                                                                            FILED
                                                                 United States Court of Appeals
                                                                         Tenth Circuit

                         UNITED STATES COURT OF APPEALS
                                                                      September 5, 2007
                                                       Elisabeth A. Shumaker
                                  TENTH CIRCUIT            Clerk of Court



 VALERIE S. SCHWOB,

                  Plaintiff - Appellant,

             v.                                                No. 06-6155
                                                       (D. Ct. No. CIV-04-736-M)
 STANDARD INSURANCE COMPANY,                                   (W.D. Okla.)

                  Defendant - Appellee.



                                 ORDER AND JUDGMENT *


Before TACHA, Chief Circuit Judge, TYMKOVICH, and HOLMES, Circuit Judges.


         Plaintiff-Appellant Valerie Schwob filed a lawsuit challenging Defendant-

Appellee Standard Insurance Company’s decision to apply a mental-disorder limitation to

her claim for long-term-disability benefits. She appeals the District Court’s order

entering judgment in favor of the insurance company based on the administrative record.

We exercise jurisdiction pursuant to 28 U.S.C. § 1291 and AFFIRM the District Court’s

order.

                                      I. BACKGROUND

         Beginning in 1995, Dr. Valerie Schwob was eligible through her employment with


         *
        This order and judgment is not binding precedent except under the doctrines of
law of the case, res judicata, and collateral estoppel. It may be cited, however, for its
persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Urocor, Inc., for long-term-disability benefits under a policy (Plan) issued by Standard

Insurance Company (Standard). In 1997, Dr. Schwob applied for benefits from Standard,

claiming a physical disability resulting from a recurrence of Lyme disease contracted

after a tick exposure in 1987. Specifically, she explained that, as a result of cognitive

problems resulting from the disease’s effect on her central nervous system, she could no

longer safely perform her job as a pathologist. In her application, she further explained

that the disease had been suppressed and controlled from 1995 to 1997, but was now

active and physically debilitating. In support of her claim, three of Dr. Schwob’s treating

physicians submitted attending physician’s statements identifying Lyme disease as the

cause of her disability.

       Standard subsequently arranged for an independent medical examination of Dr.

Schwob. After the doctor conducting the examination concluded that no evidence

supported a diagnosis of active Lyme disease, Standard arranged for an independent

psychiatric examination with a doctor board-certified in both psychiatry and neurology.

This doctor concluded that Dr. Schwob was suffering from major depression and

hypochondriasis with poor insight. After inviting Dr. Schwob to submit further

information in support of her claim, Standard asked an independent specialist with

expertise in Lyme disease to review her file. The specialist found “little if any evidence”

of active Lyme disease, expressing the opinion that her debility was likely psychological.

Standard then notified Dr. Schwob of its decision to apply the Plan’s mental-disorder

limitation to her claim. This provision limits the payment of long-term-disability benefits

                                            -2-
to twenty-four months “for each period of Disability caused or contributed to by a Mental

Disorder.” After conducting an independent review, Standard’s Quality Assurance Unit

confirmed the applicability of this limitation to the claim in September 1999.

Consequently, Dr. Schwob no longer qualified for benefits after January 2000.

       Dr. Schwob continued to submit materials and medical records from her treating

physicians to Standard after receiving notification from Standard’s Quality Assurance

Unit regarding the limitation of her benefits. In addition to reviewing this information,

Standard agreed to reopen the administrative record and reconsider its denial of benefits

based on a physical disability.1 Subsequently, Standard arranged for another independent

neuropsychological examination of Dr. Schwob and asked two physician consultants—a

board-certified psychiatrist and a board-certified neurologist—to review her file. The

findings of the examination and the file reviews supported the conclusion that Dr.

Schwob was suffering from a mental disorder and her physical symptoms were not

caused by a recurrence of Lyme disease. In March 2003, Standard therefore notified Dr.

Schwob that it would uphold its earlier decision applying the mental-disorder limitation to

her claim. Four months later, Standard’s Quality Assurance Unit informed Dr. Schwob



       1
        Before Standard’s Quality Assurance Unit issued its decision in September 1999,
Dr. Schwob filed suit in federal district court challenging Standard’s decision to apply the
mental-disorder limitation. In September 2000, the district court entered summary
judgment in favor of Standard based on the administrative record as it existed in
September 1999. But because Standard had agreed to reopen the administrative record,
this Court vacated the district court’s order after determining that the matter was not yet
ripe and the district court therefore lacked subject matter jurisdiction. Schwob v.
Standard Ins. Co., 37 F. App’x 465 (10th Cir. 2002) (unpublished opinion).

                                            -3-
that its review of her file supported the decision to limit her claim.

       Dr. Schwob then sued Standard in federal district court for improper denial of

benefits under an employee benefit plan pursuant to the Employee Retirement Income

Security Act (ERISA), 29 U.S.C. § 1132(a)(1)(B).2 In response to Dr. Schwob’s motion

for summary judgment and Standard’s brief supporting its claim determination under

ERISA, the District Court entered judgment in favor of Standard. Dr. Schwob appeals

the District Court’s order, arguing that the court applied an incorrect standard in

reviewing the administrative record and that Standard’s decision to limit her benefits is

not supported by substantial evidence.

                                     II. DISCUSSION

       We review de novo a district court’s decision regarding the appropriate standards

of review, as well as its application of the proper standards to a plan administrator’s

determination of benefits under an employee benefit plan. DeGrado v. Jefferson Pilot

Fin. Ins. Co., 451 F.3d 1161, 1167 (10th Cir. 2006). In addition, when we review

decisions concerning ERISA claims, “our review is confined to the administrative

record.” Adamson v. Unum Life Ins. Co. of Am., 455 F.3d 1209, 1212 (10th Cir. 2006).



       In the present case, the employee benefit plan grants Standard discretionary

authority as an administrator to interpret the Plan and determine benefit eligibility. When

       2
       Both parties agree that Standard’s group long-term-disability insurance policy is
an employee benefit plan governed by ERISA and that Dr. Schwob is an eligible
employee under the Plan.

                                             -4-
an employee benefit plan grants the plan administrator or fiduciary discretion to interpret

the plan’s terms and decide eligibility for benefits, we will uphold the administrator’s

decision unless it is arbitrary and capricious. Id. But because Standard operates under an

inherent conflict of interest,3 we apply a “less deferential arbitrary and capricious

standard,” which requires that Standard bear the burden of proving the reasonableness of

its decision. Fought v. Unum Life Ins. Co. of Am., 379 F.3d 997, 1004–06 (10th Cir.

2004); see also Pitman v. Blue Cross & Blue Shield of Okla., 217 F.3d 1291, 1298 (10th

Cir. 2000) (“A basic rule of insurance law provides that the . . . insurer has the burden of

showing that a loss falls within an exclusionary clause of the policy.”). Specifically, as

plan administrator, Standard must show “that its interpretation of the terms of the plan is

reasonable and that its application of those terms to the claimant is supported by

substantial evidence.” Fought, 379 F.3d at 1006.

       To determine whether the administrator’s decision is supported by substantial

evidence, we look at the record as a whole and consider “whatever in the record fairly

detracts from its weight.” Caldwell v. Life Ins. Co. of N. Am., 287 F.3d 1276, 1282 (10th

Cir. 2002) (quotation omitted). The evidence is substantial if “a reasonable mind might

accept [it] as adequate to support” the administrator’s decision. Id. (quotation omitted).

Moreover, under the less deferential standard, the reviewing court “must take a hard look

       3
         The parties agree that, as plan administrator and insurer, Standard operates under
an inherent conflict of interest. See Pitman v. Blue Cross & Blue Shield of Okla., 217
F.3d 1291, 1296 n.4 (10th Cir. 2000) (“[A]s both insurer and administrator of the plan,
there is an inherent conflict of interest between its discretion in paying claims and its need
to stay financially sound.”).

                                             -5-
at the evidence and arguments presented to the plan administrator to ensure that the

decision was a reasoned application of the terms of the plan to the particular case,

untainted by the conflict of interest.” Fought, 379 F.3d at 1006.

       In reviewing the administrative record, the District Court clearly identified and

applied this less deferential standard to Standard’s decision to limit Dr. Schwob’s

benefits. Although Dr. Schwob argues that the District Court failed to take the “hard

look” at the evidence that this standard requires, 4 our review of the administrative record

convinces us otherwise. As we explain below, we agree with the District Court’s

conclusion that Standard reasonably interpreted and applied the terms of the Plan to Dr.

Schwob’s claim.

A.     Terms of the Plan

       Under Standard’s group long-term-disability policy, an eligible employee is not

entitled to long-term-disability benefits after twenty-four months if a mental disorder

“caused or contributed to” the disability. The relevant provision states:

       Payment of LTD [long-term-disability] Benefits is limited to 24 months for
       each period of Disability caused or contributed to by a Mental Disorder.

       4
          On appeal, Dr. Schwob argues that the less deferential standard we articulated in
Fought alters the evidentiary standard in ERISA cases involving a conflict of interest.
She contends that the plan administrator must demonstrate that its decision is supported
by more than substantial evidence. But while we clarified that the burden of proof shifts
to the plan administrator, we did not alter the evidentiary standard. Indeed, in applying
the less deferential standard in Fought, we held that the plan administrator had failed to
justify its denial of benefits by substantial evidence. 379 F.3d at 1015. We specifically
noted that the administrator had failed to offer “‘more than a scintilla of evidence,’” the
evidentiary threshold associated with substantial evidence. Id. (quoting Sandoval v.
Aetna Life and Cas. Ins. Co., 967 F.2d 377, 382 (10th Cir. 1992)).

                                            -6-
       However, if you are confined in a Hospital at the end of the 24 months, this
       limitation will not apply while you are continuously confined.

The Plan also contains a lengthy definition of mental disorder:

       Mental Disorder means any mental, emotional, behavioral, psychological,
       personality, cognitive, mood or stress-related abnormality, disorder,
       disturbance, dysfunction or syndrome, regardless of cause, including any
       biological or biochemical disorder or imbalance of the brain. Mental
       Disorder includes, but is not limited to, bipolar affective disorder, organic
       brain syndrome, schizophrenia, psychotic illness, manic depressive illness,
       depression and depressive disorders, anxiety and anxiety disorders.

       In July 2003, after concluding that a mental disorder caused or contributed to Dr.

Schwob’s disability, Standard sent her attorney a detailed letter explaining its final

decision to deny her further benefits under the Plan. Assuming a mental disorder caused

or contributed to Dr. Schwob’s disability, Standard’s interpretation of the limitations

provision is reasonable. Consequently, the only remaining question is whether substantial

evidence in the administrative record supports Standard’s determination.

B.     Substantial Evidence

       1.     Evidence that Lyme Disease Caused the Disability

       Although three of Dr. Schwob’s treating physicians submitted statements

indicating that her disability was caused by a recurrence of Lyme disease, the majority of

evidence in the record does not support a diagnosis of active Lyme disease as the cause of

her disability. In addition to seeking an independent medical examination, Standard

asked Dr. Sigal, a Lyme disease specialist, to review Dr. Schwob’s file. See Fought, 379

F.3d at 1015 (stating that when a conflict of interest exists, “the administrator best



                                             -7-
promotes the purposes of ERISA by obtaining an independent evaluation”). Dr. Sigal

concluded that, although Dr. Schwob may have had Lyme disease in the past, the medical

evidence did not indicate the presence of active Lyme disease. He specifically noted the

absence of the kind of abnormalities he would expect to see in her central nervous system

as a result of infections caused by active Lyme disease. He also explained that the tests

Dr. Schwob claims are evidence of Lyme disease are not valid diagnostic tests. Although

these tests may show patterns compatible with Lyme disease, they cannot be used to

diagnose it. Without evidence of a physical disease, he concluded that the evidence best

supported a diagnosis of psychologic disorder, noting her “psychologically-based debility

is very real.”

       To determine whether anything in the record “fairly detracts from the weight” of

Standard’s evidence, we have also thoroughly reviewed medical records and other

information submitted by Dr. Schwob. These records do not, however, support a

determination that Lyme disease caused her disability. For example, a comprehensive

evaluation at the Mayo Clinic in 1990 did not even confirm the initial 1989 diagnosis of

Lyme disease. Instead, the report summarizing the doctors’ findings states that “the

infectious disease people and rheumatologist who saw her [concluded] that a diagnosis of

Lyme’s disease could not be made and that her symptomatology and history were not

consistent with [Lyme disease].” The Mayo Clinic’s evaluation therefore undermines Dr.

Schwob’s claim that she contracted Lyme disease in 1987. Moreover, an evaluation

conducted at the University of Iowa Hospitals and Clinics in 1998 found “no evidence of

                                           -8-
a serious encephalopathy,” a physical complication that can result from Lyme disease and

that Dr. Schwob claims contributes to her cognitive impairment. As a result, the

neurologist concluded he had “little basis to recommend aggressive antibiotic treatment

for CNS Lyme disease.” In other words, the University of Iowa doctors found no

evidence to support Dr. Schwob’s claim that her disability (i.e., her cognitive impairment)

resulted from Lyme disease.

       In addition, one of Dr. Schwob’s treating physicians, Dr. Gondwe, recognized the

lack of objective evidence indicating that Lyme disease caused her impairment. In 1998,

he made the following notes after seeing Dr. Schwob: “It is very difficult to ascertain the

real deficiency of cognitive state in this patient in that all complaints are primarily

subjective. There [are] no telltale symptoms that this disease has really caused since she

came to see me.” 5 Furthermore, he expressed considerable concern that Dr. Schwob

insisted she be placed on high doses of antibiotics without any indication of an ongoing

infection: “I did try to reason with the patient that I believe there has to be documentation

of ongoing infection before we can make this decision. However, she would like to

continue with the treatment as long as these subjective complaints remain” (emphasis

       5
        Dr. Gondwe’s reservations suggest that he relied on Dr. Schwob’s 1989 diagnosis
of Lyme disease, rather than objective physical evidence, when he noted a diagnosis of
“CNS Lyme disease” on an attending physician’s statement submitted to Standard in
support of Dr. Schwob’s claim. The statement as a whole actually reflects Dr. Gondwe’s
uncertainty regarding the underlying cause of the disability. In the statement, he
indicated that he was waiting for the neurologic and cognitive assessments from the
University of Iowa and could not determine her prognosis at that time. As we noted
above, the evaluation at the University of Iowa Hospitals and Clinics revealed no
evidence of Lyme disease.

                                             -9-
added). Dr. Gondwe also noted that another one of Dr. Schwob’s treating physicians

recommended that she stop the drug treatment for a brief period so that the doctors can

better evaluate her symptoms and their causes. She refused, however, to listen to her

doctors’ recommendations.

       The other evidence submitted by Dr. Schwob only supports the conclusion that her

symptoms are compatible with Lyme disease; this evidence does not support the

conclusion that Lyme disease caused her disability. For example, she draws our attention

to a neuropsychological evaluation conducted by Dr. Tager in 1999. In his report, Dr.

Tager noted that she had suffered an overall cognitive decline that “may be a direct

consequence of Lyme and Babesis infection, fatigue associated with Lyme disease,

and/or medication side effects” (emphasis added). Similarly, after seeing her a second

time in 1999, Dr. Grabowski (from the University of Iowa) noted that “the objective

findings to date implicate Lyme disease, and give evidence of a stable encephalopathy,

which might reasonably be attributed to the action of Lyme disease at some point in the

past.” More important, however, he explained that he found “no evidence of active CNS

infection at the last visit, and, importantly, there has been no detectable cognitive decline

in the interim.” In other words, “the evidence of active and/or progressive CNS Lyme

disease is not substantial.”

       Other doctors’ reports and medical findings submitted by Dr. Schwob also

distinguish between possible Lyme disease in the past and unlikely Lyme disease in the

present. For example, after Dr. Schwob complained about Dr. Grabowski’s care, Dr.

                                            - 10 -
Damasio (the head of the University of Iowa’s Department of Neurology) reviewed her

records and concluded: “There is little doubt that you had Lyme’s disease . . . .

Fortunately you have been appropriately treated with antibiotics and there is no longer

evidence of active Lyme’s disease.” Similarly, after reviewing some of Dr. Schwob’s

medical records, Dr. Fallon, who directs a Lyme disease research program, concluded

that, although the evidence confirmed the Lyme disease diagnosis, she may “not be

correct in her assumption that she now has persistent active infection.” Hence, after

closely reviewing the evidence Dr. Schwob submitted in behalf of her claim, we conclude

that the record nonetheless contains substantial evidence supporting Standard’s

determination that active Lyme disease was not the cause of her disability beginning in

1997. As we explain below, the record does, however, contain substantial evidence that a

mental disorder caused or contributed to her disability.

       2.     Evidence that a Mental Disorder Caused or Contributed to the Disability

       In addition to Dr. Schwob’s documented history of depression, the record contains

reports from various doctors indicating that she continues to suffer from depression.

After Dr. Schwob filed her claim and the independent medical evaluation revealed major

depression as a significant feature of her illness, Standard arranged for an independent

psychological examination, which resulted in a diagnosis of major depression and

hypochondriasis with poor insight. A physician consultant later described this diagnosis

as “reasonable.” In fact, this physician further characterized Dr. Schwob’s mental

disorder as “potentially life threatening” and “not sufficiently described by a diagnosis of

                                            - 11 -
depression.” In addition, another neuropsychological examination could not rule out

psychological causes, leading the doctor to conclude that “negating any possibility of a

psychiatric factor to her impairment would be negligent.” And as noted above, Dr. Sigal

(the Lyme disease specialist) concluded that the evidence best supported a diagnosis of

psychologic disorder.

       Moreover, medical records from Dr. Schwob’s 1998 evaluation at the University

of Iowa lend further support to the conclusion that a mental disorder contributed to her

cognitive impairment. Dr. Grabowski, a neurologist, concluded that “her cognitive

inefficiency seems as likely to be attributable to depression as to mild cerebral

dysfunction.” A report issued after a neuropsychological evaluation at the university

echoes Dr. Grabowski’s conclusion:

       Neuropsychological evaluation does not show frank cognitive defects. It is
       indicative, however, of mild attentional compromise which would be
       consistent with mild diffuse cerebral dysfunction or, alternatively, reduced
       cognitive efficiency typical of depression.

The report also contains a strong recommendation that Dr. Schwob be treated for

depression: “In addition to neurological treatment as appropriate, pharmacological and

psychotherapeutic treatment for depression is strongly recommended.” In short, the

record contains substantial evidence that a mental disorder contributed to—if not

caused—Dr. Schwob’s disability.

       Furthermore, the medical records Dr. Schwob submitted in support of her claim do

not detract from the weight of this evidence. At best, they indicate that a mental disorder,



                                            - 12 -
such as depression, could be secondary to Lyme disease, which she may or may not have.

For example, Dr. Tager’s neuropsychological examination revealed symptoms “often

seen in Lyme disease as well as other diseases affecting the brain and/or central nervous

system, including some psychiatric disorders.” He then noted that, because Lyme disease

can cause both cognitive and psychological difficulties, Dr. Schwob’s psychological

problems could be secondary to Lyme disease (assuming she has the disease).6 Dr.

Schwob also draws attention to a letter from a doctor who concluded that her SPECT

brain scan revealed a pattern “typical of what is seen in patients with Lyme

encephalopathy.” Although he explained that the particular pattern was not typically

associated with “mood disorders,” he cautioned that mood disorders can co-exist with

physical disorders, such as Lyme disease, as either primary or secondary illnesses.

Indeed, Dr. Fallon (the director of a Lyme disease research program) made a similar point

in more certain terms: “the brain is the central mediating agent for all neurologic

processes, including neuropsychiatric ones, so that patients affected by Lyme disease will

have psychiatric issues as well as cognitive, peripheral neurologic, and systemic ones.”

       This evidence therefore suggests the logical possibility that a mental disorder

could result from an underlying physical disease. But this possibility does not detract

from the weight of the evidence in support of Standard’s decision. First, as we noted



       6
        In addition, we note that, in Dr. Tager’s initial assessment, he reported that Dr.
Schwob had “no significant psychiatric history.” Because this is not true, we assume he
was not aware of Dr. Schwob’s full medical history, raising concerns about his ability to
reach reliable conclusions.

                                           - 13 -
above, the record contains substantial evidence that a mental disorder contributed to Dr.

Schwob’s cognitive impairment. A reasonable mind could certainly accept this evidence

as adequate support for Standard’s decision. See Caldwell, 287 F.3d at 1282. Second,

even if we accept the premise that Dr. Schwob’s mental disorder is secondary to a

physical illness, this would not prevent Standard from applying the mental-disorder

limitation to her claim. The Plan’s definition of mental disorder includes mental

disorders “regardless of cause.” As long as Dr. Schwob’s mental disorder contributed to

her disability, the limitation would apply even if the mental disorder resulted from Lyme

disease or another physical disease. Standard did not, therefore, have to rule out the

possibility that the mental disorder contributing to her disability resulted from an

underlying physical disease.

                                   III. CONCLUSION

       Because we find that Standard’s decision is supported by substantial evidence, we

AFFIRM the District Court’s order entering judgment in favor of Standard based on the

administrative record.




                                           ENTERED FOR THE COURT,



                                           Deanell Reece Tacha
                                           Chief Circuit Judge




                                            - 14 -
