Doyle v. Liberty Life Assur. Co. of Boston

• Decision Date: 07 January 2008
• Docket Number: No. 07-10348.,07-10348.
• Parties: Robin DOYLE, Plaintiff-Appellant, v. LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

511 F.3d 1336

Robin DOYLE, Plaintiff-Appellant, v. LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, Defendant-Appellee.

No. 07-10348.

United States Court of Appeals, Eleventh Circuit.

January 7, 2008.

Robert T. Bleach, The Soloway Law Firm, Daniel M. Soloway, Daniel M. Soloway, P.A., Pensacola, FL, for Plaintiff-Appellant.

Ernest J. Myers, Lee W. Marcus, Marcus, McMahon & Myers, P.L., Orlando, FL, for Defendant-Appellee.

Appeal from the United States District Court for the Northern District of Florida.

Before BIRCH, BARKETT and COX, Circuit Judges.

COX, Circuit Judge:

I. INTRODUCTION

The principal issue in this case is whether the district court applied the correct standard of review in determining that an ERISA administrator's decision denying benefits to a plan beneficiary was not tainted by its conflict of interest. We reverse the district court's grant of summary judgment in favor of the administrator because the court used the wrong standard of review and because we cannot say that application of the proper standard would yield the same result.

II. FACTS AND PROCEDURAL HISTORY

The Plaintiff, Robin Doyle, began working for ChoicePoint Services on February 24, 2003, as a Registered Nurse/Clinical Information Line Specialist. ChoicePoint sponsored for its eligible employees a longterm disability ("LTD") benefit plan governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. The Defendant, Liberty Life Assurance Company of Boston, insured the plan pursuant to a group policy, and administered the plan.

On January 30, 2004, Doyle filed a claim with ChoicePoint for disability benefits under the plan, claiming that an anal fissure, enlarged internal hemorrhoids, and external anal skin tags prevented her from working. On February 10, 2004, she underwent a fissurotomy and sphincterotomy in an attempt to alleviate these problems. Liberty Life granted Doyle short-term disability ("STD") benefits through the maximum date available, May 9, 2004.

While Doyle was receiving STD benefits, Liberty Life obtained her medical records to determine whether she would qualify for LTD benefits, for which she had applied, after her STD benefits expired. After receiving medical records from six of Doyle's treating physicians, an independent physician retained by Liberty Life reviewed her records. Liberty Life notified Doyle that she would not receive LTD benefits because she did not meet the "own occupation" standard of "disability" under ChoicePoint's LTD policy, which provided:

For persons other than pilots, co-pilots, and crewmembers of an aircraft:

a. if the Covered Person is eligible for the 24 Month Own Occupation benefit, "Disability" or "Disabled" means that during the Elimination Period and the next 24 months of Disability the Covered Person, as a result of Injury or Sickness, is unable to perform the Material and Substantial Duties of his Own Occupation; and

b. thereafter, the Covered Person is unable to perform, with reasonable continuity, the Material and Substantial Duties of Any Occupation.

(R.2-12 at 6.)

After Liberty Life denied her claim for LTD benefits, Doyle visited a rheumatologist who diagnosed her with fibromyalgia. In light of this new diagnosis, Doyle appealed denial of her claim. Liberty Life reviewed her additional medical records and received further peer review from a specialist in internal medicine. Liberty Life then upheld its decision denying Doyle benefits, stating that she still did not meet the "own occupation" standard of "disability" under ChoicePoint's LTD policy.

Invoking ERISA jurisdiction, 29 U.S.C. § 1132(a)(1)(B), (e)(1), Doyle filed this action against Liberty Life seeking review of its decision. Liberty Life filed a motion for summary judgment, which the district court granted. Doyle appeals.

III. ERISA FRAMEWORK AND THE DISTRICT COURT PROCEEDING

ERISA does not promulgate standards under which district courts must review an administrator's decision denying benefits. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109, 109 S.Ct. 948, 953, 103 L.Ed.2d 80 (1989). To fill this void, the Supreme Court held in Bruch that district courts should review de novo benefit decisions made by an administrator who is without discretion to determine eligibility or construe the terms of an ERISA-governed plan. Id. at 115, 109 S.Ct. at 956. On the other hand, the Court said that where the administrator exercises discretion, deferential (i.e., arbitrary and capricious¹) review is appropriate according to trust principles, which guide review of decisions affecting ERISA-governed plans. Id. at 111, 109 S.Ct. at 954. Finally, the Court observed that when an administrator with discretion operates under a conflict of interest, that "conflict must be weighed as a `factor in determining whether there is an abuse of discretion.'" Id. at 115, 109 S.Ct. at 957 (quoting Restatement (Second) of Trusts § 187 cmt. d (1959)).

Following Bruch, we undertook the "task [of] develop[ing] a coherent method for integrating factors such as self-interest into the legal standard for reviewing benefits determinations." Brown v. Blue Cross & Blue Shield of Ala., Inc., 898 F.2d 1556, 1561 (11th Cir.1990). In Brown, a plan interpretation case, we reasoned that trust principles mandated that some deferential level of review applies to benefits decisions, id. at 1568, but refused to apply "highly deferential" review when the administrator operated under a conflict of interest, id. at 1562. Thus, we settled on what came to be known as the "heightened arbitrary and capricious standard" (hereinafter the "heightened standard"), the hallmark of which is its burden-shifting requirement. Under this standard, "the burden shifts to the fiduciary to prove that its interpretation of plan provisions committed to its discretion was not tainted by self-interest." Id. at 1566. We said that an administrator's plan interpretation that "advances the conflicting interest of the fiduciary at the expense of the affected beneficiary" was arbitrary and capricious, unless the administrator "justifies the interpretation on the ground of its benefit to the class of all participants and beneficiaries." Id. at 1567.

Our more recent cases condense the holdings of Bruch and Brown into a 6-step analysis to guide district courts in reviewing an administrator's decision to deny benefits:

(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 of interest, then apply heightened arbitrary and capricious review to the decision to affirm or deny it.

Williams v. BellSouth Telecomms., Inc., 373 F.3d 1132, 1138 (11th Cir.2004) (summarizing analysis set forth in HCA Health Servs. of Ga., Inc. v. Employers Health Ins. Co., 240 F.3d 982, 993-95 (11th Cir. 2001)) (footnotes omitted).

The district court began its discussion in this case by noting that ChoicePoint's plan vested Liberty Life with discretion in making claims decisions (step 2). The court next found that genuine issues of material fact precluded a determination of whether Liberty Life's decision was right or wrong; so, for purposes of summary judgment, the court assumed that Liberty Life's decision was wrong (step 1). Next, the court recited the measures taken by Liberty Life in reviewing Doyle's claim for benefits and concluded that Liberty Life's denial of her claim was reasonable (step 3).

Finally, the court found that Liberty Life operated under a conflict of interest since it was responsible for both determining eligibility and paying benefits under the plan (step 4). But, instead of applying the heightened arbitrary and capricious standard (step 6), it applied a "modified" heightened arbitrary and capricious standard. The court apparently "modified" the heightened standard in the following way: instead of requiring Liberty Life to prove that its decision was not influenced by the conflict—as the heightened standard requires—the court reviewed the record and concluded that "there does not appear to be any evidence that Liberty in any way manipulated or improperly influenced Doyle's LTD benefits process in order to achieve a financially beneficial result." The court said that "given the lack of any indication to the contrary, ... Liberty would have reached the same conclusion in this case even if it had not been operating under a conflict of interest."

The court offered two justifications for not applying the heightened standard. First, the court thought that the question of whether the heightened standard applied to an administrator's factual determinations "remains open in this circuit," although it acknowledged that the heightened standard applies in plan interpretation cases. Second, the court reasoned that a modified standard was more in line with Bruch and principles of trust law than was our heightened standard.

IV. ISSUES ON APPEAL AND STANDARD OF REVIEW

Doyle raises two arguments on appeal. First, she argues that the district court erred in finding that Liberty Life's decision was reasonable. Second, she argues that the district court...