                                                                                                                           Opinions of the United
2008 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-13-2008

Addis v. Ltd Long Term
Precedential or Non-Precedential: Non-Precedential

Docket No. 06-2513




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                                                                  NOT PRECEDENTIAL

                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT


                                      No. 06-2513


                                JACQUELINE ADDIS,

                                           v.

               THE LIMITED LONG-TERM DISABILITY PROGRAM,

                                                      Appellant


                      Appeal from the United States District Court
                        for the Eastern District of Pennsylvania
                          (D.C. Civil Action No. 05-cv-00357)
                      District Judge: Honorable Timothy J. Savage


                                Argued January 7, 2008

        Before: SCIRICA, Chief Judge, AMBRO, and JORDAN, Circuit Judges

                            (Opinion filed: March 13, 2008)

Matthew D. Besser, Esquire
David A. Campbell, Esquire (Argued)
Michael J. Settineri, Esquire
Vorys, Sater, Seymour & Pease
1375 East Ninth Street
2100 One Cleveland Center
Cleveland, OH 44114-1724

      Counsel for Appellant

Allan D. Goulding, Jr., Esquire (Argued)
Curtin & Heefner
250 North Pennsylvania Avenue
Morrisville, PA 19067

       Counsel for Appellee




                                        OPINION


AMBRO, Circuit Judge

       Jacqueline Addis, now 35 years old, applied for long-term disability benefits under

a plan subject to the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.

§§ 1001–1191c. The plan administrator, on behalf of defendant-appellant The Limited

Long-Term Disability Program (“LLDP”), denied her claim. The District Court reversed

that decision and awarded benefits. We affirm.

                            I. Facts and Procedural History

       Addis began working as a manager for Victoria’s Secret Stores, owned by The

Limited, Inc., in 1997. Her duties included serving customers, managing payroll,

monitoring inventory, and performing certain physical tasks, such as moving floor

fixtures. After experiencing various symptoms, she began undergoing testing for multiple

sclerosis in 1998 and received a diagnosis of MS by November 2000. According to Dr.

Gabriel Tatarian, her treating neurologist, Addis’s persistent symptoms included

“difficulty walking, fatigure, poor concentration, difficulty with memory, bowel and

bladder incontinence, visual symptoms including [sensitivity to] bright lights[,] and poor

facial perception.” Her more occasional symptoms include confusion, muscle spasms,

                                            -2-
tingling sensations in her limbs, headaches, rashes, and losses of balance resulting in falls.

       Addis stopped coming to work and applied for benefits on January 5, 2003.1

MetLife, the claims administrator for LLDP (an ERISA plan funded by The Limited),

approved her claim for a provisional two-month period until March 6, 2003. On March

11, 2003 (five days after the provisional deadline), Addis submitted documentation to

support her continued inability to work, including notes from Dr. Tatarian and MRI

results prepared by Dr. Norbertina Banson. After review by an “independent physician

consultant,” MetLife rejected Addis’s claim and terminated her benefits. MetLife found

that her condition was not worsening and relied on Dr. Tatarian’s statement that she could

return to work once she determined herself to be medically fit. In mid-April 2003, Addis

returned to work on a limited basis of twenty hours a week for “light duty,” but she

stopped again after less than two months.

       Meanwhile, Addis appealed MetLife’s denial of benefits, submitting

documentation of her continuing regular exams with Dr. Tatarian. A nurse consultant for

MetLife performed a second review of her case, after which MetLife denied the appeal.

It argued that Addis’s condition had not increased in severity since her initial claim and

that she had submitted no additional clinical information. The information Addis



   1
     To qualify for long-term benefits, a participant must demonstrate a “Total Disability”
as defined under the plan. For the first twelve months of illness or injury, the participant
must demonstrate that she can no longer perform her “regular occupation”; thereafter, the
participant must show that she “cannot work at any gainful occupation” for which she is
“reasonably qualified, or could become qualified, by education, experience or training.”

                                             -3-
submitted previously led to a denial of benefits. Therefore, MetLife concluded, without

more clinical information it was compelled to deny her appeal as well.

       Addis requested reconsideration. More medical documentation accompanied her

request, including: (1) a longer history of her quarterly visits to Dr. Tatarian; (2) a

summary letter from Dr. Tatarian referring to “times of progressive symptoms” and

“various exacerbations” and recommending that she cease working; (3) past MRI results;

(4) notes from her chiropractor, Dr. Ana Lavdas, reporting various symptoms over the

course of two years; (5) her chemical and drug treatment records; and (6) notes from Dr.

Nancy McCarel, a psychologist Addis consulted for a three-month period. Eventually,

after she retained new counsel, MetLife agreed to reconsider her appeal. Addis then

added three more pieces of evidence: (7) a new exam report from Dr. Tatarian, indicating

“no neurologic problems” but also noting tremors and fatigue; (8) part of her successful

application for Social Security disability benefits, which were dated back to January

2003; and (9) a more recent MRI from December 2003, showing three or four brain

lesions.

       Despite these nine additional categories of documents, MetLife again denied

benefits. A nurse consultant as well as an independent physician consultant, Dr. Gary

Greenhood, reviewed the new body of evidence, but they did not examine Addis. Dr.

Greenhood concluded that he was “unable to confirm that there was an exacerbation of

multiple sclerosis during the interval in question” and found that Addis could work with



                                              -4-
some restrictions. MetLife’s case manager, Tammi Phillips, acknowledged Addis’s

diagnosis of MS but stated that “the MRI of your cervical spine dated January 4, 2003

showed no evidence of multiple sclerosis.” Phillips mischaracterized a finding of

“increased tone” in Addis’s legs as a positive development.2 She listed every “normal”

finding in the record, such as evaluations of Addis’s mental-health status. But Phillips

did not explain why these non-findings outweighed the abnormal findings or the ailments

Addis consistently reported to multiple doctors.

       Addis next sued MetLife in the United States District Court for the Eastern District

of Pennsylvania to recover benefits under 29 U.S.C. § 1132(a)(1)(B). As MetLife only

administers the Plan, LLDP, as the insurer, is the proper defendant. In June 2005 Addis

amended her complaint to substitute LLDP as the defendant.3

       The District Court reversed the denial of benefits, granting Addis’s motion for

summary judgment. Finding procedural irregularities in MetLife’s handling of Addis’s

claim, the District Court applied a moderately heightened standard of review. The

District Court found MetLife’s assessment of the evidence to be selective and its denial of



   2
    In this context, increased muscle tone refers to a symptom of MS. See, e.g., Jane
Johnson & Bernadette Porter, Strategies and Challenges in Managing Spasticity, in
Advanced Concepts in Multiple Sclerosis Nursing Care 117, 118–19 (June Halper ed.,
2007).
   3
      Addis alleges that MetLife was unaware that it did not fund the plan, since it engaged
in litigation for five months before pointing out that it was not the proper defendant. But
LLDP argues that the plan documents made the Plan’s funding source clear. See infra
Part II.

                                            -5-
Addis’s benefits to be improper. In light of these procedural irregularities and the

evidence regarding Addis’s condition, the District Court awarded long-term benefits to

Addis directly, i.e. without remand to the claims administrator.4 LLDP appeals to our

Court.

                                  II. Standard of Review

         In ERISA cases brought under § 1132(a)(1)(B),5 the standard of review depends

on the level of discretion given to the claims administrator. Here, the plan states that

“[t]he Claims Administrator shall have discretionary authority.” Absent any question of a

conflict of interest for the administrator, we would review for abuse of discretion. But, in

the presence of an alleged conflict and alleged procedural irregularities, we must assess

where on a sliding scale our standard of review should lie, “grant[ing] the administrator

deference in accordance with the level of conflict.” Post v. Hartford Ins. Co., 501 F.3d

154, 161 (3d Cir. 2007). We explained the sliding-scale analysis as follows:

               To apply the approach, courts first consider the evidence that
               the administrator acted from an improper motive and heighten
               their level of scrutiny appropriately. Second, they review the
               merits of the decision and the evidence of impropriety
               together to determine whether the administrator properly
               exercised the discretion accorded it. If so, its decision stands;
               if not, the court steps into the shoes of the administrator and
               rules on the merits itself.


   4
    The District Court awarded benefits under both the “regular occupation” and “any
gainful occupation” standards. See supra note 1.
   5
     The District Court had jurisdiction under 29 U.S.C. § 1132(e)(1). We have
jurisdiction over this appeal under 28 U.S.C. § 1291.

                                              -6-
                     At its best, the sliding scale reduces to making a
              common-sense decision based on the evidence whether the
              administrator appropriately exercised its discretion. This
              theme, rather than getting bogged down in trying to find the
              perfect point on the sliding scale, should be district courts’
              touchstone.

Id. at 161–62 (citations omitted). We further explained that structural factors—i.e.,

whether the administrator has “financial incentives to act against the participants’

interest”—and procedural factors—e.g., selectivity in reviewing the evidence—both can

come into play. Id. at 162.

       In our case, Addis alleges that MetLife (mistakenly) thought that it funded the

plan, rather than the Limited. “Although MetLife did not, in fact, have a conflict of

interest at the time it rendered its decision, it believed that it did.” Addis’s Opening Br.

16 (emphasis added). But one must engage in behavioral-economic speculation to argue

that perceived rather than actual incentives determine claims administrators’ behavior.

Our Court has only recognized conflicts of interest “when the administrator has a

non-trivial financial incentive to act against the interests of the beneficiaries.” Id. at 162

(emphasis added). Thus, in this case we decline to treat a perceived financial conflict like

an actual one. That issue is reserved for another day.

       The kind of procedural irregularities that have led our Court to apply a heightened

standard of review include, but are not limited to: “(1) reversal of position without

additional medical evidence; (2) self-serving selectivity in the use and interpretation of

physicians’ reports; (3) disregarding staff recommendations that benefits be awarded; and

                                              -7-
(4) requesting a medical examination when all of the evidence indicates disability.” Id. at

164–65 (citations omitted). The degree to which we raise the standard of review depends

on our level of doubt regarding the claims administrator’s neutrality that the irregularities

create. For example, where we have seen “non-trivial evidence of procedural bias” that

was “neither egregious nor coupled with evidence of structural bias, we heightened our

scrutiny only a moderate amount.” Id. at 165 (citing Kosiba v. Merck & Co., 384 F.3d

58, 68 (3d Cir. 2004)).

       The District Court found in this case that no one familiar with MS reviewed

Addis’s case. MetLife’s case managers are not physicians. MetLife’s independent

physician consultant, Dr. Greenhood, is an expert in infectious diseases. Typically,

experts in neurology treat MS patients, since the disease attacks the central nervous

system.6 The District Court faulted Dr. Greenhood’s writing style as willfully vague and

cited phrases in his report that cast unwarranted aspersions on Addis’s MS diagnosis.

The Court found MetLife’s reading of the evidence to be selective, taking positive

comments out of context and ignoring—or even misunderstanding—negative diagnoses.

It is true MetLife had no duty to defer to Addis’s treating physicians in the context of

ERISA (as opposed to Social Security). See Black & Decker Disability Plan v. Nord, 538



   6
    Many scientists do suspect that viruses play a role in the onset of MS. But the
discovery of a specific viral cause or the precise relationship between viruses and the
development of the disease remains at the research frontier. See, e.g., “Research Reports
on Multiple Sclerosis from B. Serafini and Colleagues Provide New Insights,” Biotech L.
Wkly., Mar. 7, 2008, at 3545.

                                             -8-
U.S. 822, 829–30 (2003). But, as the District Court found, MetLife provided no

justification for failing to mention the opinion of Dr. Lavdas (Addis’s treating

chiropractor) or for giving more weight to the views of its own consultant than to Dr.

Tatarian (Addis’s treating physician). Finally, the District Court was right to criticize

MetLife for failing to consider more than a six-month window of evidence (starting from

the time Addis stopped working). There is no reason and no language in the plan that

required or authorized MetLife to limit the scope of its inquiry in that way.

       In light of these procedural flaws, the District Court chose to apply the moderately

heightened standard of review.7 We agree that MetLife’s decision involved a procedural

irregularity, specifically a “self-serving selectivity in the use and interpretation of

physicians’ reports.” Post, 501 F.3d at 165.8 The MetLife’s case managers’ letters, along

with Dr. Greenhood’s report, support the District Court’s criticisms along the lines of

selectivity and questionable interpretation. Moreover, the flaws that the District Court

identified qualify as “serious, numerous, or regular,” given the length of the list of

problems. Id. As a result, the District Court was correct to apply the moderately

heightened standard of review.


   7
     The District Court noted, however, that either a moderately heightened standard of
review or a normal abuse-of-discretion standard would yield the same result.
   8
     Another indicator of procedural irregularity mentioned in Post—“reversal of position
without additional medical evidence”—does not appear to apply here. 501 F.3d at
164–65. MetLife’s initial two-month award of disability benefits to Addis was
provisional and not based on a review of the evidence. Thus, MetLife did not change its
position on the evidence.

                                              -9-
                                        III. Merits

       In this context, we affirm the District Court’s holding that MetLife abused its

discretion by denying Addis’s benefits. LLDP argues that many pieces of evidence

suggest that Addis’s condition was not getting worse. But, as the District Court pointed

out, those pieces of evidence required a selective reading, and occasional 180-degree

misreading, of the medical record. Instead, everything in the medical record suggests that

Addis suffered from various symptoms of MS, and that some of her symptoms had

worsened. Moreover, the evidence that Addis returned to work for less than two

months—after MetLife denied her benefits—is not enough to undercut her claims of

disability. The denial of benefits itself spurred her to work. And it seems convincing that

she could not continue working after a few weeks of trying, because her decision not to

work caused her financial harm and uncertainty. She was not receiving benefits of any

kind at that time; it would be another year until she was awarded Social Security benefits.

       Finally, LLDP’s argument that the nurse consultant’s and independent physician

consultant’s reports provide substantial evidence for MetLife’s decision is unconvincing.

For example, the nurse consultant’s report, after noting the bulging disc in Addis’s spine,

immediately concludes: “Therefore medical provided does not support a limit of function

from the time period of 1/5/03 to 7/5/03.” The nurse consultant failed to address why the

bulging disc was or was not a problem, or why it was outweighed by other evidence. The

independent physician consultant used dodgy language—e.g., “unable to confirm,”



                                            -10-
“unable to substantiate”—in the face of an administrative record that had grown quite

large by the end of MetLife’s second review on appeal. LLDP points out that MetLife

was under no affirmative duty to pursue an independent medical opinion. See Pinto v.

Reliance Standard Life Ins. Co., 214 F.3d 377, 394 (3d Cir. 2000). But that does not

imply that Dr. Greenhood’s review of evidence was sufficient to deny Addis’s claim, or

that other evidence existed to support such a decision. The bottom line is that we see no

reason to disturb the District Court’s well-reasoned conclusion that MetLife improperly

used its discretion by denying benefits.

                                           IV. Remedy

       LLDP argues that it would be unprecedented for the District Court to rule on

Addis’s “any occupation” benefits, because the claims administrator did not have a

chance to rule on those benefits first. But the District Court pointed out that the six-

month period that MetLife chose to review was arbitrary. In light of the procedural

irregularities discussed above, it was legitimate for the District Court to “step[] into the

shoes of the administrator and rule[] on the merits itself.” Post, 501 F.3d at 162.

                                       *    *    *     *   *

       We affirm the District Court’s judgment in all respects.




                                                -11-
