Kosiba v. Merck Co Inc

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit

9-13-2004

Kosiba v. Merck Co Inc
Precedential or Non-Precedential: Precedential

Docket No. 02-2668

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"Kosiba v. Merck Co Inc" (2004). 2004 Decisions. Paper 282.
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 CHARLES F. SZYMANSKI (Argued)
PRECEDENTIAL Markowitz & Richman
121 South Broad Street
THE UNITED STATES COURT OF Suite 1100
APPEALS FOR THE THIRD CIRCUIT Philadelphia, PA 19107

_______________ Attorney for Appellant

NO. 02-2668 PETER J. HECK (Argued)
Del Mauro, DiGiaimo, Knepper & Heck
MICHAELEEN KOSIBA; CELESLIE 8 Headquarters Plaza
EPPS-MALLOY North Tower
Morristown, NJ 07960
v.
Attorney for Appellee
MERCK & COMPANY; UNUM LIFE
INSURANCE ______________________
COMPANY OF AMERICA; MERCK &
CO., LONG TERM OPINION
DISABILITY PLAN FOR UNION ______________________
EMPLOYEES

Celeslie Epps-M alloy, BECKER, Circuit Judge.
Plaintiff Celeslie Epps-Malloy is a
Appellant
former employee of defendant Merck &
Co. (“Merck”), who participated in
__________________
Merck’s ERISA-based Long Term
Disability Plan for Union Employees (the
On Appeal From The United States
“Plan”). 1 At times relevant, Merck, as
District Court For The District Of New
overall plan administrator, had delegated
Jersey
responsibility for claims administration to
(D.C. No. 98-cv-03571)
defendant U N UM Life Insurance
District Judge: Honorable Mary Little
Cooper
Argued June 28, 2004
Before: AMBRO, BECKER, and
GREENBERG, Circuit Judge 1
Michaleen Kosiba, the other named
plaintiff in this case, settled her case
against the defendants in the District
(Filed September 13, 2004 )
Court, and is not participating on appeal.

1
Company of America (“UNUM”). 2 ERISA plan fiduciaries’ discretionary
Following an at-work injury and a decisions regarding benefits. Turning to
diagnosis of sarcoidosis and fibromyalgia, the merits of Epps-Malloy’s claim, the
Epps-Malloy applied for and received District Court found, principally because
long-term disability (LTD) benefits from of Dr. Dev’s report, that the defendants’
the defendants in 1993. During a periodic denial of benefits was not arbitrary and
review conducted in 1996, the defendants capricious.
terminated Epps-Malloy’s benefits, finding
On appeal, we concentrate on the
that she was no longer totally disabled
District Court’s first conclusion. We agree
under the terms of the Plan. During the
with the District Court that the record in
course of the Plan’s administrative appeals
this case does not support finding a
process, Merck requested that Epps-
financial conflict of interest (which, under
Malloy undergo an independent medical
Pinto’s “sliding scale” approach, would
e x a m i n a ti o n , a n d d e s i g n a te d a
warrant a standard of judicial review less
pulmonologist, Dr. Gautam Dev, to
deferential than arbitrary and capricious
evalu ate her. Dr. Dev’s report
review), and that delegation by Merck to
contradicted Epps-M alloy’s treating
UNUM of claims administration would
physicians’ diagnoses, and on this basis
ordinarily preclude heightened review.
the defendants upheld their denial of
However, there is evidence of procedural
continued benefits. Epps-M alloy then
bias in Merck’s intervention in the appeals
filed this suit under 29 U.S.C. §
process to request an independent medical
1132(a)(1)(B), seeking benefits allegedly
exam. This is especially problematic
due her under the terms of the Plan.
because the record before the defendants
Epps-M alloy’s c la im surviv ed prior to Dr. Dev’s examination provided
summary judgment, and the District Court reasonably sound as well as unequivocal
held a Fed. R. Civ. P. 52(a) bench trial on support for Epps-Malloy’s claim for
a stipulated documentary record. The benefits; the choice to request a third
Court concluded that under Pinto v. medical opinion therefore strongly
Reliance Standard Life Insurance Co., 214 suggests a desire to generate evidence to
F.3d 377 (3d Cir. 2000), and its progeny, counter Epp s-M alloy’s physicians’
the structural arrangement among Merck, diagnoses. Because Merck’s intervention,
the Plan, and UNUM did not warrant a notwithstanding its delegation of claims
departure from the traditional “arbitrary administration to a large and experienced
and capricious” standard of review over carrier, undermines the defendants’ claim
to the deference normally accorded an
ERISA plan fiduciary with discretionary
2
We shall refer to Merck, the Plan, and authority, we conclude that the District
UNUM collectively as “the defendants” Court should have applied a moderately
except where it is necessary to heightened arbitrary and capricious
distinguish them.

2
standard of review. Additionally, with granted short-term disability benefits by
respect to the merits, the District Court the defendants in October 1992. In
fa il e d to ad dr es s E pp s-M all oy’ s October 1993, she was approved for LTD
fibromyalgia diagnosis, an omission which benefits, but was reminded that periodic
itself alone would require a new trial. For requests for medical information would be
these reasons, we will reverse the made in the future to ensure continued
judgment of the District Court and remand eligibility (i.e., to determine that she
for a new trial. continued to be completely disabled under
the Plan). Around the same time, Epps-
Malloy applied for Social Security
I. Factual Background and Procedural disability benefits. In 1994, an
History administrative law judge overruled the
Social Security Administration’s (SSA)
Although the District Court, which
initial determination denying her Social
rendered its opinion following a Fed. R.
Security benefits, and awarded her Social
Civ. P. 52(a) bench trial on a stipulated
Security long-term disability benefits,
documentary record, gave a lengthy
finding her permanently disabled.
account of the parties’ factual contentions,
it by and large did not make findings of Epps-M alloy’s benefits were provided
fact as required by Rule 52(a). As such, under the terms of the Merck & Co. Long
what follows is not so much the District
Court’s factual findings as it is our own
summary of the record before us. stiffness of muscles and associated
A. Epps-Malloy’s Medical History connective tissue structures.”
Merriam-Webster Medical Dictionary
Epps-Malloy was employed by Merck (2002), at http://www.dictionary.com.
as a cook and food-service attendant. She The cause is unknown. Sarcoidosis is “a
suffered an injury at work in 1991, and disease of unknown origin marked by
was diagnosed with fibromyalgia, chronic formation of granulomatous lesions that
pain syndrome, and sarcoidosis.3 She was appear especially in the liver, lungs, skin,
and lymph nodes.” American Heritage
Stedman’s Medical Dictionary (2002), at
3
It is unclear from the record whether http://www.dictionary.com. A
there was any causal relationship granuloma, in turn, is a “[c]hronic
between the injury—a stack of food inflammatory lesion characterised by
service trays falling on Epps- large numbers of cells of various types
Malloy—and the ailments that form the (macrophages, lymphocytes, fibroblasts,
basis of her claim. Fibromyalgia (also giant cells), some degrading and some
referred to as fibromyositis) is “any of a repairing the tissues.” On-line Medical
group of nonarticular rheumatic disorders Dictionary, at http://cancerweb.ncl.ac.uk/
characterized by pain, tenderness, and omd/index.html.

3
Term Disability Plan fo r Un ion In May 1996, as part of a periodic
Employees, an ERISA plan. By the Plan’s review of Epps-Malloy’s benefits, UNUM
terms, “[Merck] shall pay the cost of the requested information from her treating
benefits provided under the Plan,” though physicians, Dr. Panullo and Dr. David
the Plan gives discretion to the Williams. Dr. Panullo was Epps-Malloy’s
M a n a g e m e n t P e n s i o n I n v e s t m e nt gynecologist. Epps-M alloy’s disability is
Committee to choose “any funding not related to any gynecological condition,
method, or combination of funding s o D r . P a n u l l o ’ s re p o r t s a re
methods which are permissible under irrelevant—though they seem to have been
ERISA.” The District Court found that no misunderstood by UNUM, at some points,
evidence was introduced on how Merck to indicate that Epps-M alloy was entirely
actually funded the plan, and the parties do able to work, when they in fact say only
not dispute this on appeal. The Plan that no gynecological problems prevented
allocates fiduciary responsibility among a Epps-Malloy from working. We therefore
committee of Merck’s Board of Directors say no more about Dr. Panullo.
( w h i c h h a s c e r ta i n po w e r s o f
Dr. Williams’s notes from January 16,
appointment); the Merck Management
1996, refer to Epps-Malloy’s sarcoidosis
Pension Investment Committee (which is
and her fibromyalgia. According to his
responsible for the investment and
notes, the sarcoidosis had been diagnosed
management of Plan funds); and Merck
by a 1989 bronchoscopy; the record does
itself, which is the plan administrator. As
not disclose when the initial fibromyalgia
plan administrator, Merck has the power to
diagnosis was made. Dr. Williams’s June
appoint a claims administrator, who “shall
14, 1996, notes state that “[s]arcoidosis is
determine claims for benefits by
her diagnosis as well as fibromyalgia,” and
Participants under the Plan.” At the time
he indicated that she was being medicated
Epps-M alloy’s LTD benefits were first
for fibromyalgia. In response to an
granted, Thomas L. Jacob & Associates
UNUM questionnaire dated October 28,
(“TLJ”) was Merck’s appointed claims
1996, Dr. Williams stated that Epps-
administrator; later, appellee UNUM was
Malloy was “disabled to light activity
the claims administrator. Notwithstanding
because of shortness of breath” and that
this appointment, the Plan confers on
his prognosis for her to return to gainful
Merck (as plan administrator) the powers
employment on a part-time basis or full-
“to construe the Plan”; “to decide all
time basis was “never.”
questions of eligibility”; and “to request
and receive from all Participants such UNUM informed Epps-Malloy on
information [as is] necessary for the proper December 31, 1996 that it was terminating
administration of the Plan.” her benefits. The letter explained that a
review of medical documentation,
B. Termination of Epps-Malloy’s LTD
including information from Drs. Panullo
Benefits
and Williams, led UNUM to conclude that

4
 she no longer met the definition of being
“unable to perform any and every duty” of
her occupation, as required by the Plan. non-productive and worse upon laying
The letter also stated that “there is no down. The patient also has post-nasal
evidence to support that you are medically drip and chronic sinus problems. Her
incapable to perform the duties of your exercise tolerance is minimal, and she is
occupation.” The letter further informed barely able to achieve her day-to-day
Epps-Malloy that she would have to come activities. The patient was treated in the
forward with objective medical evidence past with steroids; however, could not
of her disability. tolerate them because of what appears to
Epps-Malloy administratively appealed be psychosis and marked degree of
this decision. She provided additional weight gain. She has a history of
information to UNUM, including the name smoking one pack per day for six years.
of her new treating physician, Dr. Fred
McQueen. Dr. McQueen repeated the [Physical exam reveals nothing
fibromyalgia diagnosis, stated “[s]he amiss; pulmonary function was
cannot return to gainful employment,” and normal; blood gases were near
that he did “not feel it in her best interest normal]
to be under any stress due to triggering her My impression of Mrs. Epps-
sarcoid remission.” Dr. McQueen Malloy is that her
concluded: “Permanently & totally symptomatology is not
disabled. Suffers with severe anxiety. She commensurate with her clinical
cannot cope with stress.” presentation. Considering the
Upon receiving Dr. McQueen’s report, normal pulmonary function test
UNUM wrote to Epps-Malloy stating that and near normal arterial blood
“Merck & Company has requested an gas, I have a difficult time
Independent Medical Exam.” The ascribing sarcoidosis as a cause of
defendants designated Dr. Dev to perform her symptomatology. She appears
the examination. We rescribe Dr. Dev’s to be somewhat emotional and I
report in the margin;4 cannot reliably exclude
malingering behavior. On the
contrary, the endobronchial
4
I saw Celeslie Epps-M alloy on 5/8/97. sarcoid may be leading to a
The patient is a 47 year old female with a persistent cough and dyspnea.
history of sarcoidosis reportedly Chronic sinusitis can also
diagnosed by a transbronchial biopsy in exacerbate a respiratory condition
1987. The patient currently presents for and lead to some degree of
medical evaluation for her complaints of shortness of breath. The patient’s
shortness of breath on minimal exertion impaired cardiac status is also a
and also complains of cough, which is possibility and an exercise stress

5
in sum, Dr. Dev concluded that a diagnosis F.3d 377 (3d Cir. 2000), and its progeny,
of sarcoidosis was “incompatible with her the District Court first concluded that an
clinical presentation”—i.e., that he “arbitrary and capricious” standard of
disagreed with the sarcoidosis diagnosis. review applied to its judicial review of the
He did not opine on her fibromyalgia defendants’ denial of benefits. The Court
diagnosis. Based on Dr. Dev’s report, then concluded that their denial of benefits
UNUM upheld its decision denying was not arbitrary and capricious. It
benefits. therefore entered judgment for the
defendants.
C. Proceedings Before the District Court
Epps-Malloy filed this suit, seeking
benefits allegedly due her under the terms II. Our Standard of Review Over the
of the Plan under 29 U.S .C. § District Court’s Decision
1132(a)(1)(B), and other relief. Merck
In the post-Pinto era, we appear to
counterclaimed to recoup, under the terms
have had only one case in the same
of the Plan, the Social Security disability
procedural posture as this one, i.e., an
benefits Epps-M alloy had received. The
appeal from a bench trial. In Goldstein v.
counterclaim was settled, and the District
Johnson & Johnson, 251 F.3d 433, 441 (3d
Court denied summary judgment on Epps-
Cir. 2001), we stated (without further
Malloy’s § 1132(a)(1)(B) claim. The case
elaboration or citation) that in such an
therefore proceeded to a trial on the merits,
appeal “[w]e have plenary review over a
which was conducted as a Fed. R. Civ. P.
district court’s conclusions of law, and we
52(a) bench trial on a stipulated
review its factual conclusions for clear
documentary record. Canvassing Pinto v.
error.” This is, of course, the usual
Reliance Standard Life Insurance Co., 214
standard of review on appeal from a bench
trial. See In re Unisys Savings Plan Litig.,
test might be able to help 173 F.3d 145, 149 (3d Cir. 1999).
answer some of the Determining the proper standard of
unanswered questions. judicial review under Pinto is a question of
applying law to fact; accordingly, our
I feel, based on her pulmonary review is plenary, though we review a
function tests and arterial blood district court’s underlying factual findings
gas information, that her present only for clear error. Because we conclude
diagnosis is incompatible with her the District Court applied too deferential a
clinical presentation. standard of judicial review, we do not
Dr. Dev’s description of when and how reach the merits of Epps-Malloy’s claim.
Epps-Malloy’s sarcoidosis was first
diagnosed conflicts with that of Dr.
Williams; it is not clear whether this III. Standard of Judicial Review over
inconsistency is significant. Unum’s Determination of Epps-Malloy’s

6
Claim relevant is “the current status of the
fidu ciary,” id., i.e., whethe r the
Our principal task is to determine
decisionmaker is a current employer,
whether the District Court applied the
former employer, or insurer. Our cases
appropriate standard of judicial review to
have addressed various combinations of
the defendants’ decision to deny LTD
these factors. In Pinto itself, we
benefits to Epps-Malloy. We begin with a
concluded that “heightened arbitrary and
discussion of Pinto and our cases
capricious review,” id. at 393, or review
following it, and then turn to the proper
“on the far end of the arbitrary and
standard of judicial review in this case.
capricious ‘range,’” id. at 394, was
A. Pinto and Its Progeny appropriate because Pinto’s insurer both
made benefits determinations and funded
We held in Pinto that, in reviewing an
the benefits, and because of various
ERISA plan fiduciary’s discretionary
procedural anomalies that tended to
determination regarding benefits, a court
suggest that “whenever it was at a
must take into account the existence of the
crossroads, [the insurer defendant] chose
structural conflict of interest present when
the decision disfavorable to Pinto.” Id.
a financially interested entity also makes
benefit determinations. Specifically, we Turning to Pinto’s progeny, we first
adopted a “sliding scale” approach, in note that in some cases the parties stipulate
which district courts must “consider the to the applicable standard of judicial
nature and degree of apparent conflicts review, or at least do not contest the
with a view to shaping their arbitrary and District Court’s choice of a standard of
capricious review of the benefits review. See, e.g., McLeod v. Hartford Life
d e t e r m in a t i o n s o f d i s c re t i o n a r y & Accident Ins. Co., 372 F.3d 618, 623-24
decisionmakers.” Pinto, 214 F.3d at 393. & nn.3-4 (3d Cir. 2004); Orvosh v.
This “sliding scale” method “intensif[ies] Program of Group Ins. for Salaried
the degree of scrutiny to match the degree Employees of Volkswagen of Am., Inc.,
of the conflict.” Id. at 379. 222 F.3d 123, 129 (3d Cir. 2000). Other
cases, though they cite Pinto, are factually
Pinto offered a nonexclusive list of
too far removed from the facts of this case
factors to consider in assessing whether a
to provide meaningful guidance. See, e.g.,
structural conflict of interest warranting
Goldstein, 251 F.3d 433 (unfunded
heightened review exists. The sliding-
executive deferred compensation, or “top
scale approach “allows each case to be
hat,” plan).
examined on its facts.” Id. at 392. Among
the factors we identified were “the While Pinto addressed the case of an
sophistication of the parties, the i n s u r er b o t h m aking bene fit s
information accessible to the parties, and determinations and paying claims, it did
the exact financial arrangement between not definitively decide whether any form
the insurer and the company.” Id. Also of heightened review applies to employers

7
both making benefits determinations and and capricious standard.” Id. at 199. Most
paying claims. When an employer pays recently, we approved a district court’s
claims out of its general operating holding that the unfunded and self-
funds—the situation most likely to administered benefit plan in Stratton v. E.I.
introduce a structural conflict because the DuPont de Nemours & Co., 363 F.3d 250,
employer feels an immediate “sting” from 255 (3d Cir. 2004), warranted only a
paying a claim—the plan is referred to as “slightly heightened form of arbitrary and
“unfunded” or sometimes “self-funded.” capricious review.”
This is in contrast to “the typical
As we noted in Pinto itself, the
employer-funded pension plan” which “is
financial and administrative relationship
set up to be actuarially grounded, with the
between the employer and the benefit plan
company making fixed contributions to the
is not the only relevant consideration. For
pension fund.” Pinto, 214 F.3d at 388.
example, in Stratton, we observed that
We confronted (but were ultimately while an employer administering an
able to avoid) ruling on the issue of unfunded plan may have a financial
whether heightened review applies to incentive to deny the claims of its
employers making benefits determinations employees, it thereby risks “the loss of
and paying claims in Skretvedt v. E.I. morale and higher wage demands that
DuPont de Nemours & Co., 268 F.3d 167 could result from denials of benefits.” 363
(3d Cir. 2001). That case concerned F.3d at 254 (quoting Nazay v. Miller, 949
(among other things) an employer- F.2d 1323, 1335 (3d Cir. 1991)); see also
administered unfunded benefit plan, and Smathers, 298 F.3d at 198; Pinto, 214 F.3d
noted that “a heightened standard of at 389. We have recognized the inverse as
review might be applicable to the well: When a former employee seeks
[employer-controlled] Board’s denial of b e n e f it s , t h i s c o n f l ic t-mitiga tin g
Skretvedt’s claim for the unfunded . . . consideration is not present. See
benefits, because of the potential conflict Smathers, 298 F.3d at 198 (“Since
under Pinto.” Id. at 175. We reached this Smathers was no longer an employee when
question less than a year later, in Smathers Multi-Tool made its decision to deny his
v. Multi-Tool, Inc./Multi-Plastics, Inc. claims, the counterbalancing of its
Employee Health & Welfare Plan, 298 monetary self-interest by possible concerns
F.3d 191 (3d Cir. 2002). In Smathers, we about the impact of its decision on morale
concluded that an employer’s unfunded and wage demands would thereby be
and self-adminstered benefits plan lessened.”).
presented a conflict that, though “not
Indeed, we made the general point
extraordinary,” did warrant “somewhat
about the short-circuiting of incentives by
heightened” scrutiny, requiring “a more
imperfect information flow in Pinto itself:
penetrating review of [the] administrator’s
decisionmaking process than would [M]any claims for benefits are
normally be conducted under the arbitrary made after individuals have left

8
 active employment and are her insurer’s financial conflict of interest.
seeking pension or disability See Pinto, 214 F.3d at 393 (“[L]ooking at
benefits. Details about the the final decision, we see a selectivity that
handling of those claims, appears self-serving in the administrator’s
w h e t h e r r e s p o n s ib l e o r use of [one doctor’s] expertise.”); id.
irresponsible, are unlikely to (“[i]nconsistent treatment of the same
seep into the collec tive facts”); id. at 394 (suggesting that
knowledge of still-ac tive “whenever it was at a crossroads, Reliance
employees. If Pinto’s claim is Standard chose the decision disfavorable
denied, few at Rhone-Poulenc to Pinto”). Though no case since Pinto
will learn of it, and Reliance appears to have turned on evidence of
Standard will have little motive procedural bias or unfairness, the
to heed the economic advice of corresponding negative pregnant appears
the Seventh Circuit that “it is a in several of our cases. See Skretvedt, 268
poor business decision to resist F.3d at 175-76 (considering but rejecting
paying meritorious claims for allegations of decisionmaker bias in the
benefits.” benefits review system); Goldstein, 251
F.3d at 435-36 (noting that heightened
214 F.3d at 388 (quoting Mers v. Mariott
review would be required when “the
Int’l G roup Accidental Death &
beneficiary has put forth specific evidence
Dismemberment Plan, 144 F.3d 1014,
of bias or bad faith in his or her particular
1020 (7th Cir. 1998)); see also id. at 392
case”); Bill Gray Enters., Inc. Employee
(noting the relevance of the current
Health & Welfare Plan v. Gourley, 248
relationship between the fiduciary and
F.3d 206, 216 (3d Cir. 2001) (“[U]nless
beneficiary). In short, our precedents
specific evidence of bias or bad-faith has
recognize that the situation of an
been submitted, plans . . . are reviewed
individual claiming benefits from her
under the traditional arbitrary and
former employer may, for Pinto purposes,
capricious standard.”); id. at 216 n.8
be more akin to that of an insured claiming
(“Gourley has failed to allege bias on the
benefits from an insurance company than
part of the plan administrator . . . .”).
that of an employee claiming benefits from
her current employer. B. The Appropriate Standard of Review
in This Case
Our precedents establish at least one
more cause for heightened review: We begin with the financial and
demonstrated procedural irregularity, bias, administrative arrangement between
or unfairness in the review of the Merck and the Plan. The District Court
claimant’s application for benefits. The found that Epps-M alloy had offered no
Pinto panel’s decision to apply heightened evidence on the mechanism by which
review turned almost as much on the Merck funds the Plan beyond the bare
procedures afforded to Pinto as it did on statement in the Plan itself that “[M erck]

9
shall pay the cost of the benefits provided conclusion above that Epps-M alloy’s
under the Plan.” By the Plan’s terms, status as a former employee might well
Merck is the plan administrator, and even trigger some heightened level of review if,
t h o u g h it has delegated claim s for example, Merck pays Plan benefits out
administrative authority to UNUM , it of its general operating funds.
exercises ultimate administrative authority
Ep ps -M all oy’ s argument f or
as evidenced by its request that Epps-
heightened review draws more support
Malloy be examined by Dr. Dev. But
from our discussion in Pinto of procedural
since Epps-Malloy has not excluded the
bias. As described above, Merck
possibility that Merck pays for the benefits
intervened in Epps-Malloy’s appeal
it administers through fixed contributions
process, requesting that she submit to an
to an actuarially grounded fund, thereby
“Independent Medical Exam,” ultimately
leaving Merck with no immediate financial
conducted by Dr. Dev. Merck surely has
conflict of interest, we do not impose a
the authority under the plan to require such
heightened standard of review on this
an exam—the Plan empowers Merck as
ground.5 We reiterate, however, our
Administrator “to request and receive from
all Participants such information [as is]
5
The District Court may, of course, necessary for the proper administration of
allow the parties on remand to the Plan.” But the circumstances under
supplement the record to introduce which Merck made this request necessarily
evidence of the Plan’s actual funding raise an inference of bias: At the time of
mechanism. While we have held that, in the request, every piece of evidence in
general, the record for arbitrary-and- Epps-M alloy’s record—the opinions of
capricious review of ERISA benefits two doctors ( D rs. Williams and
denial is the record made before the plan McQueen), a consistent medical history,
administrator, and cannot be and an SSA determination that she was
supplemented during litigation, see totally disabled— supported her contention
Mitchell v. Eastman Kodak Co., 113 F.3d that she was disabled.6 The District
433, 440 (3d Cir. 1997), when a court is
deciding what standard of review to
employ—arbitrary-and-capricious deciding on a level of review); Skretvedt,
review, or some higher standard under 268 F.3d at 174-75 (same). We leave
Pinto—it may consider evidence of of this decision to the sound discretion of
potential biases and conflicts of interest the District Court.
that is not found in the administrator’s
6
record. The Plan’s funding mechanism We express no view on the relevance
might well be evidence of this sort. See, vel non in the ERISA benefits context of
e.g., Stratton, 363 F.3d at 254-55 an SSA finding of total disability. It is
(considering an ERISA plan’s funding enough for our purposes here to note that
and decisionmaking mechanisms in the SSA ruling gives at least some

10
Court’s discussion is consistent with this faith belief that Epps-Malloy’s application
view: It recognized that Epps-Malloy’s was a close call, and that it could resolve
physician’s reports uniformly supported perceived ambiguities with a third
her contentions (though they were, in some physician’s opinion. Independent medical
aspects, incomplete), and that the examinations are not uncommon in the
defendants’ denial of benefits was claims administration world, and this is
grounded on Dr. Dev’s report, augmented responsible plan administration that we
by medical opinions offered by one Nurse would not wish to deter. At this stage,
Girardo based on a review of Epps- however, we are considering only how
Malloy’s file. searching a review of the defendants’
benefits determination to undertake. Epps-
It is in this light that we must view
Malloy’s suit will rise or fall with the
Merck’s request for an independent
merits of her underlying claim (including
medical examination. We have a claimant
Dr. Dev’s opinion), modulated by the
seeking continued LTD benefits whose
deference owed to the defendants’
treating physicians offer unequivocal
decision. For a responsible fiduciary, we
support for her claims, and a plan
trust that the incentive to collect enough
administrator that has delegated claims
information to make a responsible claims
administration to a large insurance
determination will outweigh the incentive
company intervening—not at the initial
to avoid requesting more information in
determination stage, but at the appeal
the hopes of maintaining the most
stage— with a request for an additional
deferential standard of review. And we
medical examination to be performed by a
trust that courts will not penalize plan
physician of its own choosing. This
administrators for seeking independent
situation arguably has a quality to it that
medical examinations at appropriate stages
undermines the administrator’s claim to
of the claims determination process.
the deference normally owed to plan
fiduciaries. Given how favorable the We conclude that the procedural bias
record was to Epps-Malloy prior to Dr. we have described in Epps-Malloy’s
Dev’s examination, the most natural appeals process warrants a moderately
inference is that by intervening and heightened arbitrary and capricious
ordering the retention of Dr. Dev, thus standard of review. Naturally, a
seeking evidence to counter Epps-Malloy’s significantly heightened arbitrary and
physicians’ evaluation, Merck was not capricious standard of review would be
being a disinterested fiduciary. warranted if Merck also acted under a
financial conflict of interest, but, as noted
That said, we acknowledge the
above, the record before us does not
possibility that Merck acted with a good
demonstrate such a conflict. Because the
District Court applied an unmodified
support for Epps-Malloy’s claim for arbitrary and capricious standard of review
ERISA benefits. to the defendants’ actions, we will set

11
aside the judgment and remand for a new a rheumatologist.
trial on the merits under an appropriate
It would be premature to hold that,
standard of judicial review. Because the
given the record on Epps-M alloy’s alleged
question whether the de fend ants’
fibromyalgia, the defendants’ denial of
determination can stand is essentially an
benefits to her was impermissible as a
ultimate issue of fact, it is appropriate for
matter of law. Doctor Dev did, in fact,
the District Court to undertake that inquiry
apparently perform a musculo-skeletal
in the first instance. See Fed. R. Civ. P.
examination, finding “unremarkable”
52(a); cf. Pullman-Standard v. Swint, 456
results; this may be evidence that Epps-
U.S. 273, 287 (1982) (holding that clearly
Malloy was not disabled by fibromyalgia.
erroneous review applies to ultimate issues
But it is plain that the District Court did
of fact as well as subsidiary findings of
not adequately address the defendants’
fact).
treatment of Epps-M alloy’s fibromyalgia
diagnosis. On remand, the District Court
should separately consider the defendants’
IV. The District Court’s Conclusion on
determinations regarding the two distinct
the Merits
infirmities from which Epps-Malloy
Even if we were not setting aside the allegedly suffers.
District Court’s conclusion on the merits
That Court’s review of these
because of the standard of review it
determinations should be based on the
applied, we would be constrained to do so
record available to the plan administrator
because it did not adequately address the
in making its own decision; if there is not
defendants’ denial of LTD benefits to
sufficient evidence in the defendants’
Epps-Malloy in light of her diagnosis of
record to support their decision as to the
fibromyalgia. While one diagnosis in
fibromyalgia claim, then it must be
Epps-M alloy’s records is sarcoidosis, she
reversed. See Mitchell v. Eastman Kodak
was also diagnosed with fibromyalgia.
Co., 113 F.3d 433 (3d Cir. 1997); cf.
Not only did her doctors ascribe aspects of
Sandoval v. Aetna Life & Cas. Ins. Co.,
her disability to fibromyalgia, the ALJ
967 F.2d 377, 381 (10th Cir. 1992) (“In
appears to have granted SSA benefits to
effect, a curtain falls when the fiduciary
Epps-Malloy principally on the basis of
completes its review, and for purposes of
her fibromyalgia. As noted above, Dr.
determining if substantial evidence
Dev’s report is the defendants’ best
supported the decision, the district court
counter to Epps-Malloy’s physicians’
must evaluate the record as it was at the
diagnoses, but, as the District Court itself
time of the decision.”). While the District
found, “[Dr. Dev] did not address the
Court may take further evidence to aid in
previous diagnosis of fibromyalgia or any
its understanding of the medical issues
other condition.” This is hardly surprising,
involved, it must base its ultimate
as Dr. Dev is a pulmonologist, and
determination on the record before the
fibromyalgia is most commonly treated by

12
plan administrator, not its own judgment
of whether Epps-Malloy was disabled. We
leave it to the District Court to determine
whether the defendants’ treatment of Epps-
Malloy’s fibromyalgia claims met the
moderately heightened arbitrary and
capricious standard that we have
identified.

V. Conclusion
Because the original bench trial
proceeded on too deferential a standard of
review, we will reverse the judgment of
the District Court and remand for a new
trial on the merits.

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