Rodriguez-Lopez v. Triple-S Vida, Inc.

United States Court of Appeals
For the First Circuit

No. 15-2413

NILDA RODRÍGUEZ-LÓPEZ,

Plaintiff, Appellant,

v.

TRIPLE-S VIDA, INC.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

[Hon. Bruce J. McGiverin, U.S. Magistrate Judge]

Before

Torruella, Thompson, and Kayatta,
Circuit Judges.

Víctor Gratacós-Díaz, with whom Gratacós Law Firm, PSC was on
brief, for appellant.
Diana Pérez-Seda, with whom César T. Alcover and Casellas
Alcover & Burgos, PSC were on brief, for appellee.

March 1, 2017
 TORRUELLA, Circuit Judge. Plaintiff-appellant Nilda

Rodríguez-López ("Rodríguez") appeals from the district court's

grant of summary judgment in favor of defendant-appellee Triple-S

Vida, Inc. ("Triple-S"). The district court reviewed and

sustained Triple-S's denial of Rodríguez's claim for long-term

disability ("LTD") benefits under the deferential arbitrary and

capricious standard. Because the plan contained no clear

delegation of authority to Triple-S, we hold that Triple-S's

decision was not entitled to deference. Accordingly, we reverse

and remand to the district court to decide the case under the

de novo standard of review.

I. Factual Background

The following facts have been drawn largely from the

district court's opinion in this case.

A. Rodríguez's History

Rodríguez, a licensed chemist, worked as a senior

chemist/quality control laboratory supervisor for Mova

Pharmaceutical Corporation ("Mova") from 1995 to 2004. Her job

required her to perform some physical activity, such as standing,

walking, bending, reaching, lifting, carrying, and writing.

Rodríguez first started to experience symptoms on

March 12, 2004 -- which was also her last day of work -- and was

then diagnosed with several physical and mental conditions. She

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was prescribed medications to mitigate some of the symptoms. She

subsequently underwent a series of medical exams and began

treatment with Dr. Héctor J. Cases, a neurologist, in June 2004.

Dr. Cases filled out a "Functional Capacity Estimate" form on

November 29, 2004, where he concluded that she could not work full-

time or part-time, even if her employer accommodated her

limitations and restrictions. Accordingly, Rodríguez filed a

claim for disability benefits under Mova's LTD plan.

B. Plan Provisions

Mova's LTD plan is an employee welfare benefits plan

governed by the Employee Retirement Income Security Act of 1974

("ERISA"), 29 U.S.C. §§ 1001 et seq. Jefferson-Pilot Life

Insurance Company ("Jefferson-Pilot") originally issued a group

policy (the "Plan") to Mova. The summary plan description ("SPD")

named Mova as the Plan sponsor and administrator, and stated that

"[t]he Plan Sponsor is granted the discretionary authority to

determine eligibility for benefits and to construe the terms of

the Plan."

Under the Plan, the forms to claim benefits and proof of

loss for a disability were to be submitted to Jefferson-Pilot.

Jefferson-Pilot had the right, at its own expense, to examine the

claimant, when and as often as was reasonably required while the

claim was pending. If the claim was wholly or partially denied,

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Jefferson-Pilot would furnish a written notice that stated the

specific reasons for the denial and the basis in the Plan

provisions, explain the Plan's claim review procedures, and

describe any additional material or information needed to

reconsider the decision. Also, an officer designated by

Jefferson-Pilot would review requests for review of a claim, and

Jefferson-Pilot would furnish a written decision.

Triple-S claims that at some point it replaced

Jefferson-Pilot in the contractual relationship between Mova and

Jefferson-Pilot and that it notified Mova that Triple-S would pay

the benefits provided under the Plan, subject to all the policy's

provisions. Thereafter, all the things that the Plan stated would

be performed by Jefferson-Pilot were actually performed by Triple-

S. The Plan, however, was not amended to reflect this change.

Nor was a new SPD or summary of material modifications furnished

to plan participants notifying them of this change and naming

Triple-S as claims administrator and/or insurer.

The Plan offered LTD benefits due to total disability.

To qualify for these benefits, the beneficiary had to comply with

the Plan's definition of "total disability" or "totally disabled"

and be under a doctor's care during the entire time of the total

disability. "'Total disability' . . . means . . . that you are

unable to perform all of the material and substantial duties of

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your occupation on a full-time basis because of disability:

(1) caused by injury or sickness; and (2) that started while you

are insured." A beneficiary is "totally disabled" if she is

"unable to perform with reasonable continuity all of the material

and substantial duties of [her] own or any other occupation for

which [she is] or become[s] reasonably fitted by training,

education, experience, age[,] and physical and mental capacity."

Benefits would be paid when the beneficiary is totally disabled

for longer than the applicable Elimination Period until the

earliest of: (1) the day the total disability ends, (2) death, or

(3) the end of the maximum payment period. For mental illness,

however, the plan limited payment of benefits to twenty-four

months.1

C. Rodríguez's Claim for LTD Benefits

Triple-S received Rodríguez's application for LTD

benefits on January 13, 2005.2 She claimed to be experiencing

various symptoms which rendered her unable to work. She stated

that she did not anticipate working in the near future, either in

her previous occupation or in any other occupation, and was not

1 Benefits for mental illness could be extended longer than
twenty-four months under certain conditions not present here.
2 The claim was dated December 9, 2004.

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interested in getting training or in working in another type of

occupation or work activity.

Rodríguez's claim was initially denied, but it was later

approved on administrative appeal once Rodríguez supplemented her

record with additional evidence. Her LTD benefits were granted

on October 10, 2005, under the mental illness disability provision

of the Plan, but it was effective retroactively to September 24,

2004. Since the Plan provided that disability benefits due to

mental illness could be granted for a maximum term of twenty-four

months, Rodríguez's mental-illness benefits expired September 24,

2006. Rodríguez was not awarded LTD benefits for her physical

ailments, but she was notified that her physical condition would

be further investigated.

From 2007 to 2012, Rodríguez was notified on various

occasions that her claim for LTD benefits for physical disability

was being evaluated, as the Plan's twenty-four-month term for

mental illness had expired. During this time period, Triple-S

continued issuing the same monthly disability payments Rodríguez

had been receiving for her mental illness. On December 16, 2009,

the Social Security Administration found Rodríguez to be disabled,

retroactive to March 12, 2004. Rodríguez submitted evidence of

her Social Security claim to Triple-S. Since Social Security

benefits were to be deducted from the amount payable for disability

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under the Plan, Triple-S requested a refund of all excess LTD

benefits.

Rodríguez also submitted updated copies of progress

notes from her treating physicians, including her rheumatologist

and endocrinologist, which stated that she was unable to perform

a gainful job since her disability was permanent and total. After

further medical exams were performed on Rodríguez, her

neurologist, Dr. Cases, filled out additional "Functional Capacity

Estimate" forms on February 9, 2009, and January 18, 2013, where

he stated that Rodríguez was not able to work full-time or part-

time. He certified that Rodríguez was completely disabled, that

she had reached the maximum medical improvement, and that she was

not fit to return to work, despite any work accommodations

available for her limitations and restrictions. Rodríguez also

filled out and submitted various Triple-S resource questionnaires,

in which she stated her symptoms and claimed to be unable to work

because her conditions were permanent.

Triple-S referred Rodríguez's case to Dr. Alfonso Bello,

a rheumatologist, for an Independent Medical Review of her medical

file. After reviewing the medical file provided to him, Dr. Bello

concluded that, from a rheumatologic perspective, Rodríguez's

medical record did not support a finding that she suffered from an

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active and disabling disorder, and, hence, she was not totally

disabled.

Triple-S also referred the case to a Vocational

Specialist for an Employability Evaluation from a physical

standpoint. The Vocational Specialist found that there were 162

sedentary and light duty occupations, including her previous job,

available in the San Juan, Caguas, and Guaynabo metropolitan area,

which Rodríguez could perform given her education, training, and

previous work experience, and that met or exceeded her reasonable

wage of $12.62 per hour. Some of these jobs are similar to the

work she performed at Mova, including technical and supervisory

duties in laboratories.

D. Denial of Claim and Administrative Appeal

On July 23, 2013, Triple-S denied Rodríguez's

application for LTD benefits, finding she no longer met the Plan's

definition of disabled. According to Triple-S, her administrative

record did not contain enough clinical evidence to support a

finding that she was unable to physically perform the tasks of her

previous job or any other occupation. Triple-S also terminated

her mental illness disability benefits, as the benefits had been

paid beyond the twenty-four-month limit allowed by the Plan. It

did not request reimbursement for the excess benefits paid.

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 In accordance with the Plan's internal appeal process,

on August 23, 2013, Rodríguez administratively appealed Triple-

S's decision and submitted new evidence, copies of her medical

files, and Social Security documents. Rodríguez underwent

additional medical exams that suggested deterioration of an injury

when compared to the same study conducted in 2004.

Triple-S referred the case to Dr. Inocencio A. Cuesta,

an internist with a sub-specialty in adult rheumatology, who

performed an independent peer review on October 11, 2013.

Dr. Cuesta noted that, although the record sustained subjective

evidence of pain and evidence of a rheumatologic condition, there

was no objective evidence that indicated these findings impaired

Rodríguez. He opined that the record contained no clinical

information as to how her physical ailments affected her ability

to return to work and concluded that Rodríguez did not suffer from

physical deterioration based on a rheumatoid condition that would

prevent her from working full-time in a light or sedentary

occupation.

Another employability evaluation was conducted, taking

into account only her physical condition. The occupational

specialist concluded that there were jobs that Rodríguez could

perform given her education and experience that might not require

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additional training, modification, or restructuring, and that

would meet or exceed her reasonable wage of $12.62 per hour.

On December 3, 2013, Triple-S notified Rodríguez that it

was denying benefits because the medical record did not support a

finding that she suffered from a physical condition that prevented

her from performing light or sedentary occupations, and that

disability benefits under the mental illness provision of the LTD

plan had already been exhausted, even if she continued to be

disabled due to a mental health condition. She was also advised

of her right to sue under § 502(a) of ERISA since she had already

exhausted the administrative remedies.

E. Procedural Background

On May 21, 2014, Rodríguez filed suit in a Puerto Rico

state court. Triple-S removed the action to the federal district

court. The parties cross-moved for summary judgment. On

September 30, 2015, the district court granted Triple-S's motion

and denied Rodríguez's cross-motion. In granting Triple-S's

motion, the district court found that

[u]pon review of the group policy, administrative
documents, and related correspondence between
Rodríguez, her treating physician, her legal
representatives, and Triple-S, it is clear that
Triple-S had discretionary authority to determine
benefits eligibility. Under 29 U.S.C. § 1002(21)
(A)(iii), although Mova was designated as plan
administrator of the employee benefit plan, Triple-S
was plan fiduciary with administrative authority to

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 interpret the terms of the plan and determine
eligibility for and entitlement to plan benefits.

Rodríguez-López v. Triple-S Vida, Inc., No. 14-1498, 2015 WL

5792621 at *3 (D.P.R. Sept. 30, 2015). It therefore applied the

arbitrary and capricious standard of review. Under this

deferential standard, the district court concluded that, in light

of the medical evidence in the administrative record, Triple-S's

denial of LTD benefits for physical illness was reasonable and

based on substantial evidence and, consequently, was neither

arbitrary nor capricious.

On appeal, Rodríguez contends that the district court

employed an incorrect standard of review and that the denial of

LTD benefits was insupportable under the more stringent de novo

standard.

II. Discussion

A. Applicable Law

The question of what standard of review is applicable to

a benefits decision governed by ERISA is a question of law that

this Court reviews de novo. Maher v. Mass. Gen. Hosp. Long Term

Disability Plan, 665 F.3d 289, 291 (1st Cir. 2011) (citing Smart

v. Gillette Co. Long–Term Disability Plan, 70 F.3d 173, 178 (1st

Cir. 1995)).

"[T]he rights and responsibilities of parties in

relation to employee pension and welfare plans" are regulated by

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ERISA. Terry v. Bayer Corp., 145 F.3d 28, 34 (1st Cir. 1998).

ERISA provides a cause of action for plan participants, and other

beneficiaries, to recover benefits due to them under the terms of

the Plan. See 29 U.S.C. § 1132(a)(1)(B). "It is under this

statutory provision that claims, such as this one, challenging

denials and termination of employer-sponsored disability benefits

are brought." Terry, 145 F.3d at 34.

ERISA does not establish the standard of review which

courts should apply when reviewing determinations made regarding

benefits claims. However, the Supreme Court has held that a denial

of benefits challenged "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 (1989); see also Stephanie C. v. Blue

Cross Blue Shield of Mass. HMO Blue, Inc., 813 F.3d 420, 427 (1st

Cir. 2016) ("The default rule favors de novo review . . . ."). If

the plan gives the plan participant or covered beneficiary adequate

notice of such reservation, then "a deferential arbitrary and

capricious or abuse of discretion standard" is applied. Gross v.

Sun Life Assur. Co. of Can., 734 F.3d 1, 11 (1st Cir. 2013)

(internal quotation marks omitted) (quoting Maher, 665 F.3d at

291); see also id. at 14; Stephanie C., 813 F.3d at 427 (noting

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that discretionary authority "must be expressly provided for, and

notice of that reservation must appropriately be given to Plan

participants" for the deferential standard to apply) (internal

citations omitted). "[T]he threshold question in determining the

standard of review is whether the provisions of the benefit plan

at issue 'reflect a clear grant of discretionary authority to

determine eligibility for benefits.'" Gross, 734 F.3d at 13

(quoting Leahy v. Raytheon Co., 315 F.3d 11, 15 (1st Cir. 2002)).

Although "[t]here are no required 'magic words,'" id. (quoting

Brigham v. Sun Life of Can., 317 F.3d 72, 81 (1st Cir. 2003)), "to

secure discretionary review, a plan administrator must offer more

than subtle inferences drawn from . . . unrevealing language," id.

at 16.

B. Analysis

The parties disagree on the standard of review that the

district court should have applied in reviewing Triple-S's denial

of Rodríguez's claim for benefits. Rodríguez alleges that the

Plan did not reflect a clear grant of authority to Triple-S to

make eligibility determinations under the Plan because such

authority was explicitly delegated to Mova. She alleges that if,

as the district court found, this discretionary authority was at

some later time transferred to Triple-S, this would have

constituted a "contractual violation," since the Plan required an

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amendment to change its provisions and no amendment was "found in

[Triple-S's] administrative record." Thus, her argument goes,

because it is not clear that Triple-S has been granted

discretionary authority under the Plan, its determination to deny

her LTD benefits was subject to the de novo standard of review.

Accordingly, she requests that the case be remanded to the district

court so that Triple-S's determination be reviewed under the

de novo standard.

In assessing whether a plan reflects a clear grant of

discretionary authority, 3 "we review the language of the Plan

de novo, just as we would review the language of any contract."

Stephanie C., 813 F.3d at 428 (quoting Ramsey v. Hercules Inc., 77

F.3d 199, 205 (7th Cir. 1996)). A careful review of the language

of the Plan leads us to conclude that it does not reflect a clear

grant of discretionary authority to Triple-S to determine

eligibility for benefits.

3 Triple-S alleges that we need not analyze this because, by
arguing in the district court that Triple-S abused its discretion
in denying her claim for benefits, Rodríguez waived any argument
that the applicable standard of review should have been de novo.
Although Triple-S acknowledges that Rodríguez also argued in her
motion for summary judgment that Mova was the plan administrator
and that Triple-S had no authority to make eligibility
determinations, Triple-S claims that this argument "was not tied
to a rejection of the abuse of discretion standard." We note that
the district court found Rodríguez had sufficiently preserved her
standard of review argument, and we find so as well.

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 Triple-S has not been able to point to any Plan language

specifically establishing that it (Triple-S) had discretionary

decisionmaking authority. Rather, it argues that the Plan grants

this authority to Mova but, because Triple-S was actually making

the benefit decisions in place of Mova, it is implied that the

discretionary authority has been transferred to Triple-S. Case

law, however, requires that the delegation of discretionary

authority to an administrator or fiduciary be clearly stated in

the plan. See id. at 428 (finding language in plan certificate

"not sufficiently clear to give notice to either a plan participant

or covered beneficiary that the claims administrator enjoys

discretion in interpreting and applying plan provisions"); Gross,

634 F.3d at 14 ("[T]he critical question is whether the plan gives

the employee adequate notice that the plan administrator . . . has

the latitude to shape the application, interpretation, and content

of the rules in each case." (quoting Díaz v. Prudential Ins. Co.

of Am., 424 F.3d 635, 637 (7th Cir. 2005)). The Plan fails to

meet this degree of clarity since it states that Mova, not Triple-

S, had this authority. If Triple-S wanted to benefit from the

delegation of authority and the deferential standard it provides,

the Plan needed to clearly state it4 so that Plan participants,

4 Because here a notice of a reservation of discretionary
decisionmaking authority as to Triple-S was not made in any way or
in any document, we need not decide whether it can be effected

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such as Rodríguez, received adequate notice that Triple-S had been

granted discretionary authority to interpret the Plan. There is

no evidence in the record that this was done. See Stephanie C.,

813 F.3d at 429, n.3 (finding that ambiguity as to whether the

claims administrator had discretionary authority could not be

cured by document defining relationship between the employer and

the claims administrator because there was no evidence that the

document was ever disclosed to plan participants, and noting that

plan participant "had no obligation to go in search of undelivered

documents in order to ascertain whether [the claims administrator]

had reserved for itself discretionary decisionmaking authority");

see also Maher, 665 F.3d at 291 ("absent a proper delegation, the

. . . Plan could not rely on [grant of discretionary authority to

plan sponsor] to defend a denial by an independent entity"); Terry,

145 F.3d at 37 (finding plan sponsor effectively delegated

discretionary authority to Benefit Committee following plan-

outlined procedure, and so Committee's decision subject to abuse-

of-discretion review).

Triple-S also argues that its delegation of

discretionary authority is "clear" because the Plan "undoubtedly

only through the Plan itself. See Stephanie C., 813 F.3d at 429
n.4.; Maher, 665 F.3d at 301 (Lipez, J., dissenting) (citing
Ringwald v. Prudential Ins. Co., 609 F.3d 946, 948-49 (8th Cir.
2010), which disregarded grant of discretionary authority that
appeared only in the SPD).

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establishes that Triple-S Vida's role is to grant and deny benefits

both after an initial review and after an administrative appeal

and contains detailed specifications as to how Triple-S Vida will

make [these] determinations." Contrary to Triple-S's assertions,

the Plan establishes that Jefferson-Pilot, and not Triple-S, has

the role to grant or deny benefits. Although Triple-S claims that

it is Jefferson-Pilot's successor, the Plan was not amended to

reflect this change. Nevertheless, we need not determine what

consequence, if any, this failure to amend may have because even

if we were to read "Triple-S" into the Plan where "Jefferson-

Pilot" appears, the Jefferson-Pilot provisions only give

Jefferson-Pilot the power to determine whether or not "benefits

. . . are due." The power to decide does not necessarily imply

the existence of discretion. See Stephanie C., 813 F.3d at 428;

Díaz, 424 F.3d at 637 (noting that because "[a]ll plans require an

administrator first to determine [eligibility for benefits] before

paying them[,] . . . the fact that an administrator is deciding on

a case-by-case basis who is entitled to benefits does not reveal

whether a plan does or does not reserve 'discretion' to the

administrator"). Here the Jefferson-Pilot provisions grant the

power to decide, but no more -- the provisions do not grant

discretionary authority. See Stephanie C., 813 F.3d at 428

(finding that "[plan administrator] decides which health care

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services . . . are medically necessary" clause did not grant

discretionary authority and "merely restates the obvious: that no

benefits will be paid if [the administrator] determines they are

not due"); Gross, 734 F.3d at 12-15 (holding formulation "[p]roof

[of claim] must be satisfactory to [claims administrator]"

insufficient to confer discretionary authority) (second alteration

in the original); Heasley v. Belden & Blake Corp., 2 F.3d 1249,

1254-56 (3d Cir. 1993) (holding formulation that claims

administrator "will evaluate the proposed admission for

certification of medical necessity and appropriateness under the

terms of the [policy]" similarly insufficient).

Finally, Triple-S argues that it has been granted

discretionary authority because the Plan recognizes the existence

of plan fiduciaries and it is a Plan "fiduciary with administrative

authority to interpret the terms of the plan and determine

eligibility for and entitlement to plan benefits." Rodríguez-

López, 2015 WL 5792621 at *3. This, it argues, is evidenced by

several provisions of the policy that vest Triple-S with authority

to examine the claimant as often as reasonably required; furnish

notices of denial of benefits, specifying the reasons for the

denial, informing of review procedures and describing additional

materials that could be submitted for review; and appoint an

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administrative review officer to make final determinations as to

eligibility. Its argument fails.

Named fiduciaries may be granted discretionary

decisionmaking authority. See 29 U.S.C. § 1105(c)(1); Rodríguez-

Abreu v. Chase Manhattan Bank, N.A., 986 F.2d 580, 584 (1st Cir.

1993). In such a case, however, the Plan's language must clearly

grant this authority. See Stephanie C, 813 F.3d at 428; Rodríguez-

Abreu, 986 F.2d at 583-84. ERISA also "allows named fiduciaries

to delegate responsibilities (other than trustee responsibilities)

through express procedures provided in the plan." Rodríguez-

Abreu, 986 F.2d at 584 (citing 29 U.S.C. § 1105(c)(1)). For the

delegation of discretionary authority to be effective so that the

deferential standard of review applies, however, the delegation

must be clear and the fiduciary must properly designate a delegate

for the fiduciary's discretionary authority. Id. (citing Madden

v. ITT Long Term Disability Plan, 914 F.2d 1279, 1283-84 (9th Cir.

1990)).

In support of its assertions, Triple-S cites to language

from a section of the SPD titled "Statement of ERISA Rights," which

states that,

In addition to creating rights for plan participants,
ERISA imposes obligations upon the people who are
responsible for the operation of the plan. The people
who operate your plan[,] called "fiduciaries" of the
plan, have a duty to do so prudently and in the
interest of all plan participants and beneficiaries.

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This language, however, cannot be afforded the effect that Triple-S

attributes to it. It does not grant discretionary authority to

named fiduciaries, does not include Triple-S as a named fiduciary

under the Plan, and does not properly designate Triple-S as a

delegate for a fiduciary with discretionary authority. All this

language does is state that those who operate the Plan -- plan

fiduciaries -- have obligations under ERISA. The inclusion of

this statement in the SPD is even required by ERISA regulations.

See 29 C.F.R. 2520.102-3(t)(1) (stating that SPDs must include

"[t]he statement of ERISA rights described in section 104(c) of

the Act, containing the items of information applicable to the

plan included in the model statement of paragraph (t)(2) of this

section," which in turn includes the paragraph referenced by

Triple-S under the header "Prudent Actions by Plan Fiduciaries").

Thus, if this were enough to confer discretionary authority,

decisions under all regulations-compliant plans would be subject

to the deferential standard of review.

Finally, Triple-S posits that Rodríguez always "dealt

directly with Triple-S by filing all forms and pursuing all

available administrative review proceedings before it," which

supports a finding that Triple-S, and not Mova, had the authority

to make eligibility determinations. But these facts do not mean

that Triple-S was "clearly" delegated with discretionary

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authority. As we have noted, it just means that Triple-S had the

power to decide, but power to decide does not amount to the

existence of discretion. See Stephanie C., 813 F.3d at 428;

Rodríguez-Abreu, 986 F.2d at 584 (fact that plan administrator

denied benefits claim did not cure failure to delegate

discretionary authority, so denial reviewed de novo).

We hold that the Plan does not confer discretionary

authority upon Triple-S. Thus, de novo review applies. Because

the district court looked at Triple-S's denial of benefits through

the wrong standard-of-review lens, we must vacate its judgment and

remand for reconsideration.

III. Conclusion

For the reasons stated above, we vacate the judgment and

remand for further proceedings consistent with this opinion.5 No

costs are awarded.

Vacated and Remanded.

5 This may be an appropriate time for the parties to seriously
consider settlement.

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