Dowdy v. Metro. Life Ins. Co.

• Decision Date: 16 May 2018
• Docket Number: No. 16-15824,16-15824
• Citation: 890 F.3d 802
• Parties: Tommy DOWDY and Sharon Morris–Dowdy, Plaintiffs–Appellants, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

890 F.3d 802

Tommy DOWDY and Sharon Morris–Dowdy, Plaintiffs–Appellants,

v.METROPOLITAN LIFE INSURANCE COMPANY, Defendant–Appellee.

No. 16-15824

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 15, 2017, San Francisco, California

Filed May 16, 2018

Mark L. Mosley (argued) and Douglas A. Applegate, Seiler Epstein Ziegler & Applegate LLP, San Francisco, California; Glenn R. Kantor, Kantor & Kantor LLP, Northridge, California; for Plaintiffs–Appellants.

Rebecca Hull (argued) and Denise Trani–Morris, Gordon Rees Scully Mansukhani, LLP, San Francisco, California; Ian S. Linker, Metropolitan Life Insurance Company, New York, New York; for Defendant–Appellee.

Before: Marsha S. Berzon and Michelle T. Friedland, Circuit Judges, and William K. Sessions,^* District Judge.

OPINION

SESSIONS, District Judge:

OVERVIEW

In 2014, Appellant Tommy Dowdy suffered a serious injury to his left leg as the result of an automobile accident. His leg was eventually amputated below the knee. Mr. Dowdy and his wife, Sharon Morris–Dowdy, sought accidental dismemberment benefits under an employee welfare benefit plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA"). Appellee Metropolitan Life Insurance Company ("MetLife") denied coverage because Mr. Dowdy's injury was complicated by his diabetes, and the district court affirmed the denial. For the reasons set forth below, we hold that the Dowdys are entitled to coverage because Mr. Dowdy's diabetes did not substantially cause or contribute to his injury. The judgment of the district court is therefore reversed and this case is remanded for further proceedings.

FACTUAL BACKGROUND

On the morning of September 13, 2014, Mr. Dowdy, age 60, was driving eastbound on California State Route 4 when he lost control of his car. The vehicle struck a metal sign post, rolled onto its right side, traveled down a dirt embankment and spun clockwise before coming to rest. The California Highway Patrol ("CHP") officer who arrived at the scene noted that Mr. Dowdy had suffered serious injuries, including a "semi-amputated left ankle" and chest abrasions. After a "prolonged" extraction from his vehicle, Mr. Dowdy was transported by helicopter to the John Muir Medical Center and treated in the Intensive Care Unit.

Mr. Dowdy remained in the hospital until October 11, 2014, at which time he was discharged to a skilled nursing facility. When discharged, he was "nonweightbearing" due to his leg injury. The injury failed to improve, and approximately three months later Mr. Dowdy was transferred back to the hospital for treatment of persistent infection issues. On February 13, 2015, Dr. Christopher Coufal amputated Mr. Dowdy's left leg below the knee.

Through Mr. Dowdy's wife's employment at Bank of the West, the Dowdys had purchased accidental death and dismemberment insurance from MetLife ("the AD&D Plan" or "Plan"). The Plan is governed by ERISA. The relevant coverage language states:

If You or a Dependent sustain an accidental injury that is the Direct and Sole Cause of a Covered Loss described in the SCHEDULE OF BENEFITS, Proof of the accidental injury and Covered Loss must be sent to Us. When We receive such Proof We will review the claim and, if We approve it, will pay the insurance in effect on the date of the injury.

Direct and Sole Cause means that the Covered Loss occurs within 12 months of the date of the accidental injury and was a direct result of the accidental injury, independent of other causes

(the "Coverage Provision").

The Plan has several exclusions, one of which provides that MetLife will not issue benefits "for any loss caused or contributed to by ... physical ... illness or infirmity, or the diagnosis or treatment of such illness or infirmity" (the "Illness or Infirmity Exclusion"). The Plan also excludes coverage for infections (the "Infection Exclusion"), but carves out of the exclusion any "infection occurring in an external accidental wound

." The Plan requires claimants to submit written evidence in support of their claim.

The Dowdys filed a request for benefits under the AD&D Plan for Mr. Dowdy's leg amputation, submitting information both in writing and through several telephone calls. Prior to the amputation, however, MetLife informed Ms. Morris–Dowdy that it intended to deny the dismemberment claim because an ankle fracture

was not a severance. Ms. Morris–Dowdy informed MetLife that amputation was possible within the next week.

One week later, on February 16, 2015, MetLife mailed a letter denying coverage. The letter stated that "[i]n general, dismemberment benefits are paid for severing injuries, which did not happen here." On March 5, 2015, Dr. Coufal wrote in a letter that Mr. Dowdy had

sustained significant injuries to his left lower extremity with an open grade III B pilon fracture

. He had significant multiple other comorbidities and traumatic injuries. ... He had wound issues, which were complicated by his diabetes. The wound healing as well as his fracture itself was slow to heal and never had any significant healing in spite of being stabilized with the external fixator. He ended up developing deep infection ... consistent with osteomyelitis and sequestrum, which was related to original injury. Eventually, due to his comorbidities as well as type of injury he ended up proceeding to an amputation. On 2/13/15, he underwent elective left below-the-knee amputation for treatment of this infected nonunion of the left pilon fracture.

Dr. Coufal's surgical report similarly stated that "[o]ver the past several months, [Mr. Dowdy] has had very poor signs of healing .... Attempts at soft tissue coverage have been unsuccessful. Due to his multiple comorbidities as well as nonhealing wounds

to his left leg and osteomyelitis, it was elected to undergo a left below-the-knee amputation."

On March 24, 2015, a senior claims examiner at MetLife called for a "new initial denial as now there is now an amputation, however the loss was contributed to by the diabetes." Correspondingly, MetLife sent a second denial letter dated April 2, 2015. The letter cited the Illness or Infirmity Exclusion, quoted above, which pertained to "any loss caused or contributed to by ... physical or mental illness or infirmity, or the diagnosis or treatment of such illness or infirmity." The letter stated that Mr. Dowdy's "amputation was contributed [to] and complicated by diabetes

per Dr. Coufal," and that "[u]nder the terms of the Plan a loss caused or contributed [to] by an illness or treatment for that illness is excluded by the Plan from payment."

The Dowdys filed an administrative appeal of MetLife's initial determination. After a further review, MetLife upheld its initial determination, concluding that the accident was not the "direct and sole cause" of the amputation "independent of other causes" as set forth in the Coverage Provision, and that the Plan's Illness or Infirmity Exclusion applied because Mr. Dowdy's diabetes contributed to the loss. As authorized by ERISA, the Dowdys then sought judicial review in federal court. See 29 U.S.C. § 1132(a)(1)(B).

In the proceedings before the district court, the parties filed cross-motions for judgment under Federal Rule of Civil Procedure 52. The district court declined to consider extrinsic evidence, citing the principle that review of an ERISA claim is generally limited to the administrative record. The court also found that a review of extrinsic materials was not warranted because the burden was on the Dowdys to provide evidence supporting their claim, and MetLife had not acted in bad faith in its communications with Ms. Morris–Dowdy. With respect to the merits of Mr. Dowdy's claim, the district court found that diabetes caused or contributed to the need for amputation, and affirmed the denial of benefits. This appeal followed.

STANDARDS OF REVIEW

We review findings of fact by the district court for clear error. Silver v. Exec. Car Leasing Long–Term Disability Plan , 466 F.3d 727, 733 (9th Cir. 2006). When reviewing a mixed question of law and fact, we review for clear error "[i]f application of the rule of law to the facts requires an inquiry that is ‘essentially factual.’ " United States v. McConney , 728 F.2d 1195, 1202 (9th Cir. 1984) (en banc) (quoting Pullman–Standard v. Swint , 456 U.S. 273, 288, 102 S.Ct. 1781, 72 L.Ed.2d 66 (1982) ). The district court's decision to exclude evidence outside the administrative record is reviewed for an abuse of discretion. Opeta v. Nw. Airlines Pension Plan for Contract Emps. , 484 F.3d 1211, 1216 (9th Cir. 2007).

DISCUSSION

I. Extrinsic Evidence

The Court must first consider whether it is limited to reviewing the administrative record. Review of a benefits denial is generally limited to the factual record presented to the plan administrator. Id. at 1217. This Circuit has held that a court may consider evidence beyond the administrative record "only when circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision." Mongeluzo v. Baxter Travenol Long Term Disability Benefits Plan , 46 F.3d 938, 944 (9th Cir. 1995) (quoting Quesinberry v. Life. Ins. Co. of N. Am. , 987 F.2d 1017, 1025 (4th Cir. 1993) ) (describing circumstances that support considering evidence outside of the administrative record).

Of the four pieces of evidence excluded by the district court, only one—Mr. Dowdy's medical chart—is relevant. The remaining evidence, which includes MetLife marketing materials, a declaration from Ms. Morris–Dowdy stating when Mr. Dowdy returned home, and evidence showing that Ms. Morris–Dowdy was forced to leave her job to manage Mr. Dowdy's medical care, is irrelevant to the issues on appeal. And with respect to the medical chart, the district court correctly concluded that it did not in fact support the Dowdys' claim. Accordingly, even assuming the district court erred in refusing to look beyond the administrative record, any such...