Stratton v. EI DuPont de Nemours

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
4-6-2004
Stratton v. EI DuPont de Nemours
Precedential or Non-Precedential: Precedential
Docket No. 03-2609
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PRECEDENTIAL Stella L. Smetanka
Jonathan Will (Argued)
UNITED STATES COURT OF Law Student Specially Admitted
APPEALS FOR THE THIRD CIRCUIT Pursuant to Third Cir. LAR 46.3
University of Pittsburgh School of Law
210 South Bouquet Street
No. 03-2609 Sennott Square - Room 5220
Pittsburgh, PA 15260
MELANIE STRATTON; Attorneys for Appellants
JEFFREY STRATTON, her husband
Raymond M. Ripple (Argued)
Appellants Donna L. Goodman
E.I. DuPont de Nemours & Company
v. Legal Department
Wilmington, DE 19898
E. I. DUPONT DE NEMOURS & CO.
Attorneys for Appellee
On Appeal from the United States
District Court for the Western District of OPINION OF THE COURT
Pennsylvania
(D.C. No. 02-cv-02131)
District Judge: Hon. Arthur J. Schwab
SLOVITER, Circuit Judge.
Appellant Melanie Stratton appeals
Argued March 8, 2004 from the order of summary judgment
entered on behalf of defendant E.I. DuPont
Before: SLOVITER, NYGAARD, de Nemours & Co. (“DuPont”). Stratton
Circuit Judges and OBERDORFER, filed this suit pursuant to the Employee
District Judge* Retirement Inc om e S ec ur ity A ct
(“ERISA”), 29 U.S.C. § 1132(a)(1)(B),
(Filed April 6, 2004 ) seeking repayment of medical benefits she
incurred for a surgical procedure to treat
her temporomandibular joint dysfunction
(“TMJ”).1 We have jurisdiction to hear
this appeal under 28 U.S.C. § 1291.
*
Hon. Louis F. Oberdorfer, Senior
1
District Judge, United States District Stratton also included a bad faith
Court for the District of Columbia, claim under Pennsylvania law that is not
sitting by designation. at issue in this appeal.
I. these treatments met with only temporary
relief, Dr. Donald J. Macher, an oral
Stratton had health insurance
surgeon, suggested that Stratton undergo
through an employer-sponsored health
arthroplasty surgery for her TMJ. The
plan of DuPont, her husband’s employer.
full medical term for this surgery is
The plan covering Stratton excludes
“Right and Left Temporomandibular
“[c]harges for services or supplies not
Joint Reconstructive Arthroplasty,” J.
medically necessary for the diagnosis and
App. at 156, and it is an invasive
treatment of the illness or injury.” J.
procedure that involves repositioning
App. at 26.2 It defines the term
discs, lysis of adhesions, and the
“medically necessary” as a “service or
insertion of a previously constructed
supply which is reasonable and necessary
splint into the mouth.
for the diagnosis or treatment of an
illness or injury, in view of the customary On or about November 13, 1999,
practice in the geographical area, and is Aetna initially denied coverage for the
given at the appropriate level of care.” J. surgery but in late December requested
App. at 15. It is undisputed that first that Stratton submit an updated magnetic
Aetna U.S. Healthcare (“Aetna”), the resonance image (“MRI”) so that her
insurance carrier for DuPont, and request could be further considered. The
ultimately DuPont had discretion to most recent MRI in Stratton’s record
administer the plan with regard to until that date was taken February 8,
medically necessary services and 1990; at Aetna’s request, Stratton
supplies. obtained an updated MRI on January 3,
2000. Stratton submitted the updated
The facts set forth hereafter are
MRI, which a specialist at Aetna, Dr.
taken from the record on the summary
George Koumaras, reviewed. On
judgment motion and are not in dispute.
January 6, 2000, Aetna denied coverage
In 1990, Stratton’s doctors for the requested surgery on the ground
diagnosed her with TMJ, and for the next that there were more conservative and
ten years she suffered from headaches medically appropriate treatments
and the inability to open and close her available, such as arthrocentesis or
mouth, chew, yawn, and laugh without arthroscopic surgery. Arthrocentesis
pain. She underwent many forms of involves anesthetizing the affected TMJ
conservative treatment, including splint and then flushing the joint with a sterile
therapy, orthodontia, dental work, solution to lubricate the joint surfaces
analgesics and muscle relaxants. After and reduce inflammation, see American
Academy of Orofacial Pain, at
http://www.aaop.org/info_arthro.htm;
2
We use “J. App.” to cite to the arthroscopy involves inserting an
Joint Appendix, and “App.” to cite to imaging and therapy device into the
Appellants’ Appendix.
2
affected TMJ. See id. at to a slightly less deferential
http://www.aaop.org/info_surgery.htm. standard because of the
Stratton nevertheless went ahead with the slight conflict of interest.
arthroplasty surgery on January 13, 2000 But even under a
and covered the cost of $9,829.05 heightened standard of
herself. review, the record before
the administrator (Aetna)
Following her surgery, Stratton
and, on appeal to the
continued to appeal the denial of benefits
DuPont Medical Care Plan,
within Aetna, which waited to review the
supports the denial of
post-operative report and any other
coverage for plaintiff’s
information pertinent to the surgery
TM J surgery.
before making a final decision on her
appeal. Aetna had three physicians App. A at 6 (District Court Opinion).
review her claim, including Dr. Hendler
On appeal, we must consider
– an independent physician from the
whether the District Court properly
University of Pennsylvania who is Board
reviewed the denial of coverage under a
Certified in Oral and Maxillofacial
“slightly less deferential” arbitrary and
Surgery, specializes in TMJ, and was not
capricious standard, App. A at 6, and
involved in the original decision. Dr.
whether it properly granted the summary
Hendler also decided that less invasive
judgment motion. We exercise plenary
surgeries would have been more
review over a district court’s grant of
appropriate. Aetna denied Stratton’s
summary judgment. Skretvedt v. E.I.
claim on February 10, 2000.
DuPont de Nemours & Co., 268 F.3d
Stratton appealed to DuPont. 167, 173-74 (3d Cir. 2001). Summary
DuPont reviewed the documents on judgment is proper if there is no genuine
which Aetna had based its denial and its issue of material fact and if the moving
own files to see how similar cases had party is entitled to judgment as a matter
been handled in the past to ensure that its of law when viewing the facts in the light
plan was being administered consistently. most favorable to the non-moving party.
On the basis of the record before it, Fed. R. Civ. P. 56(c); Celotex Corp. v.
DuPont upheld Aetna’s denial of Catrett, 477 U.S. 317 (1986). We apply
coverage and informed Stratton of this the same standard that the District Court
decision on April 18, 2000. The District should have applied. Farrell v. Planters
Court held that the plan grants discretion Lifesavers Co., 206 F.3d 271, 278 (3d
to determine eligibility for benefits, Cir. 2000).
which triggers the arbitrary Because the District Court
and capricious standard of reviewed the claim under the appropriate
review, diminished perhaps standard and did not err as a matter of
3
law, we will affirm its decision. discretion.” Id. at 115 (internal quotation
and citation omitted).
II.
Attempting to distill this direction
A. Standard of Review
into a workable standard, we have held
Stratton’s first argument on appeal that “when an insurance company both
is that the District Court should have funds and administers benefits, it is
used a heightened arbitrary and generally acting under a conflict that
capricious standard, but it is unclear that warrants a heightened form of the
this would entail closer scrutiny of the arbitrary and capricious standard of
decision of the employer than the review.” Pinto v. Reliance Standard Life
“slightly less deferential” arbitrary and Ins. Co., 214 F.3d 377, 378 (3d Cir.
capricious standard of review employed 2000). This “heightened” form of review
by the District Court in the instant case. is to be formulated on a sliding scale
App. A at 6. The standard of review in basis, which enables us to “review[ ]the
cases brought under ERISA for benefits merits of the interpretation to determine
denied is not always easy to apply. In the whether it is consistent with an exercise
seminal case on this issue, the Supreme of discretion by a fiduciary acting free of
Court stated that “a denial of benefits the interests that conflict with those of
challenged under [ERISA, 29 U.S.C.] § beneficiaries.” Pinto, 214 F.3d at 391
1132(a)(1)(B) must be reviewed under a (quoting Doe v. Group Hospitalization &
de novo standard unless the benefit plan Med. Servs., 3 F.3d 80, 87 (4th Cir.
expressly gives the administrator or 1993)). In employing the sliding scale
fiduciary discretionary authority to approach, we take into account the
determine eligibility for benefits or to following factors in deciding the severity
construe the plan’s terms.” Firestone of the conflict: (1) the sophistication of
Tire & Rubber Co. v. Bruch, 489 U.S. the parties; (2) the information accessible
101, 102 (1989). In cases where an to the parties; (3) the exact financial
administrator exercises discretion, arrangement between the insurer and the
“[t]rust principles make a deferential company; and (4) the status of the
standard of review appropriate” and the fiduciary, as the company’s financial or
Court suggested that we review such structural deterioration might negatively
exercises of discretion under the arbitrary impact the “presumed desire to maintain
and capricious standard. Id. at 111-12. employee satisfaction.” Pinto, 214 F.3d
The Supreme Court continued, “[o]f at 392.
course, if a benefit plan gives discretion
Our examination of the factors set
to an administrator or fiduciary who is
forth in Pinto in light of the
operating under a conflict of interest, that
circumstances in this case leads us to
conflict must be weighed as a factor in
conclude that the District Court did not
determining whether there is an abuse of
err in holding that the instant case
4
“triggers the arbitrary and capricious 949 F.2d 1323, 1335 (3d Cir. 1991).
standard of review, diminished perhaps However we have noted that a situation
to a slightly less deferential standard in which the employer “establish[es] a
because of the slight conflict of interest.” plan, ensure[s] its liquidity, and create[s]
App. A at 6. We assume there was a an internal benefits committee vested
sophistication imbalance between the with the discretion to interpret the plan’s
parties. There is no reason why Stratton terms and administer benefits” does not
would have had ERISA or claims typically constitute a conflict of interest.
experience, whereas DuPont, a large, Pinto, 214 F.3d at 383. This describes in
successful company with many large part the mechanism DuPont chose
employees, had numerous such claims. to fund and administer its benefits plan.
In fact, DuPont reviewed its record of Although the case-by-case
claims before denying Stratton’s claim. decisionmaking, which as Stratton points
It follows that this factor weighs in favor out means that each claim dollar avoided
of heightening the standard. Regarding is a dollar that accrues to DuPont, may
information accessibility, Stratton has leave room for some bias, the fact that
alleged no information imbalance, nor DuPont structured the program by using
should one be inferred. A review of the Aetna to hear the claim initially provides
record shows a conscientious effort on the safeguard of neutral evaluation. In
the part of Aetna to keep Stratton fact, the physicians to whose opinions
apprised of the information it had at its Stratton objects were affiliated with
disposal and the reasons animating its Aetna, not DuPont. This factor thus
decision to deny benefits. This second counsels for only a slightly heightened
factor does not alter the arbitrary and standard.
capricious standard.
The final factor regarding the
The third factor, the exact status of the fiduciary is not relevant.
financial arrangement between the Stratton alleges no facts regarding the
insurer and the company, requires more financial health or long term plans of the
attention. The conflict alleged is that the company that would undermine the
plan is funded by the employer, DuPont, “presumed desire to maintain employee
on a case-by-case basis instead of on a satisfaction.” Pinto, 214 F.3d at 392.3
fixed price basis that has been actuarially
determined. Theoretically, then, DuPont
3
may have some incentive to deny At oral argument DuPont argued,
coverage on individual requests, pursuant to Romero v. SmithKline
assuming that it has no interest in Beecham, 309 F.3d 113, 118 (3d Cir.
“avoid[ing] the loss of morale and higher 2002), that the $9,829.05 claim is
wage demands that could result from sufficiently de minimus compared to
denials of benefits.” Nazay v. Miller, DuPont’s profits to negate any inference
of conflict. Because this was not
5
Stratton alleges no facts that would give decision without reason,
rise to an inference of conflict other than unsupported by substantial
the fact that DuPont both funds and evidence or erroneous as a
ultimately administers its own plan after matter of law. Once the
outsourcing the initial phases of conflict becomes a factor
administration. Given this, the District however, it is not clear how
Court properly heightened the arbitrary the process required by the
and capricious standard slightly to typical arbitrary and
accommodate what appears to be a capricious review changes.
potential, even if negligible, chance of Does there simply need to
conflict. be more evidence
supporting a decision,
It is easier to decide which
regardless of whether that
standard to use than to apply it because it
evidence was relied upon?
is not clear how to employ a slightly
heightened form of arbitrary and
capricious review.
Pinto, 214 F.3d at 392 (internal
We acknowledged that quotations omitted).
there is something
Finding this wanting, we decided
intellectually unsatisfying,
that “we can find no better method to
or at least discomforting, in
reconcile Firestone’s dual commands
describing our review as a
than to apply the arbitrary and capricious
heightened arbitrary and
standard, and integrate conflicts as
capricious standard. . . .
factors in applying that standard,
The routine legal meaning
approximately calibrating the intensity of
of an arbitrary and
our review to the intensity of the
capricious decision is . . . a
conflict.” Id. at 393. We concluded that
we “will expect district courts to consider
the nature and degree of apparent
discussed in the briefs, and because there conflicts with a view to shaping their
is no evidence of record regarding arbitrary and capricious review of the
DuPont’s financial health, we decline to benefits determinations of discretionary
discuss the issue here. We noted in Pinto decisionmakers.” Id.“that when more money was at stake–i.e.,
Taking our cue from the
when a large class of beneficiaries
somewhat enigmatic Pinto language, we
requested and was denied benefits–the
will scrutinize carefully any allegations
potential conflict might invite closer
that Aetna erred in the manner in which
scrutiny.” Pinto, 214 F.3d at 386. No
it reviewed Stratton’s claim, as such
such large sum of money is at stake in
errors might confirm Stratton’s
the instant case.
6
contention that there was a conflict of invasive treatments had not worked for
interest. This would comport with the Stratton in the past, and finally that they
sliding scale inquiry used in the Fourth failed to accord sufficient deference to
Circuit, which gives the fiduciary the opinion of her treating physician.
decision “some deference, but this These arguments are unpersuasive.
deference will be lessened to the degree
In her briefs and during oral
necessary to neutralize any untoward
argument, Stratton asserts that an e-mail
influence resulting from the conflict.”
submitted by Dr. Koumaras, which
Group Hospitalization & Medical Servs.,
stated, “studies have shown that 85% of
3 F.3d at 87.
those cases operated on regarding
B. Summary Judgment respositioning of the disc do fail and the
disc usually relocates itself to the
Of particular significance is our
dislocated position,” J. App. at 200,
precedent holding that a court may not
demonstrates that Aetna made its
substitute its own judgment for that of
determination of benefits based on a
plan administrators under either the
generalized review not focused on
deferential or heightened arbitrary and
Stratton’s individual experience.
capricious standard. Smathers v. Multi-
However, the statistical likelihood that
Tool, Inc./Multi-Plastics, Inc., 298 F.3d
the surgery will be successful is relevant
191, 199 (3d Cir. 2002) (citation
to deciding whether it is “medically
omitted). Even under the heightened
necessary.” Also, Dr. Koumaras’
standard, “a plan administrator’s decision
medical opinion was based on his
will be overturned only if it is clearly not
experience in and knowledge of the field,
supported by the evidence in the record
an important predicate for
or the administrator has failed to comply
recommendation of individual treatment.
with the procedures required by the
Furthermore, there are documents of
plan.” Id. at 199 (quoting Orvosh v.
record that show that Stratton’s claim did
Program of Group Ins. for Salaried
receive individualized attention. One
Employees of Volkswagen of Am., Inc.,
such document, a letter in which Dr.
222 F.3d 123, 129 (3d Cir. 2000)).
Koumaras quotes the independent
Stratton does not argue that either Aetna
physician Dr. Hendler, indicates that the
or DuPont deviated from required
Aetna physicians scrutinized the medical
procedures.
evidence at least as closely, if not more,
Stratton makes three principal than did Dr. Macher. It noted,
arguments with regard to DuPont’s
Plain films [of an MRI
denial of her claim: that Aetna’s
taken in 1990] did not
physicians did not give Stratton’s claim
indicate any evidence of
individualized review, that these same
degenerative joint disease .
physicians failed to consider that less
. . . A recent MRI was
7
obtained after . . .”
recommendations by
J. App. at 100.
[Aetna] reviewers . .
. . Performing Careful scrutiny of the record
surgery of this reveals that the criticism that Aetna paid
magnitude without a insufficient attention to Stratton’s claim
current MRI would, is unwarranted. The record here is
in fact, be a detailed and comprehensive because
deviation of DuPont and Aetna took many steps in
standard of care. considering Stratton’s claim: Aetna
On January 3, 2000, invited additional information and
a MRI revealed medical history by Stratton, Dr. Macher,
minimal disc and her previous treating physician, Dr.
displacement. 4 In R.H. Tallents, after first denying
light of the patient’s coverage, reviewed the TMJ post-
failure to respond to operative report, and finally had three
conservative physicians, one of whom was not
(nonsurgical) involved in the original decision, review
therapy and based the information submitted before finally
on the clinical denying Stratton’s request. Aetna’s
findings offered in request of an updated MRI which it then
Dr. Macher’s reviewed rebuts Stratton’s contention
records, less that its consideration of her claim was
invasive general as opposed to individual.
arthrocentesis
It is undisputed that Stratton
and/or arthroscopic
attempted neither arthrocentesis 5 nor
surgery would be
considered the
procedure of choice. 5
Appellants’ counsel asserted
during oral argument that because there
is no medical finding of record that
4
At oral argument, Stratton’s Stratton’s joint contained excess fluid, a
counsel argued that Koumaras recommendation that she undergo
incorrectly characterized the 2000 MRI arthrocentesis was medically
as showing disc displacement only on the inappropriate. But arthrocentesis is not a
left side. However, the observation of fluid-draining procedure; it is a
the “normal temporomandibular joint procedure in which a sterile solution is
disc-condyle relationship on the right” inserted into the joint and then drained
referred to the 1990 MRI, not the 2000 away. This discussion is of no moment,
MRI. J. App. at 182. however, because this argument
8
arthroscopic surgery, both of which are opened or closed her mouth, chewed,
less invasive treatments than the yawned, or laughed. It was in light of
arthroplasty she chose to undergo and this failure and “based on the clinical
both of which Aetna physicians findings offered in Dr. Macher’s
recommended in lieu of the arthroplasty. records” that Aetna’s physicians
Stratton argues that “to say that [she] recommended these two less invasive
refused conservative treatment is a gross surgical procedures. J. App. at 122. We
mischaracterization of her medical are not in a position, nor are we
history,” Appellant’s Br. at 14, because permitted, to decide which of the three
over the years, she had undergone several procedures was best tailored to Stratton’s
conservative courses of treatment, case. But a review of the record shows
including an occlusal splint, analgesics, that DuPont acknowledged and
and muscle relaxants. But this argument considered that the more conservative
itself mischaracterizes the record. treatments had not worked for Stratton in
DuPont notes in an affidavit of Jean the past and that its suggestion that she
Opreska, a Health Care Benefits undergo less invasive procedures was not
Consultant and Qualified Benefits based on oversight.
Consultant for DuPont, that “Aetna still
The final argument Stratton makes
recommended denial of benefits because
is that Aetna, DuPont, and the District
Ms. Stratton refused more conservative
Court failed to accord sufficient
medical treatment.” J. App. at 91.
deference to the opinion of her treating
Because the only more conservative
physician, Dr. Macher, who
medical treatments recommended by
recommended the arthroplasty. Just last
Aetna were “less invasive arthrocentesis
Term, the Supreme Court in Black &
and/or arthroscopic surgery,” J. App. at
Decker Disability Plan v. Nord, 123 S.
100, we can assume that it was to these
Ct. 1965, 1967 (2003), held that “plan
treatments that Opreska’s affidavit
administrators are not obliged to accord
referred–not to the treatments previously
special deference to the opinions of
undertaken by Stratton.
treating physicians.” In so holding, the
Aetna specifically acknowledged Court also stated,
Stratton’s “failure to respond to
Plan administrators, of
conservative (non-surgical) therapy,” J.
course, may not arbitrarily
App. at 122, which presumably meant
refuse to credit a claimant’s
that she continued to suffer from
reliable evidence, including
headaches and other pain whenever she
the opinions of a treating
physician. But we hold,
courts have no warrant to
regarding the medical propriety of
require administrators
arthrocentesis was not mentioned in the
automatically to accord
Appellants’ briefs.
9
special weight to the revert to prior position). A professional
opinions of a disagreement does not amount to an
claimant’s arbitrary refusal to credit.
physician; nor may
The Supreme Court in Black &
courts impose on
Decker Disability Plan, in discussing the
plan administrators
relative inclinations of consulting
a discrete burden of
physicians engaged by a plan and treating
explanation when
physicians stated, of the latter, that “a
they credit reliable
treating physician, in a close case, may
evidence that
favor a finding” for the patient. 123 S.
conflicts with a
Ct. at 1971. The Court eschewed
treating physician’s
deciding whether “routine deference to
evaluation.
the claimant’s treating physician would
Id. at 1972. yield more accurate [claim]
determinations,” because such a
As Stratton notes, Dr. Macher in
determination “might be aided by
his post-operative report stated that he
empirical investigation of the kind courts
“did not feel that arthroscopy or
are ill equipped to conduct.” Id. The
arthrocentesis would provide sufficient
professional disagreement between
mechanical relief of the problems within
Aetna’s consulting physicians and
the joint and thus [ ] discussed [with
Stratton’s physician seems grounded in
Stratton] the risks, benefits and
differing conclusions based on the
alternatives of TMJ arthroplasties.” J.
review of Stratton’s MRI, past medical
App. at 115. Aetna’s physicians did not
history, and the likelihood that the
arbitrarily refuse to credit this opinion;
chosen course of action would be
they simply disagreed with Dr. Macher’s
successful or not. Because Black &
recommended treatment. It appears that
Decker Disability Plan holds that plan
they may have been wary of Dr.
administrators are not obliged to defer to
Macher’s initial recommendation
the treating physician’s opinion, the
because he made that recommendation
District Court did not err in upholding
before he had an updated MRI. See J.
the decision of the plan administrators.
App. at 122. Aetna acknowledged that
Stratton had not responded to her Having carefully considered the
previous course of treatment but arguments put forth by Stratton that
concluded that less invasive forms of Aetna and DuPont erred in denying her
surgery would be more appropriate claim, as the intensified degree of
because repositioned discs usually scrutiny requires we do, we cannot hold
migrate back to their original position. that the denial of benefits in this case
See J. App. at 200 (referring to studies was “clearly not supported by the
that have shown that 85% of such cases evidence in the record.” Smathers, 298
10
F.3d at 199.
CONCLUSION
For the reasons set forth, we will
affirm the District Court’s order granting
summary judgment to DuPont.
11