United States Court of Appeals
For the First Circuit
No. 06-2087
JOSÉ MORALES-ALEJANDRO,
Plaintiff, Appellant,
v.
MEDICAL CARD SYSTEM, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jay A. García-Gregory, U.S. District Judge]
Before
Torruella and Lynch, Circuit Judges,
and DiClerico, Jr.,** District Judge.
Héctor L. Claudio-Rosario on brief for appellant.
Lourdes C. Hernández-Venegas and Schuster & Aguiló, LLP on
brief for appellee.
May 16, 2007
*
Of the District of New Hampshire, sitting by designation.
DICLERICO, District Judge. José Morales-Alejandro sought
reinstatement of long-term disability benefits, reimbursement of
his medical expenses, and payment of past long-term disability
benefits under the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001, et seq. The district court considered
the parties’ cross motions for judgment on the administrative
record and granted Medical Card System, Inc.’s motion, concluding
that the decision to terminate Morales’s benefits was not arbitrary
or capricious. Morales appeals from that decision.
I.
Morales worked for seven years at Warner Lambert, Inc.,
and participated in the long-term disability plan (“Plan”) offered
there.1 In 1994, Morales filed a claim for long-term disability
benefits under the Plan, claiming disability due to bronchial
asthma and other ailments, which was approved by the Plan
administrator. As a condition for receiving benefits, Morales
filed an application for social security disability benefits, which
was approved. The Plan administrator required Morales to reimburse
the Plan for the social security benefits he had received.
In 1997, Medical Card System, Inc. (“MCS”) became the
Plan administrator and approved the continuation of Morales’s
1
Medical Card System, Inc., represents that Warner Lambert,
Inc., is now part of Pfizer Pharmaceuticals LLC.
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benefits.2 At the end of 1999, the Social Security Administration
notified Morales that his social security benefits would continue,
subject to periodic review. MCS began a review of Morales’s
continued eligibility for benefits under the Plan in April of 2001.
As part of the review, MCS asked Morales to provide
updated medical information for the period from January of 2000 to
April of 2001. In response, Morales initially sent a list of his
hospitalizations from 1990 through early January of 2000, a list of
medications he was taking, and documentation of his move to Tortola
in the British Virgin Islands. MCS also required Morales to
undergo an independent examination by Dr. Rene Ramirez Ortiz, which
was conducted on May 4, 2001. Dr. Ramirez found that Morales had
mild persistent bronchial asthma with an appropriate level of
control and that he had been stable for the last few years. Dr.
Ramirez also noted that Morales had a bronchial cough during the
examination. Morales then sent MCS a note from his treating
physician, Dr. E. Castillo Volckers, dated May 21, 2001, stating
that Morales had been in his care for the past two years, had not
needed hospitalization during that time, but was not able to work.
An independent occupational medical consultant, Dr.
Ocasio, reviewed Morales’s entire file in June of 2001, noting
diagnoses of chronic obstructive pulmonary disease, high blood
2
Other companies served as the Plan administrator prior to
July 1, 1997, when MCS assumed that function.
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pressure, and diabetes. Dr. Ocasio concluded that Morales had a
mild and stable pulmonary condition and recommended that MCS
terminate Morales’s long-term disability benefits.
MCS notified Morales that his benefits would be
terminated as of June 30, 2001, and Morales appealed. With his
appeal, Morales resubmitted copies of the same information he had
provided in response to MCS’s request for his updated medical
records. An MCS disability specialist re-evaluated Morales’s file,
and based on the re-evaluation, MCS denied Morales’s appeal.
Morales filed suit against MCS in the Puerto Rico Court
of First Instance, San Juan, in April of 2005, alleging breach of
contract and seeking long-term disability benefits. MCS removed
the case to the United States District Court for the District of
Puerto Rico, asserting that Morales’s complaint raised claims
governed by ERISA. Once in federal court, MCS filed a motion on
August 12, 2005, requesting that the case be removed from the
standard track and decided on the administrative record. The court
granted the motion on September 7, 2005, setting a briefing
schedule.
On September 23, 2005, new counsel filed an appearance on
behalf of Morales.3 Counsel filed an opposition to MCS’s
previously-granted motion to have the case removed from the
3
Morales’s original counsel was not a member of the federal
bar, and therefore, could not participate in the case once it was
removed to federal court.
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standard track, seeking discovery on an alleged conflict of
interest, and also moved for leave to file an amended complaint.
The district court denied the opposition and the motion for leave
to file an amended complaint. As required by the briefing
schedule, Morales moved for judgment on the administrative record.
He also filed a motion to set aside the court’s denial of his
motion for leave to file an amended complaint, and the court denied
this motion as untimely. MCS filed its motion for judgment on the
administrative record within the time allowed.
The case was referred to a magistrate judge for a report
and recommendation, which issued on January 11, 2006. The
magistrate judge recommended that the court grant MCS’s motion for
judgment and deny Morales’s motion. After Morales filed an
objection and MCS responded, the district court adopted the report
and recommendation on June 20, 2006. Judgment was entered in favor
of MCS, and this appeal followed.
II.
On appeal Morales contends that the district court abused
its discretion in denying his motion to amend his complaint and in
not allowing him to conduct discovery on the issue of MCS’s alleged
conflict of interest. Morales also contends that the district court
erred in concluding that MCS’s decision denying him benefits was not
arbitrary and capricious and that Morales was not prejudiced by
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MCS’s communications during the disability claim process. MCS
argues that the district court properly denied Morales’s motion for
leave to file an amended complaint and his request to conduct
discovery and did not err in granting MCS’s motion for judgment on
the administrative record.
A. Leave to Amend and Discovery
In his motion for leave to amend, Morales sought to add
allegations that procedural irregularities occurred during the
claims process and to add a “bad faith claim against the insurer.”
Morales’s request for discovery was included in his opposition to
MCS’s previously-granted motion to have the case removed from the
standard track. The district court denied the motion for leave to
amend and the request for discovery without a written opinion. On
appeal, Morales argues that decision was an abuse of discretion
because MCS had an inherent conflict of interest or bias toward
denying benefits based on its dual role as insurer and Plan
administrator.
A district court’s decision to deny leave to amend the
complaint is reviewed for an abuse of discretion. Universal Commc’n
Sys., Inc. v. Lycos, 478 F.3d 413, 418 (1st Cir. 2007). Under that
deferential standard, we uphold the district court’s decision “‘for
any reason apparent from the record.’” Id. (quoting Resolution
Trust Corp. v. Gold, 30 F.3d 251, 253 (1st Cir. 1994)). ERISA cases
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are generally decided on the administrative record without
discovery, and “some very good reason is needed to overcome the
presumption that the record on review is limited to the record
before the administrator.” Liston v. UNUM Corp. Officer Severance
Plan, 330 F.3d 19, 23 (1st Cir. 2003).
Morales’s conflict of interest theory is premised on a
mistaken assumption. As MCS points out, the Plan explains that it
is funded by contributions from participating companies, and in this
case it is Warner Lambert. The contributions are held in a trust
fund for the benefit of Plan participants and beneficiaries. MCS
administers claims under the Plan but does not insure the Plan.
Successful claims are paid from the trust fund and not by MCS.
Therefore, Morales’s “inherent” conflict of interest theory is not
supported by the record, and he showed no other reason to support
his request for discovery. The district court did not abuse its
discretion in denying his motion for leave to amend and his request
for discovery.
B. Decision to Terminate Benefits
The district court decided this case based on the
parties’ motions for judgment on the administrative record. Our
review is de novo. See Bard v. Boston Shipping Ass’n, 471 F.3d
229, 235 (1st Cir. 2006).
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When, as here, an ERISA plan gives the plan administrator
discretionary authority to interpret the terms of the plan and to
determine a claimant’s eligibility for benefits, we will uphold the
decision unless it is arbitrary, capricious, or an abuse of
discretion. Tsoulas v. Liberty Life Assurance Co. of Boston, 454
F.3d 69, 76 (1st Cir. 2006). Under that standard, the decision
“must be upheld if there is any reasonable basis for it.” Madera
v. Marsh USA, Inc., 426 F.3d 56, 64 (1st Cir. 2005). Stated in
different terms, we will uphold an administrator’s decision “if the
decision was reasoned and supported by substantial evidence,”
meaning that the evidence “is reasonably sufficient to support a
conclusion and contrary evidence does not make the decision
unreasonable.” See Denmark v. Liberty Life Assurance Co. of Boston,
--- F.3d ---, 2007 WL 914673, at *15 (1st Cir. Mar. 28, 2007).
MCS concluded that Morales had a mild pneumological
condition that had become stable with treatment so that he no longer
qualified for disability benefits. That decision was based on Dr.
Ramirez’s opinion, following his examination, and on consideration
of all of the records in Morales’s file. Morales argues that MCS
used the wrong definition of disability, which was less favorable
to him. Morales contends that the definition of disability in the
Summary Plan Description (“SPD”), quoted by MCS in its letter
terminating his benefits, is narrower than the definition of
disability in the Plan. Morales further contends that MCS’s use of
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the SPD definition imposed a more onerous burden of proving
disability than the Plan demanded.
ERISA imposes an important requirement on plan
administrators and insurers to communicate accurately with plan
participants and beneficiaries. See Bard, 471 F.3d at 244-45. Part
of the communication requirement is that the SPD provide certain
information “written in a manner calculated to be understood by the
average plan participant, and shall be sufficiently accurate and
comprehensive to reasonably apprise such participants and
beneficiaries of their rights and obligations under the plan.” 29
U.S.C. § 1022(a). Section 1022(b) specifies the information to be
included in the summary. When the terms, language, or provisions
of the SPD conflict with the plan, the language that the claimant
reasonably relied on in making and proving his claim will govern the
claim process. Bard, 471 F.3d at 245. The burden is on the
claimant to show reasonable reliance and resulting prejudice. Id.
Although he asserts that the Plan’s definition of
disability is more favorable to him than the definition contained
in the SPD, Morales does not show that he would have qualified for
benefits under the Plan’s definition.4 As such, Morales has not
4
The Plan defines disability as follows:
Total Disability or Totally Disabled: The complete
inability of an Employee to perform substantially all of
the material duties of his or her regular occupation as
it is generally performed in the national economy, or
perform another occupation for which the Employee is
qualified and can earn at least 75% of pre-disability
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shown that he reasonably relied on the Plan definition in making his
claim for benefits and that the difference in definitions resulted
in MCS’s denying his claim. Therefore, as the district court
decided, Morales has not sustained his burden of proof on this
issue.5
Morales also contends that MCS was required to give the
disability ruling by the Social Security Administration controlling
weight because MCS required him to apply for social security
benefits and then to reimburse the Plan for the amount he received
from social security. Contrary to Morales’s argument, however,
“benefits eligibility determinations by the Social Security
Administration are not binding on disability insurers.” Pari-Fasano
v. ITT Hartford Life & Accident Ins. Co., 230 F.3d 415, 420 (1st
Cir. 2000)). Morales offers no persuasive authority to support his
Compensation. The Covered Employee cannot engage in any
other employment except as provided under the
rehabilitation program described in Article 14.
The SPD provides in pertinent part:
Total Disability . . .
After you have received the benefits of the plan for
two years, you will be considered completely disabled if
you cannot work in occupations or employment for which
you are qualified or could be qualified in accordance to
your academic preparation, training or experience.
5
To the extent Morales also argues that he was misled by MCS’s
use of the definition in the SPD, that theory is not well developed
and would also fail due to a lack of evidence that he was
prejudiced.
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theory that as a result of MCS’s reimbursement requirement the
social security ruling must be given controlling weight in MCS’s
decision-making process.6
Alternatively, Morales argues that the social security
ruling governs because the definition of disability under the Social
Security Act is more restrictive than the Plan’s definition. To
qualify for disability benefits under a plan, a claimant must
satisfy the plan’s definition of disability, not the definition of
disability under the Social Security Act. Matias-Correa v. Pfizer,
Inc., 345 F.3d 7, 12 (1st Cir. 2003). For that reason, a related
social security ruling “should not be given controlling weight
except perhaps in the rare case in which the [social security]
statutory criteria are identical to the criteria set forth in the
insurance plan.” Pari-Fasano, 230 F.3d at 420.
Aiming at the rare case, Morales asserts that the
definition of disability under the Social Security Act is narrower
than the Plan’s definition so that the social security ruling should
be given controlling weight here. He fails to cite the social
security definitions on which he relies, however, or provide any
analysis to support his theory. As MCS points out, another claimant
6
Morales relies on Calvert v. Firstar Fin., Inc., 409 F.3d
286, 293-95 (6th Cir. 2005), which held that a social security
ruling is one factor for the plan administrator to consider in
making its disability determination. Morales has not shown that
MCS refused to consider the social security ruling in making its
own independent determination. See Denmark, 2007 WL 914673, at *20
(discussing Calvert).
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was unable to show that a social security ruling in her favor was
entitled to controlling weight for purposes of a disability
determination by MCS under the same Plan. See Matias-Correa, 345
F.3d at 12. Therefore, Morales has not shown that his is the rare
case where a related social security ruling should be given
controlling weight.
Morales more generally attacks MCS’s decision to
terminate his benefits on the ground that the record lacks
substantial evidence to support it. He asserts that the record does
not include evidence that his medical condition changed or that he
is now able to work. He faults MCS for failing to have him undergo
a functional capacity evaluation and for failing to have him
assessed by a vocational rehabilitation specialist. He also cites
the lack of a labor market survey to show what work was available
for him to do.
Morales’s arguments show that he fails to understand that
it is his responsibility to prove his claim. A claimant seeking
disability benefits bears the burden of providing evidence that he
is disabled within the plan’s definition. See Wright v. R.R.
Donnelley & Sons Co. Group Benefits, 402 F.3d 67, 77 (1st Cir.
2005). In addition, a plan administrator is not obligated to accept
or even to give particular weight to the opinion of a claimant’s
treating physician. Black & Decker Disability Plan v. Nord, 538
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U.S. 822, 831 (2003). Therefore, Morales bore the burden of showing
that he continued to be disabled, as defined in the Plan.
MCS asked Morales to provide updated medical records to
support his claim. The records he provided demonstrated that his
hospitalizations stopped in early January of 2000 and that he had
not needed hospital care since that time. Morales’s treating
physician confirmed that fact. Morales provided no records of any
medical care during the period in question other than a list of
medications he was taking. Dr. Volcker’s opinion that Morales was
unable to work was not entitled to any weight in the context in
which it was offered.7 The records Morales provided, along with the
opinions of Dr. Ramirez and Dr. Ocasio, showed that Morales’s
pneumological condition was stable with treatment and supported
MCS’s conclusion that he was no longer disabled. Therefore, the
district court correctly decided that MCS’s termination of Morales’s
benefits was not arbitrary or capricious.
III.
For the foregoing reasons, the district court did not
abuse its discretion in denying Morales’s motion for leave to amend
7
In fact, even in the context of social security disability
claims, where deference is ordinarily accorded to the opinions of
treating physicians, see 20 C.F.R. § 404.1527(d)(2), no deference
is given to a physician’s opinion that a claimant is disabled or
unable to work because that is not a medical opinion, see id. at §
404.1527(e)(1); Ellis v. Barnhart, 392 F.3d 988, 994 (8th Cir.
2005).
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his complaint and his request to conduct discovery. In addition,
MCS’s decision to terminate Morales’s disability benefits was not
arbitrary or capricious. Therefore, we uphold the district court’s
decision.
Affirmed.
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