
Mr. Percic’s proposed vocational alternatives on the ground that Oates was either
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underqualified, disabled, or both. Ms. Pennachio concluded that Oates “does not
have the ability to perform any occupation for which he may be qualified by
education, training or experience within his physical capabilities.”
C. The Instant Lawsuit
Oates filed suit against Walgreens in federal district court, attaching the SPD
as an exhibit to his complaint. In a motion to, inter alia, limit discovery to the
existing administrative record, Walgreens made three relevant assertions. First,
Walgreens expressed its belief that there was no dispute regarding which
documents governed the Plan. Second, Walgreens—arguing from the SPD—
asserted that the Plan vested Sedgwick with sufficient discretion such that
Sedgwick’s benefits determinations should be reviewed under an “arbitrary and
capricious” standard. See, e.g., Blankenship v. Metro. Life Ins. Co., 644 F.3d
1350, 1355 (11th Cir. 2011) (per curiam). Third, Walgreens asserted that there
was no structural conflict of interest because the entity paying the claims,
Walgreens, was not the same as the entity evaluating the claims, Sedgwick.
Oates apparently did not submit a written response to Walgreens’s motion.
At a subsequent hearing, however, Oates asserted that the SPD was merely a
summary and that he “[did] not concede that that is the Plan.” Oates did not
challenge Walgreens’s assertion that the Plan vested Sedgwick with discretion.
Oates argued that there was a conflict of interest, however, because Walgreens had
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authority to be involved in benefits determinations and may have, at least,
participated in the decision to terminate Oates’s benefits. Oates sought to
supplement the administrative record with discovery regarding both whether there
was a conflict of interest and also how the claims benefits determinations were
actually made. 11
The district court held that there was no conflict of interest and that the
administrator’s determination would be reviewed under an “arbitrary and
capricious” standard. The court permitted Oates to serve five interrogatories and
five requests for admission, limited in scope to the following four issues:
1) the exact nature of the information considered by [Sedgwick] in
making the decision; 2) whether Sedgwick was competent to evaluate
the information in the administrative record; 3) how Sedgwick
reached its decision; and 4) whether, given the nature of the
information in the record, it was incumbent upon Sedgwick to seek
outside assistance in addressing the claim.
Oates apparently never served any written discovery.
Pursuant to the district court’s order, the parties submitted memoranda of
law in support of their respective positions. The district court reviewed the
termination of Oates’s long-term disability benefits pursuant to this Circuit’s six-
step test, which is as follows.
11
Oates’s attorney stated that he sought both discovery “because of the conflict” and also
“Cerrito type discovery with regard to the actual claims decisions that were made.” The word
“Cerrito” is a reference to Cerrito v. Liberty Life Assurance Co. of Boston, 209 F.R.D. 663(M.D. Fla. 2002).
16
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(1) Apply the de novo standard to determine whether the claim
administrator’s benefits-denial decision is “wrong” (i.e., the court
disagrees with the administrator’s decision); if it is not, then end the
inquiry and affirm the decision.
(2) If the administrator’s decision in fact is “de novo wrong,” then
determine whether he was vested with discretion in reviewing claims;
if not, end judicial inquiry and reverse the decision.
(3) If the administrator’s decision is “de novo wrong” and he was
vested with discretion in reviewing claims, then determine whether
“reasonable” grounds supported it (hence, review his decision under
the more deferential arbitrary and capricious standard).
(4) If no reasonable grounds exist, then end the inquiry and reverse
the administrator’s decision; if reasonable grounds do exist, then
determine if he operated under a conflict of interest.
(5) If there is no conflict, then end the inquiry and affirm the decision.
(6) If there is a conflict, the conflict should merely be a factor for the
court to take into account when determining whether an
administrator’s decision was arbitrary and capricious.
Blankenship, 644 F.3d at 1355.
The district court first concluded that Sedgwick’s decision was not “wrong.”
The court alternatively concluded that, even if Sedgwick made the “wrong”
decision, it was vested with sufficient discretion to invoke the “arbitrary and
capricious” standard of review, and its decision was supported by “reasonable”
grounds. Finally, the district court reiterated its conclusion that Sedgwick did not
operate under a conflict of interest and opined that, even if it did, that factor was
not so significant as to render the decision “arbitrary and capricious.” The court
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affirmed the termination of Oates’s long-term disability benefits and ordered the
entry of judgment in Walgreens’s favor. This appeal followed.
II. STANDARD OF REVIEW
For the first time on appeal, Oates challenges Walgreens’s assertion that the
Plan vested Sedgwick with sufficient discretion to invoke the “arbitrary and
capricious” standard of review. Oates makes this argument despite having asserted
multiple times below that the Plan gave both Walgreens and Sedgwick discretion
to make claims determinations. 12
Oates also argues, for the first time on appeal, that it was improper for the
district court to draw conclusions about Sedgwick’s discretion under the Plan from
the SPD because the SPD had not been authenticated or entered into evidence.
Oates makes this argument despite having invited consideration of the SPD by
attaching a copy of it as an exhibit to the complaint.
In addition, Oates argues that the district court’s discovery order 13 prevented
him from pursuing discovery that might have revealed “defects” in the SPD.14
Oates did not argue below for additional discovery on that ground.
12
Oates made these assertions as part of his attempt to argue that Walgreens had
participated in the decision to terminate Oates’s benefits and that there was, therefore, a conflict
of interest.
13
Walgreens observes that Oates did not mention the discovery order in his notice of appeal
and argues that Oates consequently may not challenge it on appeal. We disagree. “[T]he appeal
from a final judgment draws in question all prior non-final orders and rulings which produced
the judgment.” Barfield v. Brierton, 883 F.2d 923, 930 (11th Cir. 1989). Because the district
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We decline to consider these arguments raised for the first time on appeal.
See Ramirez v. Sec’y, U.S. Dep’t of Transp., 686 F.3d 1239, 1249–50 (11th Cir.
2012). We have reviewed Oates’s arguments and are not persuaded that our
refusal to consider them will result in a “miscarriage of justice.” Id. at 1250. We
consequently limit our review to the question of whether Sedgwick’s determination
was “arbitrary and capricious.” Blankenship, 644 F.3d at 1355. Oates bore the
burden to establish that it was. See id.III. WHETHER SEDGWICK OPERATED UNDER A CONFLICT OF
INTEREST
If a plan administrator operates under a conflict of interest, that conflict is a
factor to consider when determining whether the administrator’s decision was
arbitrary and capricious. Id. On appeal, Oates challenges the district court’s
conclusion that Sedgwick did not operate under a conflict of interest. Oates’s
primary argument is that Sedgwick has a financial incentive to deny claims. Oates
court’s discovery order was a step toward the final judgment, rather than an order “separate from
that progression,” we have jurisdiction to review the discovery order on appeal. See 16A
Charles Alan Wright et al., Federal Practice and Procedure § 3949.4, at 100–105 (4th ed. 2008)
(“A notice of appeal that names the final judgment suffices to support review of all earlier orders
that merge in the final judgment . . . , at least if the earlier orders are part of the progression that
led up to the judgment rather than being separate from that progression.”) (footnote omitted).
14
Oates relies heavily on Wilson v. Walgreen Income Protection Plan for Pharmacists and
Registered Nurses, 942 F. Supp. 2d 1213, 1248–50 (M.D. Fla. 2013). The Wilson court
conducted a bench trial on the issue of “whether the grant of discretion to Sedgwick under [the]
Summary Plan Description . . . was effective to entitle Defendants to a review of Sedgwick’s
resolution of Plaintiff’s [long-term disability] claim under a deferential standard of review.” Id.
at 1217. Obviously the evidence and testimony introduced in the Wilson bench trial was not
before the district court in this case.
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suggests that some unknown financial arrangement between Walgreens and
Sedgwick may give Sedgwick a direct financial incentive to deny claims. 15 Oates
also argues that Walgreens, as the payor, might prefer a claim administrator that
denies more claims, resulting in indirect pressure on Sedgwick to deny claims so
that it can keep its business with Walgreens.
Again, Oates failed to make these arguments below. Oates argued that the
determination of his claim was tainted by a conflict of interest, but his argument
was that the payor, Walgreens, had somehow participated in or influenced the
decision. Oates did not argue, as he does now, that Sedgwick operated under a
conflict of interest because it had a financial incentive to deny claims. Oates had
the opportunity to make these arguments at the hearing on Walgreens’s motion to,
inter alia, limit discovery. In its motion, Walgreens had already argued that there
was no conflict of interest, and it was clear that that question would be discussed at
the hearing. Oates did not respond to Walgreens’s motion in writing and did not
15
Oates relies only on Wilson, 942 F. Supp. 2d at 1227, to support this proposition. As
previously stated, supra note 14, the evidence and testimony before the Wilson court was not
before the district court in this case. As Walgreens points out, furthermore, the Wilson court did
not hold that Sedgwick operates under a conflict of interest when it acts as the Claim
Administrator for this Plan. In addition, the Wilson court’s discussion of the financial
arrangement between Walgreens and Sedgwick does not uniformly support the proposition that
Walgreens gives Sedgwick a direct financial incentive to deny claims. For example, the court in
Wilson recounted testimony that “Sedgwick is paid monthly for every open claim. Further, if [a
long-term disability] claim is granted, then the claim remains ‘open’ for purposes of calculating
the fee collected by Sedgwick.” Id. Therefore, even if we were to consider Wilson for the
purpose of determining whether Walgreens gives Sedgwick a direct financial incentive to deny
claims, it is not at all clear that Wilson supports Oates’s argument.
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make these arguments at the hearing. Nor did Oates make these arguments at any
other point before the district court. We decline to entertain these arguments made
for the first time on appeal.
To the extent that Oates reasserts a version of the argument that he did make
below—i.e., that Walgreens had the authority to reverse Sedgwick’s decisions and
may have participated in the final decision to uphold the termination of Oates’s
benefits—that argument does not persuade us that there was reversible error.
According to the SPD, Sedgwick’s decisions are subject to further review by
Walgreens only if either Sedgwick or Walgreens “determines that the appeal
presents material issues that are outside the expertise or purview of [Sedgwick]
(such as hours worked, employment status or new or unique procedural or Plan
interpretation issues).” Even if the language regarding “new or unique . . . Plan
interpretation issues” indicates that Walgreens has the power to reverse
Sedgwick’s Plan interpretations, it does not indicate that Walgreens has the power
to reverse Sedgwick’s factual determinations. More specifically, it does not
indicate that Walgreens had the power to reverse Sedgwick’s factual
determinations with respect to Oates’s condition and transferable skills. It is those
determinations that Oates challenges on appeal. See infra Part IV.
Finally, to the extent, if any, that Walgreens’s limited power of review
created a conflict of interest, the district court did not err in its alternative holding
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that the conflict was not significant enough to render Sedgwick’s decision
“arbitrary and capricious” in light of the other factors. A conflict of interest should
be weighed more heavily “where circumstances suggest a higher likelihood that it
affected the benefits decision.” Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 117,
128 S. Ct. 2343, 2351 (2008). The converse is also true. There is no indication
that the payor, Walgreens, directly influenced Sedgwick’s determination. 16 It is
possible that the mere prospect of reversal influenced Sedgwick’s decision, but the
district court was not required to attach great weight to this possibility in the
circumstances at bar. We note, in particular, the sworn declaration of a Sedgwick
employee that “[u]nder the Plan, Sedgwick performs claims evaluations and makes
determinations on specific claims . . . . Walgreens only provides information
regarding the general eligibility for Plan benefits and regarding the duties and
compensation of Walgreens employees participating in the Plan.”
IV. WHETHER SEDGWICK IGNORED RELEVANT AND RELIABLE
EVIDENCE THAT OATES’S MEDICATION CAUSED HIM
COGNITIVE PROBLEMS, THAT OATES HAD PROBLEMS WITH
HIS HANDS, AND THAT OATES WAS UNABLE TO SIT FOR
LONG PERIODS OF TIME
Where there is no conflict of interest, an administrator’s benefits decision is
not “arbitrary and capricious” if it has a “reasonable basis” in the material available
to the administrator at the time of the decision. See Blankenship, 644 F.3d at 1354.
16
We note that Oates was permitted to serve written discovery on issues including “how
Sedgwick reached its decision[s],” but Oates apparently declined to do so.
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Oates correctly observes that only Mr. Percic’s and Ms. Pennachio’s
transferable skills analyses applied the specific standard at issue in this case, i.e.,
whether as a “direct result” of Oates’s sickness or accidental injury he was “unable
to earn more than 60% of [his] indexed pre-disability earnings from any employer
in [his] local economy at any gainful occupation for which [he was] reasonably
qualified, taking into account [his] training, education, experience, and pre-
disability earnings.” Oates argues that it was arbitrary and capricious for Sedgwick
to rely on Mr. Percic’s May 2011 analysis because, inter alia, it did not incorporate
more recent medical evidence.
We disagree. Sedgwick was not required to conclude that medical opinions
obtained subsequent to Mr. Percic’s analysis undermined the assumption on which
it was based—i.e., the assumption that Oates was able to work in a “sedentary or
light physical exertion level occupation in which he is able to change positions as
needed and not require [sic] long distance walking, standing for extended periods
of time, climbing stairs or ladders, or bending, stooping, and kneeling.” We are
likewise not persuaded that it was arbitrary and capricious for Sedgwick to favor
Mr. Percic’s transferable skills analysis over Ms. Pennachio’s more recent analysis.
Oates argues that even if Mr. Percic’s analysis was not out of date, it was
nevertheless based on unreliable medical evidence. Specifically, Oates argues that
Sedgwick’s independent physician advisers—including Dr. Mendelssohn, upon
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whom Mr. Percic relied—gave insufficient weight to evidence of Oates’s cognitive
dysfunction, hand problems, and difficulty sitting for extended periods of time.
Oates argues that it was, therefore, arbitrary and capricious for Sedgwick to rely on
a transferable skills analysis that relied on Dr. Mendelssohn’s medical opinion.
Again, we disagree. A plan administrator “may not arbitrarily refuse to
credit a claimant’s reliable evidence,” Black & Decker Disability Plan v. Nord, 538
U.S. 822, 834, 123 S. Ct. 1965, 1972 (2003), or “simply ignore[] relevant medical
evidence in order to arrive at the conclusion it desire[s],” Oliver v. Coca Cola Co.,
497 F.3d 1181, 1199 (11th Cir.), vacated in part on other grounds, 506 F.3d 1316(11th Cir. 2007). A plan administrator is not categorically required, however, to
accept the opinions of the claimant’s treating physicians over those of independent
medical professionals who have reviewed the claimant’s file but have not directly
observed the claimant. See Blankenship, 644 F.3d at 1356. 17
Mr. Percic crucially relied on Dr. Mendelssohn’s opinion. By the time
Sedgwick upheld the termination of Oates’s benefits for the second time, Sedgwick
had before it the reports of six other independent physician advisers who had
17
In Black & Decker, the Supreme Court stated that “courts have no warrant to require
administrators automatically to accord special weight to the opinions of a claimant’s physician.”
538 U.S. at 834, 123 S. Ct. at 1972. Black & Decker involved a conflict between the opinions of
the claimant’s treating physicians and an independent physician who had examined the claimant.
See id. at 826–27, 123 S. Ct. at 1968. In Blankenship, however, we invoked Black & Decker in
a case involving a conflict between the opinions of the claimant’s treating physicians and
independent physicians who had merely reviewed the claimant’s file. See 644 F.3d at 1353,
1356.
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reviewed Oates’s file. These reports permitted Sedgwick to conclude that Dr.
Mendelssohn’s opinion was correct, at least in its crucial aspects. Specifically,
three of these other physicians—specialists in pain medicine, occupational
medicine, and physical medicine and rehabilitation—agreed that Oates was
capable of performing sedentary work, and none of them disagreed. Two of these
physicians—including a psychiatrist, Dr. Rigaud—agreed that evidence of Oates’s
cognitive problems was unpersuasive; two—again including Dr. Rigaud—
suggested possible alternative explanations for Oates’s purported cognitive
dysfunction, such as alcohol consumption or sleep apnea; and one stated that any
cognitive dysfunction resulting from Oates’s medications was potentially treatable.
In addition, four of these physicians specifically documented their consideration of
Dr. Sweeney’s statements that Oates suffered from hand problems (although
apparently none of them addressed these statements in their written analyses).
In sum, Sedgwick had conflicting evidence before it, and evidence tending
to establish that Oates was able to perform sedentary work was not obviously
unreliable. We conclude that Sedgwick was permitted to deny Oates’s benefits on
the basis of this evidence. See Oliver, 497 F.3d at 1199 (stating that a plan
administrator may deny a claim “on the basis of conflicting, reliable evidence”).
V. WHETHER SEDGWICK FAILED TO GIVE PROPER
CONSIDERATION TO THE SOCIAL SECURITY
ADMINISTRATION’S DISABILITY DETERMINATION
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Oates additionally argues that Sedgwick’s determination was “arbitrary and
capricious” because it failed to give sufficient weight to the SSA’s determination
that Oates was entitled to disability benefits. “‘[A] district court may consider the
Social Security Administration’s determination of disability in reviewing a plan
administrator’s determination of benefits,’” but “the approval of disability benefits
by the Social Security Administration is not considered dispositive on the issue.”
Whatley v. CNA Ins. Cos., 189 F.3d 1310, 1314 n.8 (11th Cir. 1999) (per curiam)
(quoting Kirwan v. Marriott Corp., 10 F.3d 784, 790 n.32 (11th Cir.1994)).
We reject Oates’s argument that the mere failure to consider the award of
benefits rendered Sedgwick’s determination “arbitrary and capricious.” This is not
a case in which Sedgwick “ignore[d] the evidence generated by the SSA process.”
Melech v. Life Ins. Co. of N. Am., 739 F.3d 663, 675 (11th Cir. 2014). In a letter
memorializing the initial termination of Oates’s benefits, Sedgwick asserted that it
had previously requested a copy of the SSA’s Independent Medical Examination
and that Oates had failed to provide a copy. 18 Once Oates provided a copy of Dr.
Kutner’s report as part of his first appeal, Sedgwick provided it to each of the
independent physician advisers who reviewed Oates’s file during both his first and
his second appeals. Multiple advisers specifically referred to Dr. Kutner’s
18
Oates does not argue that Sedgwick had either the power or a duty to request a copy of
this report directly from the Social Security Administration. Cf. Melech, 739 F.3d at 671.
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findings, which were not obviously inconsistent with the conclusion that Oates was
capable of working in a sedentary capacity. 19 Accordingly, the instant case is very
different from Melech, in which the plan administrator deemed irrelevant the SSA
award and the evidence on which it was based. Melech, 739 F.3d at 671–72. The
instant case does not involve the “procedural unfairness” which we found in
Melech. See id. at 676.
We cannot conclude that Sedgwick, having considered Dr. Kutner’s report,
was also required to specifically consider either the Social Security award itself or
the contents of the Notice of Award letter. The Notice of Award letter contained
no information whatsoever about Oates’s condition or the process by which the
SSA had reached its decision. Sedgwick’s determination that Oates was not
disabled is, of course, in some discord with the SSA’s determination that he was,
which was made under a perhaps more stringent standard.20 An administrator
19
Dr. Kutner’s bottom line was that Oates “would not be able to do any type of work that
requires him to be on his feet for long periods, no frequent bending, stooping or climbing.”
20
According to Oates, the relevant definition of “disability” in the Social Security Act is the
inability “to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than twelve months.” 42 U.S.C.
§ 1382c(a)(3)(A). For the purpose of that provision,
an individual shall be determined to be under a disability only if his physical or
mental impairment or impairments are of such severity that he is not only unable
to do his previous work but cannot, considering his age, education, and work
experience, engage in any other kind of substantial gainful work which exists in
the national economy, regardless of whether such work exists in the immediate
area in which he lives, or whether a specific job vacancy exists for him, or
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departing from the SSA may be well-advised, whenever possible, “to draw a
principled distinction between its own standards for granting disability benefits
under [a plan] and the SSA’s standards for awarding SSDI.” Id. at 676. But
having considered what is apparently the only substantive evidence generated by
the SSA process,21 and having found it not inconsistent with the opinions of its
independent physician advisers, Sedgwick did not act arbitrarily and capriciously
by failing to explain its departure from the SSA’s opinion. See Paramore v. Delta
Air Lines, Inc., 129 F.3d 1446, 1452 n.5 (11th Cir. 1997) (“[A]n award of benefits
by the Social Security Administration is not dispositive of the issue before us,
particularly given the measure of deference that we afford a plan administrator’s
decision.”).
We note that it may have been difficult for Sedgwick to explain its decision
in light of the apparently limited evidence generated by the SSA process. We also
note that the SSA, unlike ERISA claim administrators, is generally required to give
more weight to the opinions of a claimant’s treating physicians. See Black &
whether he would be hired if he applied for work. For purposes of the preceding
sentence (with respect to any individual), “work which exists in the national
economy” means work which exists in significant numbers either in the region
where such individual lives or in several regions of the country.
Id. § 1382c(a)(3)(B). Walgreens does not challenge Oates’s assertion that the SSA’s eligibility
standard is more stringent than the Plan eligibility standard that is relevant on appeal.
21
Oates does not assert either that the SSA process generated additional substantive
evidence or that Sedgwick was required to request additional information from the SSA.
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Decker, 538 U.S. at 829, 123 S. Ct. at 1969. Finally, we note that in both Melech
and Glenn v. MetLife, on which Oates primarily relies, the entity paying the claims
was the same as the entity evaluating the claims, which created a structural conflict
of interest. See Melech, 739 F.3d at 668 (“[E]very dollar the claimant gets from
the SSA is one less dollar [the defendant] has to pay.”); Glenn v. MetLife, 461
F.3d 660, 666 (6th Cir. 2006) (“[Defendant] is authorized both to decide whether
an employee is eligible for benefits and to pay those benefits.”), aff’d, 554 U.S.
105, 112, 128 S. Ct. 2343, 2348 (2008). As discussed, supra Part III, that was not
the situation in this case. 22
AFFIRMED.
22
Other arguments not addressed in this opinion are rejected without need for further
discussion.
29