Lee v. MBNA Long Term Disability & Benefit Plan

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 05a0223n.06
Filed: March 29, 2005
No. 04-3105
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
TRACEY D. LEE,
Plaintiff-Appellant,
v. ON APPEAL FROM THE
UNITED STATES DISTRICT
COURT FOR THE NORTHERN
DISTRICT OF OHIO
MBNA LONG TERM DISABILITY
& BENEFIT PLAN, et al.,
Defendants-Appellees.
__________________________________________/
BEFORE: MARTIN and GILMAN, Circuit Judges; and COHN, District Judge.*
AVERN COHN, District Judge. This is a case under the Employment Retirement
Income Security Act (“ERISA”), 42 U.S.C. § 1001, et seq seeking long-term disability
(“LTD”) benefits. Plaintiff-Appellant Tracey D. Lee (“Lee”) appeals from (1) the district
court’s decision entering judgment in favor of Defendants-Appellees MBNA Long Term
Disability & Benefit Plans (“MBNA”), ING Benefit Claim Manager Duncanson & Holt
*
The Honorable Avern Cohn, United States District Judge for the Eastern District
of Michigan, sitting by designation.
(“D&H”), and Security Life of Denver (“Security Life”) and (2) the district court’s order
denying Lee’s motion to supplement the administrative record. For the reasons that
follow, we AFFIRM the decisions of the district court.
I. BACKGROUND
A. The Framework of the Plan and Delegation of Authority
MBNA is the sponsor and administrator of the LTD plan at issue. MBNA
contracted with Security Life, an insurance company, to fund the LTD plan. The
insurance policy contains all of the essential provisions regarding the payment of LTD
benefits and is, for all intents and purposes, the LTD plan. There is no dispute that the
plan is governed by ERISA. The governing plan documents include the summary plan
description (“SPD”) and the insurance policy between MBNA and Security Life. As
administrator, MBNA retained discretionary authority to determine benefit eligibility.
The SPD provides in part:
The Plan Administrators, or their delegates, have the exclusive
discretionary authority to operate and administer the benefit plans summarized in
this guide, and to determine all questions arising in connection with the plans.
They also have the discretionary authority to construe the terms of the plans, to
decide all questions of eligibility and participation, and to determine benefit
amounts. The Plan Administrators’ decision on all such matters are final. Any
interpretation or determination made while carrying out their discretionary
authority will be upheld on judicial review, unless it is shown that the
interpretation or determination was an abuse of discretion.
The SPD further states that MBNA could delegate its discretionary authority and
the delegate(s) could re-delegate the discretionary authority:
The Plan Administrator periodically delegates discretionary authority in
2
contracts, letter, and other documents. For example, discretionary authority may
be delegated to the claims administrators, insurers, and trustee listed on page 2, 4,
and 5 of this section, as well as their predecessors or successors. Delegates may
also assign their discretionary authority to others as allowed by the Plan
Administrator.
The insurance policy also conferred upon Security Life discretionary authority:
In making benefits determinations under the Policy, the Insurance Company
shall have the discretionary authority both to determine an individual’s eligibility
for benefits and to construe the terms of the Policy.
MBNA delegated its discretionary authority to administer the plan to D&H.
Security Life later entered into an assumption agreement with SAFECO Life
Insurance Company, which assumed liability as insurer of the LTD plan in place of
Security Life. SAFECO and D&H in turn entered into a Group Long Term Disability
Reinsurance Agreement (“Reinsurance Agreement”) under which D&H is identified as
the Managing Agent for participating reinsurers, referred to as the American Disability
Reinsurance Underwriters Syndicate (“ADRUS”). SAFECO is identified as the insurer.
Under a Claims Management Agreement attached as an appendix to the Reinsurance
Agreement, D&H, as agent for the reinsurers, designated Claims Service International,
Inc. (“CSI”) to perform “claims management services,” including determining benefit
eligibility.1
In order to qualify for LTD benefits, a claimant must meet the following definition
of disability:
1
Effective January 1, 2002, Integrated Disability Resources, Inc. (“IDR”)
purchased the assets and business operations of D&H and CSI.
3
Total Disability or Totally Disabled means during the elimination period [180
days] and the next 36 months of disability the insured is:
1. Unable to perform all of the material and substantial duties of his
occupation on a basis consistent with his regularly scheduled hours
(immediately prior to his disability) because of a disability:
a. caused by injury or sickness
b. that started while insured under this policy; and
2. After 36 months of benefits have been paid, the insured is unable to perform
with reasonable continuity all of the material and substantial duties of his
own or any other occupation for which he is or becomes reasonably fitted
by training, education, experience, age and physical and mental capacity.
B. Processing of Lee’s LTD Claim and Relevant Procedural History
1.
In 1997, MBNA Marketing Systems, Inc. (“MSI”) hired Lee as a part-time
Customer Service Satisfaction Specialist. MSI is a subsidiary of MBNA America, which
is in turn a subsidiary of MBNA. Lee’s duties included answering telephone calls,
preparing, reviewing, and approving customer requests for credit line increases,
processing incoming mail, and tracking incoming calls. She was also required to possess
strong written and oral communication skills, work in a high-volume environment, be
self-motivated, and identify and resolve customer concerns.
In February of 1998, Lee was hired full-time and became eligible for coverage
under MBNA’s benefit plan, which included short term disability (“STD”) and LTD
benefits. Relevant plan provisions are set forth and discussed below.
In December of 1998, Lee applied for and received STD benefits as a result of
fatigue, snoring, daytime somnolence, irregular heartbeat, and shoulder pain. Lee
4
returned to work at the end of March 1999. In September of 1999, Lee again applied for
STD benefits for sleep apnea, high blood pressure and shoulder problems. She received
these benefits until October 1999.2 After Lee exhausted her leave under the Family
Medical Leave Act, she was placed on leave pending her application for LTD benefits.
On December 30, 1999, Lee completed an LTD claim form, on which CSI’s name
and address appears at the top. Lee described her disability as follows: “walking at night
unable to breath [sic] and cardiac distress several times weekly[,] extreme fatigue[,]
muscle weakness[,] unable to think clearly[,] began falling asleep behind the wheel of
auto each time driving.” MBNA completed its portion of the form outlining Lee’s job
duties on February 1, 2000, at which time it was submitted to CSI. Lee’s form was
accompanied by a physician’s statement of January 3, 2000 from her treating physician,
Dr. Chagin, who diagnosed “sleep apnea, HTN, chronic insomnia, possible narcolepsy.”
He listed restrictions of “no driving” and “nothing involving concentration for prolonged
periods.”
It is undisputed that Lee’s alleged onset of disability, for purposes of LTD
benefits, is October of 1999.
On February 14, 2000, CSI identified itself as the claims advisory agent for
SAFECO, the LTD carrier for MBNA, and informed Lee that it had received her claim.
CSI also received the following medical documentation: treatment notes from Dr.
2
Lee apparently challenged the termination of her STD benefits. However, the
matter was later resolved and is not the subject of this appeal.
5
Chagin from February 1999 to February 14, 2000; treatment notes from Dr. Hershey, a
cardiologist, from June 1999 to October 5, 2000; and three of Lee’s STD forms. Dr.
Hershey’s records show that cardiac test results were essentially normal. Dr. Chagin’s
notes outline Lee’s several complaints over time, and include diagnosis of sleep apnea,
obesity, shoulder pain, chronic insomnia, fibromyalgia, and hypertension. None of Dr.
Chagin’s notes indicate that Lee’s sleeping difficulties prevent her from working.
On March 27, 2000, Trina Couture at CSI documented a phone call from Lee in
which she stated, inter alia, that her Continuos Positive Airway Pressure (“CPAP”)
machine was not working, she has trouble keeping it on at night, and she subconsciously
removes it.
On May 9, 2000, CSI, though Couture, referred Lee’s file to Dr. Barry Gendron, a
consulting physician specializing in rehabilitation and physical medicine. Dr. Gendron
completed a Memorandum dated May 14, 2000, in which he stated:
It is unclear what Ms. Lee’s alleged primary impairing condition is. There
is no objective medical evidence to corroborate attention/concentration deficits
related to sleep apnea syndrome. We also do not have the results of the sleep
study to review. I see no formal neuropsychiatric or psychiatric assessment of
cognitive capacity, nor do I see even a baseline mini-mental status exam
attempting to document cognitive function.
From the medical information available, I do not see adequate evidence
from 8/99 to present which would support complete impairment from a sedentary
occupation. It is entirely unclear why the claimant left work; her hypertension was
under fair control and her sleep apnea was apparently fairly longstanding. It is
unclear if her job/motivational issues have impacted her leaving work.
Dr. Gendron recommended obtaining results of the sleep study, as well as considering
contacting her attending physician to better understand her restrictions and limitations.
6
Later in May, CSI received additional medical records relating to Lee’s sleep
apnea, insomnia, and possible narcolepsy. These records show that Lee was diagnosed
with sleep apnea in 1998. On November 18, 1998, Lee underwent a sleep study at Akron
General Medical Center at the direction of Dr. Chagin. The study documented
“prolonged sleep latency” of more than one hour and found “moderately severe”
obstructive sleep apnea. A repeat study was conducted on December 10, 1998 that
showed that Lee’s apnea was well controlled with the use of a CPAP device.
On June 6, 2000, Dr. Gendron spoke with Dr. Chagin regarding Lee’s condition.
The substance of the conversation is memorialized in a letter from Dr. Gendron to Dr.
Chagin, also dated June 6, 2000, which Dr. Chagin signed and returned. Dr. Chagin
indicated that he supported a period of disability from August 30, 1999 until September
30, 1999 relative to Lee’s hypertension. After that time, Dr. Chagin indicated that her
condition was well controlled and did not affect her job duties. They also discussed Lee’s
work restrictions, to which Dr. Chagin stated that Lee had been diagnosed in February of
1999 with left rotator cuff tendinitis and that a restriction of not lifting greater than ten
pounds was in place from February 1999 to August 1999. They did not discuss Lee’s
sleep apnea; either Dr. Gendron did not inquire about the condition and/or Dr. Chagin did
not mention it.
Also on June 6, 2000, Dr. Gendron completed a second Memorandum regarding
Lee’s condition. As to her sleep apnea, he stated that “[a]lthough comorbid conditions of
sleep apnea syndrome and possible narcolepsy are listed, the objected evidence show that
7
she is well controlled on 10 cms of water CPAP.” His summary of the condition noted
that her limitation was to wear a CPAP at night. He found no evidence limiting her
regarding her hypertension, tendinitis or fibromyalgia.
Based on this information, CSI denied Lee’s claim in a letter dated June 21, 2000.
The letter discusses Lee’s treatment for hypertension and tendinitis, as well as the
conversation with Dr. Chagin; it does not mention Lee’s sleep apnea. Lee, through
counsel, appealed the decision. Counsel for Lee wrote CSI, agreeing that her
hypertension was not in and of itself disabling, but that Lee’s primary disability was
“sleep apnea” that had resulted in a decreased ability to concentrate, chronic fatigue, and
short-term memory loss. Counsel indicated that medical records from Dr. Chagin would
support her condition and would be forwarded to CSI. CSI agreed to hold the file open
for 30 days for receipt of the additional information. CSI, however, did not receive any
additional information. Accordingly, on September 29, 2000, CSI notified Lee that her
appeal was denied. The letter references the conversation between Dr. Chagin and Dr.
Gendron and states in part as follows:
Dr. Chagin did not indicate there were any work restrictions which would
carry forward with respect to the sleep apnea. The medical records reflect that
your client’s sleep apnea improved with treatment with the CPAP. There is no
indication that a new polysomnography was done showing that the CPAP
treatment from the previous polysomnogram of 12.10/98, which was effective in
controlling abnormalities, was no longer valid. Nor have we been provided with
any neuropsychological results outlining any cognitive impairments.
The letter further indicated that CSI would review any additional medical information
received within sixty days.
8
On October 2, 2000, Lee’s counsel advised CSI that he had requested a detailed
medical report from Dr. Chagin and would forward it to CSI. CSI, however, did not
receive such a report.
More than seven months later, on May 17, 2001, CSI received a telephone call
from Lee’s new counsel requesting a copy of Lee’s claim file. On June 2, 2001, CSI
received a copy of a letter dated September 4, 2000 that Dr. Chagin wrote to Lee’s former
counsel. In that letter, Dr. Chagin stated:
Tracey Lee has been seen by me for persistent Hypertension, Chronic
Fatigue, Chronic Insomnia, Fibromyalgia and Sleep Apnea. Her sleep apnea most
likely is the causative problem for her other health concerns. She had persistent
symptoms from her sleep apnea even though she is equipped with a home CPAP
machine. She has seen a neurologist and is currently seeing an ear, nose, and
throat specialist. She continues to be aggravated by fatigue, headaches and stress.
Tracey is seen periodically by me to monitor response to therapy. Should you
have need for further information, feel free to contact my office.
CSI also received the following information: treatment notes from Dr. Chagin
through July 19, 2001; the results of a sleep study performed by Dr. Raymond Salomone
on October 9, 2000; treatment notes from Dr. Frankie Roman, a sleep specialist, from
July 3, 2001 to November 2, 2001; and an affidavit of Kelly Bevington, Lee’s roommate,
a nursing assistant. These records show that the sleep study by Dr. Salomone reported
“moderately severe obstructive sleep apnea,” which was treated adequately with the use
of a CPAP. It also recommended that other alternatives, such as a different device or
surgery, could be explored if Lee continued to have problems. Dr. Roman performed a
sleep study in July 2001. The results showed “no clinically significant snoring or sleep
9
related disturbance, abnormal decreased architecture with severely decreased sleep
efficiency ....” It also stated that “if the clinical suspicion for obstructive sleep apnea
remains high, ...[Lee should] return to the sleep center for a repeat polysomnogram after
correcting the difficulty initiating and maintaining sleep.” None of Dr. Roman’s or Dr.
Chagin’s treatment notes indicate any restriction on Lee’s ability to work. However, Dr.
Roman wrote a letter dated November 2, 2001 in which he opined:
Ms. Tracey Lee has been disabled as defined by her employer’s guidelines
since August 1999 when she left work to the present. She has been unable and is
still unable to perform the substantial and material duties of her regular occupation
as a clerk. Furthermore, I am pessimistic that there will be dramatic improvement
in the near future. Nonetheless we will continue to work with Ms. Lee and her
other healthcare providers towards improving her overall condition.
On October 30, 2001, Dr. Gendron telephoned Dr. Salomone to discuss the
October 9, 2000 sleep study. The substance of the conversation was confirmed in a letter
of the same date written by Dr. Gendron and signed and returned by Dr. Salomone. Dr.
Salomone confirmed the results of the sleep study that Lee had “moderately severe
obstructive sleep apnea” that was controlled with a CPAP. He stated he did not believe
based on the study that Lee was precluded from engaging in a sedentary occupation, such
as Lee’s job as customer satisfaction specialist. Dr. Salomone stated the only restriction
he would impose would be that Lee not perform shift work, work around dangerous or
heavy equipment, or be employed as a bus or truck driver.
Dr. Gendron attempted to contact Dr. Chagin to obtain information regarding his
letter to Lee’s former counsel and the statement in the June 22, 2000 letter following their
10
conversation in which he opined that Lee could return to work after October 5, 1999. Dr.
Chagin, however, did not respond. Dr. Gendron submitted additional Memoranda of his
review of the medical evidence on November 1, 2001 and December 27, 2001, in which
he essentially concluded that Lee was not disabled. He noted that the data from Dr.
Roman comes nearly two years following Lee’s disability onset of August 1999 and in his
opinion was not supportive of a finding of disability as of August 1999.
On February 20, 2002, CSI informed Lee of its decision to uphold the denial of
benefits. Five days later, Lee filed the instant action, claiming a wrongful denial of
benefits and a breach of fiduciary duty under ERISA.
2.
At a case management conference on July 15, 2002, Lee claimed to have new
evidence supporting her claim for LTD benefits as of August 1999. The district court
ordered Lee to submit the evidence to CSI for review and a final decision. Lee submitted
the following additional information: treatment notes from Dr. Deborah Reed, a
neurologist; a letter dated August 14, 2002 from Adele Webb; and a letter dated August
19, 2002 from Dr. Roman. Lee claimed to be disabled since August of 1999 based on
newly discovered evidence of a brain lesion. Most of Dr. Reed’s studies were normal or
unremarkable. However, a May 14, 2002 MRI of the brain noted a “single high signal
intensity lesion within the anterior aspect of the basal ganglia measuring 5 mm.” The
radiologist indicated that the lesion was “non specific and may be related to ischemia or
demyelination.” Dr. Reed diagnosed, among other things, sleep apnea and memory
11
problems. Webb, a registered nurse specializing in AIDS care, submitted a letter which
indicated she reviewed Lee’s file (it does not appear that she saw Lee) and opined:
Based on the appearance and exacerbation of symptoms since 1988 and the
failure of conventional therapies to alleviate Ms. Lee’s health concerns, it is
probable that this brain lesion occurred on or around April 1998, the date of the
onset of her symptoms.
Dr. Reed’s August 19, 2002 letter stated that he had recently reviewed Lee’s old
medical records and opined that Lee’s “brain lesion probably existed in 1998 and
contributed to her ongoing problems.” He stated that Lee continued “to have cognitive
dysfunction with decreased attention span, poor concentration and excessive daytime
sleepiness.”
Based on this information, CSI requested a review of Lee’s file by Dr. David
Webster, an independent medical expert who is board certified in psychiatry and
neurology. On October 7, 2002, Dr. Webster submitted a report in which he stated that he
agreed with Dr. Reed’s diagnosis of pseudodementia, but did not agree with the
radiologist’s assessment of the brain lesion as being ischemic or demyelinating based on
its location, noting that such lesions are not uncommon in smokers or those with
hypertension, such as Lee. He also opined, contrary to Webb and Dr. Roman, that it was
“physiologically impossible” for the lesion to be responsible for her sleep symptoms
because lesions in the basal ganglia are not involved in sleep disorders or cognitive
disorders. He also disputed the assertion that all of her symptoms appeared in 1998, as
Webb suggested. Dr. Webster further stated that it was impossible to determine when the
12
lesion occurred. He also stated that there was no medical evidence to suggest that Lee
was sufficiently impaired from performing her occupation as of August 1999.
On October 15, 2002, CSI determined that Lee was not entitled to LTD benefits as
of August 1999 and therefore again denied her claim.
3.
A second status conference was held on October 30, 2002, where the district court
permitted Lee to depose Dr. Chagin and Dr. Gendron. The case was later transferred to
the docket of another district judge.
Lee filed a motion for a bench trial on her claim for benefits and a jury trial on her
claim for breach of fiduciary duty. MBNA and D&H, together with Security Life, filed
separate motions to dismiss and for entry of judgment on the administrative record. D&H
and Security Life filed a motion to strike Lee’s references in her briefs to materials
outside the administrative record, including the depositions of Drs. Chagin and Adams,
certain items “taken from the Internet,” and references to the facts of a reported case. The
district court granted in part and denied in part the motion, noting that the deposition of
the doctors were permitted by the district court to establish Lee’s argument regarding a
conflict of interest.
Faced with the voluminous filings, on June 12, 2003, the district court ordered that
no further motions would be entertained without leave of court. On June 16, 2003, Lee
moved to file a favorable decision from the Social Security Administration (“SSA”)
issued on June 7, 2003. The district court denied the motion on the grounds that it was
13
not part of the administrative record. Lee moved for reconsideration, which was also
denied.
On December 30, 2003, the district court issued an opinion denying Lee’s motion
for a bench trial and a jury trial and granting defendants’ motions for entry of judgment
on the administrative record. The district court found that Lee’s ERISA claim for breach
of fiduciary duty failed as a matter of law, that she had not pled a state-law claim for
breach of fiduciary duty, that the arbitrary and capricious standard of review applied,
there was no conflict of interest, and CSI did not act arbitrarily or capriciously in denying
her LTD claim.
Lee appeals from the district court’s December 30, 2003 order as well as its order
denying her motion to file her favorable SSA decision.
II. ANALYSIS
A. Standard of Review
This court reviews a decision of a district court in an ERISA benefits case de novo.
Gatlin v. National Healthcare Corp., 248 F.3d 1148 (6th Cir. 2001) (citing Paul Revere
Life Ins. Co. v. Brock, 28 F.3d 551, 553 (6th Cir. 1994)).
B. Whether there was a proper delegation of claims authority to CSI
Lee argues that there was an improper delegation of discretionary authority by
defendants that, as a result, requires that this Court review her claim de novo.
It is well established that an ERISA fiduciary may delegate its fiduciary
responsibilities to either another named fiduciary or a third party if the plan establishes
14
procedures for such delegation. See 29 U.S.C. § 1105(c)(1).3 In Madden v. ITT Long
Term Disability Plan, 914 F.2d 1279, 1283 (9th Cir. 1990), the court rejected the
plaintiff's position that a delegate of such authority was not entitled to the same
discretionary review as (admittedly) was the original named fiduciary. Rather, the court
held that where a named fiduciary with discretionary authority “properly designates
another fiduciary,” then discretionary review “applies to the designated ERISA-fiduciary
as well as to the named fiduciary.” Id. at 1283-84. See also Bayer v. Holcroft/Loftus,
Inc., 769 F. Supp. 225, 229 (E.D. Mich. 1991) (“[t]he same arbitrary and capricious
standard applies even though [original administrator] delegated to [designee] its duty of
interpreting the Plan as to benefits”).
Here, the plan provisions set forth above clearly show that MBNA, as plan
administrator and fiduciary, had the authority to delegate its fiduciary responsibilities and
that its delegates could in turn re-delegate their authority provided MBNA “allowed” the
re-delegation. The record shows that MBNA delegated its claims administration function
to D&H that in turn delegated it to CSI. Lee says this was improper for several reasons.
Lee first argues that D&H was not a fiduciary at all because it is a life and health
reinsurance company and a managing agent of ADRUS and its members and therefore
could not have delegated its authority. Lee cites no authority for this argument and
3
This section provides in part:
the instrument[s] under which a plan is maintained may expressly provide for
procedures ... for named fiduciaries to designate persons other than named
fiduciaries to carry out fiduciary responsibilities.
15
indeed there is no authority that states that an entity such as D&H cannot be a fiduciary.
Lee next argues that the delegation from D&H to CSI was improper because there
are no documents indicating MBNA’s authorization of the delegation to CSI. This
argument also fails. There is nothing in ERISA that requires a re-delegation be in
writing; what is required is, if delegation is desired, that the instrument provide for the
delegation procedures. See 29 U.S.C. § 1105(c)(1). Here, the plan documents set forth
such a procedure – the plan administrator may delegate its authority “in contracts, letters,
and other documents” and “delegates may also assign their discretionary authority to
others as allowed by the Plan Administrators.” Thus, while a delegation from the MBNA
to another entity may be evidenced in a contract, letter, or other document, there is no
similar provision for a re-delegation. The only requirement is that the re-delegation be
“allowed” by MBNA. MBNA clearly “allowed” the delegation as evidenced by MBNA
submitting claim forms to Lee bearing CSI’s name and the communications between CSI,
Lee, and MBNA in the record regarding her claim. Thus, rather than establishing a
procedural irregularity, as Lee seems to suggest, the record shows that the procedure for
delegation and re-delegation used here was entirely consistent with relevant plan
provisions. Again, a delegation need not be in writing if the plan does not call for a
writing. See Hensley v. Northwest Permanente P.C. Ret. Plan & Trust, 258 F.3d 986, 998
(9th Cir. 2001) (noting that delegation of discretionary authority under an ERISA plan
need not be in writing where plan did not require delegation to be in writing). Thus, the
delegation from D&H to CSI was not improper or in violation of ERISA.
16
Lee also argues that the delegation from D&H to CSI was not a delegation of
discretionary authority, and therefore CSI was not truly a fiduciary, because the
delegation language only said CSI would perform “claims management services.” Lee,
however, provides no authority for her argument, nor is there any provision in ERISA that
requires that delegations of discretionary authority contain certain operative, or magical,
language.
Finally, the caselaw upon which Lee relies is distinguishable. In Rubio v. Chock
Full O’Nuts Corp., 254 F. Supp. 2d 413 (S.D.N.Y. 2003), the plan expressly provided
that only the employer’s board of directors or a committee appointed by the board could
interpret the benefit plan and determine eligibility. Because the plan did not allow for
further delegation, the court held that the claimant was entitled to de novo review. Here,
as stated above, the plan allowed for delegation and re-delegation. In Doe v. Travelers
Ins. Co., 971 F. Supp 623, 635 (D. Mass. 1997), the court found that the entity that
actually decided the plaintiff’s benefits claim was “concealed” and therefore de novo
review applied. That clearly is not the case here. Lee was well aware of CSI.
In short, because the delegation of discretionary authority was proper, Lee is not
entitled to de novo review of her claim on this ground. The district court did not err in
concluding the same.
C. What is the appropriate standard of review for CSI’s decision
Because we conclude that Lee is not entitled to de novo review based on an alleged
improper delegation, or on the allegation that CSI was not a proper fiduciary, the only
17
issue remaining regarding the standard of review requires an examination of the plan
documents to determine whether CSI was granted discretionary authority.4 As noted
above, the plan conferred upon the plan administrator the authority to determine benefits
and construe the terms of the plan. The language of the SPD is sufficient to invoke the
arbitrary and capricious standard of review.5 See Firestone Tire & Rubber Co. v. Bruch,
489 U.S. 101, 115 (1989); Miller v. Metro. Life Ins. Co., 925 F.2d 979, 983 (6th Cir.
1991).
The arbitrary and capricious standard is the “least demanding form of judicial
review.” Admin. Comm. of the Sea Ray Employees Stock Ownership and Profit Sharing
Plan v. Robinson, 164 F.3d 981, 989 (6th Cir. 1999). A decision regarding eligibility for
benefits is not arbitrary and capricious if the decision is “rational in light of the plan’s
provisions.” Daniel v. Eaton Corp., 839 F.2d 263, 267 (6th Cir. 1988). See also Yeager
v. Reliance Standard Life Ins. Co., 88 F.3d 376, 381 (6th Cir. 1996). Stated differently,
“[w]hen it is possible to offer a reasoned explanation, based on the evidence, for a
particular outcome, that outcome is not arbitrary or capricious.” Davis v. Kentucky
4
To the extent that Lee argues she is entitled to a bench trial on her ERISA claim,
this argument lacks merit. It is well settled in this Circuit that denial of benefit claims are
decided in accordance with the procedure set forth in Wilkins v. Baptist Healthcare Sys.
Inc., 150 F.3d 609, 618-19 (6th Cir. 1998), which requires the district court to render
findings of fact and conclusions of law based on the administrative record; there is no
provision for a bench trial.
5
The SPD states that judicial review will be for “an abuse of discretion,” which, for
practical purposes, essentially confers an arbitrary and capricious standard of review.
18
Finance Cos. Retirement Plan, 887 F.2d 689, 693 (6th Cir. 1989) (internal quotation
marks and citation omitted). See also Perez v. Aetna Life Ins. Co., 150 F.3d 550, 555 (6th
Cir. 1998) (en banc).
D. Whether CSI was operating under a conflict of interest
Lee argues that CSI was operating under a conflict of interest because it was acting
for the interests of certain reinsurers (Allianz, a member of ANDRUS) and SAFECO who
were ultimately responsible for paying Lee’s benefits. Lee also says that a conflict exists
because CSI was the agent for D&H, which in turn was the managing agent for ADRUS.
Lee is correct that if a conflict of interest exists, this factor must be taken into
account in determining whether the decision to deny benefits was arbitrary or capricious.
See Miller, 925 F.2d at 984.
Here, SAFECO assumed Security Life’s liability under the MBNA LTD plan via
an assumption reinsurance agreement. CSI itself was not responsible for paying benefits.
Moreover, as the district court noted, even if D&H is affiliated with CSI, CSI, not D&H,
decided the claim and D&H delegated it discretion to CSI. Thus, there does not appear to
be a conflict of interest under the circumstances. See Krause v. Modern Group, Ltd., 156
F. Supp. 2d 437 (E.D. Pa. 2000) (holding that a similar relationship where CSI was
delegated claims authority did not create a conflict of interest).
Regardless, even assuming, arguendo, that CSI was operating under a conflict of
interest vis-a-vis its relationship with D&H, SAFECO, and ANDRUS, this is only a factor
to be considered. As will be explained, CSI did not abuse its discretion in denying Lee’s
19
claim. This conclusion is not altered even if CSI was acting under a conflict of interest.
E. Whether CSI’s decision was correct under
the appropriate standard of review
The next issue, which really forms the heart of this appeal, is whether CSI’s
decision denying Lee’s claim for LTD benefits was arbitrary and capricious. It is
important to note that in order to be eligible for benefits, Lee must show that she met the
definition of disability under the plan as of her onset date of August 1999.
Regarding this, Lee first argues that CSI erred because it failed to give sufficient
weight to the opinions of Dr. Roman, her treating physician. “Generally, when a plan
administrator chooses to rely upon the medical opinion of one doctor over that of another
in determining whether a claimant is entitled to ERISA benefits, the plan administrator's
decision cannot be said to have been arbitrary and capricious because it would be possible
to offer a reasoned explanation, based upon the evidence, for the plan administrator's
decision.” McDonald v. Western-Southern Life Ins. Co., 347 F.3d 161, 169 (6th Cir.
2003) (citing Black & Decker Disability Plan v. Nord, 123 S. Ct. 1965 (2003)). Under
Nord, CSI was not required to give Dr. Roman’s opinion any special weight. Moreover,
CSI had the opinions from Dr. Salomon and Dr. Webster who both found that Lee’s sleep
apnea did not preclude her from working at her former occupation. Under these
circumstances, CSI was free to favor these opinions over Dr. Roman’s without being
found to have acted arbitrarily.
It is notable that Lee focuses only on the evidence of her sleeping disorders, and
20
problems in concentration stemming therefrom, as the basis for her disability. Thus, the
evidence relating to her hypertension and tendinitis will not be discussed, as it is assumed
and confirmed by the record that these conditions were not disabling.
As to her sleep apnea, the record contains conflicting evidence of whether or not it
is disabling. Notable also is Dr. Chagin’s altering opinion of Lee’s sleep condition. In
June 2000, he said in his conversation with Dr. Gendron that Lee’s only work restriction
was related to her tendinitis. Lee characterizes this conversation as one in which Dr.
Gendron “snookered” or “actively deceived” Dr. Chagin into not discussing Lee’s sleep
problems. This contention is difficult to support in light of the fact that Dr. Chagin signed
the letter prepared by Dr. Gendron memorializing the conversation, indicating his
agreement. Dr. Chagin knew the purpose of the conversation was to discuss Lee’s
restrictions and ability to work and that Dr. Gendron was reviewing her file for that
purpose. Certainly, it would appear that if Dr. Chagin believed that Lee’s sleep apnea
affected her ability to work, it would have been logical for him to so inform Dr. Gendron.
Then, just months later, in September 2000, Dr. Chagin stated that Lee’s sleep apnea is
the cause of her other health problems, but he does not state that she is disabled and he
failed to point to any medical evidence. Dr. Chagin’s January 25, 2002 letter
affirmatively stated that Lee has been disabled since August 1999 and that Lee suffers
from sleep apnea. Again, Dr. Chagin did not point to any medical evidence in support.
Moreover, the results of the sleep studies fail to establish that CSI acted arbitrarily
or capriciously. The December 1998 and October 2000 sleep studies were closer in time
21
to Lee’s onset date and both demonstrated her condition was controlled with a CPAP. Dr.
Salomon opined following the October 2000 study that Lee was not precluded from
sedentary work. The fact that CSI credited these studies over Dr. Roman’s opinion,
which was conducted years after her onset date, was not arbitrary.
As to her brain lesion, the record was also conflicting on whether it was a cause of
her sleep apnea and when it first manifested. In light of the conflicting evidence, CSI was
not arbitrary in crediting Dr. Webster’s opinion over than of Dr. Roman and Webb.
Having carefully reviewed the record, we agree with the district court that CSI’s
decision to deny Lee’s claim for LTD benefits was not arbitrary or capricious in light of
the medical evidence and plan provisions. CSI’s decision was the result of a reasoned
process that considered all of the medical evidence. Indeed, CSI afforded Lee several
opportunities to submit additional evidence and reviewed all the evidence she submitted.
It is important to note that the issue is not whether Lee suffers from any medical
conditions, but rather whether CSI’s determination that Lee’s medical conditions did not
meet the definition of disability under the plan was arbitrary and capricious.
F. Whether Lee stated a claim for breach of fiduciary duty under
ERISA and state law
Lee also argues that the district court erred in finding that Lee failed to state a
claim for breach of fiduciary duty under ERISA and state law. The district court
dismissed Lee’s breach-of-fiduciary duty claim under ERISA and found that she failed to
allege a breach-of-fiduciary duty claim under state law.
22
Lee claimed a breach of fiduciary duty under ERISA, 29 U.S.C. §§ 1109 and
1132(a)(3). Section 1109 deals with liability for breach of fiduciary duty and provides
that:
Any person who is a fiduciary with respect to a plan who breaches any of
the responsibilities, obligations, or duties imposed upon fiduciaries by this
subchapter shall be personally liable to make good to such plan any losses
to the plan resulting from each such breach ... and shall be subject to such
other equitable or remedial relief as the court may deem appropriate,
including removal of such fiduciary ....
29 U.S.C. § 1109(a). Section 1132(a)(3) provides that a civil action may be brought:
[B]y a participant, beneficiary, or fiduciary (A) to enjoin any act or
practice which violates any provision of this subchapter or the terms of the
plan, or (B) to obtain other appropriate equitable relief (i) to redress such
violations or (ii) to enforce any provisions of this subchapter or the terms
of the plan.
29 U.S.C. § 1132(a)(3).
The Supreme Court limited the relief afforded by § 1132(a)(3) to plan participants
or beneficiaries are not able to avail themselves of other remedies under § 1132. See
Varity Corp. v. Howe, 516 U.S. 489, 512 (1996). In Wilkins, supra, this Circuit adopted
the reasoning of Varity and noted that § 1132(a)(1)(B) already provides a remedy for a
claimant who alleges that his benefits were wrongly denied; such a claimant does not
have an additional claim for breach of fiduciary duty pursuant to § 1132(a)(3). Wilkins,
150 F.3d at 615. It is clear that an ERISA claimant may not recharacterize a denial of
benefits claim as a claim for breach of fiduciary duty. See id. at 616 (citing Varity, 516
U.S. at 514-15).
23
Here, Lee had a cause of action for denial of benefits under § 1132(a)(1)(B). Lee
cannot also characterize CSI’s denial of LTD benefits as a breach of fiduciary duty.
Moreover, because Lee has not shown any improper delegation of fiduciary authority by
MBNA and D&H, her breach of fiduciary duty claim arising out of this allegation must
fail.
As to a claim under state law, the district court examined Lee’s Fourth Amended
Complaint and found no affirmative allegations that would constitute a discrete claim for
breach of fiduciary duty under state law. We agree. The only possible reference to state
law in the complaint is contained in her jurisdictional statement that “if this court lacks
subject matter under ERISA, [it has] supplemental jurisdiction under 28 U.S.C. § 1367.”
Later in the complaint, Lee makes a reference to defendants acting in bad faith, but does
not refer to state law. Indeed, Lee states her claims are “to recover benefits, for injunctive
relief, and for breach of fiduciary duty under ERISA.” Lee simply did not plead a state-
law breach-of-fiduciary duty claim. Although Lee cites Fed. R. Civ. P. 1 and argues that
her complaint should be liberally construed in the interests of justice, there is no basis for
construing her clearly drawn ERISA complaint as alleging a claim under state law.
Moreover, even if Lee had pled a state-law breach-of-fiduciary duty or bad-faith
claim, it would have failed as a matter of law as preempted under ERISA. ERISA
preempts “any and all state laws insofar as they may now or hereafter relate to any
employee benefit plan [governed by ERISA].” 29 U.S.C. § 1144(a). The Supreme Court
and this Circuit have clearly held that a state-law claim for breach of fiduciary duty
24
and/or bad faith are preempted. See Pilot Life Ins. v. Dedeaux, 481 U.S. 41 (1985)
(holding that bad faith claim arising out of failure to pay benefits was preempted under
ERISA);
See Smith v. Provident Bank, 170 F.3d 609, 612-13 (6th Cir. 1999) (holding that
“[c]ommon law breach of fiduciary duty claims are clearly preempted by ERISA.”)
G. Whether the district court was correct in not allowing
Lee to submit a favorable decision of the SSA
Lee argues that the district court erred in not permitting her to file a favorable
decision from the SSA awarding her Social Security benefits. The district court ruled that
the decision could not be made a part of the record because it clearly was not part of the
administrative record at the time of its decision. The district court was entirely correct. It
is settled that a court’s review is limited to the evidence before the plan administrator as
contained in the administrative record. See Wilkins, 150 F.3d at 516. Because this
evidence is not part of the administrative record, it cannot be considered. Second, the fact
Lee was awarded Social Security benefits under the SSA's rules does not necessarily
mean that she was disabled under the plan’s definition of disability. See Whitaker v.
Hartford Life and Accident Ins. Co., ___ F.3d ___, 2005 WL 147076 (6th Cir. Jan. 24,
2005). Thus, even if Lee’s favorable SSA decision was part of the administrative record,
CSI would not be bound by it and the decision would likely not support a finding that
CSI’s denial of benefits was arbitrary or capricious.
III. CONCLUSION
25
For the reasons stated above, we AFFIRM the decisions of the district court.
26