F I L E D United States Court of Appeals Tenth Circuit UNITED STATES CO URT O F APPEALS October 4, 2006 FO R TH E TENTH CIRCUIT Elisabeth A. Shumaker Clerk of Court
DORI ATK INS,
Plaintiff-Appellant,
v. No. 05-5081 (D.C. No. 03-CV-00839-K(M )) SBC COM M UNICATIO NS, IN C.; (N.D. Okla.) SB C D ISA BILITY IN CO M E PLAN; SEDGW ICK CLAIM M ANAGEM ENT SERVICES, IN C.,
Defendants-Appellees.
OR D ER AND JUDGM ENT *
Before T YM KOV IC H, M cKA Y, and BALDOCK , Circuit Judges.
Plaintiff Dori Atkins worked as a pay telephone technician for defendant
SBC Communications, Inc. (SBC) and participated in the defendant SBC
Disability Income Plan (Plan). SBC self-insures the Plan and is the plan
* After examining the briefs and appellate record, this panel has determined unanimously to grant the parties’ request for a decision on the briefs without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3. administrator and fiduciary. Pursuant to its power to delegate, SBC designated
defendant Sedgwick Claim M anagement Services, Inc. (Sedgwick) as the claims
administrator for the disability Plan with the authority to determine eligibility for
benefits. 1
M s. Atkins suffered from mental health concerns. Although Sedgwick
approved periods of short-term disability benefits for her condition, it later denied
her request for continued benefits. M s. Atkins challenged that decision in the
district court, relying on the Employee Retirement Income Security Act (ERISA),
29 U.S.C. §§ 1001-1461. Adopting the magistrate judge’s report and
recommendation, the district court decided that Sedgwick’s denial of short-term
disability benefits was not arbitrary and capricious. The court therefore granted
defendants’ motion for summary judgment.
M s. Atkins appeals, arguing that (1) the district court should have applied
a sliding scale arbitrary and capricious standard of review and (2) even under
a pure arbitrary and capricious standard of review, the denial of benefits was not
supported by substantial evidence in the administrative record and there were
other indicia that the denial of benefits was arbitrary and capricious. W e affirm.
1 Sedgwick administers the SBC M edical Absence and Accommodations Resource Team (SM AART), which is the administrator for SBC’s short-term disability plan. Aplt. A pp., Vol. 3 at 854.
-2- BACKGROUND
From M ay 7 to 11, 2003, M s. Atkins received inpatient treatment for major
depression and severe anxiety. On M ay 13, she submitted a claim for short-term
disability benefits, which Sedgwick approved for the time period of M ay 14
through M ay 27. On M ay 30, M s. Atkins underwent foot surgery and sought
permission to remain on short-term disability related to this surgery. Sedgwick
approved a continuation of short-term disability benefits through June 22 and,
later, through July 13. On July 14, M s. Atkins returned to work.
On September 10, 2003, she again requested short-term disability benefits
based on a relapse of her major depression and severe anxiety. She had received
inpatient mental health treatment from September 5 to 9. Sedgwick approved the
relapse claim and granted short-term disability benefits through October 19.
On October 22, 2003, Sedgwick denied continued short-term disability
benefits effective October 20, because M s. Atkins’ medical evidence was
insufficient to support her claim for continued benefits. M s. Atkins appealed,
submitting additional evidence. Sedgwick denied the appeal because neither
M s. Atkins’ psychiatrist, Dr. David L. Shadid, nor her counselor, Trinna Burrow s,
had conducted a formal mental status examination and instead had based their
findings on M s. Atkins’ self-reports. Aplt. App., Vol. 1 at 130. Sedgwick
determined that the lack of objective findings failed to substantiate M s. Atkins’
inability to perform job duties.
-3- After receiving notice of the denial of short-term disability benefits from
Sedgwick, M s. Atkins filed this ERISA action in district court alleging wrongful
denial of benefits. See 29 U.S.C. § 1132(a)(1)(B) (permitting plan participants to
bring civil action to recover benefits under plan). Both parties filed motions for
summary judgment. Adopting the magistrate judge’s report and recommendation,
the district court granted defendants’ motion and denied M s. Atkins’ motion.
Finding no conflict of interest requiring that it apply a heightened arbitrary and
capricious standard of review, the district court concluded that under a pure
arbitrary and capricious standard of review , it must uphold the denial of disability
benefits. The court found that Sedgwick’s decision was supported by the
opinions of three physicians who had reviewed the medical record. This appeal
followed.
DISCUSSION
I.
W hen the district court grants a motion for summary judgment, we review
de novo, applying the same standards the district court applied. Adamson v.
U num Life Ins. C o. of Am ., 455 F.3d 1209, 1212 (10th Cir. 2006). “Summary
judgment is appropriate where no genuine issue of material fact exists, and
the moving party is entitled to judgment as a matter of law.” Id. (citing
Fed. R. Civ. P. 56(c)).
-4- In addition to applying summary judgment standards, we must apply the
standards of review applicable to ERISA actions. In doing so, we review de novo
the district court’s legal conclusion that the pure arbitrary and capricious standard
was the proper standard to apply when reviewing Sedgwick’s decision. See
DeGrado v. Jefferson Pilot Fin. Ins. Co., 451 F.3d 1161, 1167 (10th Cir. 2006).
Also, we review the district court’s application of that standard de novo. Id.
“W hen an ERISA plan grants a plan administrator (or its delegate)
discretion in administering the plan, we w ill uphold its decisions unless they are
arbitrary or capricious.” Gaither v. Aetna Life Ins. Co., 388 F.3d 759, 767
(10th Cir. 2004) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115
(1989)). The parties agree that under the circumstances presented here the
arbitrary and capricious standard of review applies. See Fought v. Unum Life Ins.
C o. of Am ., 379 F.3d 997, 1003 (10th Cir. 2004) (per curiam). They, however, do
not agree how much deference should be given to Sedgwick’s decision to deny
M s. Atkins short-term disability benefits.
M s. Atkins argues that the district erred in applying a pure arbitrary and
capricious standard of review. Instead, she contends that a sliding scale arbitrary
and capricious standard should apply because SBC was the plan administrator
over its self-insured plan; it retained sole discretion and absolute power over the
plan, including the power to decide her and other claimant’s entitlement to
benefits; and it therefore had a conflict of interest. Defendants counter that there
-5- is no conflict of interest requiring application of a sliding scale arbitrary and
capricious standard of review.
W hen there is a conflict of interest, the review ing court must conduct a
sliding scale analysis. Finley v. Hewlett-Packard Co. Employee Benefits Org.
Income Prot. Plan, 379 F.3d 1168, 1175 (10th Cir. 2004). “Under [the sliding
scale] approach, the reviewing court will always apply an arbitrary and capricious
standard, but the court must decrease the level of deference given to the
conflicted administrator’s decision in proportion to the seriousness of the
conflict.” Fought, 379 F.3d at 1004 (quotation omitted).
In deciding whether to apply a pure or sliding scale arbitrary and capricious
standard of review, we consider the plan documents and the contractual
agreement between SBC and Sedgwick to ascertain their powers. The Summary
Plan Description for the Plan seemingly gives unlimited power to SBC in all
respects:
The Plan Administrator is the named fiduciary of the Plan and has the power and duty to do all things necessary to carry out the terms of the Plan. The Plan Administrator has the sole and absolute discretion to interpret the provisions of the Plan, to make findings of fact, determine the rights and status of participants and others under the Plan, and decide disputes under the Plan. To the extent permitted by law, such interpretations, findings, determinations, and decisions shall be final and conclusive on all persons for all purposes of the Plan.
Aplt. A pp., Vol. 3 at 735.
-6- But the contract between SBC and Sedgwick specifically recognizes that
SBC has delegated some of its functions as plan administrator to Sedgwick. The
contract provides that “except as delegated to” Sedgwick, SBC retains ultimate
responsibility with respect to the Plan. Id. at 767. And Sedgwick is specifically
delegated authority to review and process all short-term disability claims. Id.
at 769, 774. Indeed, under the Plan, the
Claims Administrator[, Sedgwick,] . . . to whom claim determination or review authority has been delegated shall have full and exclusive authority and discretion to grant and deny claims under the Plan, including the power to interpret the Plan and determine the eligibility of any individual to participate in and receive benefits under the Plan. The decision of . . . a Claims A dministrator . . . on any claim . . . shall be final and conclusive . . . .
Id., Vol. 2 at 368.
Construed together, the plan documents and the contract between SBC and
Sedgwick establish that Sedgwick has the power to make final and conclusive
short-term disability decisions. Thus, the plan documents and contract do not
support M s. Atkins’ argument that the sliding scale arbitrary and capricious
standard of review should apply.
M s. Atkins cites Williams v. BellSouth Telecommunications, Inc., 373 F.3d
1132 (11th Cir. 2004), as authority for applying a sliding scale arbitrary and
capricious standard of review . W e agree with the district court that William s is
distinguishable. In William s, BellSouth Telecommunications, Inc. (BellSouth),
the plan administrator, employed Kemper Risk M anagement Services, Inc.
-7- (K emper) as its claim administrator. Id. at 1135. In its contract with Kemper,
BellSouth expressly retained the power to provide Kemper with specific
instructions regarding specific claims, and Kemper was required to follow those
instructions. Id. at 1136. Thus, BellSouth in effect retained the power to control
the disposition of any claims. Id. Based on this retained power, the Williams
court applied a heightened standard of review. Id.
Unlike in William s, in this case there was no contractual agreement
between SBC and Sedgwick requiring that Sedgwick strictly comply with any
instructions given by SBC. Rather, as indicated above, SBC gave Sedgwick the
“exclusive” authority to approve or deny short-term disability claims. Aplt. A pp.,
Vol. 2 at 368; see also id., Vol. 3 at 769-70 (stating under agreement Sedgwick
was to “Review all Disability Claims” and make final determination of all
appeals). Furthermore, the information SBC provided to employees, such as
M s. Atkins, stated that only Sedgwick had the authority to determine whether an
employee qualified for short-term disability benefits. See id., Vol. 3 at 857.
At most, there is only the possibility that SBC could retain administration of some
claims. See id. at 751 (suggesting in contract between SBC and Sedgwick that
SBC can retain administration of claims). Nothing, however, indicates it did so
with respect to M s. Atkins’ claim or any other claim, or that once a claim was
assigned to Sedgwick, SBC could regain control of the claim. Thus, the district
-8- court correctly concluded that M s. Atkins failed to prove a conflict of interest and
therefore there w as no basis for applying a heightened standard of review. 2
II.
Next, M s. Atkins argues that even under the pure arbitrary and capricious
standard, the district court erred in finding that the denial of her short-term
disability claim was supported by substantial evidence in the record. She
contends “the district court engaged in a rubber-stamp review of the adverse
claim decision and wholly failed to evaluate the reasonableness of the adverse
claim decision in light of the totality of the record.” Aplt. Br. at 25. Also, she
argues that the district court’s finding that Dr. Shadid’s mental status examination
was unreliable or lacked specificity overlooked the fact that Dr. Shadid provided
his mental status examination results on the very form provided by Sedgwick.
2 M s. Atkins argues for the first time on appeal that a less deferential arbitrary and capricious standard of review should apply based on the serious procedural irregularity of Sedgwick’s selectively reviewing the record by failing to mention her September 2003 hospitalization in its final decision. Generally, we will not consider an issue not raised before the district court. See Ray v. U num Life Ins. C o. of Am ., 314 F.3d 482, 487 (10th Cir. 2002). Even if we w ere to consider the argument, we would not apply the sliding scale arbitrary and capricious standard. Sedgwick’s failure to note the September hospitalization did not have significance for two reasons: Sedgwick had granted benefits immediately after the hospitalization and it denied benefits only after concluding the objective medical evidence failed to substantiate M s. Atkins’ inability to perform job duties after October 19, 2003. Thus, this is not a case where a conflict of interest, dishonesty, or an improper motive can be attributed to the decision to deny benefits. See Johnson v. M etro. Life Ins. Co., 437 F.3d 809, 813 (8th Cir. 2006). Nor can it be said that Sedgwick failed to consider the relevant circumstances at issue. Id.
-9- “In applying the arbitrary and capricious standard, the decision [denying
short-term disability benefits] will be upheld so long as it is predicated on a
reasoned basis.” Adamson, 455 F.3d at 1212. The decision need not be the only
logical decision or the best decision, so long as it is reasonable. See Kimber v.
Thiokol Corp., 196 F.3d 1092, 1098 (10th Cir. 1999).
Indicia of an arbitrary and capricious decision include, inter alia, lack of substantial evidence. Substantial evidence is such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the decision maker. It requires more than a scintilla but less than a preponderance. In determining whether the evidence in support of the administrator’s decision is substantial, we must take into account whatever in the record fairly detracts from its weight. M oreover, substantiality of the evidence is based upon the record as a whole.
Rekstad v. U.S. Bancorp, 451 F.3d 1114, 1119-20 (10th Cir. 2006) (quotations
and citations omitted).
Applying these standards and upon consideration of the entire
administrative record, we conclude that Sedgwick’s denial of short-term disability
benefits was supported by substantial evidence and was reasonable. W hen
Sedgwick denied a continuation of benefits and informed M s. Atkins of her right
to appeal, it provided her with its appeals procedures information. That
information directed that upon filing an appeal she should ask her treatment
providers to submit a clear outline of her level of functionality, a description of
how that level of functionality impacts her ability to w ork and her daily activities,
a detailed description of the rationale for her level of functionality, clinical
-10- documentation supporting the treatment provider’s rationale for the disability
determination, findings from a formal mental status examination including
clinical presentation and interaction, observations made by the treatment provider
during office visits and therapy sessions, and dosage of and responses to
medication. Aplt. App., Vol. 1 at 243. In addition, the SM AART Guide, which
was provided to employees, states that an employee must provide objective
evidence of disability. Id., Vol. 3 at 857 (“Some treatment providers . . . believe
that just providing a diagnosis is sufficient in order to determine disability. It is
not. Objective medical examination findings are also necessary to support the
diagnosis.”). Also, the Guide states that if an employee does not return to work at
the end of the approved period for absence, additional objective medical evidence
is required to support the treatment provider’s recommendation that disability
benefits continue. Id.
Despite these clear requests for detailed information concerning her ability
to work, including a mental status examination, M s. Atkins never provided the
needed information or indicated that a formal mental status examination could not
be obtained or that her level of functionality could not be ascertained. Instead,
she provided only brief and conclusory medical information. Cf. Kimber,
196 F.3d at 1099 (holding medical documents provided insufficient evidence of
disability because they did not contain supporting clinical data for conclusion
reached). Dr. Shadid’s responses to the questions on the form provided by
-11- Sedgwick provided no detailed information establishing M s. Atkins’ inability to
function at work, nor did it show the results of a formal mental status
examination. M s. Burrows admitted that she did not perform a mental status
examination, because she believed her role was therapeutic and supportive.
As Sedgwick found, there was no objective evidence of M s. Atkins’ disability and
Dr. Shadid’s and M s. Burrows’ reports primarily consisted of a listing of
M s. Atkins’ self-reports concerning her alleged disability. Thus, it was not
unreasonable for Sedgwick to deny benefits based on the lack of objective
evidence. See Johnson v. M etro. Life Ins. Co., 437 F.3d 809, 813 (8th Cir. 2006).
In addition to generally arguing that the denial of her short-term disability
benefits claim was not supported by substantial evidence in the record,
M s. Atkins also argues that the district court erred in failing to find that
Sedgwick’s review was riddled w ith the follow ing procedural irregularities,
selectivity, and inconsistencies: (1) Sedgwick gave too much credit to the
opinions of the physicians employed by Sedgwick, who reviewed the record, but
did not examine her, and not enough credit to her healthcare providers’ opinions;
(2) Sedgwick previously determined that similar medical evidence was sufficient
to approve her short-term disability claims on M ay 19, 2003 and October 3, 2003;
(3) Sedgwick selectively reviewed the records she presented to support her
relapse claim, including failing to mention her September 2003 hospitalization in
its final decision denying benefits; and (4) Sedgwick failed to note that SBC had
-12- prohibited her from the workplace until she underwent an Employee Assistance
Program (EA P) examination. W e discuss each of these five assertions in turn,
keeping in mind, however, that we do not consider whether discrete acts by the
claims administrator are arbitrary and capricious, but only whether the ultimate
decision denying benefits is arbitrary and capricious, see Evans v. Unumprovident
Corp., 434 F.3d 866, 876 (6th Cir. 2006).
W e disagree with M s. Atkins’ assertion that Sedgwick gave too much
weight to the opinions of Sedgwick’s review ing doctors and not enough weight to
the opinions of Dr. Shadid and M s. Burrows. Although Sedgwick was not
permitted to arbitrarily refuse to credit M s. Atkins’ reliable medical evidence,
including the opinions of Dr. Shadid and M s. Burrows, it was not required to
accord special deference to those opinions. See Black & Decker Disability Plan
v. Nord, 538 U.S. 822, 825 (2003). Nor was it required to credit their opinions
over other evidence that was relevant to her medical condition. See id. Because,
as the district court decided, M s. Atkins’ “evidence was not thorough enough to
be considered reliable,” Aplt. App., Vol. 3 at 890, and the additional medical
evidence she submitted “did not meet the degree of specificity [she] had been
advised was required,” id. at 891, Sedgwick gave proper w eight to Dr. Shadid’s
and M s. Burrows’ opinions. Sedgwick’s reliance on its consulting doctors’ paper
review of the medical records of Dr. Shadid and M s. Burrows was not, under the
circumstances presented here, arbitrary and capricious. See Hufford v. Harris
-13- Corp., 322 F. Supp. 2d 1345, 1359 (M .D. Fla. 2004); see also Davis v. Unum Life
Ins. C o. of Am ., 444 F.3d 569, 577 (7th Cir. 2006) (recognizing it is common and
reasonable for doctors to examine medical records and arrive at professional
opinions), cert. denied, No. 06-70, 2006 W L 2007574 (U.S. Oct. 2, 2006); Voight
v. M etro. Life Ins. Co., 28 F. Supp. 2d 569, 580 (C.D. Cal. 1998) (accepting
opinion of independent medical review ers rather than opinion of treating doctor is
not proof of arbitrary or capricious conduct).
Sedgwick properly treated the more recent documentation from her
healthcare providers differently in the denial of her request for a continuation of
short-term disability benefits than it treated similar documentation in its prior
approvals of benefits. The prior approvals occurred immediately after her
hospitalizations. W e agree with the district court that it was not unreasonable for
Sedgwick to require more specific information regarding M s. Atkins’ ability to
work when considering a continuance of benefits claim, since her most recent
hospitalization had occurred forty days earlier. See Kimber, 196 F.3d at 1099
(holding it is not arbitrary and capricious to request additional evidence of
continuing disability).
Nothing beyond M s. Atkins’ assertion suggests that Sedgwick selectively
reviewed the medical records. It is curious that Sedgwick did not mention
M s. Atkins’ September 2003 hospitalization in its final decision. But it did
approve short-term disability benefits after that hospitalization and correctly
-14- requested additional, objective evidence showing that disability continued.
Considering the totality of the record in this case, we cannot conclude that
Sedgwick’s denial of benefits was unreasonable simply because it failed to
mention M s. Atkins’ September 2003 hospitalization.
It is true that Sedgwick did not mention SBC’s requirement that M s. Atkins
go through its EAP program and obtain a fitness for duty certification before she
would be allowed to return to work. Aplt. App., Vol. 1 at 259. SBC required
this after M s. Burrows told M s. Atkins’ former attorney in September 2003 that
M s. Atkins had mentioned blowing up the SBC building and targeting a
co-worker due to anger. At that time, M s. Burrows believed that M s. Atkins was
homicidal and presented a danger to herself and others. These threats were made
during the time M s. Atkins was receiving in-patient treatment and during the time
when she was receiving short-term disability benefits. W hile Sedgwick perhaps
should have mentioned this, we cannot say that its failure to do so caused the
denial of short-term disability benefits to be arbitrary and capricious.
W e agree with the district court that although the record contains evidence
supporting a disability claim, the question on review concerns the reasonableness
of Sedgwick’s decision to deny M s. Atkins short-term disability benefits.
Sedgwick provided a reasonable basis for its decision. Because the decision to
deny M s. Atkins continued short-term disability benefits was not arbitrary and
-15- capricious, the district court properly granted summary judgment in favor of
defendants.
The district court’s judgment is AFFIRMED.
Entered for the Court
M onroe G. M cKay Circuit Judge
-16-