Blankenship v. Metro. Life Ins. Co.

• Court: U.S. Court of Appeals — Eleventh Circuit
• Writing for the Court: Before EDMONDSON, MARTIN and COX, Circuit Judges.
• Citation: Blankenship v. Metro. Life Ins. Co., 644 F.3d 1350, 23 Fla. L. Weekly Fed. C 53 (11th Cir. 2011)
• Decision Date: 30 June 2011
• Docket Number: No. 10–10717.,10–10717.
• Parties: Frank BLANKENSHIP, Plaintiff–Appellee,v.METROPOLITAN LIFE INSURANCE COMPANY, Defendant–Appellant.

644 F.3d 1350

23 Fla. L. Weekly Fed. C 53

Frank BLANKENSHIP, Plaintiff–Appellee,

v.METROPOLITAN LIFE INSURANCE COMPANY, Defendant–Appellant.

No. 10–10717.

United States Court of Appeals, Eleventh Circuit.

June 30, 2011.

John M. Pennington, Pennington Law Firm, LLC, Birmingham, AL, for Plaintiff–Appellee.Elizabeth J. Bondurant, Smith Moore Leatherwood, LLP, Atlanta, GA, James S. Christie, Jr., Brian M. Vines, Bradley, Arant, Boult, Cummings, LLP, Birmingham, AL, Teresa Wynn Roseborough, Iole Staples, New York City, Scott Burnett Smith, Bradley, Arant, Boult, Cummings, LLP, Huntsville, AL, Amelia T. Driscoll, McDowell, Knight, Roedder & Sledge, LLC, Mobile, AL, for Defendant–Appellant.Appeal from the United States District Court for the Northern District of Alabama.Before EDMONDSON, MARTIN and COX, Circuit Judges.PER CURIAM:

In this appeal, Plaintiff Frank Blankenship challenges the denial by Defendant Metropolitan Life Insurance Company (“MetLife”) of his claims for long-term disability benefits. In reviewing those benefits decisions by MetLife, the ERISA plan administrator, we consider whether the decisions were reasonable and entitled to deference. Pointing chiefly to MetLife's structural conflict of interest as both administrator and payor of benefits, the district court ruled that MetLife arbitrarily and capriciously denied Blankenship's benefits requests. We conclude that a reasonable basis supported MetLife's benefits decisions and that the conflict of interest did not render the decisions arbitrary and capricious; we reverse.

I.

Frank Blankenship worked for Sears, Roebuck & Co. as a store manager and participated in the Sears Group Long–Term Disability Plan (“the Plan”). The Plan is governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001–1461. Defendant MetLife serves as both the Plan's administrator of claims and also the payor of benefits. The Plan vests MetLife with discretionary authority to interpret the Plan's terms and to determine whether a claimant is disabled under the Plan.

Blankenship suffered a heart attack in August 2003 while playing tennis. Based on his heart attack, MetLife provided Blankenship with short-term disability benefits until mid-January 2004 and then provided Blankenship with long-term disability benefits for the remainder of 2004. After requesting and receiving medical records from Blankenship to evaluate his benefits claim, MetLife notified Blankenship, in December 2004, that his disability benefits would end on 31 December 2004.¹

Blankenship appealed the decision and submitted letters from his internist and cardiologist stating that Blankenship could not return to work due to stress. MetLife reviewed those letters, and MetLife submitted Blankenship's file to an independent cardiologist for review. MetLife denied Blankenship's appeal.

In February 2005, Blankenship underwent surgery to repair a knee injury that he suffered while exercising. In April 2005, MetLife reinstated Blankenship's long-term disability benefits through May 2005, based on the knee surgery and on Blankenship's expected rehabilitation period. MetLife then informed Blankenship that his eligibility for long-term disability benefits would end in January 2006 unless Blankenship could show that he was eligible for benefits under the Plan's “Any Occupation” standard.²

In conjunction with its continued review of Blankenship's case, MetLife considered a report from an independent vocational rehabilitation consultant hired by MetLife. MetLife had provided the consultant with, among other files, a report from Blankenship's orthopedic surgeon. The consultant concluded that Blankenship could not stand for more than three-to-four hours or walk for more than one-to-two hours each work day. But the consultant also concluded that Blankenship could perform sedentary work, and the consultant identified several occupations in which Blankenship could be employed in the local market. MetLife determined that Blankenship was fit to perform a sedentary occupation and that he did not qualify for benefits under the Plan's “Any Occupation” standard.

MetLife informed Blankenship that his eligibility for long-term disability benefits would end in January 2006. Blankenship appealed that decision. In further reviewing Blankenship's case, MetLife requested review of Blankenship's file by three different specialists: a cardiologist, a dermatologist, and an orthopedist. MetLife then denied the appeal, informing Blankenship that he had exhausted his appeals.³

In April 2008, Blankenship filed a complaint against MetLife in the district court to recover long-term disability benefits under ERISA, 29 U.S.C. § 1132(a)(1)(B). The district court granted, in part, Blankenship's motion for a judgment as a matter of law; the motion sought an award of long-term disability benefits under the Plan, subject to any pertinent SSDI offsets. Blankenship v. Metro. Life Ins. Co., 686 F.Supp.2d 1227, 1228–29 (N.D.Ala.2009). The district court concluded that MetLife's decisions to deny benefits were arbitrary and capricious, chiefly because of MetLife's structural conflict of interest as both administrator and payor of the pertinent benefits. See id. at 1234–39.

The district court later issued a short amendment to its opinion after this Court decided Capone v. Aetna Life Insurance Company, 592 F.3d 1189 (11th Cir.2010). In the amendment, the district court listed and answered—without elaboration—the six steps of the Williams test for reviewing an ERISA plan administrator's benefits decision. Although the district court did not expressly apply the Williams test in its initial opinion, the district court stated that “in finding that MetLife abused its discretion when it denied benefits, the court was implicitly finding that MetLife was de novo ‘wrong.’ ” In its amendment, the district court “ma[de] explicit now” that conclusion. The amendment to the opinion did not alter the judgement entered earlier. MetLife appeals.

II.

This case calls upon us to determine whether a reasonable basis existed for the ERISA plan administrator's benefits decisions. We review de novo a district court's ruling affirming or reversing a plan administrator's ERISA benefits decision, applying the same legal standards that governed the district court's decision. Cf. Capone, 592 F.3d at 1194. Review of the plan administrator's denial of benefits is limited to consideration of the material available to the administrator at the time it made its decision. See Jett v. Blue Cross & Blue Shield of Ala., Inc., 890 F.2d 1137, 1140 (11th Cir.1989). Whether the administrator's decision was either de novo correct or reasonable under this Circuit's Williams framework is a question of law. ⁴

ERISA itself provides no standard for courts reviewing the benefits decisions of plan administrators or fiduciaries. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 953, 103 L.Ed.2d 80 (1989). As a result, and based on the Supreme Court's guidance in Firestone and Glenn, see Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 128 S.Ct. 2343, 2348, 171 L.Ed.2d 299 (2008), we have established a multi-step framework to guide courts in reviewing an ERISA plan administrator's benefits decisions. The first five steps have remained unchanged since we established the framework in Williams. See Williams v. BellSouth Telecomms., Inc., 373 F.3d 1132, 1137–38 (11th Cir.2004), overruled on other grounds by Doyle v. Liberty Life Assurance Co. of Boston, 542 F.3d 1352 (11th Cir.2008). But the sixth step listed below reflects a more recent change based on Glenn. See 128 S.Ct. at 2351; Doyle, 542 F.3d at 1359–60 (modifying the sixth step's “heightened” review and shifting the burden of proof about the influence of a conflict of interest from the administrator to the prospective beneficiary).

For a court reviewing a plan administrator's benefits decision, the present Williams test goes this way:

(1) Apply the de novo standard to determine whether the claim administrator's benefits-denial decision is “wrong” (i.e., the court disagrees with the administrator's decision); if it is not, then end the inquiry and affirm the decision.

(2) If the administrator's decision in fact is “ de novo wrong,” then determine whether he was vested with discretion in reviewing claims; if not, end judicial inquiry and reverse the decision.

(3) If the administrator's decision is “ de novo wrong” and he was vested with discretion in reviewing claims, then determine whether “reasonable” grounds supported it (hence, review his decision under the more deferential arbitrary and capricious standard).

(4) If no reasonable grounds exist, then end the inquiry and reverse the administrator's decision; if reasonable grounds do exist, then determine if he operated under a conflict of interest.

(5) If there is no conflict, then end the inquiry and affirm the decision.

(6) If there is a conflict, the conflict should merely be a factor for the court to take into account when determining whether an administrator's decision was arbitrary and capricious.

See Capone, 592 F.3d at 1195.⁵

A pertinent conflict of interest exists where the ERISA plan administrator both makes eligibility decisions and pays awarded benefits out of its own funds. See Glenn, 128 S.Ct. at 2348. Where a conflict exists and a court must reach step six, “the burden remains on the plaintiff to show the decision was arbitrary; it is not the defendant's burden to prove its decision was not tainted by self-interest.” Doyle, 542 F.3d at 1360. The effect that a conflict of interest will have within the Williams analysis in any given case will vary according to the severity of the conflict and the nature of the case: we look to the conflict's “inherent or case-specific importance.” Glenn, 128 S.Ct. at 2351–52.

Even where a conflict of interest exists, courts still “owe deference” to the plan administrator's “discretionary...