Leahy v. Raytheon Co.

• Decision Date: 17 December 2002
• Docket Number: No. 02-1215.,02-1215.
• Citation: 315 F.3d 11
• Parties: Daniel J. LEAHY, Plaintiff, Appellant, v. RAYTHEON COMPANY, et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 11

315 F.3d 11

Daniel J. LEAHY, Plaintiff, Appellant, v. RAYTHEON COMPANY, et al., Defendants, Appellees.

No. 02-1215.

United States Court of Appeals, First Circuit.

Argued September 11, 2002.

Heard December 17, 2002.

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Robert O. Berger for appellant.

Stephen S. Churchill, with whom James F. Kavanaugh, Jr. and Conn Kavanaugh Rosenthal Peisch & Ford, LLP were on brief, for appellees.

Before SELYA, Circuit Judge, COFFIN and B. FLETCHER,^* Senior Circuit Judges.

SELYA, Circuit Judge.

In this case, brought pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461 (2000), plaintiff-appellant Daniel J. Leahy alleges that defendant-appellee Metropolitan Life Insurance Company (MetLife), as the claims administrator for Raytheon Company's long-term disability plan (the Plan), unreasonably denied his claim for benefits. The district court granted summary judgment in the defendants' favor.¹ The plaintiff appeals. After addressing certain questions raised by the plaintiff anent the standard of review in ERISA benefit denial cases, we affirm.

I. Background

The basic facts are uncontradicted. The Plan is an employee benefit plan funded by employee contributions and governed by ERISA. As the claims administrator, MetLife is responsible for making benefit determinations. For a participant to receive benefits, MetLife must determine that he is "fully disabled" as defined by the Plan. To meet that criterion, a claimant must show that by reason "of a sickness or an injury which is not covered by an applicable workers' compensation statute ... [he or she] cannot perform the essential elements and substantially all of the duties of his or her job at Raytheon even with a reasonable accommodation."

The plaintiff began working for Raytheon in 1969. He eventually became a departmental administrator and a Plan participant. On October 18, 1996, Raytheon furloughed him from that essentially sedentary position. The plaintiff received a severance benefit that included six months of salary continuation.

Over the years, the plaintiff has had more than his share of serious health problems; among other things, he has undergone three hip replacements and two knee replacements. In April of 1997, he applied for benefits under the Plan, claiming that he had become fully disabled on or about October 19, 1996 (the day after he was furloughed). The linchpin of his claim was an allegation that chronic hip pain prevented him from sitting for any length of time (and, therefore, prevented him from performing his job, even with a reasonable accommodation).

MetLife denied the claim on the ground that the plaintiff did not meet the Plan's definition of "fully disabled." In embellishing its decision, MetLife wrote that, taking into account available accommodations, the plaintiff had not established an inability to perform substantially all the duties of his job.

After exhausting his administrative remedies, the plaintiff filed suit in the United States District Court for the District of Massachusetts. He asserted that MetLife had violated ERISA when it unreasonably denied his claim. In due season, the parties cross-moved for summary judgment. The district court granted the defendants' motion and denied the plaintiff's counter-part motion. Leahy v. Raytheon Co., No. 00-CV-12093, slip op. (D.Mass. Jan. 29, 2002) (unpublished). The court noted that the Plan vested broad discretionary authority in MetLife to determine eligibility for benefits and declared that while some medical evidence supported the plaintiff's claim of disability, other evidence supported MetLife's denial of benefits. On that scumbled record, the court ruled that MetLife's determination was neither arbitrary nor capricious. This timely appeal followed.

II. Standard of Review

This denial-of-benefits claim arises under 29 U.S.C. § 1132(a)(1)(B).² The Supreme Court has provided the ground rules for determining the proper standard of review. In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), the Court stated that when a denial of benefits is challenged under ERISA § 1132(a)(1)(B), the standard of review depends largely upon whether "the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone, 489 U.S. at 115, 109 S.Ct. 948. If so, "Firestone and its progeny mandate a deferential `arbitrary and capricious' standard of review." Recupero v. New Engl. Tel. & Tel. Co., 118 F.3d 820, 827 (1st Cir.1997) (quoting Firestone, 489 U.S. at 115, 109 S.Ct. 948). The threshold question, then, is whether the provisions of the employee benefit plan under which remediation is sought reflect a clear grant of discretionary authority to determine eligibility for benefits. Terry v. Bayer Corp., 145 F.3d 28, 37 (1st Cir.1998); Rodriguez-Abreu v. Chase Manhattan Bank, 986 F.2d 580, 583 (1st Cir.1993). We turn, therefore, to the text of the Plan.

The Plan documents give MetLife "the exclusive right, in [its] sole discretion, to interpret the Plan and decide all matters arising thereunder...." The documents further provide that any decision by MetLife in the exercise of that authority "shall be conclusive and binding on all persons unless it can be shown that the... determination was arbitrary and capricious." This discretionary grant hardly could be clearer. Consequently, the arbitrary and capricious standard applies to judicial review of MetLife's determination.³

In an effort to blunt the force of this reasoning, the plaintiff makes two points. First, he suggests that a less deferential standard of review is appropriate in this case because the plan administrator operated under a conflict of interest. As a purely theoretical matter, this suggestion rests on a sound foundation. It is well settled that when a plan administrator labors under a conflict of interest, courts may cede a diminished degree of deference — or no deference at all — to the administrator's determinations. See, e.g., Doe v. Travelers Ins. Co., 167 F.3d 53, 57 (1st Cir.1999); Doyle v. Paul Revere Life Ins. Co., 144 F.3d 181, 184 (1st Cir.1998); Brown v. Blue Cross & Blue Shield of Ala., Inc., 898 F.2d 1556, 1562-64 (11th Cir.1990). But there is no meaningful conflict here, and so this case does not fit within that rubric. We explain briefly.

In the plaintiff's view, the ostensible conflict involves MetLife's hiring of outside physicians to scrutinize the plaintiff's medical records. To affect the standard of review, however, a conflict of interest must be real. A chimerical, imagined, or conjectural conflict will not strip the fiduciary's determination of the deference that otherwise would be due. See Doyle, 144 F.3d at 184; Mers v. Marriott Int'l Group Accid'l Death & Dismemb. Plan, 144 F.3d 1014, 1020 (7th Cir.1998). The conflict that the plaintiff envisions does not pass through this screen.

Analyzing disability claims plainly requires expertise. It is, therefore, difficult to fault a plan administrator for seeking expert assistance (indeed, it probably would be easier to fault a plan administrator for not seeking such assistance). We are aware of no case holding that a plan administrator operates under a conflict of interest simply by securing independent medical advice to aid in the evaluation process.⁴ Nor do we view this as an accident: common sense dictates that retaining outside physicians to assist in evaluating disability claims, without more, does not constitute a conflict of interest. Here, there is no "more" (and, thus, there is no conflict).

This conclusion is reinforced by the nature of the Plan. The Plan is a voluntary employee-funded entity, and market forces are at work. If MetLife denies claims that Plan participants as a group view as valid, those employees will be inclined to withdraw from the Plan, thus reducing MetLife's role (and, presumably, its compensation). By the same token, if MetLife awards benefits that are viewed as undeserved, Plan participants will experience an increase in their premiums and thus be inclined to withdraw from the Plan (again reducing MetLife's role and remuneration). Either way, the structure of the Plan furnishes an incentive for MetLife to be unbiased in its handling of claims. This is telling, for courts should not lightly presume that a plan administrator is willing to cut off its nose to spite its face.

The plaintiff's second ground for questioning the standard of review is more artful. He points to the usual rule that appellate review of an order granting summary judgment is de novo. E.g., Plumley v. S. Container, Inc., 303 F.3d 364, 369 (1st Cir.2002); Suarez v. Pueblo Int'l, Inc., 229 F.3d 49, 53 (1st Cir.2000). This means that the court of appeals must decide for itself whether "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). And in doing so, the court must take the record "in the light most hospitable to the party opposing summary judgment, indulging all reasonable inferences in that party's favor." Griggs-Ryan v. Smith, 904 F.2d 112, 115 (1st Cir.1990).⁵ Because the district court decided this case on summary judgment, the plaintiff suggests that the summary judgment standard displaces the arbitrary and capricious standard for purposes of this appeal. We reject this suggestion.

To be sure, there is an obvious discongruence between the two standards. The arbitrary and capricious standard asks only whether a factfinder's decision is plausible in light of the record as a whole, see, e.g., Pari-Fasano v. ITT Hartford Life & Accid. Ins. Co., 230 F.3d 415, 419 (1st Cir.2000), or, put another way, whether the decision is supported by...