NOT RECOMMENDED FOR PUBLICATION File Name: 23a0283n.06
No. 22-3774
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT FILED ) Jun 16, 2023 KAREN O’KELLY, fka Karen Langenfeld, ) DEBORAH S. HUNT, Clerk ) Plaintiff-Appellant, ) ON APPEAL FROM THE UNITED ) v. STATES DISTRICT COURT FOR ) THE NORTHERN DISTRICT OF FEDERAL RESERVE BANK OF CLEVELAND, ) OHIO ) et al., OPINION ) Defendants-Appellees. )
Before: BOGGS, WHITE, and BUSH, Circuit Judges.
BOGGS, Circuit Judge. Karen O’Kelly stopped working at the Federal Reserve Bank of
Cleveland (“Bank”) and filed for long-term disability benefits, citing symptoms related to mold
exposure. The Bank’s third-party claims administrator, Matrix Absence Management, Inc.
(“Matrix”), initially approved O’Kelly’s claim but later terminated her benefits after finding that
she no longer qualified as “totally disabled” under the terms of the plan. O’Kelly now challenges
Matrix’s denial. Because the Bank delegated authority under the plan to Matrix to decide benefits
claims in its sole discretion, we review Matrix’s decision only for arbitrariness under New York
law. Matrix’s decision was procedurally sound and supported by substantial evidence, including
the professional opinions of seven physicians who reviewed O’Kelly’s medical records. We affirm
the district court’s grant of summary judgment to the Bank. No. 22-3774, O’Kelly v. Fed. Rsrv. Bank of Cleveland
I
A. Administrative History While working at the Federal Reserve Bank of Cleveland, Karen O’Kelly enrolled in the
long-term disability-income plan for Federal Reserve employees. Under the plan, participants can
receive long-term disability benefits if they are deemed “totally disabled.” The plan provides two
definitions of total disability, based on how long the participant claims to have been disabled.
During the first eighteen months of the participant’s disability, the participant is totally disabled if
her disability keeps her from working on a regular and full-time basis at her own job or at another
job in her same occupation. After eighteen months, the participant is totally disabled if her
disability keeps her from working in any occupation.
To administer benefits under the plan, the plan administrator appoints a medical board—
which may be a third-party administrator—to determine whether those who have filed claims are
totally disabled. The medical board has sole discretion to make these determinations. The Bank
appointed a third party, Matrix, as the plan’s medical board. Matrix adjudicated O’Kelly’s claim.
After first complaining of exposure to mold in August 2015, O’Kelly stopped working for
the Bank on August 31, 2016. When she exhausted her short-term disability benefits, O’Kelly filed
for long-term disability benefits. O’Kelly also applied for social-security disability benefits, for
which she submitted to a psychological exam in February 2017. The Social Security
Administration (SSA) deemed O’Kelly disabled due to “psychologically based symptoms” and
approved her claim.
After receiving the SSA’s report, Matrix agreed that O’Kelly could not work at her own
job and approved her claim for the plan’s initial eighteen-month period, which ended on March 1,
2018. Matrix found that, although O’Kelly’s medical records did not support her claim that she
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was impaired due to mold toxicity, heavy-metal exposure, or chronic-inflammatory-response
syndrome, they did support O’Kelly’s claims of impairment due to depression and anxiety.
However, Matrix told O’Kelly that it would review her claim as she moved into the plan’s second
period, which would require a finding that O’Kelly could not work in any occupation.
In January 2018, roughly three months before the initial eighteen-month period was set to
elapse, Matrix reviewed O’Kelly’s updated medical records and found that O’Kelly was not totally
disabled, even under the initial-period definition, because her disability did not keep her from
working in her own job or in another job in that occupation. Matrix terminated her disability
benefits immediately.
O’Kelly appealed, attaching additional information. Matrix agreed to review its
termination decision, and scheduled O’Kelly for a medical exam. A psychologist evaluated
O’Kelly and found no evidence of neurocognitive impairment. As to O’Kelly’s alleged anxiety
and depression, the psychologist noted that her failing scores on a symptom-validity test suggested
that she was “likely feigning.” Matrix also sent O’Kelly’s records to two physicians, who found
no support for O’Kelly’s impairment from any physical or mental conditions. Matrix’s medical
director reviewed O’Kelly’s file and reached the same conclusion. Matrix also reviewed the SSA’s
award of disability benefits, which Matrix noted was based on records only up to March 2017. In
October 2018, Matrix affirmed its denial of O’Kelly’s benefits, noting that it had considered the
medical exam, peer reviews, the director’s review, and the SSA award.
O’Kelly appealed again, attaching more information. Matrix sent O’Kelly’s claim to two
new doctors—an internist and a psychiatrist—for further peer review. Both doctors found no
functional impairment. However, during the psychiatrist’s review, one of O’Kelly’s doctors
recommended that her records be reviewed by a pain-medicine specialist or by a neurologist.
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Matrix had both types of doctor review O’Kelly’s records. The neurologist found no support for
impairment, but the pain-medicine specialist suggested that O’Kelly had some functional
limitations, such as a limited ability to lift and no ability to crawl or balance. Matrix sought more
input as to whether O’Kelly could perform her own occupation within those limitations identified
by the specialist. Two vocational-rehabilitation consultants reviewed O’Kelly’s records and
concluded that she could work in her job. The consultants also identified four other occupations
within 50 miles of O’Kelly’s residence that matched her skill set and physical limitations. Matrix
denied O’Kelly’s second appeal in May 2019 and declared its decision final. Summarizing all of
this medical evidence, Matrix concluded that no disability kept O’Kelly from working in her job
or in another occupation.
B. Procedural History O’Kelly sued the Bank in the Northern District of Ohio, seeking review of the Bank’s denial
of disability benefits. The parties agreed at the outset that, although the Employee Retirement
Income Security Act of 1974 (“ERISA”) might not govern the plan at issue, their case would be
handled “in the same manner as that followed for Plan benefit claims under” ERISA. The district
court assigned the case to the administrative track, which does not permit discovery. Instead, both
parties moved for summary judgment based on the administrative record.
The district court granted summary judgment to the Bank. Assuming that the Bank’s plan
is a governmental plan that ERISA does not cover, the district court agreed with the Bank that,
under New York law, it would review only whether Matrix’s denial of benefits was arbitrary or
capricious. The court declined to make its own determination of whether O’Kelly was disabled
under the plan’s definition and focused instead on Matrix’s decision-making process.
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The district court upheld Matrix’s denial of O’Kelly’s benefits. The court held that Matrix’s
decision was not arbitrary because evidence in the administrative record supported it. The court
addressed O’Kelly’s claims that Matrix had failed to consider or improperly weighed various
pieces of evidence, including her psychological exam in February 2017, the medical opinions of
her physicians, the psychologist’s suggestion that O’Kelly could be faking her symptoms, and her
favorable SSA award of disability insurance. Weighing conflicting evidence and crediting one
medical opinion over another, the district court noted, does not constitute arbitrary action. The
court also found the decision untainted by any bias or conflict of interest. The court noted that
O’Kelly had not provided any evidence suggesting that Matrix’s review process was biased in
favor of the Bank. O’Kelly timely appealed.
II
A. Standard of Review
This case’s procedural posture requires us to identify two standards of review: one for
Matrix’s decision and another for the district court’s. Autran v. Procter & Gamble Health & Long-
Term Disability Benefit Plan, 27 F.4th 405, 411 (6th Cir. 2022).
Under ERISA, for employee-benefit plans that give discretionary power to administrators
to interpret plan terms and determine eligibility for benefits, we review an administrator’s denial
of benefits under the arbitrary-and-capricious standard. Ibid. (citing Frazier v. Life Ins. Co. of N.
Am., 725 F.3d 560, 566 (6th Cir. 2013)). However, this is not an ERISA case. ERISA does not
apply to “governmental plan[s],” 29 U.S.C. § 1003(b)(1), which include employee plans
established or maintained by the U.S. government or by its “agency or instrumentality,” id. §
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1002(32).1 The district court assumed, and the parties agreed, that the Bank is such an
instrumentality and its plan a governmental one to which ERISA does not apply. See Starr Int’l
Co. v. Fed. Rsrv. Bank of N.Y., 742 F.3d 37, 40 (2d Cir. 2014) (explaining that federal reserve banks
are federal instrumentalities); 12 U.S.C. § 391 (designating federal reserve banks as “fiscal agents
of the United States”). We assume the same.
Since ERISA does not apply, contract-law principles determine our standard of review for
Matrix’s decision. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 112–13 (1989). Here,
the plan contains a New York choice-of-law provision. Therefore, we apply New York law in
reviewing O’Kelly’s claims.
Under New York law, we enforce written agreements that are “complete, clear and
unambiguous on [their] face” according to the plain meaning of their terms. Greenfield v. Philles Recs.,
Inc., 780 N.E.2d 166, 170 (N.Y. 2002). When a plan vests sole authority in the designated
decisionmaker, an employer’s decision to deny “non-ERISA benefits may be set aside only where it is
made in bad faith, was arbitrary or was the result of fraud.” Welland v. Citigroup, Inc., No. 00-Civ-
738, 2003 WL 22973574, at *11 (S.D.N.Y. Dec. 17, 2003), aff’d, 116 F. App’x 321 (2d Cir. 2004).
If a reasonable basis supports the decision, we may not “substitute [our] judgment for that of [the
employer] on the disputed factual issues.” Ibid. (second alteration in original) (quoting Gehrhardt
v. Gen. Motors Corp., 581 F.3d 7, 12 (2d Cir. 1978)).
O’Kelly argues that Welland does not apply because it concerned stock options, not
disability benefits. This distinction is unpersuasive. In Welland, the employer offered its
employees stock options that were forfeited upon the employee’s termination for any reason other
1 ERISA, then, cannot provide the statutory hook for federal subject-matter jurisdiction. Halttunen v. City of Livonia, 664 F. App’x 510, 513 (6th Cir. 2016). Instead, the district court exercised jurisdiction under the Federal Reserve Act, 12 U.S.C. § 632.
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than retirement. Id. at *10. To determine when employees forfeited their stock options under the
plan, the employer delegated authority to a committee that “functioned as the plan administrator
and was vested with the sole authority to interpret” the terms of the benefits plan. Id. at *11. In
affirming the district court’s standard of review, the Second Circuit found this delegation of
authority especially relevant. Welland, 116 F. App’x at 322.2 Here, the Bank’s plan similarly
delegated authority to Matrix to make all disability determinations in its sole discretion, making
arbitrary-and-capricious review of Matrix’s denial the appropriate standard.
O’Kelly also refers us to Dunham v. Unum Grp., No. 2:13-cv-0794, 2015 WL 6798578
(S.D. Ohio Nov. 6, 2015), suggesting that we should review Matrix’s decision de novo. There, the
court reviewed de novo a breach-of-contract claim under a non-ERISA disability-benefits plan that
defined disability and denied benefits because the claimant did not meet that definition. Id. at *3–
4. We find this case unhelpful. First, the Dunham court applied Ohio law, not New York law. Id.
at *3. Second, the plan did not delegate authority to a third-party administrator to make disability
determinations in its sole discretion. Since O’Kelly’s plan expressly included such a delegation,
New York law requires us to enforce it. See Greenfield, 780 N.E.2d at 170. Therefore, whether the
Bank breached its contract with O’Kelly turns not on whether O’Kelly is actually disabled, but on
whether Matrix’s denial was a valid exercise of its delegated decision-making authority—that is,
on whether its decision was “made in bad faith, was arbitrary or was the result of fraud.” Welland,
2003 WL 22973574, at *11.
2 We note that the Second Circuit described the district court’s review as review “under an arbitrary and capricious standard.” Welland, 116 F. App’x at 322, which explains why we and the district court also cite non–New York cases that employ this standard.
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As for our review of the district court, we review its legal holding that Matrix did not act
arbitrarily de novo and its factual findings for clear error. Fenwick v. Hartford Life & Accident Ins.
Co., 841 F. App’x 847, 852 (6th Cir. 2021).
B. Threshold Challenges
O’Kelly raises several challenges to the district court’s decision that we address before
reviewing whether Matrix’s decision was arbitrary. In particular, O’Kelly argues that the district
court applied the wrong standard of review to Matrix’s decision, and considered medical
documents in the administrative record that were not authenticated and therefore inadmissible as
evidence.
First, we conclude from our discussion above that the district court applied the proper
standard of review under New York law. Second, we note that the district court properly based its
grant of summary judgment on the administrative record. O’Kelly forfeited her authentication
argument below by raising it for the first time in her summary-judgment reply brief. See Bennett
v. Bascom, 788 F. App’x 318, 323 (6th Cir. 2019) (citing Scottsdale Ins. Co. v. Flowers, 513 F.3d
546, 553 (6th Cir. 2008)). Even if we did not deem O’Kelly’s argument waived, we would agree
with the district court that it does not “constitute a proper objection on summary judgment.” The
Federal Rules of Civil Procedure have no bearing on which medical documents Matrix may
consider in evaluating O’Kelly’s claim. Cf. Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609,
619 (6th Cir. 1998) (Gilman, J., concurring) (stating, as the opinion of the court, that Rule 56’s
summary-judgment procedures are “inapposite” to ERISA actions). O’Kelly’s point that her case
is a non-ERISA matter does not render Rule 56 any more appropriate because the district court
still was required to review the full administrative record that Matrix used in its review in order to
rule on arbitrariness.
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We also decline, as the district court did, to consider O’Kelly’s argument that she met the
plan’s definition of being totally disabled. Our decision to review Matrix’s denial for arbitrariness
renders moot O’Kelly’s breach-of-contract argument on the merits of her disability claim. Our role
on review is not to find for ourselves whether O’Kelly was totally disabled under the plan, but to
check if a reasonable basis supported Matrix’s finding.
C. The Bank’s Decision
Arriving at O’Kelly’s central challenge, we find no bad faith, arbitrariness, or fraud in
Matrix’s denial of benefits. The decision to deny plan benefits is not arbitrary if it is “the result of
a deliberate, principled reasoning process and . . . supported by substantial evidence.” Autran, 27
F.4th at 411 (omission in original) (quoting Davis v. Hartford Life & Accident Ins. Co., 980 F.3d
541, 547 (6th Cir. 2020)). Substantively, plan administrators can reach only those decisions for
which a rational person could conclude that adequate evidence exists. Id. at 412. When the record
contains enough support for a rational decision in either direction, how the administrator weighs
conflicting evidence is not arbitrary. Ibid. Procedurally, plan administrators must reach their
decisions through “reasoned decisionmaking.” Ibid. If a participant’s disability is contested, the
administrator must weigh the full administrative record. Id. at 415.
Matrix’s decision in O’Kelly’s case passes substantive and procedural muster. The record
contained more than adequate evidence for Matrix to conclude that O’Kelly was not disabled. See
id. at 413. O’Kelly’s primary-care physician and seven other physicians all reviewed O’Kelly’s
medical records and found no evidence that she suffered from any neurological impairment. After
the SSA’s disability finding, another physician found no evidence of a disabling psychiatric
condition. And to the extent that O’Kelly does suffer some impairment, two vocational reviews
found that O’Kelly could perform her own or another occupation.
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Matrix also considered the full administrative record in deciding O’Kelly’s claim. In its 33-
page final denial letter, Matrix addressed all relevant evidence, including the conflicting disability
opinions. Matrix also confronted the SSA’s contrary disability finding, explaining that the initial
SSA award was based on clinical records from the time of the SSA decision and that its denial
rested on “updated clinical information” received since the SSA’s decision and on “current
findings” from four physicians. In sum, Matrix had enough evidence to conclude that O’Kelly was
not totally disabled, and it followed a rational process in reaching that conclusion. See ibid.
O’Kelly responds with instances of alleged arbitrariness at each of Matrix’s three reviews.
She argues that Matrix’s decision was arbitrary because (1) Matrix’s initial termination of benefits
“relied on an unnamed non-examining nurse practitioner” who found that O’Kelly’s condition had
improved, and (2) Matrix did not address the opposing medical opinions of several physicians,
submitted with O’Kelly’s first and second appeals.
1. Initial Termination
O’Kelly argues that Matrix’s initial decision to terminate her disability benefits was
arbitrary because it relied in part on the opinion of an unnamed nurse who focused on the fact that
O’Kelly was “smiling and appear[ed] improved” at a medical appointment. This opinion, O’Kelly
argues, amounted to a selective review of the record.
O’Kelly’s focus on the nurse is misplaced because it challenges only Matrix’s initial
termination of benefits, not its final denial. Under the terms of the plan, Matrix’s denial of
O’Kelly’s benefits was not final until she exhausted the internal appeals process, after which
Matrix reached a final decision based on its review of all the evidence in the record. Only Matrix’s
final decision is before us. In that decision, it is clear that Matrix addressed all of the relevant
information.
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Even if we reviewed Matrix’s initial termination, we would not find it arbitrary. As the
district court noted, Matrix had reviewed and summarized medical records from four of O’Kelly’s
doctors. Both Matrix and the nurse based their conclusions on this evidence. And although Matrix’s
initial termination letter did not mention the SSA’s disability finding, Matrix relied on that same
finding when it first approved O’Kelly’s disability benefits. O’Kelly’s claim of selective review
mischaracterizes the review that actually took place.
2. First Appeal
O’Kelly next argues that Matrix acted arbitrarily by failing to address a clinical counselor’s
opinion, submitted with O’Kelly’s first appeal, that suggested that O’Kelly suffered from
depression, anxiety, and post-traumatic stress disorder. However, Matrix noted in its final letter
that the counselor’s opinion was inconclusive and never actually diagnosed O’Kelly with any
disorder. It was not arbitrary for Matrix to assign little weight to a medical opinion with little
significance. In any event, Matrix’s reviewing physicians addressed the opinion. Two peer
reviewers noted that the opinion lacked any specific diagnosis or definitive finding of impairment.
Another noted that the opinion was based only on a “symptom survey” ordered by O’Kelly’s own
attorney. O’Kelly faults one of the peer reviewers for not personally contacting the author of the
opinion, but she offers no support for the notion that Matrix’s reviewing physicians must contact
each of O’Kelly’s care providers. Matrix’s review of the medical record was adequate, and that
review balanced the counselor’s opinion against the weight of other relevant evidence.
3. Second Appeal
Finally, O’Kelly contends that Matrix acted arbitrarily when it failed to respond to two
medical opinions that O’Kelly submitted with her second appeal. Although Matrix consulted four
physicians in reviewing O’Kelly’s second appeal, O’Kelly claims that none refuted the conclusions
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of her physicians, which countered Matrix’s findings up to that point. Even if we accepted
O’Kelly’s premise that Matrix needed to rebut each contrary opinion in the medical record, we
would conclude that Matrix met that burden. See Balmert v. Reliance Standard Life Ins. Co., 601
F.3d 497, 504 (6th Cir. 2010) (“Reliance on other physicians is reasonable so long as the
administrator does not totally ignore the treating physician’s opinions.”). Matrix sent O’Kelly’s
medical records to four physicians, who reviewed these opinions in light of the medical evidence
from O’Kelly’s other doctors. One reviewer even spoke with the author of one of O’Kelly’s
proffered opinions and addressed that diagnosis in his report. The other opinion, as the district
court noted, conflicted with those of three of O’Kelly’s doctors. Contrary to what O’Kelly claims,
Matrix explained its disagreement with the two opinions through its peer reviewers. In denying
O’Kelly her disability benefits, Matrix did not ignore any part of the medical record.
CONCLUSION
For the reasons above, the judgment of the district court is AFFIRMED.
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