Torres v. Pittston Company

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED
________________________
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 02-16985 September 30, 2003
________________________ THOMAS K. KAHN
CLERK
D. C. Docket No. 01-00485 CV-J-20-TEM

LOIS ANN TORRES,

Plaintiff-Appellant,
versus

PITTSTON COMPANY, as Plan Administrator
of the Employee Benefit Plan of the Pittson Company,

Defendant-Appellee,

LIFE INSURANCE COMPANY OF NORTH AMERICA,

Intervenor-Defendant-
Appellee.
________________________

Appeal from the United States District Court for the
Middle District of Florida
_________________________
(September 30, 2003)

Before ANDERSON and BIRCH, Circuit Judges, and PROPST*, District Judge.

*
Honorable Robert P. Propst, United States District Judge for the Northern District of
Alabama, sitting by designation.
PER CURIAM:

The only issue that we will definitively resolve in this appeal is the

appropriate standard for a district court’s review where an ERISA fiduciary, which

is operating under a conflict of interest, denies disability benefits based on its

determination of the factual circumstances of the beneficiary's claim The district

court applied the deferential arbitrary-and-capricious standard of review,

apparently adopting the argument of the Insurers1 that the “insurer conflict rule”

and its “heightened arbitrary capricious” standard of review should apply only to a

fiduciary's decisions regarding plan interpretation, not to its factual determinations,

even though the fiduciary is under a conflict of interest. We disagree, and

accordingly reverse and remand for reconsideration under the appropriate standard

of review.

I. BACKGROUND

Perry Torres, the deceased husband of Appellant Lois Torres,2 was employed

as a salesman with Brinks Home Security (“Brinks”), a subsidiary of Pittston.

1
For brevity, we refer to the Defendants/Appellees collectively as “the Insurers,”
using their individual company names only as necessary in the historical narrative.
2
Perry Torres died of causes unrelated to the injuries at issue here while this action
was pending before the district court, and his estate was substituted as plaintiff. All references
hereinafter to “Torres” refer to Perry Torres.

2
Through his employer, Torres was covered by three insurance policies which

provided benefits in the event of disabling injury: (1) a Personal Accident Plan, of

which Pittston was the designated Plan Administrator, which was underwritten by

Life Insurance Company of North America (“LINA”), an affiliate of CIGNA

Corporation3; (2) a Long Term Disability Plan, underwritten and administered by

Aetna Insurance Co. (hereinafter, “the Aetna plan”); and (3) a Business Travel

Accident Plan, of which LINA also served as underwriter and claims

administrator.4

In pertinent part, the Personal Accident Plan provides that an insured

employee will receive permanent total disability benefits (in Torres' case, a lump

sum of $500,000) under the following conditions:

[I]njury from a covered accident causes you to become totally
and continually disabled ... within 180 days of the accident, the
disability continues for one year, and proper medical authority certifies
you to be permanently totally disabled (unable to engage in any
occupation for which you are suited by education, training or
experience)(.)

3
The record and pleadings occasionally use “LINA” and “CIGNA”
interchangeably. We refer only to “LINA” for consistency.
4
Although Torres made claims for benefits under all three plans, benefits under
only the first plan are at issue in this appeal, and thus all succeeding references to “the plan” or
“the insurance policy” refer to the Personal Accident Plan, unless otherwise specified.

3
The summary plan description provided to Torres does not define what constitutes

a “proper medical authority.” Regarding the procedure for the review of claims,

the summary plan description states:

If a claim for benefits is denied in whole or in part, you or your
beneficiary will be notified in writing within 90 days after your claim
has been received. The notice will give you the reasons for denial and
a description of any additional information necessary to establish the
claim. You, your beneficiary or your authorized representative, within
60 days after such notification, may request the Administrative
Committee to reconsider your claim ... Your or your beneficiary will
be advised of the decision on review within 60 days after such request.

On December 2, 1998, Torres was involved in a motor vehicle accident

outside of Lake City, Florida. The circumstances of the accident are the subject of

some dispute. Torres contends that he and his wife (who was also employed by

Brinks) were in the car, returning from a work-related training session in

Jacksonville, while the Insurers assert that Torres was alone in the car and was not

engaged in business-related travel. After the accident, Torres received treatment

for back and shoulder pain, among other symptoms. He ultimately underwent

lumbar fusion surgery, during which a prosthetic device was inserted to stabilize

his back. Without detailing Torres' lengthy medical history here, the record

indicates that Torres continually complained after the surgery of severe pain,

weakness and numbness in his arms, which one of his treating physicians, Dr.

4
Lipoff, attributed to a brachial plexus injury that may have occurred during the

back surgery. Doctors tried various treatments, including stellate ganglion blocks

(the injection of a local anesthetic near the afflicted area) and various prescription

narcotic painkillers, with no lasting relief. In March of 2000, Dr. Lipoff opined

that Torres had been permanently and totally disabled since April 1999, and that

his condition could only be expected to deteriorate. Based on the aforementioned

medical conditions, among others, Torres applied for and was awarded Social

Security disability insurance benefits.

Torres filed a claim for benefits under all three Pittston policies. LINA

received Torres' application for benefits under the Personal Accident Plan on

March 10, 2000. On November 22, 2000 – more than eight months later – Torres'

attorney wrote to LINA stating that, because the insurer had neither paid nor denied

the claim within 90 days, Torres regarded the claim as having been deemed denied.

Accordingly, he requested reconsideration of the deemed denial by the Plan's

Administrative Committee. Pittston and LINA did not respond to the letter until

January of 2001, at which time they each advised Torres that his claim was still

under review and that, accordingly, reconsideration by the Administrative

Committee would be premature.

5
 Torres filed this action on February 22, 2001, in Florida state court, and

Pittston removed it to the U.S. District Court for the Middle District of Florida. On

March 15, 2001 – after the Complaint was filed, but before the Insurers received

notice of it by service or otherwise – LINA issued its denial of Torres' claim. The

denial letter began with a recitation of LINA's findings regarding the claim. These

included: (1) the circumstances of the automobile accident, according to LINA's

review of the police accident report, did not comport with Torres' account that he

was severely injured while traveling home with his wife from Brinks' Jacksonville

office, but rather indicated that Torres was alone, was traveling in a different

direction, and was not severely injured; (2) an intake questionnaire from the Florida

Neck & Back Institute, where Torres was seen after the accident, does not indicate

that the injury was work-related; (3) Torres continued working for Brinks until

January 4, 1999, a month after the accident; (4) Torres was working as a timber

broker well into the second quarter of 1999, and in fact was briefly incarcerated in

March 1999 on a contempt charge arising out of a timber brokerage deal; (5) a

Functional Capacity Evaluation by Shands Hospital indicated that Torres was

capable of working at the sedentary level, and two Shands consulting physicians

opined that Torres would benefit from returning to work at least part-time, and (6)

a Transferrable Skills Analysis performed by a LINA consultant determined that,

6
based on his education and training, Torres could work in several occupations

(commission agent-agricultural products, surveillance system monitor, dispatcher)

in spite of his physical limitations. The letter concluded that:

[I]t does not appear that his disability began within 180 days of
the claimed accident, as he continued to work as a Timber Broker.
Since it was determined that he could perform at a sedentary level and
potential occupations were identified, he is not permanently totally
disabled as defined in the policy.

The denial letter advised Torres of his right to seek administrative review within 60

days, and encouraged him – if he did so – to submit any additional medical

information supporting his claim.

Although this suit was in progress, Torres did request administrative review

by letter of May 10, 2001. In the letter, Torres' counsel maintained his position that

the denial actually occurred when the Insurers failed to make a timely decision on

the claim, and that administrative review had already been denied when the

Insurers failed to conduct such review after receiving Torres' November 22, 2000,

letter. Among the supporting documents included with the letter were two letters

from Aetna. The first, dated June 19, 1999, approved Torres' initial application for

24 months of long-term disability benefits on the grounds that he was “totally

disabled from [his] usual occupation.” The second, dated February 21, 2001,

indicated that Torres had been approved for an extension of long-term disability

7
benefits beyond the 24-month cutoff because he was “unable to work at any

reasonable occupation.” Also included were affidavits from Torres and Mrs.

Torres describing their account of the automobile accident. These supplemental

materials were not made part of the administrative record complied by the Plan

Administrator. Nothing in the record indicates that the Plan Administrator acted on

Torres' request for review.

The Insurers twice moved for summary judgment. The first motion was

based on their contention that Torres filed suit prematurely before allowing the

Insurers' review process to run its course. The district court denied the motion,

finding that the claim was deemed denied when the Insurers failed to act on it in a

timely manner (within 90 days of receipt), thus excusing Torres' failure to exhaust

his administrative remedies. The Insurers subsequently moved for summary

judgment on the merits, arguing that their denial of the claim was not arbitrary or

capricious. The district court – applying the pure arbitrary-and-capricious standard

unmodified by the “insurer conflict rule,” and limiting its review to the

administrative record without allowing Torres to present supplemental evidence –

granted the motion and entered summary judgment for the Insurers. Torres

appeals.

8
 II. DISCUSSION

A. Standard of Review for Factual Determinations

The seminal Eleventh Circuit case articulating what has later come to be

known as “heightened arbitrary and capricious” standard of review is Brown v.

Blue Cross and Blue Shield of Alabama, 898 F.2d 1556 (11th Cir. 1990).

Plaintiff there was a participant in an ERISA health care plan under which Blue

Cross provided the insurance coverage. Blue Cross denied certain hospitalization

expenses incurred by plaintiff. Because Blue Cross both made the decision

denying coverage, and would have had to pay out of its coffers if the coverage

decision had been favorable to plaintiff, Blue Cross operated under a conflict of

interest. Because the plan document conferred discretion upon Blue Cross in the

matter of benefits determinations, its denial of benefits would have been entitled

under Firestone Tire and Rubber Co. v. Bruch (“Bruch”), 489 U.S. 101, 109 S.Ct.

948 (1989), to the arbitrary-and-capricious, or abuse of discretion, standard5

absent the conflict of interest. Brown saw its task as developing a “coherent

method for integrating factors such as self interest into the legal standard for

reviewing benefits determinations.” Id. at 1561. After extensive analysis, the

5
As Brown points out, 898 F.2d at 1558 n.1, Eleventh Circuit cases have equated
the arbitrary and capricious standard and the abuse of discretion standard.

9
court noted that the “inherent conflict between the fiduciary role and the profit-

making objective of an insurance company makes a highly deferential standard of

review inappropriate.” Id. at 1562. The court therefore held “that the abuse of

discretion, or arbitrary and capricious, standard applies to cases such as this one,

but the application of the standard is shaped by the circumstances of the inherent

conflict of interest.” Id. at 1563.

The Insurers argue that Brown is not controlling with respect to the proper

standard of reviewing factual determinations by an ERISA fiduciary, because – in

the Insurers' view – the underlying issue in Brown which the court had to review

was an issue of plan interpretation, and not a factual issue. The Insurers rely by

analogy upon the Fifth Circuit opinion in Pierre v. Conn. Gen. Life Ins. Co., 932

F.2d 1552 (5th Cir. 1991). There, the Fifth Circuit distinguished Bruch and held

that factual determinations by an ERISA fiduciary should be reviewed pursuant to

an abuse of discretion standard, even though the plan document did not expressly

confer discretionary authority upon the fiduciary. The court recognized that the

Supreme Court had required de novo review of an ERISA fiduciary’s

interpretations of plan provisions unless discretionary authority was expressly

conferred. However, the Fifth Circuit thought factual determinations by the

10
fiduciary were sufficiently different from legal interpretations of the terms of the

document to warrant a different result.

We reject the Insurers' invitation to distinguish between legal and factual

determinations so that an ERISA fiduciary's factual determinations would be

entitled to the arbitrary and capricious standard of review even though the

fiduciary is under a conflict of interest. First and foremost, we believe that we are

bound by precedent to apply the heightened arbitrary-and-capricious standard

both to factual determinations and interpretations of the plan document by an

ERISA fiduciary operating with discretionary authority but operating under a

conflict of interest. Contrary to the Insurers' assertion, the underlying issues in

Brown included not only issues of plan interpretation, but also factual

determinations by the fiduciary.6 We also applied the heightened arbitrary-and-

capricious standard when reviewing the factual determinations of a conflicted

ERISA fiduciary in Levinson v. Reliance Standard Life Ins. Co., 245 F.3d 1321

(11th Cir. 2001). There, the underlying determination by the fiduciary which the

6
Although it is clear that the fiduciary decisions which the court was called upon to
review in Brown did include some issues of plan interpretation, we also believe that the court
was required to review some factual decisions of the fiduciary. For example, whether or not the
second admission to the hospital was itself an independent emergency seems clearly to have
involved a factual issue. See Brown, 898 F.2d at 1571-72. In addition, whether or not the
second admission was a continuation of the first seems also to have involved some factual issues.

11
court was called upon to review was the fiduciary’s decision that the plaintiff

there was not totally disabled, a decision which clearly involved a factual

determination. See also Yochum v. Barnett Banks, Inc. Severance Pay Plan, 234

F.3d 541 (11th Cir. 2000) (applying heightened arbitrary and capricious review to

fact-based determination as to whether ERISA plan beneficiary turned down

“comparable” offer of employment so as to be disqualified from receiving

severance).7

Although we feel bound by our prior precedent rule, we also note several

weaknesses in the Insurers' position. First, not only did the holding of Brown

apply to reviewing factual determinations as well as legal interpretations of the

plan document, but the language of the Brown opinion suggests that it applies to

benefits decisions, whether they involve plan interpretations, factual

determinations, or both. The court described its task: “to develop a coherent

method for integrating factors such as self-interest into the legal standard for

7
In Paramore v. Delta Air Lines, Inc., 129 F.3d 1446 (11th Cir. 1997), the plaintiff
challenging the denial of her application for ERISA plan benefits argued that, even though under
Bruch the plan interpretation decisions of her plan administrator were entitled to deferential
arbitrary-and-capricious review, the administrator's factual findings should be reviewed de novo
– essentially the mirror image of the issue in Pierre. We held in Paramore that the same abuse-
of-discretion standard should be used to review both types of determinations. See id. at 1451
(“[W]e consistently have upheld application of the abuse of discretion standard of review to
determinations involving both plan interpretations and factual findings under ERISA.”). Our
decision here fully comports with our holding in Paramore that the same standard governs review
of all benefit determination decisions.

12
reviewing benefits determinations.” Id. at 1561 (emphasis added). It referred

throughout the opinion to “benefits determinations” and articulated its holding as

applying to “benefits determinations,” id. at 1566. Even more significant than the

language of the Brown opinion is its underlying rationale: the notion that a

fiduciary’s duty of loyalty to the beneficiaries might be compromised by the

fiduciary's own self-interest. Common sense tells us that this rationale is

applicable both to decisions involving plan interpretations and to decisions

involving factual determinations; in both, the same self-interest operates such that

a “conflicted fiduciary may favor, consciously or unconsciously, its interests over

the interests of the plan beneficiaries.” Id. at 1565; see also Rowan v. Unum Life

Ins. Co. of America, 119 F.3d 433, 436 (6th Cir. 1997) (refusing to afford

deference to ERISA plan administrator's findings of fact, because “one party to a

contract has an incentive to find facts not in a neutral fashion, but in the manner

that is most advantageous to its own interests”) (quoting Perez v. Aetna Life Ins.

Co., 96 F.3d 813, 824 (6th Cir. 1996)).

Second, the Insurers' reliance on the Fifth Circuit opinion in Pierre is

inapposite. The issue in the instant case is whether the arbitrary and capricious,

or abuse of discretion, standard should be modified when the decision of the

fiduciary may be tainted by conflict of interest. An entirely different issue was

13
involved in Pierre. There, the ERISA plan did not expressly confer discretionary

authority upon the ERISA fiduciary charged to make benefits decisions. Of

course, in Bruch, the Supreme Court had recently held that a court reviewing such

a fiduciary’s interpretation of the plan language should conduct a de novo review,

unless the plan document expressly conferred upon the fiduciary discretionary

authority. The issue in Pierre was whether the principles of trust law gave such a

fiduciary implied authority to make discretionary findings of fact, and whether

that and other differences between fact findings and plan interpretations were

sufficient to distinguish Bruch, so that a court should defer to such a fiduciary’s

findings of fact, even though no deference is due to the fiduciary’s plan

interpretations. The Fifth Circuit did distinguish Bruch by distinguishing

between plan interpretations and findings of fact, did conclude that such a

fiduciary would have implied authority to make discretionary findings of fact,

and thus concluded that a court reviewing such a fiduciary’s findings of fact

should do so deferentially under the abuse of discretion standard.8

8
Importantly, however, the court in Pierre did not find that an ERISA fiduciary's
factual findings were due the full measure of deference for which the Insurers here argue
(arbitrary-and-capricious review only). Rather, the Pierre court believed that abuse of discretion
was a more rigorous standard than arbitrariness. See id. at 1562 (rejecting arbitrary-and-
capricious standard, which it felt Supreme Court “completely” rejected in Bruch, in favor of
abuse of discretion standard, which it described as less deferential). Of course, our ERISA
caselaw treats the two standards as synonymous. It is instructive, however, that Pierre
recognized that some heightened review beyond mere arbitrariness was appropriate even for

14
 However, the issue with which the Fifth Circuit in Pierre struggled is

simply not before this court in the instant case. As noted above, the ERISA plan

here confers discretionary authority, and the appropriate standard of review

would be the arbitrary and capricious, or abuse of discretion, standard, except for

the fact of the conflict of interest. But because of the conflict of interest, the

standard of review is altered by our precedent, as described above. The Insurers

argue that the Pierre distinction between an ERISA fiduciary’s plan

interpretations and its findings of fact is a viable distinction, and urge that we

extend its holding and make this same distinction, and thus disregard the conflict

of interest. We readily reject this argument. Even if the distinction between plan

interpretations and findings of fact has some significance with respect to the issue

in Pierre9 – whether discretionary authority has been expressly conferred or

factual determinations.
9
We note that the Fifth Circuit’s holding in Pierre is a decided minority view and
has been criticized by several courts of appeal which have since addressed the issue. See Rowan
v. Unum Life Ins. Co. of America & S&CO, 119 F.3d 433 (6th Cir. 1997) (rejecting the Pierre
holding and construing Bruch to indicate that such a decisionmaker’s factual determinations
should be reviewed de novo by the court unless the plan document expressly confers such
discretion); accord Reidl v. Gen'l American Life Ins. Co., 248 F.3d 753 (8th Cir. 2001); Kintsler
v. First Reliance Standard Life Ins. Co., 181 F.3d 243 (2nd Cir. 1999) Ramsey v. Hercules, Inc.,
77 F.3d 199 (7th Cir. 1996); Luby v. Teamsters Health Welfare & Pen. Tr. Funds, 944 F.2d 1176
(3rd Cir. 1991). See also Reinking v. Philadelphia American Life Ins. Co., 910 F.2d 1210 (4th
Cir. 1990) (holding to the same effect although decided before Pierre); cf. Paramore v. Delta Air
Lines, Inc., 129 F.3d 1446 (11th Cir. 1997) (addressing the related, but somewhat different, issue
involved in the mirror image of the Pierre facts; see supra n.7). However, we need not in this
case address that issue which has split the circuits, because the instant case involves the very

15
appropriately can be implied, which in turn has significance under Bruch as to

whether the standard of review should be de novo or abuse of discretion – we are

confident that the distinction is relatively insignificant with respect to the very

different issue before us – i.e., whether the standard of review should be altered

because the fiduciary is operating under a conflict of interest in order to protect

against the fiduciary’s self-interest. As previously noted, the holding, the

language and the rationale of Brown all apply with equal force not only to an

ERISA fiduciary’s plan interpretation, but also to its findings of fact. As a matter

of common sense, the need to protect against the fiduciary’s self-interest applies

with equal force to plan determinations and findings of fact made by a conflicted

fiduciary in the course of its benefits decision.

Third, although its discussion was arguably dicta, the Supreme Court itself

has indicated that the standard of review should be affected by a fiduciary’s

conflict of interest: “Of course, if a benefit plan gives discretion to an

administrator or fiduciary who is operating under a conflict of interest, that

different issue of whether the otherwise appropriate standard of review should be altered because
of the fiduciary’s conflict of interest. None of the reasons articulated in Pierre and none of the
distinctions between plan interpretations and findings of fact therein discussed, undermine the
need articulated in Brown for additional scrutiny to protect against the self interest which may
taint the reliability of decisions made by a fiduciary operating under a conflict of interest.
Indeed, the Fifth Circuit itself in Pierre recognized that the standard of review could be affected
by the fiduciary’s conflict of interest. See Pierre, 932 F.2d at 1562.

16
conflict must be weighed as a ‘factor in determining whether there is an abuse of

discretion.’” Bruch, 489 U.S. at 115, 109 S.Ct. at 957 (quoting Restatement (2d)

of Trusts § 187, Comment d (1959)).

In sum, we conclude that the heightened arbitrary and capricious standard

of review for decisions by a conflicted ERISA fiduciary applies equally to

determinations of fact as to determinations of plan interpretation. Consequently,

the district court erred in granting summary judgment for the Insurers based on

the more deferential, pure arbitrary and capricious standard.

B. Deemed Denial

Torres argues that the denial of his application for benefits should be

reviewed de novo, because the Insurers' failure to act on his claim within the time

allotted by ERISA regulations (and by the insurance plan's own terms) constitutes

a “deemed denial.” Because such a denial by operation of law necessarily entails

no exercise of administrative judgment or discretion, Torres contends, no

deference is due to the Plan Administrator.

The operative ERISA regulations pertaining to this case, the former 29

C.F.R. § 2560.503-1(e)(2), provided that, if an ERISA plan administrator did not

act on a claim for benefits within the allotted time – at that time, 90 days from the

17
date of receipt of the claim, with some possibility for extensions – “the claim

shall be deemed denied and the claimant shall be permitted to proceed to the

review stage.” 10 Here, in response to the Insurers' first motion for summary

judgment (on the grounds that Torres failed to exhaust remedies), the district

court held that the Insurers' delay in acting on Torres' claim constituted a deemed

denial, thus excusing Torres' failure to exhaust the administrative review process

before filing suit. In ruling on the instant motion for summary judgment,

however, the court did not address Torres' contention that a deemed denial

heightened the applicable standard of judicial review.

Some courts have held that, as Torres argues, a deemed denial receives no

deference upon judicial review, since the plan administrator did not in fact

exercise any discretion. See Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 631

(10th Cir. 2003) (holding that “when substantial violations of ERISA deadlines

result in the claim's being automatically deemed denied on review, the district

10
Section 2560.503 was amended effective January 20, 2001, but the changes were
made applicable prospectively to claims filed after January 1, 2002, and thus do not affect Torres'
claim. (Among other changes, the regulation now gives the plan administrator only 45 days to
act on a claim, rather than the 90 days applicable to pre-2002 claims.) The “deemed denial”
provision was modified in the revised regulations. See 29 C.F.R. § 2560.503-1(k)(1) (“In the
case of the failure of a plan to establish or follow claims procedures consistent with the
requirements of this section, a claimant shall be deemed to have exhausted the administrative
remedies available under the plan and shall be entitled to pursue any available remedies ... on the
basis that the plan has failed to provide a reasonable claims procedure that would yield a decision
on the merits of the claim.”).

18
court must review the denial de novo, even if the plan administrator has

discretionary authority to decide claims.”); Jebian v. Hewlett Packard Co., 310

F.3d 1173 (9th Cir. 2002) (reviewing denial de novo, where plan administrator

did not issue decision until after deadline provided by plan had elapsed, and more

than a month after beneficiary filed suit); Gritzer v. CBS, Inc., 275 F.3d 291 (3rd

Cir. 2002) (extending no deference to plan administrator's post hoc justification

for denying benefits, issued only after commencement of litigation).11 Others,

however, have held that the fact that the denial occurs by operation of ERISA

11
The Labor Department has taken the position that a denial occurring without the
minimum procedural safeguards provided in the ERISA statutes and regulations should not be
reviewed deferentially. In adopting the version of the “deemed denial” regulation that applies to
Torres' claim (based on its date of filing), the Labor Department said that, where an ERISA plan
administrator denies benefits without providing a timely and complete notice of decision
comporting with ERISA requirements, “[i]t is the Department's view that, in such a case, any
decision that may have been made by the plan with respect to the claim is not entitled to the
deference that would be accorded to a decision based upon a full and fair review that comports
with the requirements of (the ERISA statute).” See Employee Retirement Income Security Act
of 1974; Rules and Regulations for Administration and Enforcement; Claims Procedure, 63 Fed.
Reg. 48,390, 48,397 (Sept. 9, 1998) (formerly codified at 29 C.F.R. pt. 2560). The Labor
Department reiterated that view in enacting the current version of the “deemed denial” provision,
which appears at 29 C.F.R. § 2560.503-1(k)(1). See Employee Retirement Income Security Act
of 1974; Rules and Regulations for Administration and Enforcement; Claims Procedure, 65 Fed.
Reg. 70246, 70255 (Nov. 21, 2000) (codified at 29 C.F.R. pt. 2560) (stating, in explaining
deemed denial provision entitling beneficiary to sue without exhausting administrative remedies,
that “[t]he Department's intentions in including this provision in the proposal were to clarify that
the procedural minimums of the regulation are essential to procedural fairness and that a decision
made in the absence of the mandated procedural protections should not be entitled to any judicial
deference.”). The parties did not cite this agency explanation, and accordingly, the district court
did not have occasion to determine to what extent, if any, the agency interpretation is entitled to
deference under Chevron USA, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 937,
104 S.Ct. 2778 (1984).

19
regulations does not alter the otherwise-applicable standard of review. See

McGarrah v. Hartford Life Ins. Co., 234 F.3d 1026 (8th Cir. 2000) (holding that

ERISA plan fiduciary's failure to respond to beneficiary's request for

administrative review does not trigger heightened scrutiny, absent showing of

extreme procedural irregularities); Daniel v. Eaton Corp., 839 F.2d 263, 267 (6th

Cir. 1988) (holding that, even though administrative review body failed to act on

claimant's appeal of an initial denial, resulting in a deemed denial, the denial

should be reviewed under the arbitrary-and-capricious standard, because “the

standard of review is no different whether the appeal is actually denied or is

deemed denied”)

We cannot tell from the record below why the district court refused Torres'

request to apply the de novo standard in light of the deemed denial. The court's

decision may have been based on a pure legal interpretation – i.e., that the district

court believed that a deemed denial did not alter the applicable standard of

review. However, the decision may also have turned on a more fact- and context-

specific determination – e.g., that there were ongoing exchanges between the

parties warranting time extensions, or that the Insurers here did issue a

determination (albeit one well past the deadline, but before receiving notice of

Torres' suit), which might arguably negate the purpose of applying de novo

20
review to an ordinary deemed denial, in which there is no exercise of

administrative discretion to be reviewed. Or, it may be that the district court

simply ignored Torres' deemed denial argument.

In any event, because the district court has not addressed Torres' deemed

denial argument, and because its resolution might be affected by the facts and

circumstances, we prefer for the district court to address the issue in the first

instance. On remand, the district court should address the issue and determine

whether Torres' argument warrants further alteration of the appropriate standard

of review.

C. Other Issues to be Resolved on Remand

Torres argues that the district court erred in excluding from the record to be

considered Torres' supplemental submission, in particular the Aetna letters of

June 1999 and February 2001 declaring that Torres was unable to work at any

reasonable occupation. The Insurers respond that exclusion was appropriate

because Torres submitted this evidence after the instant suit was filed on

February 22, 2001. Because the Insurers do not explain why the filing of the suit

should cut off consideration of this supplemental evidence, but not cut off

consideration of the Insurers' own decision letter of March 15, 2001, because the

21
district court's discussion of this issue was inadequate, because the briefs on

appeal with respect to this issue are inadequate, and because resolution of this

issue may be affected by the other issues remanded for the district court's initial

resolution, we vacate the district court's decision with respect to this issue and

remand for the district court to address anew on remand. We express no opinion

with respect to resolution of the issue.

We also note that the Insurers placed primary reliance in their brief on

appeal, and also at oral argument, on what they characterize as evidence of fraud

by Torres – discrepancies between Torres' description of circumstances of the

accident and the police report of the incident; the timing of Torres' claim (filed

the day Brinks announced that the Jacksonville office was being closed); alleged

exaggerations in Torres' accounts to his doctors of the severity of the accident

and its causal link to his injuries; and Torres' criminal record and disciplinary

record with the Florida Department of Insurance. Because the district court did

not in its decision rely at all on fraud, because it is not at all clear that the

Insurers' decision denying Torres' claim was based in part on fraud, and because

it is not clear that the Insurers' March 15, 2001, denial letter afforded notice to

Torres that his claim was denied in part on the basis of fraud and an opportunity

to respond thereto, we decline to address the significance of the Insurers'

22
assertions of fraud. We prefer for the issue to be addressed in the first instance

by the district court, and we express no opinion thereon.

III. CONCLUSION

We hold that, where a conflict of interest exists, an ERISA plan

administrator's decision to deny benefits is to be reviewed under the heightened

arbitrary-and-capricious standard of Brown, regardless of whether the decision

turns on findings of fact or on interpretations of plan terminology. We therefore

conclude that the district court erred in granting summary judgment under the

more deferential arbitrary and capricious standard. Accordingly, we vacate the

grant of summary judgment and remand for the Insurers' decision to be reviewed

under (at least) the heightened Brown standard, with the possibility that –

depending on the district court's resolution of the matters discussed supra – de

novo review might instead prove to be appropriate. We further vacate the district

court's ruling denying Torres the opportunity to supplement the record, and direct

that the court reconsider Torres' motion in light of all of the circumstances of this

case.

23
 The judgment of the district court is vacated, and the case is remanded for

further proceedings not inconsistent with this opinion.12

VACATED AND REMANDED.

12
Developments on remand may prompt the district court to explore whether it would be
appropriate to remand to the plan administrator. We express no opinion thereon, preferring for
the district court to assess the relevant facts and case law in the first instance.

24