Nolan v. Heald College

• Decision Date: 13 January 2009
• Docket Number: No. 07-15679.,07-15679.
• Citation: 551 F.3d 1148
• Parties: Jeanne NOLAN, Plaintiff-Appellant, v. HEALD COLLEGE, a California corporation; Heald College Longterm Disability Plan; Metropolitan Life Insurance Company, a New York corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

551 F.3d 1148

Jeanne NOLAN, Plaintiff-Appellant, v. HEALD COLLEGE, a California corporation; Heald College Longterm Disability Plan; Metropolitan Life Insurance Company, a New York corporation, Defendants-Appellees.

No. 07-15679.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 20, 2008.

Filed January 13, 2009.

Geoffrey V. White, Law Office of Geoffrey V. White, San Francisco, CA, and Cassie Springer-Sullivan, Oakland, CA, for the plaintiff-appellant.

Rebecca A. Hull, Sedgwick, Detert, Moran & Arnold LLP, San Francisco, CA, for the defendants-appellees.

Appeal from the United States District Court for the Northern District of California Martin J. Jenkins, District Judge, Presiding. D.C. No. CV-05-03399-MJJ.

Before: FERDINAND F. FERNANDEZ, T.G. NELSON and SIDNEY R. THOMAS, Circuit Judges.

T.G. NELSON, Circuit Judge:

After suffering injuries in a work-place fall, Jeanne Nolan (Nolan) applied for and received long-term disability benefits from Metropolitan Life Insurance Company (MetLife). After paying benefits for approximately two years, however, MetLife reviewed Nolan's file in June 2004 and determined that Nolan no longer qualified for benefits. Nolan twice appealed the decision, but MetLife denied both appeals in reliance on two independent physician opinions that MetLife had requested from Network Medical Review. Nolan thereafter filed this action under the Employee Retirement Income Security Act of 1974 (ERISA). The district court granted summary judgment in favor of MetLife, concluding that the abuse of discretion standard tempered with no skepticism applied, and that MetLife did not abuse its discretion in denying benefits.

As permitted by Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 970 (9th Cir. 2006), Nolan submitted evidence outside of the administrative record at summary judgment. The evidence bore on MetLife's structural conflict of interest, and more specifically, suggested that Drs. Silver and Jares—the opinions of whom MetLife relied on to deny benefits—were biased in favor of MetLife. In examining the evidence, however, the district court did not apply the traditional rules of summary judgment and/or view that evidence in the light most favorable to Nolan.

We conclude that a district court must apply the traditional rules of summary judgment when examining evidence outside of the administrative record in an ERISA case, including the requirement that the evidence must be viewed in the light most favorable to the non-moving party. As the district court failed to apply the traditional rules of summary judgment in examining Nolan's evidence, we reverse and remand for further proceedings.

I. BACKGROUND

A. The Plan

In January 2002, Appellee Heald College purchased a group long-term disability insurance plan (the Plan) from MetLife. The Plan granted MetLife broad discretion to both interpret relevant Plan provisions and to determine eligibility for benefits. Specifically, the Plan provided that "MetLife in its discretion has authority to interpret the terms, conditions, and provisions of the entire contract. This includes the Group Policy, Certificate and any Amendments." In addition, the Plan stated:

Discretionary Authority of Plan Administrator and Other Plan Fiduciaries

In carrying out their respective responsibilities under the Plan, the Plan administrator and other Plan fiduciaries¹ shall have discretionary authority to interpret the terms of the Plan and to determine eligibility for and entitlement to Plan benefits in accordance with the terms of the Plan. Any interpretation or determination made pursuant to such discretionary authority shall be given full force and effect, unless it can be shown that the interpretation or determination was arbitrary and capricious.

(Footnote added).

B. The Injury

While serving as the executive director of Heald College in April 2002, Nolan tripped on a mat at work, fell, and suffered serious injuries to her wrist and back. Nolan immediately saw Dr. Dominic Tse, who diagnosed a fractured wrist and an acute compression fracture of the lumbar spine. One month later Dr. Tse stated that Nolan was making good progress and released her to work with some restrictions. Tse thereafter treated Nolan for approximately eight months, during which time he determined that Nolan was unable to work. As a result of the work-place injuries, MetLife approved long-term disability benefits for Nolan, and began sending monthly payments beginning in August 2002.

In January 2003, Nolan began seeing Dr. Robert Minkowsky for her injuries. Like Tse, Minkowsky determined that Nolan was unable to work. During this time, MetLife continued to make disability payments, and encouraged Nolan to apply for Social Security benefits, which she was granted in May 2003. MetLife concluded during an internal review of Nolan's file that it was doubtful that Nolan would be able to return to work due to the severity of the pain she was reporting.

The Plan defined "disabled" differently twenty-four months after a disabling injury. Accordingly, in March 2004, MetLife instructed Nolan to fill out paperwork and to refer physical capacity evaluation forms to her treating physicians as part of MetLife's disability determination. Nolan complied. Thereafter, on June 16, 2004, MetLife determined that Nolan was not eligible for continued benefits on the ground that Nolan's injuries were subject to a twenty-four month Plan limitation for neuromusculoskeletal disorders.

C. Administrative Appeals

Nolan appealed MetLife's disability determination, and submitted additional medical reports from treating physicians Tse, Minkowsky, and Dr. William Anderson showing that Nolan's injuries were not subject to the twenty-four month limitation. MetLife, in turn, submitted Nolan's file to Dr. Silver of Network Medical Review. Silver concluded that Nolan was not disabled (i.e., she was capable of working in a sedentary environment) and that her injuries were subject to the twenty-four month limitation for neuromusculoskeletal disorders. Relying heavily on Silver's findings, MetLife denied Nolan's appeal on the dual grounds that Nolan was not disabled and her injuries were subject to the twenty-four month benefits limitation.

Nolan appealed for a second time, contending that there was overwhelming evidence that her injuries were not subject to the twenty-four month limitation and that she was unable to work in a sedentary capacity.² The evidence included multiple diagnoses of radiculopathies (injuries that were not subject to the Plan's twenty-four month limitation) and her treating physicians' opinions that she was unable to perform sedentary work due to injuries and pain. Once again MetLife referred Nolan's file to a Network Medical Review physician for review—this time Dr. Joseph Jares. Jares, like Silver, disagreed with Nolan's treating physicians and concluded that Nolan was capable of sedentary work. With respect to the Plan's twenty-four month benefits limitation however, Jares ultimately concluded that there was objective evidence indicating that Nolan's injuries were not subject to the twenty-four month limitation.

Relying on the opinions of Drs. Jares and Silver, MetLife denied Nolan's second appeal. While MetLife "reversed" itself by conceding that Nolan's injuries were not subject to the Plan's twenty-four month benefits limitation for neuromusculoskeletal disorders, it nevertheless denied benefits on the ground that there was insufficient evidence that Nolan was unable to perform sedentary work.

D. District Court Proceedings

On September 8, 2005, Nolan filed an ERISA complaint in federal district court for disability benefits and breach of fiduciary duty against MetLife, Heald College, and the Heald College Long-Term Disability Plan. After discovery, the parties filed cross-motions for summary judgment on the administrative record. Importantly, Nolan submitted evidence outside of the administrative record to support her motion for summary judgment and her opposition to MetLife's cross-motion. This evidence indicated that Network Medical Review, Dr. Silver, and Dr. Jares received substantial work and monies from MetLife in the three-to-four years preceding and including Nolan's benefits denial.³ The district court accepted and considered the evidence.

In November 2006, the district court denied Nolan's motion for summary judgment and granted MetLife's cross-motion for summary judgment. The district court concluded that the Plan unambiguously conferred discretion upon MetLife to interpret the Plan and determine eligibility for benefits. The district court appears to have recognized that because MetLife operated under a structural conflict of interest, Abatie required the court to consider whether the abuse of discretion standard should be tempered with skepticism. See Abatie, 458 F.3d at 968-69. However, the district court concluded that the traditional rules of summary judgment did not apply in examining the evidence,⁴ rejected Nolan's evidence of bias on the grounds that the evidence did not "demonstrate a prima facie case of misconduct," and determined that the abuse of discretion standard tempered with no skepticism applied. Thereafter, the district court concluded that MetLife did not abuse its discretion in denying benefits to Nolan because it was entitled to rely on the opinions of Drs. Jares and Silver that Nolan's injuries were subject to the twenty-four month benefits limitation and that she could perform sedentary work.

Nolan moved to alter or amend the district court's order, and on March 21, 2007, the district court denied the motion. The district court conceded that it wrongly upheld MetLife's decision on the ground that Nolan's injuries were subject to the Plan's twenty-four month benefits limitation. However, the court determined that MetLife's decision to deny benefits on the ground that Nolan could perform sedentary work was not an...