Stratton v. EI DuPont de Nemours

• Court: Court of Appeals for the Third Circuit
• Decided: April 6, 2004
• Docket: 03-2609
• Status: Published

Opinion

Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit

4-6-2004

Stratton v. EI DuPont de Nemours Precedential or Non-Precedential: Precedential

Docket No. 03-2609

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004

Recommended Citation "Stratton v. EI DuPont de Nemours" (2004). 2004 Decisions. Paper 754. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/754

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu. PRECEDENTIAL Stella L. Smetanka Jonathan Will (Argued) UNITED STATES COURT OF Law Student Specially Admitted APPEALS FOR THE THIRD CIRCUIT Pursuant to Third Cir. LAR 46.3 University of Pittsburgh School of Law 210 South Bouquet Street No. 03-2609 Sennott Square - Room 5220 Pittsburgh, PA 15260

MELANIE STRATTON; Attorneys for Appellants JEFFREY STRATTON, her husband Raymond M. Ripple (Argued) Appellants Donna L. Goodman E.I. DuPont de Nemours & Company v. Legal Department Wilmington, DE 19898 E. I. DUPONT DE NEMOURS & CO. Attorneys for Appellee

On Appeal from the United States District Court for the Western District of OPINION OF THE COURT Pennsylvania (D.C. No. 02-cv-02131) District Judge: Hon. Arthur J. Schwab SLOVITER, Circuit Judge. Appellant Melanie Stratton appeals Argued March 8, 2004 from the order of summary judgment entered on behalf of defendant E.I. DuPont Before: SLOVITER, NYGAARD, de Nemours & Co. (“DuPont”). Stratton Circuit Judges and OBERDORFER, filed this suit pursuant to the Employee District Judge* Retirement Inc om e S ec ur ity A ct (“ERISA”), 29 U.S.C. § 1132(a)(1)(B), (Filed April 6, 2004 ) seeking repayment of medical benefits she incurred for a surgical procedure to treat her temporomandibular joint dysfunction (“TMJ”).1 We have jurisdiction to hear this appeal under 28 U.S.C. § 1291.

* Hon. Louis F. Oberdorfer, Senior 1 District Judge, United States District Stratton also included a bad faith Court for the District of Columbia, claim under Pennsylvania law that is not sitting by designation. at issue in this appeal. I. these treatments met with only temporary relief, Dr. Donald J. Macher, an oral Stratton had health insurance surgeon, suggested that Stratton undergo through an employer-sponsored health arthroplasty surgery for her TMJ. The plan of DuPont, her husband’s employer. full medical term for this surgery is The plan covering Stratton excludes “Right and Left Temporomandibular “[c]harges for services or supplies not Joint Reconstructive Arthroplasty,” J. medically necessary for the diagnosis and App. at 156, and it is an invasive treatment of the illness or injury.” J. procedure that involves repositioning App. at 26.2 It defines the term discs, lysis of adhesions, and the “medically necessary” as a “service or insertion of a previously constructed supply which is reasonable and necessary splint into the mouth. for the diagnosis or treatment of an illness or injury, in view of the customary On or about November 13, 1999, practice in the geographical area, and is Aetna initially denied coverage for the given at the appropriate level of care.” J. surgery but in late December requested App. at 15. It is undisputed that first that Stratton submit an updated magnetic Aetna U.S. Healthcare (“Aetna”), the resonance image (“MRI”) so that her insurance carrier for DuPont, and request could be further considered. The ultimately DuPont had discretion to most recent MRI in Stratton’s record administer the plan with regard to until that date was taken February 8, medically necessary services and 1990; at Aetna’s request, Stratton supplies. obtained an updated MRI on January 3, 2000. Stratton submitted the updated The facts set forth hereafter are MRI, which a specialist at Aetna, Dr. taken from the record on the summary George Koumaras, reviewed. On judgment motion and are not in dispute. January 6, 2000, Aetna denied coverage In 1990, Stratton’s doctors for the requested surgery on the ground diagnosed her with TMJ, and for the next that there were more conservative and ten years she suffered from headaches medically appropriate treatments and the inability to open and close her available, such as arthrocentesis or mouth, chew, yawn, and laugh without arthroscopic surgery. Arthrocentesis pain. She underwent many forms of involves anesthetizing the affected TMJ conservative treatment, including splint and then flushing the joint with a sterile therapy, orthodontia, dental work, solution to lubricate the joint surfaces analgesics and muscle relaxants. After and reduce inflammation, see American Academy of Orofacial Pain, at http://www.aaop.org/info_arthro.htm; 2 We use “J. App.” to cite to the arthroscopy involves inserting an Joint Appendix, and “App.” to cite to imaging and therapy device into the Appellants’ Appendix.

2 affected TMJ. See id. at to a slightly less deferential http://www.aaop.org/info_surgery.htm. standard because of the Stratton nevertheless went ahead with the slight conflict of interest. arthroplasty surgery on January 13, 2000 But even under a and covered the cost of $9,829.05 heightened standard of herself. review, the record before the administrator (Aetna) Following her surgery, Stratton and, on appeal to the continued to appeal the denial of benefits DuPont Medical Care Plan, within Aetna, which waited to review the supports the denial of post-operative report and any other coverage for plaintiff’s information pertinent to the surgery TM J surgery. before making a final decision on her appeal. Aetna had three physicians App. A at 6 (District Court Opinion). review her claim, including Dr. Hendler On appeal, we must consider – an independent physician from the whether the District Court properly University of Pennsylvania who is Board reviewed the denial of coverage under a Certified in Oral and Maxillofacial “slightly less deferential” arbitrary and Surgery, specializes in TMJ, and was not capricious standard, App. A at 6, and involved in the original decision. Dr. whether it properly granted the summary Hendler also decided that less invasive judgment motion. We exercise plenary surgeries would have been more review over a district court’s grant of appropriate. Aetna denied Stratton’s summary judgment. Skretvedt v. E.I. claim on February 10, 2000. DuPont de Nemours & Co., 268 F.3d Stratton appealed to DuPont. 167, 173-74 (3d Cir. 2001). Summary DuPont reviewed the documents on judgment is proper if there is no genuine which Aetna had based its denial and its issue of material fact and if the moving own files to see how similar cases had party is entitled to judgment as a matter been handled in the past to ensure that its of law when viewing the facts in the light plan was being administered consistently. most favorable to the non-moving party. On the basis of the record before it, Fed. R. Civ. P. 56(c); Celotex Corp. v. DuPont upheld Aetna’s denial of Catrett, 477 U.S. 317 (1986). We apply coverage and informed Stratton of this the same standard that the District Court decision on April 18, 2000. The District should have applied. Farrell v. Planters Court held that the plan grants discretion Lifesavers Co., 206 F.3d 271, 278 (3d to determine eligibility for benefits, Cir. 2000). which triggers the arbitrary Because the District Court and capricious standard of reviewed the claim under the appropriate review, diminished perhaps standard and did not err as a matter of

3 law, we will affirm its decision. discretion.” Id. at 115 (internal quotation and citation omitted). II. Attempting to distill this direction A. Standard of Review into a workable standard, we have held Stratton’s first argument on appeal that “when an insurance company both is that the District Court should have funds and administers benefits, it is used a heightened arbitrary and generally acting under a conflict that capricious standard, but it is unclear that warrants a heightened form of the this would entail closer scrutiny of the arbitrary and capricious standard of decision of the employer than the review.” Pinto v. Reliance Standard Life “slightly less deferential” arbitrary and Ins. Co., 214 F.3d 377, 378 (3d Cir. capricious standard of review employed 2000). This “heightened” form of review by the District Court in the instant case. is to be formulated on a sliding scale App. A at 6. The standard of review in basis, which enables us to “review[ ]the cases brought under ERISA for benefits merits of the interpretation to determine denied is not always easy to apply. In the whether it is consistent with an exercise seminal case on this issue, the Supreme of discretion by a fiduciary acting free of Court stated that “a denial of benefits the interests that conflict with those of challenged under [ERISA, 29 U.S.C.] § beneficiaries.” Pinto, 214 F.3d at 391 1132(a)(1)(B) must be reviewed under a (quoting Doe v. Group Hospitalization & de novo standard unless the benefit plan Med. Servs., 3 F.3d 80, 87 (4th Cir. expressly gives the administrator or 1993)). In employing the sliding scale fiduciary discretionary authority to approach, we take into account the determine eligibility for benefits or to following factors in deciding the severity construe the plan’s terms.” Firestone of the conflict: (1) the sophistication of Tire & Rubber Co. v. Bruch, 489 U.S. the parties; (2) the information accessible 101, 102 (1989). In cases where an to the parties; (3) the exact financial administrator exercises discretion, arrangement between the insurer and the “[t]rust principles make a deferential company; and (4) the status of the standard of review appropriate” and the fiduciary, as the company’s financial or Court suggested that we review such structural deterioration might negatively exercises of discretion under the arbitrary impact the “presumed desire to maintain and capricious standard. Id. at 111-12. employee satisfaction.” Pinto, 214 F.3d The Supreme Court continued, “[o]f at 392. course, if a benefit plan gives discretion Our examination of the factors set to an administrator or fiduciary who is forth in Pinto in light of the operating under a conflict of interest, that circumstances in this case leads us to conflict must be weighed as a factor in conclude that the District Court did not determining whether there is an abuse of err in holding that the instant case

4 “triggers the arbitrary and capricious 949 F.2d 1323, 1335 (3d Cir. 1991). standard of review, diminished perhaps However we have noted that a situation to a slightly less deferential standard in which the employer “establish[es] a because of the slight conflict of interest.” plan, ensure[s] its liquidity, and create[s] App. A at 6. We assume there was a an internal benefits committee vested sophistication imbalance between the with the discretion to interpret the plan’s parties. There is no reason why Stratton terms and administer benefits” does not would have had ERISA or claims typically constitute a conflict of interest. experience, whereas DuPont, a large, Pinto, 214 F.3d at 383. This describes in successful company with many large part the mechanism DuPont chose employees, had numerous such claims. to fund and administer its benefits plan. In fact, DuPont reviewed its record of Although the case-by-case claims before denying Stratton’s claim. decisionmaking, which as Stratton points It follows that this factor weighs in favor out means that each claim dollar avoided of heightening the standard. Regarding is a dollar that accrues to DuPont, may information accessibility, Stratton has leave room for some bias, the fact that alleged no information imbalance, nor DuPont structured the program by using should one be inferred. A review of the Aetna to hear the claim initially provides record shows a conscientious effort on the safeguard of neutral evaluation. In the part of Aetna to keep Stratton fact, the physicians to whose opinions apprised of the information it had at its Stratton objects were affiliated with disposal and the reasons animating its Aetna, not DuPont. This factor thus decision to deny benefits. This second counsels for only a slightly heightened factor does not alter the arbitrary and standard. capricious standard. The final factor regarding the The third factor, the exact status of the fiduciary is not relevant. financial arrangement between the Stratton alleges no facts regarding the insurer and the company, requires more financial health or long term plans of the attention. The conflict alleged is that the company that would undermine the plan is funded by the employer, DuPont, “presumed desire to maintain employee on a case-by-case basis instead of on a satisfaction.” Pinto, 214 F.3d at 392.3 fixed price basis that has been actuarially determined. Theoretically, then, DuPont 3 may have some incentive to deny At oral argument DuPont argued, coverage on individual requests, pursuant to Romero v. SmithKline assuming that it has no interest in Beecham, 309 F.3d 113, 118 (3d Cir. “avoid[ing] the loss of morale and higher 2002), that the $9,829.05 claim is wage demands that could result from sufficiently de minimus compared to denials of benefits.” Nazay v. Miller, DuPont’s profits to negate any inference of conflict. Because this was not

5 Stratton alleges no facts that would give decision without reason, rise to an inference of conflict other than unsupported by substantial the fact that DuPont both funds and evidence or erroneous as a ultimately administers its own plan after matter of law. Once the outsourcing the initial phases of conflict becomes a factor administration. Given this, the District however, it is not clear how Court properly heightened the arbitrary the process required by the and capricious standard slightly to typical arbitrary and accommodate what appears to be a capricious review changes. potential, even if negligible, chance of Does there simply need to conflict. be more evidence supporting a decision, It is easier to decide which regardless of whether that standard to use than to apply it because it evidence was relied upon? is not clear how to employ a slightly heightened form of arbitrary and capricious review. Pinto, 214 F.3d at 392 (internal We acknowledged that quotations omitted). there is something Finding this wanting, we decided intellectually unsatisfying, that “we can find no better method to or at least discomforting, in reconcile Firestone’s dual commands describing our review as a than to apply the arbitrary and capricious heightened arbitrary and standard, and integrate conflicts as capricious standard. . . . factors in applying that standard, The routine legal meaning approximately calibrating the intensity of of an arbitrary and our review to the intensity of the capricious decision is . . . a conflict.” Id. at 393. We concluded that we “will expect district courts to consider the nature and degree of apparent discussed in the briefs, and because there conflicts with a view to shaping their is no evidence of record regarding arbitrary and capricious review of the DuPont’s financial health, we decline to benefits determinations of discretionary discuss the issue here. We noted in Pinto decisionmakers.” Id. “that when more money was at stake–i.e., Taking our cue from the when a large class of beneficiaries somewhat enigmatic Pinto language, we requested and was denied benefits–the will scrutinize carefully any allegations potential conflict might invite closer that Aetna erred in the manner in which scrutiny.” Pinto, 214 F.3d at 386. No it reviewed Stratton’s claim, as such such large sum of money is at stake in errors might confirm Stratton’s the instant case.

6 contention that there was a conflict of invasive treatments had not worked for interest. This would comport with the Stratton in the past, and finally that they sliding scale inquiry used in the Fourth failed to accord sufficient deference to Circuit, which gives the fiduciary the opinion of her treating physician. decision “some deference, but this These arguments are unpersuasive. deference will be lessened to the degree In her briefs and during oral necessary to neutralize any untoward argument, Stratton asserts that an e-mail influence resulting from the conflict.” submitted by Dr. Koumaras, which Group Hospitalization & Medical Servs., stated, “studies have shown that 85% of 3 F.3d at 87. those cases operated on regarding B. Summary Judgment respositioning of the disc do fail and the disc usually relocates itself to the Of particular significance is our dislocated position,” J. App. at 200, precedent holding that a court may not demonstrates that Aetna made its substitute its own judgment for that of determination of benefits based on a plan administrators under either the generalized review not focused on deferential or heightened arbitrary and Stratton’s individual experience. capricious standard. Smathers v. Multi- However, the statistical likelihood that Tool, Inc./Multi-Plastics, Inc., 298 F.3d the surgery will be successful is relevant 191, 199 (3d Cir. 2002) (citation to deciding whether it is “medically omitted). Even under the heightened necessary.” Also, Dr. Koumaras’ standard, “a plan administrator’s decision medical opinion was based on his will be overturned only if it is clearly not experience in and knowledge of the field, supported by the evidence in the record an important predicate for or the administrator has failed to comply recommendation of individual treatment. with the procedures required by the Furthermore, there are documents of plan.” Id. at 199 (quoting Orvosh v. record that show that Stratton’s claim did Program of Group Ins. for Salaried receive individualized attention. One Employees of Volkswagen of Am., Inc., such document, a letter in which Dr. 222 F.3d 123, 129 (3d Cir. 2000)). Koumaras quotes the independent Stratton does not argue that either Aetna physician Dr. Hendler, indicates that the or DuPont deviated from required Aetna physicians scrutinized the medical procedures. evidence at least as closely, if not more, Stratton makes three principal than did Dr. Macher. It noted, arguments with regard to DuPont’s Plain films [of an MRI denial of her claim: that Aetna’s taken in 1990] did not physicians did not give Stratton’s claim indicate any evidence of individualized review, that these same degenerative joint disease . physicians failed to consider that less . . . A recent MRI was

7 obtained after . . .” recommendations by J. App. at 100. [Aetna] reviewers . . . . Performing Careful scrutiny of the record surgery of this reveals that the criticism that Aetna paid magnitude without a insufficient attention to Stratton’s claim current MRI would, is unwarranted. The record here is in fact, be a detailed and comprehensive because deviation of DuPont and Aetna took many steps in standard of care. considering Stratton’s claim: Aetna On January 3, 2000, invited additional information and a MRI revealed medical history by Stratton, Dr. Macher, minimal disc and her previous treating physician, Dr. displacement. 4 In R.H. Tallents, after first denying light of the patient’s coverage, reviewed the TMJ post- failure to respond to operative report, and finally had three conservative physicians, one of whom was not (nonsurgical) involved in the original decision, review therapy and based the information submitted before finally on the clinical denying Stratton’s request. Aetna’s findings offered in request of an updated MRI which it then Dr. Macher’s reviewed rebuts Stratton’s contention records, less that its consideration of her claim was invasive general as opposed to individual. arthrocentesis It is undisputed that Stratton and/or arthroscopic attempted neither arthrocentesis 5 nor surgery would be considered the procedure of choice. 5 Appellants’ counsel asserted during oral argument that because there is no medical finding of record that 4 At oral argument, Stratton’s Stratton’s joint contained excess fluid, a counsel argued that Koumaras recommendation that she undergo incorrectly characterized the 2000 MRI arthrocentesis was medically as showing disc displacement only on the inappropriate. But arthrocentesis is not a left side. However, the observation of fluid-draining procedure; it is a the “normal temporomandibular joint procedure in which a sterile solution is disc-condyle relationship on the right” inserted into the joint and then drained referred to the 1990 MRI, not the 2000 away. This discussion is of no moment, MRI. J. App. at 182. however, because this argument

8 arthroscopic surgery, both of which are opened or closed her mouth, chewed, less invasive treatments than the yawned, or laughed. It was in light of arthroplasty she chose to undergo and this failure and “based on the clinical both of which Aetna physicians findings offered in Dr. Macher’s recommended in lieu of the arthroplasty. records” that Aetna’s physicians Stratton argues that “to say that [she] recommended these two less invasive refused conservative treatment is a gross surgical procedures. J. App. at 122. We mischaracterization of her medical are not in a position, nor are we history,” Appellant’s Br. at 14, because permitted, to decide which of the three over the years, she had undergone several procedures was best tailored to Stratton’s conservative courses of treatment, case. But a review of the record shows including an occlusal splint, analgesics, that DuPont acknowledged and and muscle relaxants. But this argument considered that the more conservative itself mischaracterizes the record. treatments had not worked for Stratton in DuPont notes in an affidavit of Jean the past and that its suggestion that she Opreska, a Health Care Benefits undergo less invasive procedures was not Consultant and Qualified Benefits based on oversight. Consultant for DuPont, that “Aetna still The final argument Stratton makes recommended denial of benefits because is that Aetna, DuPont, and the District Ms. Stratton refused more conservative Court failed to accord sufficient medical treatment.” J. App. at 91. deference to the opinion of her treating Because the only more conservative physician, Dr. Macher, who medical treatments recommended by recommended the arthroplasty. Just last Aetna were “less invasive arthrocentesis Term, the Supreme Court in Black & and/or arthroscopic surgery,” J. App. at Decker Disability Plan v. Nord, 123 S. 100, we can assume that it was to these Ct. 1965, 1967 (2003), held that “plan treatments that Opreska’s affidavit administrators are not obliged to accord referred–not to the treatments previously special deference to the opinions of undertaken by Stratton. treating physicians.” In so holding, the Aetna specifically acknowledged Court also stated, Stratton’s “failure to respond to Plan administrators, of conservative (non-surgical) therapy,” J. course, may not arbitrarily App. at 122, which presumably meant refuse to credit a claimant’s that she continued to suffer from reliable evidence, including headaches and other pain whenever she the opinions of a treating physician. But we hold, courts have no warrant to regarding the medical propriety of require administrators arthrocentesis was not mentioned in the automatically to accord Appellants’ briefs.

9 special weight to the revert to prior position). A professional opinions of a disagreement does not amount to an claimant’s arbitrary refusal to credit. physician; nor may The Supreme Court in Black & courts impose on Decker Disability Plan, in discussing the plan administrators relative inclinations of consulting a discrete burden of physicians engaged by a plan and treating explanation when physicians stated, of the latter, that “a they credit reliable treating physician, in a close case, may evidence that favor a finding” for the patient. 123 S. conflicts with a Ct. at 1971. The Court eschewed treating physician’s deciding whether “routine deference to evaluation. the claimant’s treating physician would Id. at 1972. yield more accurate [claim] determinations,” because such a As Stratton notes, Dr. Macher in determination “might be aided by his post-operative report stated that he empirical investigation of the kind courts “did not feel that arthroscopy or are ill equipped to conduct.” Id. The arthrocentesis would provide sufficient professional disagreement between mechanical relief of the problems within Aetna’s consulting physicians and the joint and thus [ ] discussed [with Stratton’s physician seems grounded in Stratton] the risks, benefits and differing conclusions based on the alternatives of TMJ arthroplasties.” J. review of Stratton’s MRI, past medical App. at 115. Aetna’s physicians did not history, and the likelihood that the arbitrarily refuse to credit this opinion; chosen course of action would be they simply disagreed with Dr. Macher’s successful or not. Because Black & recommended treatment. It appears that Decker Disability Plan holds that plan they may have been wary of Dr. administrators are not obliged to defer to Macher’s initial recommendation the treating physician’s opinion, the because he made that recommendation District Court did not err in upholding before he had an updated MRI. See J. the decision of the plan administrators. App. at 122. Aetna acknowledged that Stratton had not responded to her Having carefully considered the previous course of treatment but arguments put forth by Stratton that concluded that less invasive forms of Aetna and DuPont erred in denying her surgery would be more appropriate claim, as the intensified degree of because repositioned discs usually scrutiny requires we do, we cannot hold migrate back to their original position. that the denial of benefits in this case See J. App. at 200 (referring to studies was “clearly not supported by the that have shown that 85% of such cases evidence in the record.” Smathers, 298

10 F.3d at 199. CONCLUSION For the reasons set forth, we will affirm the District Court’s order granting summary judgment to DuPont.