                    FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT


 DANIEL G. DEMER,                               No. 13-17196
             Plaintiff-Appellant,
                                                 D.C. No.
                   v.                       4:11-cv-00441-JGZ

 IBM CORPORATION LTD PLAN;
 METROPOLITAN LIFE INSURANCE                      OPINION
 COMPANY,
          Defendants-Appellees.


        Appeal from the United States District Court
                 for the District of Arizona
        Jennifer G. Zipps, District Judge, Presiding

         Argued and Submitted December 11, 2015
                 San Francisco, California

                        Filed August 26, 2016

Before: Jay S. Bybee and Morgan Christen, Circuit Judges,
          and Edward M. Chen, District Judge.*

                 Opinion by Judge Chen;
  Partial Concurrence and Partial Dissent by Judge Bybee


 *
   The Honorable Edward M. Chen, United States District Judge for the
Northern District of California, sitting by designation.
2               DEMER V. IBM CORP. LTD PLAN

                           SUMMARY**


        Employee Retirement Income Security Act

    The panel reversed the district court’s summary judgment
in favor of the defendants in an action under the Employee
Retirement Income Security Act, challenging the denial of a
claim for long-term disability benefits.

    The panel held that Metropolitan Life Insurance Company
(“MetLife”), the ERISA plan’s claims administrator and
insurer, had a conflict of interest such that the court’s abuse-
of-discretion review should be tempered by some skepticism
because of the financial conflict of the independent physician
consultants (“IPCs”) upon whom MetLife relied.

     The panel held that MetLife abused its discretion because
it did not find that the plaintiff’s mental capacity was affected
in any way by the medications he was taking for his physical
pain, and improperly rejected the credibility of his complaints
of fatigue and difficulty concentrating based on the opinions
of two IPCs who did not examine him and did not explain
why they rejected his credibility. The panel held that in light
of the totality of the circumstances, including the financial
conflict of interest of the IPCs and substantial evidence of the
plaintiff’s physical limitations, MetLife abused its discretion
in denying the plaintiff’s claim for benefits.




  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
             DEMER V. IBM CORP. LTD PLAN                    3

    The panel remanded the case to the district court, with
instructions to remand to MetLife to re-evaluate the merits of
the plaintiff’s long-term disability claim.

    Judge Bybee dissented from Part II.B of the majority
opinion, addressing the financial conflict of the IPCs.
Because that section was not otherwise necessary to the
majority’s opinion, he concurred in the judgment. Judge
Bybee wrote that MetLife should not be penalized for
following the court’s prior case law instructing ERISA plan
administrators to mitigate structural conflicts of interest by
walling off their claims administrators from their financial
offices and seeking medical evaluations from outside,
independent physicians.


                        COUNSEL

Michelle L. Roberts (argued), Roberts Bartolic LLP,
Alameda, California; Barry Kirschner (argued), Waterfall,
Economidis, Caldwell, Hanshaw & Villamana, P.C., Tucson,
Arizona; for Plaintiff-Appellant.

Michelle McAloon Constandse (argued), Metropolitan Life
Insurance Company, Irvine, California; James K. Mackie,
Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Tucson,
Arizona, for Defendants-Appellees.
4             DEMER V. IBM CORP. LTD PLAN

                          OPINION

CHEN, District Judge:

    Plaintiff-Appellant Daniel G. Demer filed suit, pursuant
to the Employee Retirement Income Security Act of 1974
(“ERISA”), against Defendants-Appellees IBM Corporation
LTD Plan (the “Plan”) and Metropolitan Life Insurance
Company (“MetLife”). Mr. Demer claimed that MetLife, the
claim administrator and insurer for the Plan, improperly
denied his claim for long-term disability (“LTD”) benefits.
See 29 U.S.C. § 1132(a)(1)(B) (providing that “[a] civil
action may be brought . . . by a participant or beneficiary . . .
to recover benefits due to him under the terms of his plan, to
enforce his rights under the terms of the plan, or to clarify his
rights to future benefits under the terms of the plan”). The
district court denied Mr. Demer’s motion for summary
judgment, granted Defendants’ cross-motion, and entered
judgment in favor of Defendants.

    We reverse the district court’s entry of judgment in
Defendants’ favor and remand to the district court with
instructions to remand this case to MetLife to re-evaluate the
merits of Mr. Demer’s LTD claim.

                               I.

A. Mr. Demer’s Claim for LTD Benefits

    Mr. Demer was an employee of IBM Corporation and a
participant in the Plan. MetLife is the claim administrator for
and insurer of the Plan. The parties agree that the Plan gives
MetLife, as the administrator, discretionary authority to
interpret the Plan and determine benefits eligibility. Where,
              DEMER V. IBM CORP. LTD PLAN                    5

as here, an ERISA plan confers discretionary authority on the
plan administrator as a matter of contractual agreement, then
the standard of review is abuse of discretion rather than de
novo. See Tapley v. Locals 302 & 612 of the Int’l Union of
Operating Eng’rs-Employers Constr. Indus. Ret. Plan,
728 F.3d 1134, 1139 (9th Cir. 2013) (“Where an ERISA Plan
grants ‘discretionary authority to determine eligibility for
benefits or to construe the terms of the plan,’ ‘a plan
administrator’s interpretation of a plan’ is reviewed for abuse
of discretion. We review the district court’s application of
this standard de novo.”); Abatie v. Alta Health & Life Ins.
Co., 458 F.3d 955, 963 (9th Cir. 2006) (en banc) (“[I]f the
plan does confer discretionary authority as a matter of
contractual agreement, then the standard of review shifts
[from de novo] to abuse of discretion.”) (emphasis omitted).

    The Plan provides that a participant is disabled and
eligible for LTD benefits if,

       during the elimination period and the first 12
       months after you complete the elimination
       period, you cannot perform the important
       duties of your regular job [i.e., your own
       occupation] with IBM because of a sickness
       or injury. After expiration of that 12 month
       period, disabled means that, because of a
       sickness or injury, you cannot perform the
       important duties of any other gainful
       occupation for which you are reasonably fit
       by your education, training or experience.

“[G]ainful occupation” means “occupations [for which] you
are reasonably qualified based on your education, training,
experience, and functional ability” and further, in Mr.
6             DEMER V. IBM CORP. LTD PLAN

Demer’s case, “provides gainful wages of $4,240.48 per
month or $24.46 hourly,” i.e., the equivalent of a yearly
salary of approximately $50,000.

    Mr. Demer stopped working at IBM on January 9, 2009,
because of a disability. At the time, he was a Lead Internal
Auditor at IBM. He began receiving short term disability
(“STD”) benefits. In March 2009, he filed a claim for LTD
benefits pursuant to the Plan (because his STD benefits were
due to expire soon). In his application for LTD benefits, Mr.
Demer stated: “I am unable to do my job duties due to severe
recurrent depression and spinal stenosis, chronic headaches.”
Symptoms included “chronic headaches, chronic back and
neck pain, myalgia, severe depression, [and] sciatica.”

    On July 28, 2009, MetLife approved Mr. Demer’s claim
for LTD benefits under the “own occupation” test for
disability articulated in the Plan. MetLife noted that the test
for disability would eventually switch to the “any occupation”
test on July 11, 2010. MetLife further noted that it was
limiting Mr. Demer’s benefits to a period of twenty-four
months because his primary diagnosis was a mental or
nervous disorder.

    Subsequently, in November 2009, MetLife sent a letter to
Mr. Demer, reminding him that, for his benefits to continue
(beyond July 11, 2010), he would have to be disabled under
the “any occupation” test for disability.

    Mr. Demer thereafter submitted statements and medical
records from numerous treating physicians, including but not
limited to his primary care doctor, Dr. Stephen Moore; a
treating neurologist, Dr. David Weidman; and a treating pain
management physician, Dr. Robert Osborne. These doctors
              DEMER V. IBM CORP. LTD PLAN                     7

discussed not only mental impairments suffered by Mr.
Demer but also physical impairments. For example:

•   In a statement from February 2010, Dr. Weidman referred
    to “chronic osteoarthritic pain and depression
    interact[ing] with each other.” Dr. Weidman also
    indicated that Mr. Demer’s physical condition had
    deteriorated since April 2009 – e.g., in April 2009, Dr.
    Weidman had concluded that Mr. Demer could
    intermittently sit for 4–5 hours, intermittently stand for
    4–5 hours, and occasionally lift 11–20 pounds; but, in
    February 2010, Dr. Weidman determined that Mr. Demer
    could only intermittently stand for 1–2 hours and never
    lift 11–20 pounds.

•   In a medical record dated February 2010, Dr. Osborne
    referred to severe cervical and lumbosacral spine disease
    with radiculopathy and chronic depression. Notably, Dr.
    Osborne found that Mr. Demer had severe limitations as
    a result of his physical impairments – e.g., able to
    intermittently sit for 1 hour, intermittently stand for 0–1
    hour, and intermittently walk for 0–1 hour and never able
    to lift up to 10 pounds.

•   Dr. Moore, Mr. Demer’s primary care physician, had a
    similar, albeit slightly more positive, view with respect to
    Mr. Demer’s physical limitations, opining, e.g., that Mr.
    Demer could continuously sit for 1 hour and continuously
    stand and walk for 0–1 hour and could occasionally lift
    21–50 pounds.

    On October 1, 2010, MetLife denied Mr. Demer’s claim
for LTD benefits under the “any occupation” test for
disability. In its denial, MetLife relied in large part on the
8              DEMER V. IBM CORP. LTD PLAN

opinion of an independent physician consultant (“IPC”), Dr.
Elyssa Del Valle, internal medicine, who conducted only a
paper review of Mr. Demer’s file – i.e., she did not personally
perform a physical or mental examination of Mr. Demer. Dr.
Del Valle concluded that “[t]he medical information does
support functional limitations . . . due to severe degenerative
disc disease, degenerative vertebral disease with numerous
levels of the cervical, thoracic and lumbar spine associated
with neural foraminal narrowing as well as spinal stenosis.”
She also stated that “[t]he condition is associated with chronic
pain necessitating narcotic analgesics despite trigger point
injections, cervical and lumbar epidural injections and
physical therapy.” But Dr. Del Valle disagreed with the
physical capacity assessments of Dr. Moore and Dr. Osborne
because they “would indicate that [Mr. Demer] is bedridden
for more than 20 hours a day.” Dr. Del Valle also indicated
that she agreed with an older assessment made by Dr.
Weidman (from April 2009),1 noting that, although it was
more than a year old, “there are no clinical data/findings to
indicate any change in his overall condition” (opining, inter
alia, that Mr. Demer could walk 3–4 hours intermittently and
that he “should avoid any prolonged periods of sitting,
standing or walking more than 30 minutes”). In its decision,
MetLife determined that, even with the limitations identified
by Dr. Del Valle, Mr. Demer “should be able to perform at
the sedentary to light level of physical exertion as defined by
the U.S. Department of Labor” and therefore denied Mr.
Demer LTD benefits.




    1
    As indicated above, Dr. Weidman submitted a more recent statement
from February 2010, indicating that Mr. Demer’s condition had worsened
after April 2009.
              DEMER V. IBM CORP. LTD PLAN                     9

B. The Appeal

    In March 2011, Mr. Demer appealed MetLife’s denial of
LTD benefits. In his appeal, Mr. Demer asserted that he “has
severe degenerative disc disease (‘DDD’) of the cervical and
lumbar spine,” for which there was “further progression [as]
reflected in the cervical MRI performed June 21, 2010.” He
also claimed that he “suffers radiculopathy,” “has a history of
significant headaches,” and has “ongoing nerve
compression.” Finally, he pointed out that he “takes powerful
narcotic and other medications” which “have known side
effects causing fatigue and reduced ability to concentrate.”
As noted above, MetLife’s own IPC, Dr. Del Valle,
acknowledged that Mr. Demer had chronic pain that
necessitated narcotic analgesics.

    In support of his appeal, Mr. Demer provided, e.g.,
additional information from Dr. Osborne. Dr. Osborne stated,
inter alia, that

       the overall picture is one of a gentleman with
       severe spinal deterioration at all components
       of the spine as well as neurophysiological
       evidence of a delayed conduction (spine cord
       problem) of the bilateral Posterior Tibial
       Nerves to the cerebral cortex as well as a
       separate focal left L5 nerve root lesion
       (diagnostic SSEP and diagnostic L5
       radiculopathy).

Dr. Osborne further stated that “[t]he overall treatment plan
has included chronic narcotic medication in attempt to control
his overall pain” which has side effects that “limit the ability
to complete productive mental functions.” Mr. Demer also
10            DEMER V. IBM CORP. LTD PLAN

provided third-party witness statements from his brother
(Frank Demer) and a friend (Shirley Piel) and a personal
statement in support of his appeal. Both Ms. Piel’s statement
and Mr. Demer’s personal statement addressed, inter alia, the
impact Mr. Demer’s medications had on his mental ability to
function.

    MetLife denied the appeal, this time relying on the
opinions of two different IPCs, namely, Dr. Marcus Goldman,
Board Certified in psychiatry, and Dr. Dennis S. Gordan,
Board Certified in physical medicine and rehabilitation. Like
Dr. Del Valle, Dr. Goldman and Dr. Gordan conducted only
paper reviews of Mr. Demer’s file without any personal
examination.

    With regard to mental functional limitations, Dr.
Goldman stated that, “[g]iven the lack of recent data and the
paucity of any compelling objective findings, as well as the
lack of serial mental status examinations, this reviewer would
be unable to establish the presence of an impairing mental
condition.”

    With regard to physical functional limitations, Dr. Gordan
acknowledged that there was “documented anatomical
cervical spinal stenosis, degenerative disc disease, and
degenerative facet disease of the spine, as well as
degenerative arthritis of the left hip.” He disagreed, however,
that Mr. Demer suffered from a radiculopathy based on his
interpretation of the medical evidence. Dr. Gordan also
indicated that Dr. Osborne’s impressions may have been
colored by Mr. Demer’s “dire” account of his history, “a
reversal of his prior positive attitude . . . about the
effectiveness of the previous interventional procedures and
medications.” In addition, Dr. Gordan relayed a conversation
              DEMER V. IBM CORP. LTD PLAN                     11

he had with Dr. Moore (Mr. Demer’s primary care physician)
in which Dr. Moore said “he thought it was likely that [Mr.
Demer] could do a very sedentary job, but . . . felt that he
would have to see him again to say that definitively.” Dr.
Gordan ultimately concluded that Mr. Demer “likely had a
modicum of discomfort” from, inter alia, “neck and back
pain related to spinal degeneration, and referred pain down
the limbs from those degenerative changes,” but Mr. Demer
retained the physical functional capacity to, e.g., “sit[] for an
hour at a time . . . and up to 7 hours a day, stand[] and walk[]
for 15 minutes at a time and up to 2 hours a day, lift[] up to
10 pounds frequently, 20 pounds occasionally.”

    In addition to the above, both Dr. Goldman and Dr.
Gordan addressed the specific issue raised by Mr. Demer in
his appeal that the medications prescribed for his physical
condition affected his ability to mentally function. According
to Dr. Goldman, “there clearly are no objective or other
compelling or convincing data to establish functional
impairment as a result of Mr. Demer’s psychotropic
medications.” Dr. Gordan stated: “There is no specific
information about medications taken or effects from them
during the period in question. Although Dr. Osborne asserted
that the claimant’s needed narcotic medication caused
cognitive side effects, there was never any evidence of that.”

    In denying Mr. Demer’s appeal, MetLife appears to have
accepted Dr. Gordan’s physical capacity assessment.
MetLife also appears not to have placed any mental
limitations on Mr. Demer as a result of his medications.
Based on the physical capacity assessment and lack of any
cognitive limitation, and an occupation assessment conducted
by a vocational rehabilitation consultant based thereon,
MetLife concluded that Mr. Demer could work in certain
12               DEMER V. IBM CORP. LTD PLAN

sedentary occupations, such as Project Director and Computer
Security Coordinator.2

C. District Court Proceedings

     Following MetLife’s denial of LTD benefits, Mr. Demer
initiated this lawsuit. In reviewing MetLife’s denial of
benefits, the district court applied the abuse-of-discretion
standard and rejected Mr. Demer’s contention that the abuse-
of-discretion review must be tempered with skepticism
because of a conflict of interest on the part of MetLife. See
Demer v. IBM Corp., 975 F. Supp. 2d 1059, 1076–77 (D.
Ariz. 2013). The district court found that



  2
      After MetLife denied his appeal, Mr. Demer sent a letter to MetLife,
claiming that there was additional information from Dr. Weidman and Dr.
Moore that had been sent to MetLife prior to the decision on appeal but
that had not been addressed in the decision on appeal. Mr. Demer
attached that information to his letter. That information included, inter
alia, a treatment note from Dr. Weidman indicating that Mr. Demer was
on a higher amount of opiate analgesics which seemed to cause a slight
change in his speech and a treatment note from Dr. Moore stating that Mr.
Demer was taking opiates which affected his cognition and executive
functioning, including memory. The documentation was reviewed by a
MetLife appeals nurse consultant. “The nurse consultant opined that
while some current clinical exam changes were noted, no additional
clinical findings were submitted relating to the appeal period in question
. . . .” MetLife also noted that the Plan had only “one level of appeal” and
that appeal had already been denied on May 6, 2011.

    At the trial level, the district court refused to consider Mr. Demer’s
post-appeal evidence. Mr. Demer now argues that this refusal was
erroneous. For purposes of this appeal, we need not decide the issue of
whether the post-appeal evidence should have been considered. Even
without the post-appeal evidence, Mr. Demer is entitled to a remand, as
discussed below.
               DEMER V. IBM CORP. LTD PLAN                 13

       the record taken as a whole establishes that
       MetLife reasonably relied on its IPCs’ reports.
       Every doctor agreed that Plaintiff suffered
       from a combination of depression and chronic
       pain syndrome, but every doctor also had a
       different opinion as to Plaintiff’s future
       functionality. MetLife was required to choose
       between divergent opinions.         MetLife’s
       decision to rely on its IPCs’ findings was
       reasonable.

Id. at 1083.

                             II.

    We first address whether MetLife had a conflict of
interest such that our review should be tempered by
skepticism. See Harlick v. Blue Shield of California,
686 F.3d 699, 707 (9th Cir. 2012). A conflict of interest is a
factor in the abuse-of-discretion review, the weight of which
depends on the severity of the conflict. See id.; see also
Renfro v. Funky Door Long Term Disability Plan, 686 F.3d
1044, 1048 (9th Cir. 2012) (noting that, “if the plan gives
discretion, but the administrator operates under a conflict of
interest, then ‘the conflict of interest must be weighed as a
factor in determining whether there is an abuse of
discretion’”) (quoting Met. Life Ins. Co. v. Glenn, 554 U.S.
105, 110–11 (2008)); Stephan v. Unum Life Ins. Co. of
America, 697 F.3d 917, 929 (9th Cir. 2011) (noting that
degree of skepticism in determining whether administrator
abused its discretion varies based on extent of conflict of
interest); Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d
623, 630–31 (9th Cir. 2009) (stating that the extent of a
14               DEMER V. IBM CORP. LTD PLAN

conflict of interest affects its weight in the overall analysis of
whether an abuse of discretion occurred).3

    In the instant case, the evidence of a conflict of interest on
which Mr. Demer relies consists of the following: (1) MetLife
is both the claim administrator for the Plan and its insurer and
(2) at least two of the IPCs that MetLife hired to review the
medical record (Dr. Del Valle and Dr. Gordan) have
performed a significant number of reviews for MetLife and
have received significant compensation for their services.

    “‘We review de novo a district court’s choice and
application of the standard of review to decisions by
fiduciaries in ERISA cases.’” Prichard v. Metro. Life Ins.
Co., 783 F.3d 1166, 1168 (9th Cir. 2015).

A. Structural Conflict of Interest

   In its opinion, the district court acknowledged that
MetLife has a structural conflict of interest because MetLife
both evaluates claims made against the Plan and funds claims.

   3
     The dissent is critical of our review for abuse of discretion with
skepticism because, inter alia, the term skepticism is “not descriptive in
some useful way,” and even less so when “modified by a raft of
adjectives.” However, the framework employing abuse of discretion
review subject to some degree of skepticism (where warranted) is well
established under both Glenn and Ninth Circuit law. See Glenn, 554 U.S.
at 117 (noting that requiring consideration of a conflict of interest as a
factor “is no stranger to the judicial system” as “[n]ot only trust law, but
also administrative law, can ask judges to determine lawfulness by taking
account of several different, often case-specific, factors, reaching a result
by weighing all together”); Abatie, 458 F.3d at 969 (noting that “abuse of
discretion review, with any ‘conflict . . . weighed as a factor,’ is
indefinite” but “trial courts are familiar with the process of weighing a
conflict of interest”).
               DEMER V. IBM CORP. LTD PLAN                      15

See Montour, 588 F.3d at 630 (noting that, when “the same
entity that funds an ERISA benefits plan also evaluates
claims, . . . the plan administrator faces a structural conflict
of interest: since it is also the insurer, benefits are paid out of
the administrator’s own pocket, so by denying benefits, the
administrator retains money for itself”). However, the district
court applied no skepticism as a result of the structural
conflict because “MetLife has taken affirmative steps to
reduce potential bias and promote accurate claim
determinations.” Demer, 975 F. Supp. 2d at 1076; see also
MetLife, 554 U.S. at 117 (noting that a conflict of interest
“should prove less important (perhaps to the vanishing point)
where the administrator has taken active steps to reduce
potential bias and to promote accuracy, for example, by
walling off claims administrators from those interested in
firm finances, or by imposing management checks that
penalize inaccurate decisionmaking irrespective of whom the
inaccuracy benefits”).

    Mr. Demer objects to the district court’s reliance on the
declarations from two employees, Gregory Hafner and Laura
Sullivan, who describe the affirmative steps taken by MetLife
to reduce its structural conflict, on the ground that neither Mr.
Hafner nor Ms. Sullivan was disclosed as a witness in
MetLife’s initial disclosures as required by Federal Rule of
Civil Procedure 26. MetLife did not explain its failure to
identify witnesses in its mandatory initial disclosures; on the
other hand, Mr. Demer did not explain his failure to take a
30(b)(6) deposition on the structural conflict issue. See
James v. AT&T West Disability Benefits Program, 41 F.
Supp. 3d 849, 871 (N.D. Cal. 2014) (finding defendant’s
failure to disclose conflict-of-interest declarations harmless
because “plaintiff had ample time to seek discovery, but did
not do so – [thus] she cannot credibly claim prejudice.”).
16               DEMER V. IBM CORP. LTD PLAN

    We need not resolve this issue because, even assuming
there is no residual structural conflict (i.e., because of
affirmative steps taken by MetLife to insulate its claims
department), some skepticism is warranted here because of
the financial conflict of the IPCs upon whom Met Life relied.4

B. Financial Conflict of Independent Physician Consultants

    Mr. Demer claims MetLife operated under a conflict of
interest because two of the IPCs that MetLife hired to review
the medical record, Dr. Del Valle and Dr. Gordan, have done
a substantial number of reviews for Metlife and received
significant compensation from MetLife for their services. For
2009 and 2010, Dr. Del Valle performed more than 250
reviews/addendums each year and earned more than $125,000
each year; for the same time period, Dr. Gordan performed
between 200–300 reviews/addendums each year and earned
more than $175,000 each year. Based on the number of
reviews and the amount of compensation, Mr. Demer asserts
that the opinions of Dr. Del Valle and Dr. Gordan should be
questioned because the doctors had financial incentives to
render opinions favorable to MetLife. Mr. Demer further
argues that, because MetLife relied on the doctors’ opinions


     4
      The district court did not err in considering the Social Security
Administration’s (“SSA”) denial of Mr. Demer’s claim for disability
benefits as additional evidence that MetLife did not have a conflict of
interest. See Demer, 975 F. Supp. 2d at 1077 (stating that, “[a]lthough not
a decision by an administrative law judge, the SSA’s findings support the
objectivity of MetLife’s review of the medical evidence”). Contrary to
what Mr. Demer suggests, the district court did not rely on the SSA
decision to support MetLife’s ruling on the merits. See Harlick, 686 F.3d
at 719–20 (stating that “[t]he general rule . . is that a court will not allow
an ERISA plan administrator to assert a reason for denial of benefits that
it had not given during the administrative process”).
              DEMER V. IBM CORP. LTD PLAN                     17

in denying him relief, the doctors’ conflict is, in effect,
imparted to MetLife.

    As a preliminary matter, we note that Mr. Demer’s
argument here is comparable to conventional approaches to
discrediting the testimony of retained experts whose
objectivity may be challenged based on, e.g., the number of
times he or she has served as an expert in support of a party
and the amount of compensation received. This alleged
conflict of interest is distinct from the purported structural
conflict of interest discussed above. The lack of any
structural conflict of interest on the part of MetLife does not
preclude MetLife from having a conflict of interest based on
an IPC’s financial interests; the factors that raise the
possibility of a structural conflict relate to the incentives
applicable to MetLife’s claims department, whereas the
factors that raise the possibility of a financial conflict relate
to the incentives applicable to MetLife’s retained experts.
Even if MetLife operated with no structural conflict, reliance
on the reports of its retained experts who have a financial
incentive to make findings favorable to MetLife may warrant
skepticism.

    We further take note that it is Mr. Demer’s burden, as the
party claiming a conflict, to produce evidence of a financial
conflict sufficient to warrant a degree of skepticism. Placing
the burden on Mr. Demer, as an initial matter, makes sense
given that he is asking for a departure from the otherwise
applicable standard of review for abuse of discretion. Once
such evidence is produced, however, the burden then shifts to
18               DEMER V. IBM CORP. LTD PLAN

MetLife to produce evidence that there is no conflict.5 Cf.
Muniz v. Amec Constr. Mgmt., 623 F.3d 1290, 1295 (9th Cir.
2010) (in discussing a structural conflict of interest, stating,
“when a claimant produces evidence that a plan
administrator’s self-interest caused a breach of the
administrator's fiduciary obligations to the claimant, a
rebuttable presumption arises in favor of the claimant and the
plan bears the burden of proving that a conflict of interest did
not affect its decision to deny or terminate benefits”); see also
Estate of Barton v. ADT Sec. Servs. Pension Plan, 820 F.3d
1060, 1065–66 (9th Cir. 2016) (indicating that a plaintiff
fairly bears the burden of proving entitlement to ERISA
benefits where he or she has better or at least equal access to
the evidence needed to prove entitlement; in certain cases,
however, the defending entity solely controls the information
that determines entitlement).

   We conclude that Mr. Demer has satisfied his burden of
production. Mr. Demer has offered evidence that the IPCs
have earned a substantial amount of money from MetLife
($125,000–$175,000 each year) and have performed a
substantial number of reviews for the company as well
(200–300 reviews/addendums each year). The magnitudes of


 5
   In so ruling, we acknowledge the Supreme Court’s statement in Glenn
that that it did not “believe it necessary or desirable for courts to create
special burden-of-proof rules, or other special procedural or evidentiary
rules, focused narrowly upon the evaluator/payor conflict.” Glenn,
554 U.S. at 116. However, we do not read this language as barring the
burden approach articulated above. Glenn’s statement was directed at the
issue, once a conflict is identified, “‘how’ the conflict . . . should ‘be taken
into account on judicial review of a discretionary benefit determination.’”
Id. at 115 (citation omitted). The Supreme Court did not consider and
hence did not foreclose an articulation of the burdens in determining
whether there is a cognizable conflict in the first place.
                 DEMER V. IBM CORP. LTD PLAN                            19

these numbers, particularly when combined, raise a fair
inference that there is a financial conflict which influenced
the IPCs’ assessments, and thus such conflict should be
considered as a factor in reviewing MetLife’s decision for
abuse of discretion. See Montour, 588 F.3d at 634 (“how
frequently [the insurance company] contracts with the file
reviewers it employed in this case” is relevant to ascertaining
conflict); Nolan v. Heald College, 551 F.3d 1148, 1152 & n.3
(9th Cir. 2009) (evidence that the outside medical reviewers
“received substantial work and monies from MetLife in the
three-to-four years preceding and including [the claimant’s]
benefits denial” could be a factor tempering abuse of
discretion review). Here, the evidence of the IPCs’ financial
conflict of interest, in the absence of contrary evidence from
MetLife, warrants some skepticism in reviewing MetLife’s
decision.

    To be sure, the lack of more powerful evidence that, e.g.,
the IPCs had “‘some specific stake in the outcome’” of Mr.
Demer’s case, McDonald v. Hartford Life Group Ins. Co.,
361 Fed. Appx. 599, 610 (5th Cir. 2010),6 or of statistics

  6
    See also Davis v. Unum Life Ins. Co. of Am., 444 F.3d 569, 575–76
(7th Cir. 2006) (rejecting contention that “in-house doctors have an
inherent conflict in every case”; noting lack of evidence of “any specific
incentive [for the in-house doctors] to derail [a] claim” – e.g., giving the
doctors “some specific stake in the outcome of [a] case, such as paying the
doctors more if [the] claim were denied”). While such a stake would be
strong evidence of conflict, as a practical matter, this seems a highly
unlikely scenario. It is hard to imagine that a plan administrator would
explicitly tie compensation to results, as clearly such a practice would be
viewed disapprovingly by courts. To the extent the dissent suggests that
no financial conflict of interest may be found absent evidence that an IPC
has a specific stake in the outcome of the case, such a rule, if adopted,
would render review for financial conflict of interest toothless. Nothing
we said in Montour suggests such a categorical rule.
20              DEMER V. IBM CORP. LTD PLAN

showing a parsimonious pattern of assessments disfavorable
to claimants, see Montour, 588 F.3d at 634,7 minimizes the
“weight [assigned] to the conflict of interest as a factor in the
overall analysis of whether an abuse of discretion occurred.”
Id. at 631. But that lack of such specific evidence does not
mean that there is no conflict of interest. Here, we have
evidence of not only the frequency of reviews for MetLife but
also the significant dollar amounts earned by the reviewers.

     Furthermore, that Mr. Demer could have, but did not,
develop a stronger record of the IPCs’ conflict of interest
does not mean that there is no conflict. Because Mr. Demer
did provide evidence of a financial conflict warranting an
inference of bias, the burden shifted to MetLife to counter
that evidence. As we noted in Montour, both the plaintiff and
the administrator ran a risk in not developing evidence of bias
or lack thereof. See id. at 634 (before addressing plaintiff’s
failure to submit extrinsic evidence of bias such as statistics
of rate of claims denied or frequency of file reviews, court
took note of administrator’s “failure to present extrinsic
evidence of any effort on its part to ‘assure accurate claims
assessment’”). Here, MetLife could have maintained records
of its reviewers’ findings on claims to show their neutrality in
practice,8 but it did not. While MetLife therefore missed an


  7
    See, e.g., Caplan v. CNA Fin. Corp., 544 F. Supp. 2d 984, 992 (N.D.
Cal. 2008) (noting that a doctor “stood to benefit financially from the
repeat business that might come from providing [defendant] with reports
that were to its liking”; adding that “[t]he history of [the doctor’s]
conclusions provides evidence of this conflict”).
 8
   For example, MetLife could have provided but did not proffer evidence
that the IPCs being challenged do not in fact have a parsimonious pattern
of assessment unfavorable to claimants. Nor did MetLife submit
evidence, e.g., that the fees paid to the IPCs constitute only a small
                DEMER V. IBM CORP. LTD PLAN                          21

opportunity to negate any inference of a financial conflict of
interest, Mr. Demer failed as well to develop more powerful
evidence that could have established enhanced skepticism in
reviewing MetLife’s decision. Thus, we find there is neither
a lack of conflict of interest (justifying no skepticism) nor a
substantial conflict of interest (warranting enhanced
skepticism). Instead, the financial conflict – modest but
extant – warrants some, but not substantial, weight under
Abatie and Montour.

    The dissent argues that MetLife “listened very carefully”
to our instruction in Abatie that plan administrators may
reduce conflicts by “refer[ring] medical evaluations to outside
experts, such as doctors, who also have no interest in firm
finances,” and that for its trouble we give MetLife additional
scrutiny. But the dissent fails to acknowledge that Abatie
considered an administrator’s use of “truly independent
medical examiners or a neutral, independent review process.”
Abatie, 458 F.3d at 969 & n.7 (emphasis added). The dissent
mistakenly equates outside experts with independent experts,
but the former does not guarantee the latter. We do not
quarrel with the notion that using outside medical evaluators
can be an important step toward the goal of obtaining neutral
assessments, but it is not hard to imagine an outside medical
examiner who does not engage in a neutral, independent
review, such as where the examiner receives hundreds of
thousands of dollars from a single source and performs
hundreds of reviews for that source every year.

    Despite the dissent’s suggestion that the majority
disapproves of outside reviewers, we imply no such


fraction of their income or that the high number of reviews conducted by
an IPC in a particular year was an aberration.
22              DEMER V. IBM CORP. LTD PLAN

disapproval; we simply apply the unremarkable proposition
that the number of examinations referred and the size of the
professional fees paid to a reviewer may compromise the
neutrality of an expert. See Montour, 588 F.3d at 634; Nolan,
551 F.3d at 1152, n.3. The extra-circuit decisions the dissent
cites do not stand for the proposition that outside experts are
immune from judicial scrutiny for possible bias. While the
formulation in determining whether a financial conflict of
interest exists may be stated in various ways, we think it is
clear under the facts in this case where MetLife paid
substantial monies for a high volume of repeat work to the
IPCs involved and there is no evidence rebutting an inference
of bias, there is sufficient evidence of a financial conflict to
temper abuse of discretion review.9

C. Evidence of Mental Limitations

   Having concluded that the abuse-of-discretion review
should be tempered with some skepticism, we now turn to
Mr. Demer’s contention that MetLife abused its discretion in
denying his claim for benefits because it did not find his
mental functional capacity was affected in any way by the


 9
    Contrary to what the dissent seems to suggest, bias of an IPC may be
inferred even where the IPC is not entirely “financially dependent” on
income received from an administrator. Obtaining even, e.g., 30% of
one’s income from one administrator could be sufficiently influential as
to give rise to a reasonable inference of bias. See, e.g., Nolan, 551 F.3d
at 1152 n.3 (30% of reviewer’s income came from administrator).
Moreover, were claimants required to show financial dependence in order
to establish lack of neutrality, the personal financial circumstances and
needs of each IPC could be subjected to routine inquiry in ERISA cases,
a result hardly conducive to the recruitment of competent reviewers or to
the efficient and expeditious review of benefit decisions contemplated by
ERISA.
              DEMER V. IBM CORP. LTD PLAN                    23

medications he was taking for his physical pain. As indicated
above, MetLife did not ask its vocational rehabilitation
consultant to consider any limitation on Mr. Demer’s mental
ability to function. We conclude that MetLife abused its
discretion in denying Mr. Demer’s claim.

   In reaching this conclusion, we first take note of three
points that are essentially undisputed:

(1) Mr. Demer “takes powerful narcotic and other
    medications, prescribed in attempts to manage his pain.”
    These medications included morphine.

(2) These medications were medically necessary to address
    Mr. Demer’s pain arising from physical impairments.
    (MetLife’s IPC Dr. Del Valle noting that Mr. Demer’s
    physical problems “necessitat[e] narcotic analgesics”).

(3) The “prescribed narcotic and neurological oriented
    medications have known side effects” on an individual’s
    mental functioning. (Mr. Demer’s treating physician Dr.
    Osborne stating that “[t]he side effects with dosing of
    narcotics, limit the ability to complete productive mental
    functions[;] [t]hey are to be expected and are limits of the
    only treatment available for this gentleman”).

    Moreover, in a personal statement, Mr. Demer claimed
that he did, in fact, suffer side effects as a result of his
medications, including fatigue and difficulty with
concentration (e.g., the medications “cause me to fatigue and,
and they help confuse me in my thinking and ability to
communicate”; “I can no longer read complex materials
because I cannot concentrate to comprehend them”; and “I
24              DEMER V. IBM CORP. LTD PLAN

also have memory lapses after having read the pages I may
still be looking at”).

     Mr. Demer corroborated his claim with a statement from
a friend, Ms. Piel (e.g., she “know[s] [Mr.] Demer”; “[t]here
has been a sharp decline in his well being during the past ten
years”; she has viewed his physical pain; Mr. Demer has side
effects from the prescribed medication which makes him
“consistently appear[] to be in a haze, unable to cope with
what were once routine matters”; and Mr. Demer “has
repeatedly demonstrated his inability to safely drive because
of the inability to focus”).10

    He also pointed to supporting contemporaneous evidence
from his treating physicians. For example, Dr. Osborne
expressed agreement that his physical examinations and
medical records indicated that Mr. Demer was suffering from
side effects of his medications, “which infringe on [his]
ability to concentrate and tend to diminish [his] energy.” Dr.
Moore commented that Mr. Demer “has cognitive limitations
[secondary to] pain as well as analgesics.”

    Despite this evidence, MetLife rejected any mental
limitations based on the opinions of two IPCs, Drs. Goldman
and Dr. Gordan, neither of whom actually examined Mr.
Demer. (Dr. Goldman stated that, “[b]eyond October 29,
2010, there clearly are no objective or other compelling or
convincing data to establish functional impairment as a result
of Mr. Demer’s psychotropic medications.” Dr. Gordan
stating that “[t]here is no specific information about


 10
   Similarly, a medical record indicated that Mr. Demer’s father told him
“he was ‘druggy’” after being prescribed certain medication (medical
record from treating physician, Dr. Debra Weidman (anesthesiologist)).
                DEMER V. IBM CORP. LTD PLAN                          25

medications taken or effects from them during the period in
question[;] [a]lthough Dr. Osborne asserted that the
claimant’s needed narcotic medication caused cognitive side
effects, there was never any evidence of that.”) Implicit in
each doctor’s opinion – and therefore MetLife’s decision –
was a conclusion that Mr. Demer’s complaints of fatigue and
difficulty concentrating were not credible.

     But the IPCs had little basis for rejecting Mr. Demer’s
credibility. In addition to the fact that the IPCs never
examined Mr. Demer, they never explained specifically why
they rejected Mr. Demer’s claim of mental function
limitations when (1) he was taking what are undisputedly
powerful narcotic medications and (2) his subjective
complaints were corroborated by his treating physicians as
well as a friend (Ms. Piel).11 See Godmar v. Hewlett-Packard
Co., 631 Fed. Appx. 397, 406 (6th Cir. 2015) (stating that
“there is ‘nothing inherently objectionable about a [paper]
review,’” but such “reviews are particularly troubling when
the administrator’s consulting physicians – who have never
met the claimant – discount the claimant’s limitations as
subjective or exaggerated”; adding that “‘we will not credit
a file review to the extent that it relies on adverse credibility
findings when the files do not state that there is reason to
doubt the applicant’s credibility’”); Montour, 588 F.3d at
634–35 (indicating that a plan should not require a claimant
to provide objective proof of his pain level and that a plan
should not reject subjective claims of excess pain based
solely on a paper review’s observation that a physical


  11
    Because Ms. Piel’s statement was submitted only on the appeal to
MetLife, Dr. Del Valle was not able to consider it. However, Dr. Gordan
should have taken into account Ms. Piel’s statement as he was the IPC on
appeal.
26             DEMER V. IBM CORP. LTD PLAN

impairment should not cause the claimant as much pain as he
was reportedly suffering); cf. Rollins v. Massanari, 261 F.3d
853, 857 (9th Cir. 2001) (in the Social Security context,
noting that “subjective pain testimony cannot be rejected on
the sole ground that it is not fully corroborated by objective
medical evidence”).

     We acknowledge that the district court’s order suggests
possible grounds for questioning Mr. Demer’s credibility –
i.e., that his activities of daily living indicated some ability to
engage in mental functioning. See Demer, 975 F. Supp. 2d at
1081 (stating that “Dr. Osborne’s opinion that Plaintiff could
not operate a vehicle was directly contradicted by Plaintiff’s
conversations with MetLife on January 14, 2010 and May 18,
2010, where he stated that he had been driving a vehicle[;]
[f]urther, while receiving disability payments, Demer told a
MetLife claims representative that ‘he was just completing
online courses’”); (MetLife’s electronic diary notes). But
neither MetLife nor its IPCs rejected Mr. Demer’s credibility
on this basis. See Harlick, 686 F.3d at 719–20 (stating that
“[t]he general rule . . . is that a court will not allow an ERISA
plan administrator to assert a reason for denial of benefits that
it had not given during the administrative process”).
Moreover, it is not clear that these activities of daily living
necessarily establish an ability to work within the meaning of
the Plan. Notably, under the terms of the Plan, Mr. Demer is
eligible for LTD benefits if he cannot engage in a “gainful
occupation,” which in Mr. Demer’s case is a job that has a
yearly salary of approximately $50,000. A job that
commands such a salary may well require higher levels of
mental functioning, including concentration and memory,
both of which are areas where Mr. Demer has claimed
impairment as a result of his medications.
              DEMER V. IBM CORP. LTD PLAN                     27

D. Evidence of Physical Limitations

    There is an additional factor weighing in favor of finding
an abuse of discretion by MetLife. In denying Mr. Demer’s
appeal, MetLife effectively adopted the physical functional
capacity assessed by Dr. Gordan – i.e.,

        that Mr. Demer would be capable of sitting
        for an hour at a time, with short breaks for
        stretching, up to seven hours a day; standing
        and walking for 15 minutes at a time and up to
        two hours a day; lifting up to 10 pounds
        frequently, 20 pounds occasionally and 35
        pounds rarely; occasionally twisting, bending,
        stooping, and reaching above shoulder level,
        driving, and doing repetitive movements with
        either hand and occasionally climbing stairs.

    Similar to above, Dr. Gordan was implicitly rejecting Mr.
Demer’s credibility based solely on a paper review without
having physically examined him and without explaining why
Mr. Demer’s credibility was lacking, particularly, in light of
some medical records conflicting with Dr. Gordan’s physical
functional capacity assessment. Most notably, Dr. Gordan’s
assessment conflicted with the more restrictive assessment
adopted by MetLife’s other IPC, Dr. Del Valle, which
MetLife had previously adopted in initially denying Mr.
Demer benefits. For instance, with respect to lifting capacity,
Dr. Gordan found that Mr. Demer could lift up to 10 pounds
frequently, but previously, MetLife found (as part of its initial
denial) that Mr. Demer could not frequently lift more than 10
pounds. Also, whereas Dr. Gordan found that Mr. Demer
could sit with breaks up to seven hours a day, MetLife
previously found (based on Dr. Del Valle’s initial
28              DEMER V. IBM CORP. LTD PLAN

assessment) that he could only sit “4–6 hours per 8 hour work
day with proper ergonomics and the ability to change position
as needed.” MetLife never explained why it concluded that
Dr. Gordan’s assessment was more appropriate over Dr. Del
Valle’s earlier assessment, particularly since the record
indicated that Mr. Demer’s condition did not improved (and
may have deteriorated) over time.12

E. Conclusion

     Taking into account the totality of the circumstances –
i.e., the financial conflict of interest of the IPCs on whom
MetLife relied (which warrants some skepticism in reviewing
the IPCs’ conclusions), the substantial evidence of Mr.
Demer’s mental limitations due to pain medication and
physical limitations, and the IPCs’ reviews of Mr. Demer’s
condition, without having examined him and without
explaining why they rejected his credibility, particularly in
light of evidence corroborating his credibility (both medical
and nonmedical) – MetLife abused its discretion in denying
Mr. Demer’s claim for LTD benefits.

F. Remedy

   The question remaining is what remedy should issue. See
Cook v. Liberty Life Assurance Co. of Boston, 320 F.3d 11,

  12
      We acknowledge that Dr. Gordan did consult with Mr. Demer’s
treating physician, Dr. Moore, and Dr. Moore indicated to Dr. Gordan that
“it was likely that Mr. Demer could do a very sedentary job.” Dr. Moore,
however, added that “he felt that he would have to see [Mr. Demer] again
to say that definitively.” Yet Dr. Gordan never physically or mentally
examined Mr. Demer for confirmation one way or the other; nor did Dr.
Moore. Hence, any reliance by MetLife on Dr. Moore’s statement is
misplaced.
              DEMER V. IBM CORP. LTD PLAN                    29

24 (1st Cir. 2003) (“Once a court finds that an administrator
has acted arbitrarily and capriciously in denying a claim for
benefits, the court can either remand the case to the
administrator for a renewed evaluation of the claimant’s case,
or it can award a retroactive reinstatement of benefits.”). We
hold that a remand to the district court, with instructions to
remand to MetLife, is appropriate. An award of benefits is
not a proper remedy because the record does not clearly
establish that MetLife should necessarily have awarded Mr.
Demer benefits. Cf. Grosz-Salomon v. Paul Revere Life Ins.
Co., 237 F.3d 11549, 1163 (9th Cir. 2001) (“[R]etroactive
reinstatement of benefits is appropriate in ERISA cases where
. . . ‘but for [the insurer’s] arbitrary and capricious conduct,
[the insured] would have continued to receive the benefits’ or
where ‘there [was] no evidence in the record to support a
termination or denial of benefits.’”).

    To be clear, on remand, MetLife may re-open the record
to consider additional evidence regarding mental limitations.
The record as it stands does not show precisely what Mr.
Demer’s limitations were as a result of the medications.
While a retrospective evaluation may be difficult given the
passage of time, a retrospective evaluation of Mr. Demer’s
limitations is not necessarily impossible. Indeed, in the
Social Security context, retrospective evaluations are not
uncommon. Historical records, data and trends may be
relevant and useful in rendering a retrospective evaluation.
See, e.g., Smith v. Bowen, 849 F.2d 1222, 1225 (9th Cir.
1988) (in Social Security case, stating that “reports containing
observations made after the period for disability are relevant
to assess the claimant’s disability[;] [i]t is obvious that
medical reports are inevitably rendered retrospectively and
should not be disregarded solely on that basis”).
Furthermore, a current evaluation of Mr. Demer may be
30           DEMER V. IBM CORP. LTD PLAN

particularly useful because his benefit period may have
extended beyond the date of the appeal, see 2ER 130, 217
(addressing Maximum Benefit Period), such that a current
examination may be closer in time to the assessment period
than it would otherwise appear.

                             III.

    Accordingly, we REVERSE and REMAND with
instructions to the district court to remand this case to
MetLife so that it may re-evaluate the merits of Mr. Demer’s
LTD claim.



BYBEE, Circuit Judge, dissenting from Part II.B, but
concurring in the judgment:

     An ERISA plan administrator has a structural conflict of
interest where it “both funds the plan and evaluates the
claims.” Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105,
112 (2008); see also Abatie v. Alta Health & Life Ins. Co.,
458 F.3d 955, 965 (9th Cir. 2006) (en banc). The federal
courts have offered at least two ways that such conflicts
“should prove less important (perhaps to the vanishing
point).” Metro. Life, 554 U.S. at 116. First, administrators
may “wall[] off claims administrators from those interested
in firm finances.” Id.; Abatie, 458 F.3d at 969 & n.7 (an
administrator may show that “any conflict did not influence
its decisionmaking process” by showing that “its employees
do not have incentives to deny claims”); Davis v. Unum Life
Ins. Co. of Am., 444 F.3d 569, 575–76 (7th Cir. 2006)
(holding that absent evidence of “any specific incentive [for
the in-house doctors] to derail [a] claim,” such as giving the
              DEMER V. IBM CORP. LTD PLAN                   31

doctors “some specific stake in the outcome of [a] case,” the
theoretical argument that “in-house doctors have an inherent
conflict in every case” is insufficient to change the standard
of review). Second, plan administrators may refer medical
evaluations to outside experts, such as doctors, who also have
no interest in firm finances. Abatie, 458 F.3d at 969 & n.7
(“[T]he administrator might demonstrate that it used truly
independent medical examiners or a neutral, independent
review process”).

    MetLife listened very carefully to what we said. It
employed both of these methods: First, it walled off its claims
administrators from its financial offices. And then, second,
the claims office sought medical evaluations from outside,
independent physicians who have no interest in MetLife’s
finances. For its trouble, the majority is going to give
MetLife additional scrutiny—the majority is “skeptical” of
MetLife precisely because it did what we told it to. Maj. Op.
at 21. The majority’s new skepticism has been rejected by
every other circuit to have considered it. When companies
structure their operations in response to our opinions and then
we penalize them for doing exactly as we have suggested, we
sow uncertainty into both law and business. I dissent from
Section II.B of the majority’s opinion. Because that section
is not otherwise necessary to the majority’s opinion, I concur
in the judgment.

                               I

   The problems with the majority’s new concept of
skepticism are at least three fold. First, nothing in our
decisions supports the majority’s new concept of skepticism.
Our relevant cases stand for two propositions: (1) a claims
administrator has an internal conflict of interest when it
32            DEMER V. IBM CORP. LTD PLAN

stands to profit from the claims it denies; and,
(2) administrators can cleanse this conflict by taking steps
such as creating ethical walls, making sure that claim denials
are not rewarded, and hiring outside physician reviewers.
The majority takes these rules about internal conflicts of
interest for which “some skepticism” is warranted, and
discovers an external conflict in outside reviewers that is
deserving of “modest but . . . some, but not substantial”
skepticism—something between “no skepticism” and
“enhanced skepticism.” Maj. Op. at 21. The majority has
taken a mechanism we gave administrators for cleansing their
conflicts—hiring independent reviewers—and turned it into
a new source of conflicts. Second, there is no basis for
inferring a conflict of interest in the outside reviewers simply
because they reviewed multiple files for MetLife and were
compensated for their work.              Finally, I have great
reservations about the use of “skepticism” as a standard of
review.

                               A

    In Abatie, we considered the problem with “an insurer
that acts as both the plan administrator and the funding source
for benefits,” and explained that the insurer thus “operates
under what may be termed a structural conflict of interest.”
Abatie, 458 F.3d at 965. We discussed this sort of structural
conflict only, and then commented that it could be remedied
by, for example, using “independent medical examiners.” Id.
at 969 n.7 (emphasis added).

    MetLife has an internal conflict of interest in this case. It
both pays the benefits and evaluates the claims. No one
disputes it. And no one disputes that MetLife has addressed
this internal conflict by walling off its financial department
              DEMER V. IBM CORP. LTD PLAN                     33

from its claims department. See Maj. Op. 16 (assuming that
“there is no residual structural conflict . . . because of
affirmative steps taken by MetLife to insulate its claims
department”). But the Majority then finds that an external
conflict exists because MetLife refers files to outside
physician reviewers.

     The majority says that we are to view this relationship
with skepticism, but I can find no basis in our decisions for
this conclusion. Our cases simply hold that a structural
conflict of interest may warrant skepticism, nothing more.
See, e.g., Glen, 554 U.S. at 112 (holding that an ERISA
conflict emerges where the same administrator “both funds
the plan and evaluates the claims,” because “every dollar
provided in benefits is a dollar spent by . . . the
[administrator]; and every dollar saved . . . is a dollar in [the
administrator’s] pocket”) (quotation omitted); Abatie,
458 F.3d at 965. The majority claims that in Montour v.
Hartford Life & Accident Insurance Co., we “assumed that a
relevant piece of extrinsic evidence would be ‘how frequently
[the insurance company] contracts with the file reviewers it
employed in this case.’” 588 F.3d 623, 634 (alteration in
Montour). With respect, the majority overstates Montour. In
Montour, we found that the Hartford Insurance Company,
like MetLife, had a structural conflict of interest. But in
Montour we also cited to extensive district court findings that
caused us to conclude that “Hartford’s bias infiltrated the
entire administrative decisionmaking process, which leads us
to accord significant weight to the conflict.” Id. We then
observed that Hartford had failed to show any efforts that it
had made “to ‘assure accurate claims assessment,[]’ such as
utilizing procedures to help ensure a neutral review process.”
Id. (quoting Metro. Life, 554 U.S. at 117). Notice what we
said next: “To the contrary, in fact, Hartford’s nurse case
34              DEMER V. IBM CORP. LTD PLAN

manager took an advocacy position in her letters to
Montour’s physicians soliciting their agreement with her
disability conclusion.” Id. (emphasis added). Not only had
Hartford failed to present any evidence to show its neutrality,
the evidence suggested that Hartford was telling Montour’s
doctor what it wanted to hear. We then faulted the claimant,
Montour—and here is the passage the majority relies on—for
“not submit[ting] any extrinsic evidence of bias, such as
statistics regarding Hartford’s rate of claims denials or how
frequently it contracts with the file reviewers it employed in
this case.” Id. Far from demonstrating that we should be
suspicious of outside reviewers, Montour stands for nothing
more remarkable than the proposition that it would be
relevant to have known in that case where Hartford “took an
advocacy position” in its letters to Montour’s doctor what the
relationship, if any, was between Hartford’s rate of claims
denials and its reliance on outside reviewers. Here, without
the predicate for our comment in Montour, the majority
simply assumes that the evidence that MetLife used and paid
outsider reviewers is sufficient to show bias.1 The majority
calls this a “financial conflict[],” Maj. Op. at 16, but we have




   1
     Montour cited to Nolan v. Heald College, 551 F.3d 1148 (9th Cir.
2009), where, in a footnote, we suggested that there might be some
relationship between an outside reviewer’s regular contract with the
insurance company and the reviewer’s bias. Id. at 1152 n.3. We offered
no explanation why this was a problem. We later commented that “This
is not to say that [the insurance company] was not entitled to rely on the
opinions of its independent physicians,” but we assumed that it was
evidence of bias that the district court might have viewed “with
skepticism.” Id. at 1155.
                DEMER V. IBM CORP. LTD PLAN                            35

no explanation why an outside reviewer has a conflict of
interest by virtue of being compensated for her time.2

    I don’t see the conflict at all. The Supreme Court in
Firestone found that “ERISA abounds with the language and
terminology of trust law,” and that we should be “guided by
principles of trust law.” Firestone Tire & Rubber Co. v.
Burch, 489 U.S. 101, 111, 112 (1989). The trust analogy is
an important one, because a trustee is under a dual obligation:
It must ensure that trust funds are paid to those who are
eligible; at the same time, it must ensure that trust funds are
not paid to those who are not eligible. A trustee-
administrator as surely violates its obligation by violating the
one charge as the other. MetLife knows that, as trustee, it has
an internal conflict of interest and must compensate for that
conflict in some way, and perhaps in several ways. Going to
outside consulting physicians—literally, getting a second
opinion—is one way of compensating for the conflict. But
where is the conflict in the outside consulting physicians?
Reliability, not bias, is the incentive for the outside reviewer.
In the long run, it doesn’t do a company like MetLife any
good to get bad medical advice because just as it has a duty




   2
     The majority contends that I have “mistakenly equate[d] outside
experts with independent experts.” Maj. Op. at 21. Not so. I have simply
equated better-paid outside experts with slightly-lesser-paid outside
experts. The question in this case is not whether there is any circumstance
in which an outside expert could lose her independence—of course there
is. The question here is whether paying a board-certified physician an
amount that strikes the majority as a lot, on its own, makes that physician
no longer “independent.” And to me, the answer must be no.
36               DEMER V. IBM CORP. LTD PLAN

to pay deserving claims, it has a duty to avoid paying
undeserving claims.3

    I recognize that there could be a cognizable conflict of
interest where an independent physician is so dependent on
an administrator that it effectively becomes an employee of
the administrator, see McDonald v. Hartford Life Grp. Ins.
Co., 361 F. App’x 599, 609 (5th Cir. 2010), but this would
simply bring the reviewer within the administrator’s internal
umbrella. And in that case, the outside reviewer would be
subject to the same conflict of interest as the administrator’s
own employees; the outside reviewer cannot be more
conflicted than the administrator’s own claim processors
(assuming the administrator has not given the reviewer some
additional incentive tied to results). See Armstrong v. Aetna
Life Ins. Co., 128 F.3d 1263, 1265 (8th Cir. 1997) (insurer
provided incentives and bonuses to claims reviewers for
“claims savings”). What is so odd about the majority’s


  3
    It is far from clear from the cases (including the record in this case)
what files we think the outside physicians are reviewing. Are the
reviewers looking at all files, including files the claims department is
inclined to pay? If so, why would the reviewing physicians offer anything
other than their best view?

      But what if the claims department is only sending outside reviewers
the files of claims it is inclined to deny? In that case the outside reviewers
still have little incentive to shade their views in favor of the claims
department. This is not advocacy, it is medical opinion, and the claims
department, after all, is asking the reviewers for a second opinion before
denying the claim.

     If there were evidence an administrator was signaling to its outside
reviewers what result it wanted them to reach, that would be a serious
problem. In such a case, the signaling would be direct evidence that the
administrator had not addressed its structural conflict of interest.
              DEMER V. IBM CORP. LTD PLAN                   37

analysis is that if the outside consultants were MetLife’s own
internal employees, we would find that they were not
conflicted—or at the least that any conflict had been
neutralized by MetLife’s claims-handling practices. But for
the majority, because the reviewers are independent, suddenly
they are untrustworthy. Yet there is not one hint in the record
that these outside reviewers are given financial incentives
based on their results or in any other way biased.

    The principle the majority adopts has profound
implications for other areas of the law—notably Social
Security claims. The SSA, and its state partners, frequently
rely on outside medical sources to review a claimant’s file
and offer a second opinion. The views of these reviewing
physicians are given significant weight under SSA
regulations and our decisions. See 20 C.F.R. § 404.1519a–q
(SSA rules governing the hiring and use of physician
reviewers); Reed v. Massanari, 270 F.3d 838, 842 n.1 (9th
Cir. 2001) (noting the “important role played by independent
medical specialists” in SSA cases, and overturning the ALJ’s
decision not to order an outside physician review); Kish v.
Colvin, 552 F. App’x 650, 651 (9th Cir. 2014) (overturning
the ALJ’s determination because he failed to order an outside
physician review); see also Standards For Consultative
Examinations and Existing Medical Evidence, 56 Fed. Reg.
36932, 36949 (Aug. 1, 1991) (“[The SSA] spend[s]
considerable sums annually to obtain consultative
examinations.”). Sometimes the SSA uses outside physician
reviewers, and sometimes it uses physicians employed full
time by the SSA’s state-partner agencies. See Wilson v.
Comm’r of Soc. Sec., 280 F. App’x 456, 462 (6th Cir. 2008)
(relying in part on evaluation conducted by psychologist
employed by state agency); Patty v. Barnhart, 189 F. App’x
517, 519 (7th Cir. 2006) (relying on both state-employed and
38           DEMER V. IBM CORP. LTD PLAN

outside physician reviewers); see also 20 C.F.R. § 404.1519g
(stating the SSA may purchase an outside examination from
any qualified provider, including the claimant’s own
physicians or “another source”). So far as I know, we have
never questioned the bona fides of reviewing physicians’
views on the grounds that SSA or state agencies are sending
them lots of business and paying them well, or, even worse,
employing them full time. It will turn our cases upside down
if we start down that road.

                              B

    Even if we considered Demer’s evidence on the outside
reviewers in this case, there is “no there there.” The
majority’s new skepticism is based on two facts: First, the
majority thinks that Metlife’s outside reviewers are doing a
lot of work for MetLife and, second, the majority thinks the
outside reviewers are getting paid a lot of money for their
work. Maj. Op. at 18–19 (referring to the “magnitudes of
these numbers”). Neither of these reasons will bear scrutiny.

    Let’s start with the idea that the two doctors in question
here—both of whom were board-certified in internal
medicine—are doing a lot of work for MetLife. The record
discloses that Dr. Del Valle reviewed some 250 files per year;
Dr. Gordan, some 200–300 files. We have no basis for
judging the significance of these numbers. The majority has
just decided that these numbers are big. Let’s indulge the
assumption: so what? Even if MetLife decided to stop paying
these two doctors as outside consultants and brought them in-
house, it wouldn’t implicate a conflict. MetLife has followed
our directions and walled off its claim processors—including
any medical personnel—from its financial people. Its claim
processors have not been given any incentives to deny claims.
                DEMER V. IBM CORP. LTD PLAN                           39

That is precisely what we said would cleanse MetLife’s
conflicts. Abatie, 458 F.3d at 969 n.7. So whether the
doctors are doing a little bit of work for MetLife or a lot of
work is irrelevant because there is no smidgen of evidence in
the record that MetLife will compensate the doctors based on
the results of their evaluations. The majority has no basis
whatsoever for impugning the reputations of these medical
professionals.

    The majority’s second theory—that the doctors are well
compensated—doesn’t hold any more water than the first.
Dr. Gordan was compensated $175,000/year for his work; Dr.
Del Valle, $125,000. Based on nothing more than its own
ipse dixit, the majority declares this to be “significant
compensation.” Maj. Op. at 14. We have nothing in the
record to tell us how doctors are compensated, whether as
practicing physicians or as outside consultants.4 I could opine
that this doesn’t seem like a lot of money for an experienced
medical professional, but I have no more basis than the
majority for saying so. And perhaps there is some
professional jealousy at work here, but if these doctors were
lawyers, they aren’t even making first-year associate wages.5




  4
    The majority’s approach to the burdens here makes little sense. If the
claimant bears the burden, as Montour suggests, 588 F.3d at 634, then
gaps in the record—as we have here—should weigh against Demer. The
majority fails to explain how pointing to two numbers (the number of files
received and the sum of payments received) establishes that the outside
reviewers were biased.
  5
    See David Lat, Breaking: NY to $180K!!! Cravath Raises Associate
Base Salaries!!!, June 6, 2016, http://abovethelaw.com/2016/06/breaking-
ny-to-180k-cravath-raises-associate-base-salaries/.
40            DEMER V. IBM CORP. LTD PLAN

    Would we feel better if MetLife found physicians who
were willing to be poorly compensated? Does it get better
advice? Does it avoid the conflict? The doctors’
compensation tells us nothing about how the doctors make
their medical judgments. And if we are going to indict the
medical profession for understanding the potential interests
of its clients, do we get to be skeptical of Demer’s personal
physician because Demer’s insurance is paying for his
opinions? What if the doctor knows that Demer will go get
a second opinion (and perhaps leave his personal physician
and give him a poor review on Yelp) unless the doctor finds
that Demer is disabled? Does Demer’s family doctor have a
financial incentive to reach a particular medical judgment?
What if Demer’s doctor refers him to a second physician for
an opinion? Does the second doctor have a conflict of
interest because he fears that if he doesn’t corroborate the
referring doctor’s opinion he won’t get referrals in the future?
There is no end to the gamesmanship that can be played here.

                               C

    That brings me to the question of “skepticism.” The
majority, of course, should not be faulted for relying on our
prior decisions and this “skepticism” scheme. We first used
the term in Abatie. 458 F.3d at 968 (referring to the “level of
skepticism” with which we view a “structural conflict of
interest”). In Montour, we picked up on the “skepticism”
comment and amplified it, finding that courts should “adjust
the level of skepticism” “in accordance with the facts and
circumstances of the case” and that where “the conflict may
have tainted the entire administrative decisionmaking
process,” the courts should view the administrator’s decision
with “enhanced skepticism.” 588 F.3d at 631. We have
continued to solidify and elevate Montour’s scheme. See
              DEMER V. IBM CORP. LTD PLAN                   41

Stephan v. Unum Life Ins. Co. of America, 697 F.3d 917, 934
(9th Cir. 2012); Salomaa v. Honda Long Term Disability
Plan, 642 F.3d 666, 675 (9th Cir. 2011); Nolan, 551 F.3d at
1155. Even as we acknowledge that it is not “easy to decide
how many metaphorical grams should go on the metaphorical
scale,” we have added additional qualifiers to “skepticism” to
give us a range of skepticism, including “special skepticism,”
“additional skepticism,” and a “higher degree of skepticism.”
Salomaa, 642 F.3d at 675–76.

     I question the usefulness of “skepticism” as a standard of
review. Standards of review are, necessarily, not “rules” and
are subject to the vagaries of language. In Justice
Frankfurter’s memorable phrase, standards of review capture
a “mood,” but a “mood [that] must be respected, even though
it can only serve as a standard for judgment and not as a body
of rigid rules assuring sameness of applications.” Universal
Camera Corp. v. NLRB, 340 U.S. 474, 487 (1951). We are
burdened with a variety of “word formulas,” FTC v. Sun Oil
Co., 371 U.S. 505, 527 (1963), to describe amorphous
concepts such as evidence, error, and discretion. And we
(and Congress) have developed lists of adjectives to qualify
those concepts. Thus, we have at least six different kinds of
“evidence”: a “scintilla of evidence,” “some evidence,”
“substantial evidence,” a “preponderance of evidence,” “clear
and convincing evidence,” and “evidence beyond a
reasonable doubt.” It isn’t enough to commit an “error,” we
must know whether it was “harmless error,” “clear error,”
“plain error,” or “invited error.” When a court or agency
exercises discretion, we need to know whether it was “an
abuse of discretion” or merely “arbitrary and capricious.”
And I won’t even go down the road of constitutional
“scrutiny.”
42            DEMER V. IBM CORP. LTD PLAN

    The problem with “skepticism” is not that it is not
descriptive in some useful way, but that we don’t need
another noun modified by a raft of adjectives to capture our
mood when we review decisions under ERISA. We know
that the standard of review for ERISA plans in which some
discretion is conferred on the plan trustee is the well-
established “abuse of discretion.” Firestone, 489 U.S. at 115;
Abatie, 458 F.3d at 962–63. That standard is hard enough to
apply without adding a layer of “skepticism” on top of it. We
are trained in the law, and we are, either by nature or by
avocation, skeptical. It’s what we do. We are skeptical of
what defendants, witnesses, and even lawyers tell us. We
question their memories, reliability, and motives. And we
have developed our own ranges of skepticism, from ordinary
eyebrow-raising skepticism to the more ambiguous
harumphing skepticism to full-blown, exasperated snorting
skepticism. In terms of expressing a mood, we are much
better off with the facial expressions and the occasional snort
than with trying to define the difference between “some
skepticism,” “special skepticism,” “enhanced skepticism,”
and “high-degree skepticism.” I would abandon “skepticism”
as a separate standard of review in ERISA cases and try to
deal with run-of-the-mill “abuse of discretion.”

                              II

    These are problems of our own making. Every circuit
that has considered the use that MetLife made of outside
reviewers here has approved the practice, and they have
managed to do so without invoking the standard of
“skepticism.” The courts not only don’t apply even a
modicum of skepticism, they often reject the claim that there
is any conflict in the first place. For example, in Davis v.
Unum Life Insurance Company of America, the Seventh
                DEMER V. IBM CORP. LTD PLAN                           43

Circuit noted the absurdity of turning “an administrator’s
decision to seek independent expert advice [which] is
evidence of a thorough investigation” into grounds for
criticizing the administrator. 444 F.3d 569, 575–76 (7th Cir.
2006) (quotation omitted). The court explained that “[p]aying
for a legitimate and valuable service in order to evaluate a
claim thoroughly does not create a review-altering conflict.”
Id. at 575. This was true even where the reviewers’ entire
salary came from a single administrator.6 The Fifth, Sixth,
and Tenth Circuits have adopted similar rules. See Hagen v.
Aetna Ins. Co., 808 F.3d 1022, 1029 (5th Cir. 2015) (holding
that the relationship between the administrator and reviewer
was not enough, on its own, to show bias; there must be some
evidence of specific stake in the claim); Hunt v. Metro. Life
Ins. Co., 587 F. App’x 860, 862 (6th Cir. 2014) (requiring
more than mere evidence of payments between the
administrator and reviewer); Benson v. Hartford Life & Acc.
Ins. Co., 511 F. App’x 680, 685 (10th Cir. 2013) (rejecting
claim of reviewer conflict because “[n]othing in the record
suggest[ed] a specific bias on the part of the . . . reviewing
physicians.”); Christoff v. Ohio N. Univ. Employee Ben. Plan,
495 F. App’s 710, 712 (6th Cir. 2012) (declining to find
conflict of interest because the administrator used
“independent reviewers” to deny claims).




 6
   The majority suggests that its approach to analyzing outside experts is
unremarkable, and points out that other circuits do not hold “that outside
experts are immune from judicial scrutiny for possible bias.” Maj. Op. at
22. We can (and should) scrutinize outside experts when there are facts
that demonstrate that their judgment is not independent. But that is not
where I and our sister circuits depart from the majority. Our disagreement
is with the majority’s contention that the bare fact of compensating an
outside expert for her opinion makes her biased.
44            DEMER V. IBM CORP. LTD PLAN

    Where the plan administrator is operating under a
structural conflict of interest, courts have often concluded that
the conflict is mitigated by the administrator’s decision to
“reduce its inherent bias by hiring . . . independent
physicians.” Holcomb v. Unum Life Ins. Co. of Am., 578 F.3d
1187, 1193 (10th Cir. 2009); see also Fite v. Bayer Corp.,
554 F. App’x 712, 717 (10th Cir. 2014) (“Bayer took active
steps to reduce any potential bias and to promote accuracy: it
sought an independent review of Ms. Fite’s medical records
by a different psychiatrist . . . and it obtained an independent
psychiatric evaluation of Ms. Fite from a fourth psychiatrist
before reaching its final decision. We therefore give the
conflict-of-interest factor limited weight in determining
whether Bayer abused its discretion.”); Menge v. AT & T,
Inc., 595 F. App’x 811, 814 (10th Cir. 2014) (holding that an
administrator had mitigated its “inherent conflict of interest”
by “rel[ying] on the medical opinions of independent
physician advisors”); Keith v. Prudential Ins. Co. of Am.,
347 F. App’x 548, 552 (11th Cir. 2009) (holding that an
administrator’s use of three independent physician reviewers
showed the administrator was not “influenced by [its]
[structural] conflict”). Indeed, it is more likely that courts
will hold it against an administrator who doesn’t use
independent reviewers. As the First Circuit explained, it is
“difficult to fault a plan administrator for seeking expert
assistance (indeed, it probably would be easier to fault a plan
administrator for not seeking such assistance). . . . [C]ommon
sense dictates that retaining outside physicians to assist in
evaluating disability claims, without more, does not constitute
a conflict of interest.” Leahy v. Raytheon Co., 315 F.3d 11,
16 (1st Cir. 2002); see also Loan v. Prudential Ins. Co. of
Am., 370 F. App’x 592, 598 (6th Cir. 2010) (“Prudential did
not seek the opinion of an outside expert who was not
operating under Prudential's conflict-of-interest. . . .
             DEMER V. IBM CORP. LTD PLAN                   45

Prudential’s in-house doctor had less incentive than an
independent outside doctor to conduct a thorough and
accurate review of the record and address the arguments
Plaintiffs raised on appeal.” (emphasis added)).

                             III

    The majority takes the remedies we offered to
administrators for cleansing conflicts—walling off its claim
processors and hiring independent reviewers—and turns it
into a sword to punish administrators with skepticism. After
today’s decision, we cannot fault administrators for their
confusion over what they can rely on in our decisions. And
we can predict with near certainty how they will respond: at
least in our circuit, administrators will stop using outside,
independent reviewers; instead, they will try to bring them in
house where, they hope, we will still respect the
administrator’s efforts to wall them off. Today’s decision
injects confusion and change for no reason. We are not likely
to end up with better decisions in ERISA claims.

    Count me skeptical. I respectfully dissent from Section
II.B.
