FILED
NOT FOR PUBLICATION
JUL 29 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
BARBARA SCOLES, No. 13-36167
Plaintiff–Appellant, D.C. No. 3:12-cv-01665-MO
v.
MEMORANDUM*
INTEL CORPORATION LONG TERM
DISABILITY BENEFIT PLAN, an
employee welfare benefit plan,
Defendant–Appellee.
Appeal from the United States District Court
for the District of Oregon
Michael W. Mosman, Chief Judge, Presiding
Argued and Submitted July 6, 2016
Portland, Oregon
Before: PREGERSON, BEA, and OWENS, Circuit Judges.
Barbara Scoles was a systems analyst at Intel Corporation (“Intel”) until she
went on disability leave due to panic disorder, major depressive disorder, and
generalized anxiety disorder. She qualified for benefits under the Social Security
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
1
Disability Insurance program. Scoles also applied for benefits from Intel’s long-
term-disability plan (“Plan”), in which she was a participant. After an initial denial,
benefits were granted through the “own occupation” period.2 The Plan declined to
continue Scoles’s benefits into the “any occupation” period,3 ostensibly because
Scoles had failed to provide sufficient “Objective Medical Findings to support that
[she was] not able to work ‘any occupation’ as stated in [the Plan].” After
exhausting administrative remedies and a voluntary administrative appeal, Scoles
brought suit against the Plan under the Employee Retirement Income Security Act
of 1974 (“ERISA”), 29 U.S.C. § 1132(a)(1). The district court granted summary
judgment for the Plan. We have jurisdiction under 28 U.S.C. § 1291, and we
reverse and remand.
1. We agree with the district court that an unaltered abuse-of-discretion
standard of review applies. Where, as here, an ERISA plan’s administrator also
funds the benefits, there is normally a financial conflict of interest that warrants
enhanced skepticism of the benefits denial. See Metro. Life Ins. Co. v. Glenn, 554
2
A participant in the Plan is eligible for benefits for the first 18 months of
disability if he is unable to perform his “regular occupation or reasonably related
occupation.”
3
After 18 months of disability, a participant in the Plan is eligible for
continued benefits only if he is unable to perform “any occupation for which he . . .
is or becomes reasonably qualified for by training, education or experience.”
2
U.S. 105, 112, 117 (2008); Salomaa v. Honda Long Term Disability Plan, 642
F.3d 666, 675 (9th Cir. 2011). However, the Plan’s administrator, an Intel
committee, delegated the duty to decide claims to unconflicted third parties,
removing any inherent or structural conflict of interest. See Day v. AT & T
Disability Income Plan, 698 F.3d 1091, 1095–96 (9th Cir. 2012) (amended
opinion).4 Moreover, Scoles has provided nothing other than bluster to support her
argument that Claim Appeal Fiduciary Services, Inc. (“CAFS”), which decided
Scoles’s voluntary administrative appeal, had a conflict of interest because its
president “formerly made his living as an insurance defense attorney defending and
defeating ERISA benefits claims.”
2. “Even without the special skepticism [to be applied] in cases of conflict of
interest, deference to the plan administrator’s judgment does not mean that the plan
prevails. ‘Deference’ is not a ‘talismanic word that can avoid the process of
judgment.’” Salomaa, 642 F.3d at 675 (brackets omitted) (quoting Glenn, 554 U.S.
at 119). Reed Group (“Reed”), the claims administrator that denied Scoles benefits
4
We might come to a different conclusion if, for example, the financial
arrangement between the Plan and the third-party claims administrators
encouraged the claims administrators to deny benefits. Cf. Glenn, 554 U.S. at 114
(“[T]he employer’s own conflict may extend to its selection of an insurance
company to administer its plan.”). However, we have found nothing in the record
to support such a conclusion.
3
through the “any occupation” period and decided the first-level administrative
appeal, and CAFS, which decided the voluntary administrative appeal, abused their
discretion because, at each stage of the administrative process, they failed to
engage in a “meaningful dialogue” with Scoles regarding the benefits denial.
Booton v. Lockheed Med. Benefit Plan, 110 F.3d 1461, 1463 (9th Cir. 1997); see
also 29 C.F.R. § 2560.503-1.
In support of her claim for Plan benefits, Scoles gave Aetna Life Insurance
Company (“Aetna”), which was then the Plan’s claims administrator, notes from
visits with Dr. Solem, her psychiatrist, and results of tests conducted by Dr.
Balsamo, an independent psychiatrist.5 Dr. Rater, a psychiatrist hired by Aetna to
review Scoles’s claim file, stated: “The restriction[s] imposed by Dr. Solem are no
work for Ms. Scoles. Based on the review of the provided documentation, the
restrictions . . . are appropriate.” Accordingly, Aetna found sufficient “Objective
Medical Findings” to support Scoles’s claim for benefits through the “own
occupation” period and overturned an earlier decision to deny such benefits.
5
Specifically, Dr. Balsamo conducted the second version of the Minnesota
Multiphasic Personality Inventory test and the Personality Assessment Inventory
test. Dr. Balsamo explained that these tests are “objective from the standpoint that
they are construed utilizing control groups and appropriate statistical procedures to
establish norms that are both consistent and valid.”
4
Nothing about Scoles’s claim or Dr. Rater’s review would have necessarily
limited Scoles’s benefits to the “own occupation” period—Dr. Rater agreed with
Dr. Solem that Scoles should not work, period—but Aetna approved benefits only
through the “own occupation” period and not into the “any occupation” period.
Shortly thereafter, Reed took over as the Plan’s claims administrator from Aetna.
To determine whether Scoles’s benefits would continue into the “any occupation”
period, Reed “request[ed] updated Objective Medical Findings” and stated that it
“would like to schedule [Scoles] for an Independent Medical Examination with a
Psychiatrist.” Scoles responded to this request and provided updated information
from Dr. Solem. However, Reed did not schedule Scoles for an independent
medical examination. Instead, it denied Scoles’s claim.
In its denial-of-benefits letter, Reed recognized that Scoles had “documented
diagnoses of Panic Disorder, Major Depressive Disorder and Generalized Anxiety
Disorder,” but found that “the medical documentation supporting these medical
conditions does not meet the requirements of the [Plan],” ostensibly because “the
Medical documents [submitted] do not contain any Objective Medical Findings,”
5
as required by the Plan.6 The letter instructed Scoles that, “to be considered for
benefits under [the Plan], you must submit Objective Medical Findings to support
that you are not able to work ‘any occupation.’” It also stated that Reed disagreed
with Aetna’s earlier decision to grant Scoles benefits through the “own
occupation” period.
As part of its benefits denial, Reed was supposed to tell Scoles, “in a manner
calculated to be understood by the claimant,” “[t]he specific reason or reasons for
the adverse determination” and “[a] description of any additional material or
information necessary for the claimant to perfect the claim and an explanation of
6
According to the Plan: “‘Objective Medical Findings’ means a measurable,
independently-observable abnormality which is evidenced by one or more standard
medical diagnostic procedures including laboratory tests, physical examination
findings, X-rays, MRI’s, EEG’s, ECG’s, ‘Catscans’ or similar tests that support the
present of a disability or indicate a functional limitation. Not all tests or test results
meet the criteria of Objective Medical Findings. For example, tests that depend on
Participant self-reports, such as trigger point/tender point tests, are not considered
objective and do not establish eligibility for benefits under this Plan. Tests whose
results vary depending on the Participant’s expenditure of effort, such as grip
strength tests and cognitive tests, likewise are not considered objective, but may be
taken into consideration as corroborative evidence of disability . . . . Objective
Medical Findings do not include physicians’ opinions or other third party opinions
based on the acceptance of subjective complaints (e.g. headache, fatigue, pain,
nausea), age, transportation, local labor market and other non-market factors. To be
considered an abnormality, the test result must be clearly recognizable as out of the
range of normal for a healthy population. The significance of the abnormality must
be understood and accepted by the medical community as diagnostic of the specific
disabling condition asserted by the Participant.”
6
why such material or information is necessary.” 29 C.F.R. § 2560.503-1(g)(1). We
have interpreted this regulation to require a “meaningful dialogue between ERISA
plan administrators and their beneficiaries.” Booton, 110 F.3d at 1463. Far from
engaging in a “meaningful dialogue,” Reed’s denial-of-benefits letter is
perfunctory. The Plan’s definition of “Objective Medical Findings” addresses the
kinds of evidence necessary to establish a claim for benefits due to a physical
disability—but it sheds little light on how to prove disability account a mental-
health condition. See supra note 6. Reed’s decision relied on the lack of sufficient
“Objective Medical Findings” in Scoles’s claim file, but Reed’s letter gave no
further guidance on the meaning of “Objective Medical Findings” in the mental-
health context.
More importantly, Scoles had previously submitted evidence that Aetna had
found to satisfy the Plan’s requirements. Although Reed was not bound by Aetna’s
decision or interpretation of the Plan’s terms, it had to explain why it disagreed
with Aetna, its different interpretation of the term “Objective Medical Findings,”
and why Scoles’s evidence was—under Reed’s interpretation of the Plan’s
terms—insufficient to support her claim. See Salomaa, 642 F.3d at 679 (“[T]he
plan administrator denied the claim largely on account of absence of objective
medical evidence, yet failed to tell Salomaa what medical evidence it wanted.”);
7
Saffon v. Wells Fargo & Co. Long Term Disability Plan, 522 F.3d 863, 870 (9th
Cir. 2008) (“MetLife’s termination letter to Saffon is equally uninformative. It
notes merely that ‘[t]he medical information provided no longer provides evidence
of disability that would prevent you from performing your job or occupation,’ but
does not explain why that is the case, and certainly does not engage Dr. Kudrow’s
contrary assertion. The termination letter does suggest Saffon can appeal by
providing ‘objective medical information to support [her] inability to perform the
duties of [her] occupation,’ but does not explain why the information Saffon has
already provided is insufficient for that purpose.”). Similarly, Reed should have,
but did not, explain why Scoles did not qualify for benefits under the Plan even
though she had qualified for Social Security Disability Insurance benefits. See
Salomaa, 642 F.3d at 679 (“Evidence of a Social Security award of disability
benefits is of sufficient significance that failure to address it offers support that the
plan administrator’s denial was arbitrary, an abuse of discretion. Weighty evidence
may ultimately be unpersuasive, but it cannot be ignored.” (footnote omitted)).
Reed’s letter affirming the denial of benefits is even more opaque and
uninformative. Reed was required to give Scoles’s claim a “full and fair review”
and to notify Scoles, “in a manner calculated to be understood by the claimant,” of
“[t]he specific reason or reasons for the adverse determination.” 29 C.F.R.
8
§ 2560.503-1(h), (j). Instead, Reed’s letter recited definitions from the Plan, listed
documents in the administrative record, and copied verbatim a psychiatrist’s
review of the documents in the record. That review left unclear the precise reasons
for denial, the standard by which Reed was judging “Objective Medical Findings,”
and the threshold to qualify for Plan benefits for participants with mental-health
conditions.
CAFS’s final denial letter was more informative, insofar as it (1) explained
why Scoles might have qualified for Social Security Disability Insurance benefits
but not Plan benefits and (2) hinted at the kinds of evidence necessary to establish
eligibility for Plan benefits, such as “generally accepted testing results,” “trials of
various medication, changes in the frequency of treatment, changes in the
treatment approach, or reports of in-patient treatment.” But CAFS did not suggest
what “tests” would show that Scoles is disabled from working—it noted that Dr.
Balsamo’s report was “instructive,” but did not state whether Scoles needed only to
submit a similar, updated report. In any event, any clarity provided by CAFS came
too late, as CAFS was the final administrative reviewer, and Scoles lacked further
opportunities to submit new medical evidence. See Saffon, 522 F.3d at 871 (“The
second paragraph does communicate some useful information. In responding to Dr.
Kudrow’s various reports, MetLife notes that ‘[i]t is not clear what Dr. Kudrow
9
used as a basis for [his diagnosis] . . . as we’ve not been furnished with a
Functional Capacity Evaluation that would objectively measure and document your
current level of functional ability.’ This appears to be not only MetLife’s first (and
only) response to Dr. Kudrow’s evaluation, but also the first reference in the record
to the absence of a Functional Capacity Evaluation . . . . Since this was MetLife’s
final denial of Saffon’s claim, this information came too late to do Saffon any
good.”).
In sum, we hold that Reed and CAFS abused their discretion because they
failed to provide Scoles with a meaningful opportunity to provide evidence that
would satisfy their as-yet-unexplained interpretation of the term “Objective
Medical Findings.” Cf. Salomaa, 642 F.3d at 680 (“An administrator does not do
its duty under [ERISA] by saying merely ‘we are not persuaded’ or ‘your evidence
is insufficient.’ Nor does it do its duty by elaborating upon its negative answer with
meaningless medical mumbo jumbo.”). We thus reverse the district court’s grant of
summary judgment in favor of the Plan.
3. Because it is unclear how the term “Objective Medical Findings” applies
in the mental-health context and whether Scoles’s evidence meets the Plan’s
definition of that term, we remand this case to the district court, which shall, in the
first instance, determine whether to take new evidence or remand this case to the
10
Plan’s administrator for a new decision on Scoles’s claim. See Saffon, 522 F.3d at
873–74 & n.6 (remanding to the district court to take new evidence “where
procedural irregularities have prevented full development of the administrative
record”); Saffle v. Sierra Pac. Power Co. Bargaining Unit Long Term Disability
Income Plan, 85 F.3d 455, 460–61 (9th Cir. 1996) (ordering a remand to the
ERISA plan’s administrator to apply the correct terms of the long-term-disability
plan in the first instance).
REVERSED and REMANDED with instructions.7
7
The Plan’s motion to strike, Dkt. No. 37, is DENIED. The Plan’s motion
for an extension of time to reply to Scoles’s response to the motion to strike, Dkt.
No. 42, is GRANTED.
11