Mathis v. Mahle, Inc.

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 06a0091n.06
Filed: February 6, 2006
No. 04-6145
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
STACY MATHIS, )
)
Plaintiff-Appellee, )
) ON APPEAL FROM THE UNITED
v. ) STATES DISTRICT COURT FOR THE
) EASTERN DISTRICT OF TENNESSEE
MAHLE, INC., )
)
Defendant-Appellant. )
Before: CLAY and COOK, Circuit Judges; COOK, District Judge.*
COOK, Circuit Judge. Stacy Mathis, an employee of Defendant Mahle, Inc., submitted
insurance claims under Mahle’s ERISA plan, seeking reimbursement for medical expenses related
to a gunshot wound to the face. Mahle’s third-party administrator denied Mathis’s claims, calling
the injury “self-inflicted.” Mathis sued Mahle, the party ultimately responsible for claims decisions,
for payment of his claims, disputing the “self-inflicted” label. The district court, conducting de novo
review, concluded that Mahle improperly denied Mathis’s claims. Because the district court should
have reviewed Mahle’s decision under the “arbitrary and capricious” standard and Mahle’s decision
survives such scrutiny, we reverse the judgment of the district court.
I
*
The Honorable Julian Abele Cook, Jr., United States District Judge for the Eastern District
of Michigan, sitting by designation.
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Mathis’s father admitted him to Lakeway Regional Hospital for treatment of a gunshot
wound to the face, and a nurse wrote in the “Initial Assessment Form” that “Father states that he shot
him self [sic] in his truck due to marital problems.” According to hospital reports, the bullet entered
Mathis’s face “under the chin” and exited “through his nasal region.” Lakeway transferred Mathis
to University of Tennessee (“UT”) Memorial Hospital. Two days later, once he regained his speech
abilities, hospital personnel requested that he consult a psychiatrist in the hospital. The psychiatrist
noted on the consultation form, “Patient states the event was accidental. If evidence to
contrary—plz consult [illegible].”
Mathis participated in Mahle’s self-funded health and dental insurance plan (the “Plan”).
The Plan authorized Acordia, a third-party administrator, to make initial claims decisions. An
insured could appeal Acordia’s initial decision to Mahle by submitting “a written request for review
. . . to [Mahle’s] Human Resources Office.” Mathis submitted claims for his medical and dental
expenses, and Acordia denied payment of Mahle’s claims. Acordia sent Mathis an “Explanation of
Benefits,” noting that the Plan excepted from coverage claims for “self-inflicted injury” and
describing the proper appeal procedure. Mathis contacted Carolyn Miner, Mahle’s employee benefit
coordinator, about the denial of his claims. Miner requested reconsideration by Acordia, faxing a
note from one of Mathis’s treating physicians, but Acordia continued to deny Mathis’s claims.
Mathis failed to submit a written request for review to Mahle’s human resources office.
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Mathis sued Mahle for payment on his claims. Mahle initially named Acordia as an
indispensible party, but the district court found Acordia to be “a third party administrator and . . .
not a proper party to th[e] lawsuit.” The court explained that, “[u]nder the terms of the Plan, Mahle
is the Plan Administrator of its fully self-funded Plan, and . . . Mahle retained the sole authority to
make final decisions regarding benefits.”
After Mahle and Mathis cross-moved for summary judgment, the district court found the
administrative record to be inadequate and remanded the case “to the claims administrator to afford
the plaintiff a full and fair review, with complete medical records, by the appropriate named
fiduciary of the decision denying the claim.” Mahle then sent Mathis “an official, written denial of
the appeal of [his] claim for benefits.” The matter returned to the district court, which conducted
de novo review and granted Mathis summary judgment. Mahle appeals, arguing that the court
should have used a deferential “arbitrary and capricious” review standard.
II
This court reviews de novo the district court’s decision to grant summary judgment on an
ERISA claim. Williams v. Int’l Paper Co., 227 F.3d 706, 710 (6th Cir. 2000). We also review de
novo the district court’s selection of a standard under which to review the plan administrator’s
decision. Hoover v. Provident Life & Accident Ins. Co., 290 F.3d 801, 807 (6th Cir. 2002).
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At the outset, we note the presence in this case of a readily-apparent conflict of interest.
Mahle self-funds its insurance plan and thus holds a direct financial interest in the denial of claims.
It also maintains discretion over the ultimate disposition of claims, creating the conflict of interest.
See Killian v. Healthsource Provident Adm’rs, Inc., 152 F.3d 514, 521 (6th Cir. 1998). We factor
this conflict into our review, although it does not change the review standard. Kalish v. Liberty
Mut./Liberty Life Assurance Co. of Boston, 419 F.3d 501, 506 (6th Cir. 2005).
A. Appropriate Review Standard
The district court announced, without any discussion of the appropriate review standard, that
it reviewed Mahle’s decision de novo. The Plan vests Mahle with discretion to determine eligibility
for benefits and construe the terms of the plan. Generally, where a plan confers discretion on an
administrator, the court “review[s] the denial of benefits only to determine if it was arbitrary and
capricious, and will uphold [the] decision if it is rational in light of the plan’s provisions.” Marks
v. Newcourt Credit Group, Inc., 342 F.3d 444, 456-57 (6th Cir. 2003) (quotations and citations
omitted).
Even where a plan vests a party with discretion, however, this court conducts de novo review
of claims determinations where a party other than the one authorized by the plan in fact renders the
decision. Sanford v. Harvard Indus., Inc., 262 F.3d 590, 595-96 (6th Cir. 2001). Mathis contends
that Acordia, rather than Mahle, reviewed his claims, so that the district court properly conducted
de novo review. Mahle counters that it reviewed Mathis’s claims once it had proper notice of the
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appeal—specifically, after the court remanded the case for “a full and fair review . . . by the
appropriate named fiduciary.” Mathis responds that this compulsory review does not justify review
under the arbitrary and capricious standard.
Mathis reasons that, although he failed to precisely follow the Plan’s appeals procedure, he
provided a de facto notice of appeal when he contacted Mahle’s employee benefits coordinator,
Miner. He asserts that Mahle, through Miner, delegated its review authority to Acordia when Miner
requested Acordia to review its decision. But a claimant “cannot seek to estop the application of an
unambiguous written provision in an ERISA plan.” Marks, 342 F.3d at 456 (holding, where
employer allegedly misrepresented facts so that employee would miss a claims deadline, that
employee was nonetheless bound by the deadline). The Plan unambiguously stated that “the
Participant . . . may make a written request for review of the denial [by] submitting such request to
Human Resources Office of the Employer,” and Mathis cannot avoid this provision.
The district court, consistent with its holding that Acordia “perform[ed] purely ministerial
functions such as processing claims,” remanded Mathis’s claims to Mahle “to afford the plaintiff a
full and fair review, with complete medical records, by the appropriate named fiduciary.” After
Mahle denied Mathis’s claims, the district court reviewed Mahle’s decision. Because the Plan
identified Mahle as having “absolute discretion . . . to decid[e] all disputes of eligibility,” the district
court should have reviewed under the arbitrary and capricious standard. Cf. Stoll v. W. & S. Life Ins.
Co., 64 Fed. Appx. 986, 991 (6th Cir. 2003) (refusing to entertain plaintiff’s claim, unraised below,
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of an improper decisionmaker because, although the initial decisionmaker was improper, the proper
decisionmaker “ultimately did review and reject” her claim after receiving a letter from the
plaintiff’s attorney).
B. Review of Mahle’s Decision
Having concluded that the district court employed an inappropriate standard of review in
this case, we now examine Mahle’s determination under the more deferential arbitrary and
capricious review standard. “‘When it is possible to offer a reasoned explanation, based on the
evidence, for a particular outcome, that outcome is not arbitrary or capricious.’” Gismondi v. United
Techs. Corp., 408 F.3d 295, 298 (6th Cir. 2005) (quoting Davis v. Ky. Fin. Co. Ret. Plan, 887 F.2d
689, 693 (6th Cir. 1989)). Mahle, in denying Mathis’s claims, asserted that his injuries were
intentional, and thus were “self-inflicted” within the meaning of the Plan. Mahle’s explanation for
why its decision was not arbitrary and capricious relies on the statements of hospital personnel and
of Mathis’s family. Mathis discounts those statements, calling the hospital-personnel statements
ambiguous and the family’s statements inconsistent. Mathis then points to the consulting
psychiatrist’s report citing Mathis’s explanation that the gun accidentally discharged as he unloaded
it.
1. Hospital Reports
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A number of hospital reports describe Mathis’s injury as “self-inflicted.” The district court
found the hospital records’ use of this term to be ambiguous: “UT’s operative report describes the
injury as a ‘self-inflicted gunshot wound to the face’ but this report does not indicate whether the
gunshot wound was accidental or intentional. The ‘self-inflicted’ notation may simply have meant
that Mr. Mathis was not the victim of criminal assault.” An inspection of the record, however, casts
doubt on this conclusion. The operative report to which the district court referred was dictated by
the resident physician, Dr. Peter Chang. Mathis’s “Discharge Summary,” also dictated by Dr.
Chang, eliminates the ambiguity. There, Dr. Chang stated that Dr. Catron, the consulting
psychiatrist, “noted that the patient denies any self-infliction and that this was an accident and that
this was not a suicide attempt.” (Emphasis added.) Dr. Chang’s use of the term “self-infliction”
contrasts with his use of the term “accident.” Other reports dictated by Dr. Chang also describe
Mathis’s injuries as stemming from a “self-inflicted gunshot wound.”1
2. Family Accounts
Mathis’s family described his injury as intentional. A Lakeway Emergency Department
Nursing Assessment Record stated, “Mother came into ER. States son has shot himself.” A nurse
wrote in Lakeway’s “Initial Assessment Form” that “Father states that he shot him self [sic] in his
truck due to marital problems.” A police officer took statements of Lakeway emergency room
personnel and of Mathis’s family. Lakeway’s ER personnel recited to the officer their understanding
1
These reports were, of course, issued prior to the Discharge Summary, which describes Dr.
Catron’s consultation report.
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of Mathis’s father’s account of events: Mathis was depressed over a recent divorce, went riding in
his truck, shot himself, wrecked the truck, returned to his father’s house, and his father drove him
to Lakeway. The father, mother, and brother’s account, as recorded by the officer, differs somewhat:
Mathis, who had been drinking at his grandfather’s house, was depressed because of his recent
divorce. He attempted to leave in his vehicle, but ran into a ditch on his grandfather’s property. He
returned to his grandfather’s house, became enraged, shot himself, and his father drove him to
Lakeway.
Mathis calls the two descriptions of the events “facially inconsistent” as to the location of
the shooting and the timing of events. The hospital staff understood Mathis’s father to say that
Mathis shot himself in his truck and then wrecked the truck. Under the family’s account, the wreck
occurred first, and Mathis shot himself at his grandfather’s house. These differences are
unsurprising, given the emergency situation at the time Mathis’s father described the events to the
hospital staff. By the time the officer interviewed Mathis’s family at the UT hospital, the situation
was more stable, and the events could be recounted in a more orderly, straightforward manner. The
apparent conflicts in the two stories do not justify a conclusion that Mahle acted unreasonably in
relying on them for its self-inflicted label.
3. Location of the Wounds
Finally, Mahle points to the location of Mathis’s wounds as supporting its decision. The
bullet entered underneath Mathis’s chin and exited through the nasal area. The location of the
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wounds comports with the family’s description of events—that Mathis “produced a 9mm pistol . .
. placed it under his chin and fired one round.”2 Mahle did not act unreasonably in discounting
Mathis’s accidental-discharge explanation, which would require that Mathis unloaded the weapon
with the gun’s nozzle pointed upward, directly below his chin as Mathis looked straight ahead on
a horizontal plane rather than looking down at the gun as he unloaded it.
4. Mathis’s Evidence
Mathis counters that other evidence supports his position. He argues, for instance, that Dr.
Catron accepted Mathis’s explanation without further inquiry. Mathis also directs the court to a
letter that his treating physician, Dr. Shanks, sent to Acordia. Dr. Shanks wrote that “Dr. Catron .
. . achieved an accurate history describing the injuries as the result of an accidental discharge of the
gun. He did not see anything to contradict the history given by the patient so he dismissed himself
from the care and did not recommend any treatment.” Dr. Catron’s consultation report, however,
merely indicates his reliance on Mathis’s explanation, without purporting to reach any medical
conclusions. The report reads in its entirety: “Patient states the event was accidental. If evidence
to contrary—plz consult [illegible] crisis. Thnx - /s/ Dr. Catron.” Nothing in Dr. Catron’s
consultation report or in Dr. Shanks’s letter indicates that either of them spoke with Mathis’s family
about the injury, nor does Dr. Catron’s report purport to have “achieved an accurate history.”
2
It remains unclear whether the family witnessed Mathis’s actions. Their description of the
events, as recorded by the officer, reads as a first-hand account. But Mathis’s treating physician at
UT hospital wrote in his letter to Acordia that “there were no witnesses.”
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Assuming the plausibility of Mathis’s explanation of his injuries, we must nonetheless defer
to Mahle so long as “‘it is possible to offer a reasoned explanation, based on the evidence’” for
Mahle’s decision. Gismondi, 408 F.3d at 298 (quoting Davis, 887 F.2d at 693). Here, the evidence
in the record provides a reasoned explanation for Mahle’s conclusion that Mathis’s injuries were
“self-inflicted” as the term is used in the Plan, and Mahle’s denial of benefits, therefore, cannot be
said to be arbitrary and capricious.
III
Because the district court should have reviewed Mahle’s decision under the arbitrary and
capricious review standard, and because Mathis fails to convince the panel that Mahle’s decision
was arbitrary and capricious, we reverse the judgment of the district court and remand the case for
entry of judgment in favor of Mahle.
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CLAY, Circuit Judge, dissenting. This case presents a startling example of arbitrary and
capricious behavior on the part of a plan administrator. In its decision to deny the medical claims
of Plaintiff Stacy Mathis, Defendant Mahle, Inc. unabashedly placed primary reliance on the
speculative statements of Plaintiff’s family members and the repetition of those statements in
subsequent medical reports. Defendant’s use of such unreliable evidence to justify its benefits
decision demonstrates irrationality that should not prevail in this Court. Therefore, I respectfully
dissent.
As an initial matter, while I agree that this Court reviews Defendant’s administrative decision
under the arbitrary and capricious standard, I stress that we still have a responsibility to engage in
meaningful review of Defendant’s decision to insure the protection of members of the benefits plan.
“[M]erely because our review must be deferential does not mean our review must also be
inconsequential. While a benefits plan may vest discretion in the plan administrator, the federal
courts do not sit in review of the administrator’s decisions only for the purpose of rubber stamping
those decisions.” Moon v. UNUM Provident Corp., 405 F.3d 373, 379 (6th Cir. 2005). “Deferential
review is not no review, and deference need not be abject.” McDonald v. Western-Southern Life Ins.
Co., 347 F.3d 161, 172 (6th Cir. 2003). While this Court should rightfully defer to rational and
reasonable decisions, when a plan administrator bases its decision on unreliable evidence, we must
reject that decision. Glascoe v. Central States, SE SW Areas Pension Fund, No. 00-6430, 35 Fed.
App’x 121, 124-25 (6th Cir. Mar. 29, 2002) (unpublished opinion). See also Darrell Andrews
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Trucking, Inc. v. Fed. Motor Carrier Safety Admin., 296 F.3d 1120, 1134-35 (D.C. Cir. 2002)
(finding that agency use of unreliable evidence would constitute arbitrary and capricious behavior).
Moreover, in deciding whether Defendant’s benefits decision was arbitrary or capricious,
we must consider the conflict of interest apparent when a plan administrator is also the payer of the
benefits under the plan. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989) (“[T]hat
conflict must be weighed as a facto[r] in determining whether there is an abuse of discretion.”
(emphasis supplied) (internal quotations and citation omitted).) The majority’s opinion purports to
recognize its duty to consider this conflict, but it does not actually analyze the nature or extent of
the conflict in this case. Specifically, the majority in this case stated, “We factor this conflict into
our review,” yet it never so much as mentions this conflict again in its opinion. Plaintiff in this case
submitted over $40,000 in medical bills in claims that were denied by Defendant. Defendant’s
conflict, as one factor among several to be considered, must be viewed in light of the cost Defendant
was able to eliminate by rendering an adverse decision against Plaintiff.
Turning now to the record, the evidence shows that Plaintiff was admitted to Lakeway
Regional Hospital with a single gunshot wound. Due to the nature of the wound, he was unable to
speak. When he was sufficiently healed, Plaintiff communicated to medical personnel that the
gunshot was the result of an accidental discharge while he was attempting to unload his handgun.
Plaintiff also stated that there were no witnesses to the accident. Plaintiff repeated this same version
of events in his application for short-term disability benefits.
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It is evident that Defendant improperly relied on Plaintiff’s family members’ speculative
statements as to how Plaintiff sustained the gunshot injury. While the majority opines that it is
“unclear” whether Plaintiff’s family members witnessed the events surrounding the injury, I believe
that it is fairly obvious that they did not see how Plaintiff’s injury occurred, nor did Plaintiff relay
any relevant information directly to his family after sustaining the injury. First, Plaintiff specifically
stated that there were no witnesses to the occurrence, and there is absolutely nothing in the record
to contradict this point. Second, not even Defendant asserts that Plaintiff’s family members
witnessed the gunshot. Third, the nature of Plaintiff’s injury prevented him from speaking after the
injury, so Plaintiff’s family members could not have learned what had happened from Plaintiff.
Fourth, Plaintiff’s family members recounted inherently conflicting versions of what had occurred.
One version, given by the father to Lakeway medical personnel, stated that Plaintiff shot himself
while driving, crashed his car, and then went to his father’s house, from which his father took him
to the hospital. The other version, given by the father, mother and brother to a police officer at the
University of Tennessee Hospital, stated that Plaintiff was drinking at his grandfather’s house, then
crashed his car in a ditch, went back to his grandfather’s house, and then shot himself in the house.
The fact that there is an inconsistent sequence of events and an inconsistent location of the actual
shooting confirms that, in fact, no one witnessed or otherwise had knowledge of the events
surrounding the gunshot. The majority attempts to explain away these inconsistencies by pointing
to the excitement surrounding this emergency situation. Certainly, in such a situation, small
inconsistencies in details should be forgiven; however, when the inconsistencies relate to where the
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injury occurred and how the injury took place, the very heart of the matter being disputed, I believe
it would be somewhat disingenuous to attribute these inconsistencies to the heat of the moment.
Even assuming arguendo the truth of the majority’s statement that whether the family
members witnessed the occurrence is unclear, Defendant’s reliance on the family members’
statements would still be improper. If it is unclear whether the family members witnessed the
discharge of the gun, then their statements as to the occurrence would be unreliable. In other words,
the fact that there is a possibility that the family members actually had a basis for their statements
does not render their statements somehow reliable. Furthermore, it strains credibility to believe that
the family members actually witnessed events which transpired as Defendant alleges, and yet
Defendant never sought to present such information to buttress its position.
Likewise, Defendant improperly relied on the Lakeway medical reports, which stated that
Plaintiff’s injury was self-inflicted.3 When Plaintiff was admitted to Lakeway Regional Hospital,
Plaintiff’s father immediately told hospital personnel that Plaintiff’s injury was self-inflicted, as
evidenced by the Initial Assessment Form. Considering that this form became a part of Plaintiff’s
medical file at Lakeway, it is no surprise that subsequent Lakeway medical records listed Plaintiff’s
injury as self-inflicted. The ultimate source of the self-inflicted information was Plaintiff’s father,
3
As the majority notes, the phrase “self-inflicted” is subject to a variety of interpretations.
I agree with the majority that the district court’s definition, “that [Plaintiff] was not the victim of
criminal assault,” is unreasonable and defies common usage. I also agree that the context of the
medical records shows that the phrase “self-inflicted” was meant in contradistinction to “accidental.”
Plaintiff is correct in his assessment “that the question at issue is whether [Plaintiff] intentionally
shot himself.” (Pl. Br. 15.)
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and Plaintiff’s father had no firsthand knowledge whatsoever regarding how Plaintiff’s injury took
place. Just as Plaintiff’s father’s statements about the discharge of the gun were unreliable, so too
were Lakeway’s subsequent memorializations of the father’s statements unreliable. In the same
vein, University of Tennessee Hospital medical records were unreliable to support the contention
that Plaintiff’s injury was self-inflicted; that hospital had received the tainted file from Lakeway,
and Plaintiff’s family members were also present at that hospital. While it is theoretically possible
that the doctors and nurses at the two hospitals made an independent assessment of the nature of
Plaintiff’s injury, the record below does not substantiate that they did so, and it is far more likely that
they merely continued to repeat the conjecture and speculation of Plaintiff’s family members.
With the bulk of its case in doubt, Defendant has but one scrap of evidence that purportedly
indicates that Plaintiff’s injury was self-inflicted. Defendant argues, and the majority accepts, that
the nature of Plaintiff’s injury was more consistent with a suicide attempt than with the unloading
of a handgun. This type of conjecture is best suited for a firearms expert (though none was
provided), not a medical plan administrator or a reviewing court.
In sum, Defendant’s decision was based almost entirely on unreliable or invented evidence.
Viewed in conjunction with Defendant’s conflict of interest, the record amply demonstrates that
Defendant’s decision to deny Plaintiff benefits was arbitrary and capricious. I would therefore
affirm the district court order requiring Defendant to pay Plaintiff’s medical claims.
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