McIntyre v. Reliance Standard Life Ins. Co.

• Decision Date: 25 August 2020
• Docket Number: No. 19-2367,19-2367
• Citation: 972 F.3d 955
• Parties: Melissa A. MCINTYRE, Plaintiff - Appellee v. RELIANCE STANDARD LIFE INSURANCE COMPANY, Defendant - Appellant
• Court: U.S. Court of Appeals — Eighth Circuit

972 F.3d 955

Melissa A. MCINTYRE, Plaintiff - Appellee

v.RELIANCE STANDARD LIFE INSURANCE COMPANY, Defendant - Appellant

No. 19-2367

United States Court of Appeals, Eighth Circuit.

Submitted: June 18, 2020

Filed: August 25, 2020

Nicolet Lyon, Katherine Logan MacKinnon, Law Office of Katherine L. MacKinnon, Saint Paul, MN, for Plaintiff-Appellee.

William Daniel Hittler, I, Leah N. Kippola-Friske, Nilan & Johnson, Minneapolis, MN, for Defendant-Appellant.

Before GRUENDER, WOLLMAN, and KOBES, Circuit Judges.

GRUENDER, Circuit Judge.

In this action arising under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. , plan administrator Reliance Standard Life Insurance Company ("Reliance") appeals the district court's grant of summary judgment in favor of plan beneficiary Melissa McIntyre. Because the district court erred in reviewing Reliance's benefits denial de novo rather than for an abuse of discretion, we vacate its judgment and remand this case for further proceedings.

I.

All her life, McIntyre has suffered from Charcot Marie Tooth Syndrome ("CMT"), a degenerative neurological condition affecting peripheral nerves such as those in the hands and feet. From 2003 to 2011, she worked as a nurse employed by the Mayo Clinic Health System. During that time, she participated in an employer-sponsored long-term disability plan ("Reliance plan") governed by ERISA and funded by a group insurance policy issued and administered by Reliance ("Reliance policy"). In July 2011, McIntyre resigned because of CMT-related difficulties performing her duties.

Starting in 2011, she applied for a series of benefits from the Reliance plan. The Reliance policy paid a "Monthly Benefit" if "an Insured" was "Totally Disabled" within the meaning of the policy. The policy contained two definitions of "Totally Disabled." The definition applicable for the first twenty-four months in which a benefit was payable ("short-term disability definition") provided that "Totally Disabled" means "an Insured cannot perform the material duties of his/her Regular Occupation," meaning "the occupation the Insured is routinely performing when Total Disability begins." The definition after that period ("long-term disability definition") provided that "Totally Disabled" means "an Insured cannot perform the material duties of Any Occupation," meaning "an occupation normally performed in the national economy for which an Insured is reasonably suited based upon his/her education, training or experience." The policy also stated that Reliance was the "claims review fiduciary" and had "the discretionary authority to interpret the Plan and the insurance policy and to determine eligibility for benefits."

In 2011, McIntyre applied for and received benefits under the short-term disability definition. In 2013, Reliance began evaluating whether McIntyre would remain eligible for benefits under the long-term disability definition. This evaluation process continued until December 2015, when Reliance concluded McIntyre was no longer eligible for benefits because she was capable of working in "Any Occupation." In February 2016, Reliance notified McIntyre she would no longer receive benefits under the Reliance plan because she was ineligible under the long-term disability definition.

On May 31, 2016, McIntyre filed an appeal with Reliance, challenging its eligibility determination under the long-term disability definition. After delays caused by both McIntyre and Reliance, she eventually underwent an independent medical examination in December 2016. The doctor who performed that examination concluded McIntyre was "capable of working full time in a sedentary position." Following this examination, Reliance upheld its original determination that McIntyre was not eligible for benefits under the long-term disability definition and informed her of the same in late December 2016.

McIntyre then filed suit against Reliance. See 29 U.S.C. § 1132(a)(1)(B). The parties cross-moved for summary judgment. Ruling on these motions, the district court concluded it would review Reliance's decision de novo and, under that standard of review, determined that McIntyre was entitled to benefits under the long-term disability definition. Reliance appeals, arguing that the district court applied the wrong standard of review and that its denial of benefits should be affirmed under the correct standard of review.

II.

We review de novo the district court's determination of the appropriate standard of review under ERISA. Barnhart v. UNUM Life Ins. Co. of Am. , 179 F.3d 583, 587 (8th Cir. 1999). Generally, "a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch , 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). Where the benefit plan gives the administrator such discretionary authority, "a court should review the plan administrator's decision only for abuse of discretion." Buttram v. Cent. States, Se. & Sw. Areas Health & Welfare Fund , 76 F.3d 896, 899 (8th Cir. 1996). It is undisputed here that Reliance had such discretionary authority, thereby "trigger[ing] abuse-of-discretion review." Leirer v. Proctor & Gamble Disability Benefit Plan , 910 F.3d 392, 396 (8th Cir. 2018).

The district court nevertheless decided that a de novo standard applied on the basis of our caselaw providing that "less deferential review" applies despite a grant of such discretionary authority if (1) either the administrator faces a "palpable conflict of interest" or a "serious procedural irregularity" arose in the review process, and (2) either the conflict or the procedural irregularity "caused a serious breach of the plan administrator's fiduciary duty" to the claimant. See Woo v. Deluxe Corp. , 144 F.3d 1157, 1160 (8th Cir. 1998), abrogated in part by Metro. Life Ins. v. Glenn , 554 U.S. 105, 115-16, 128 S.Ct. 2343, 171 L.Ed.2d 299 (2008). Specifically, the district court found a palpable conflict of interest present insofar as Reliance "both determines and pays claims" and ostensibly has a "history of biased claims administration." The district court also found a serious procedural irregularity; namely, Reliance's "long delay in deciding McIntyre's appeal." It then concluded that both of these caused Reliance to breach its fiduciary duty owed to McIntyre and therefore decided to "review McIntyre's benefits claim de novo." McIntyre defends the district court's application of de novo review under our caselaw and argues in the alternative that a de novo standard should apply in light of authorities from other circuits whose approach she invites us to adopt.

A.

The key precedent underlying the district court's decision to apply a de novo standard is Woo , 144 F.3d 1157. In Woo , we recognized a court could apply "less deferential review" in certain circumstances even when the administrator possesses discretionary authority to interpret and apply the policy. Id. at 1160. The district court found these circumstances present and evidently read Woo 's endorsement of "less deferential review" to mean de novo review. This reading was error.

To begin, the parties agree that the Supreme Court's decision in Metropolitan Life Insurance v. Glenn , 554 U.S. 105, 128 S.Ct. 2343, 171 L.Ed.2d 299 (2008), abrogated at least the conflict-of-interest component of Woo , as we have repeatedly recognized. See, e.g., Boyd v. ConAgra Foods, Inc. , 879 F.3d 314, 320 (8th Cir. 2018) (noting that Glenn "abrogated Woo to the extent Woo allowed a less deferential standard of review based on merely a conflict of interest") (citing Wrenn v. Principal Life Ins. , 636 F.3d 921, 924 n.6 (8th Cir. 2011) ). It is thus undisputed that the district court erred in relying on the presence of a conflict of interest to justify de novo review.

The district court, however, also relied on the presence of "serious procedural irregularities" to justify de novo review. We have repeatedly avoided deciding whether Glenn "abrogated the ‘procedural irregularity’ component of the Woo sliding-scale approach." Leirer , 910 F.3d at 396 ("We need not decide that issue here ...."); Boyd , 879 F.3d at 320 ("We need not address the validity of th[e procedural-irregularities] component ...."); Waldoch v. Medtronic, Inc. , 757 F.3d 822, 830 n.3 (8th Cir. 2014) ("Our circuit has not definitively resolved the impact of Glenn on the ‘procedural irregularity component of the Woo sliding scale approach.’ See Wrenn . We need not resolve this issue here ...."). We once again avoid answering that question because we find a more fundamental error in the district court's application of Woo : Woo never permitted de novo review even in cases where procedural irregularities are present.¹

In Woo , the ERISA beneficiary argued that we should not review the administrator's benefits denial "under the traditional abuse of discretion standard because of procedural irregularities" in the benefits determination and because the administrator had a "conflict of interest." 144 F.3d at 1160. We identified a "two-part gateway" by which the beneficiary could "obtain a less deferential review": the beneficiary had to "present material, probative evidence demonstrating that (1) a palpable conflict of interest or a serious procedural irregularity existed, which (2) caused a serious breach of the plan administrator's fiduciary duty to her." Id. at 1160-61. We concluded the beneficiary had satisfied this two-part test, "warranting a less deferential standard of review." Id. at 1161.

We then turned to what this standard might look like, considering two approaches taken by other circuits in similar circumstances. Id. On the one hand, some courts "always review[ed]" a benefits denial "for an abuse of discretion" but adopted a " ‘sliding scale’ approach" to the...