Timothy P. O'Leary v. Aetna Life Insurance Company

• Court: Court of Appeals for the Eleventh Circuit
• Decided: October 1, 2018
• Docket: 17-15162
• Status: Unpublished

Opinion

Case: 17-15162 Date Filed: 10/01/2018 Page: 1 of 11

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 17-15162 Non-Argument Calendar ________________________

D.C. Docket No. 3:16-cv-00389-RV-EMT

TIMOTHY P. O’LEARY,

Plaintiff - Appellant,

versus

AETNA LIFE INSURANCE COMPANY,

Defendant - Appellee.

________________________

Appeal from the United States District Court for the Northern District of Florida ________________________

(October 1, 2018)

Before JORDAN, JILL PRYOR and HULL, Circuit Judges.

PER CURIAM: Case: 17-15162 Date Filed: 10/01/2018 Page: 2 of 11

Plaintiff Timothy O’Leary filed suit pursuant to the Employee Retirement

Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., challenging the

decision of defendant Aetna Life Insurance Company to terminate his long-term

disability benefits. The district court granted summary judgment in favor of Aetna.

O’Leary, proceeding pro se on appeal, continues to challenge Aetna’s decision

terminating his benefits. In reviewing the decision from Aetna, the ERISA plan

administrator, we consider whether the decision was reasonable and entitled to

deference. We conclude that a reasonable basis supported Aetna’s decision to

terminate O’Leary’s benefits and that its decision was not arbitrary and capricious.

We thus affirm the district court.

I. FACTUAL BACKGROUND

In 2006, O’Leary was injured in a serious motorcycle accident. At the time

of the accident, O’Leary was employed as the Director of Information Technology

for the New England Regional Council of Carpenters. The New England Regional

Council of Carpenters participated in the Association of Community Service

Agencies’ Group Insurance Trust, which had a long-term disability insurance

policy with coverage underwritten by Aetna.

Under the terms of the long-term disability policy, a claimant is entitled to

benefits for a period of up to 24 months if he is incapable of performing the

material duties of his occupation due to disease or injury. A claimant is entitled to

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benefits beyond the initial 24-month period if he is incapable of working “any

reasonable occupation” due to disease or injury. Doc. 19-10 at 156.1 Under the

policy, a “reasonable occupation” refers to any “any gainful activity for which [the

claimant is]; or may reasonably become; fitted by: education; training; or

experience,” and for which the claimant earns at least a specified minimum level of

income. Id. at 171. A disabled claimant generally remains eligible for benefits

until Aetna finds that he is no longer disabled. The policy gives Aetna

“discretionary authority to determine whether and to what extent employees and

beneficiaries are entitled to benefits; and construe any disputed or doubtful terms

of this Policy.” Id. at 196.

After the accident, O’Leary filed a claim with Aetna for long-term disability

benefits. Aetna approved O’Leary’s claim, finding that he was disabled because

he was unable to perform the material duties of his occupation due to injury or

illness. After O’Leary received 24 months of benefits, Aetna continued to pay him

long-term disability benefits, meaning it found that he was incapable of working

any reasonable occupation. O’Leary also applied for benefits and received benefits

from the Social Security Administration, which found that he was disabled.

In 2015—approximately nine years after the motorcycle accident—Aetna

decided to terminate O’Leary’s benefits. Aetna informed O’Leary that the

1 Citations to “Doc. #” refer to numbered entries on the district court’s docket.

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evidence in its file no longer supported a conclusion that he was entitled to benefits

under the policy. Aetna explained that it had conducted surveillance on O’Leary,

which showed that he was able to drive, tote a garbage can to his garage, and dance

at a nightclub. Aetna also indicated that its decision was based on the opinion of

an independent physician who had reviewed O’Leary’s medical records and

spoken with O’Leary’s physician. Aetna acknowledged that the Social Security

Administration had determined that O’Leary was disabled, but Aetna explained

that its decision was based on new information that had been unavailable to the

Social Security Administration when it awarded O’Leary benefits. Aetna informed

O’Leary that he was entitled to appeal the decision and that he could submit

additional medical evidence.

O’Leary appealed the termination of his benefits and submitted additional

medical records to Aetna. After receiving the records, Aetna requested

independent peer reviews from additional physicians. The physicians who

performed these peer reviews opined that O’Leary’s medical records showed that

he was no longer functionally impaired. After considering this additional

evidence, Aetna upheld the decision to terminate benefits. Aetna explained that

after performing a “comprehensive review of all records in [O’Leary’s] claim file,”

it found that there was a lack of evidence establishing O’Leary’s inability to

perform the duties of any reasonable occupation. Doc. 19-5 at 170. Aetna

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explained that the evidence it considered included the surveillance of O’Leary as

well as peer review reports from the physicians who had reviewed O’Leary’s

medical records.

O’Leary then filed suit in federal district court challenging Aetna’s decision.

Aetna and O’Leary filed cross motions for summary judgment. The district court

denied O’Leary’s motion and granted Aetna’s motion, explaining that Aetna’s

decision to deny benefits was “reasonable and not arbitrary and capricious.” Doc.

32 at 12. This is O’Leary’s appeal.

II. STANDARD OF REVIEW

“We review de novo a district court’s ruling affirming . . . a plan

administrator’s ERISA benefits decision, applying the same legal standards that

governed the district court’s decision.” Blankenship v. Metro. Life Ins., 644 F.3d

1350, 1354 (11th Cir. 2011). Although ERISA itself does not provide a standard

for courts reviewing the benefits decisions of plan administrators, we have

established the following six-step framework for reviewing a plan administrator’s

decision:

(1) Apply the de novo standard to determine whether the claim administrator’s benefits-denial decision is “wrong” (i.e., the court disagrees with the administrator’s decision); if it is not, then end the inquiry and affirm the decision.

(2) If the administrator’s decision in fact is “de novo wrong,” then determine whether he was vested with discretion in reviewing claims; if not, end judicial inquiry and reverse the decision.

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(3) If the administrator’s decision is “de novo wrong” and he was vested with discretion in reviewing claims, then determine whether “reasonable” grounds supported it (hence, review his decision under the more deferential arbitrary and capricious standard).

(4) If no reasonable grounds exist, then end the inquiry and reverse the administrator’s decision; if reasonable grounds do exist, then determine if he operated under a conflict of interest.

(5) If there is no conflict, then end the inquiry and affirm the decision.

(6) If there is a conflict, the conflict should merely be a factor for the court to take into account when determining whether an administrator’s decision was arbitrary and capricious.

Id. at 1355.

III. DISCUSSION

We now apply this six-part framework to review Aetna’s decision

terminating O’Leary’s long-term disability benefits. We affirm because, even

assuming that it was de novo wrong, Aetna was vested with discretion to review

claims and reasonable grounds support its decision.

Regarding the first step, we assume for purposes of this appeal that Aetna’s

decision to terminate benefits was de novo wrong. Moving to the second step, the

parties disagree about whether the policy vested Aetna with discretion to review

claims. The policy in the record states that Aetna has “discretionary authority to

determine whether and to what extent employees and beneficiaries are entitled to

benefits; and construe any disputed or doubtful terms of this policy.” Doc. 19-10

at 196. O’Leary argues that the quoted provision comes from a policy that went

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into effect in 2013 and thus does not address whether the earlier group policy,

which governs the claim in this case, gave Aetna discretion to review claims.

After O’Leary raised this argument in his summary judgment brief in the district

court, Aetna filed an affidavit acknowledging that the provision in the record

comes from a 2013 policy but explaining that this language also appeared in the

earlier policy that applies to O’Leary. In the district court, O’Leary failed to

answer or respond to Aetna’s affidavit evidence. Because O’Leary never contested

the affidavit, the district court found that he had conceded that the relevant policy

gave Aetna discretion in reviewing claims. O’Leary raised no argument before the

district court challenging the affidavit as improper—for example, by arguing that it

should not be considered because it was not part of the administrative record—so

we will consider the contents of the uncontested affidavit. See Norelus v. Denny’s,

Inc., 628 F.3d 1270, 1296 (11th Cir. 2010) (recognizing the “well-established rule

against reversing a district court judgment on the basis of issues and theories that

were never presented to that court” because “issues not raised in the district court

should not be considered on appeal”). 2 After considering the affidavit, we

conclude that the policy vested Aetna with discretion in reviewing claims.

2 Even if O’Leary had raised a challenge to the affidavit in the district court, he abandoned the issue by failing to raise any argument on appeal that the district court erred in considering the affidavit. See Sapuppo v. Allstate Floridian Ins., 739 F.3d 678, 680 (11th Cir. 2014). Although O’Leary is proceeding pro se on appeal and we construe his brief liberally, “issues not briefed on appeal by a pro se litigant are deemed abandoned.” Timson v. Sampson, 518 F.3d 870, 874 (11th Cir. 2008).

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At the third step, we conclude that reasonable grounds supported Aetna’s

decision to terminate O’Leary’s benefits. We acknowledge that there is some

evidence in the administrative record—including O’Leary’s self-reported

symptoms and opinions from some medical providers—that would support a

conclusion that O’Leary remained disabled and entitled to benefits. But other

evidence in the administrative record—including the surveillance footage of

O’Leary and the opinions of the physicians who reviewed O’Leary’s medical

records—supports the conclusion that O’Leary’s functioning was no longer

impaired. Because Aetna was entitled to rely on the surveillance evidence and the

assessments of O’Leary’s capabilities by independent physicians who reviewed

O’Leary’s medical files, its decision was not arbitrary and capricious. 3 See Turner

v. Delta-Care Disability & Survivorship Plan, 291 F.3d 1270, 1274 (11th Cir.

2002) (concluding that administrator’s decision that claimant was no longer

eligible for benefits was not arbitrary and capricious when it relied on, among

other evidence, surveillance reports); Blankenship, 644 F.3d at 1357 (concluding

3 O’Leary argues that Aetna should have given greater weight to the opinion of a consulting psychologist who determined that O’Leary had an impaired memory and would experience “marked difficulty” in returning to his prior employment. Doc. 19-8 at 156. Because O’Leary had received more than 24 months of benefits under the policy, however, he was entitled to benefits only if he was incapable of working “any reasonable occupation.” Doc. 19- 10 at 156. The consulting psychologist did not address this standard because he considered only whether O’Leary would have difficulty meeting the responsibilities associated with his prior employment. In light of the limited nature of the psychologist’s opinion, we conclude that it was reasonable for Aetna not to assign greater weight to this opinion.

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that administrator did not act unreasonably in relying on file reviews from

independent doctors instead of in-person, physical examinations of the claimant).

O’Leary also argues that Aetna’s decision to terminate benefits was

unreasonable because it was inconsistent with the determinations of the Social

Security Administration and MassHealth (Massachusetts’s state Medicaid

administrator) that he was disabled and entitled to benefits. We certainly accept

that a court “may consider the Social Security Administration’s determination of

disability in reviewing a plan administrator’s determination of benefits.” Whatley

v. CNA Ins., 189 F.3d 1310, 1314 n.8 (11th Cir. 1999) (internal quotation marks

omitted). And this reasoning from Whatley further suggests that a court may

consider the determination of disability by a state agency, like MassHealth, when

reviewing a plan administrator’s decision denying benefits. But the decisions of

the Social Security Administration and a state Medicaid administrator finding that

the claimant was disabled are “not considered dispositive on the issue of whether a

claimant satisfies the requirement for disability under an ERISA-covered plan.”

Id.

O’Leary nevertheless contends that it was unreasonable for Aetna to

terminate his benefits because it failed to consider MassHealth’s 2015

determination that he was disabled. We have held that it is unreasonable for a plan

administrator to deny benefits when the administrative record did not contain

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information from the claimant’s social security file because a plan administrator is

not free, after sending a claimant to the Social Security Administration to seek

alternative compensation, “to ignore the evidence generated by the [Social

Security] process.” Melech v. Life Ins. Co. of N. Am., 739 F.3d 663, 675 (11th Cir.

2014). We assume for purposes of this appeal that likewise it would be

unreasonable for a plan administrator to deny benefits without considering

information from the claimant’s file before a state agency that found he was

disabled.

But even with this assumption, O’Leary’s argument fails because he cannot

show that Aetna refused to consider MassHealth’s decision or the records that were

before MassHealth. It’s true that Aetna’s decision upholding the denial of benefits

did not mention that MassHealth found O’Leary to be disabled in 2015. But Aetna

stated that it had considered “every piece of information” in his file, which

included Mass Health’s disability determination. Doc. 19-5 at 167. And the

substance of Aetna’s decision confirms that it considered the records that were

before MassHealth: Aetna discussed the findings of the psychologist who

evaluated O’Leary at MassHealth’s request. Given the substance of Aetna’s

decision on appeal, we reject O’Leary’s argument that Aetna failed to consider

MassHealth’s determination that he was disabled or the records that MassHealth

reviewed in making its disability determination.

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At the fourth step of our framework, we conclude that Aetna operated under

a conflict of interest at the time that it terminated O’Leary’s benefits because it

both made eligibility decisions and paid awarded benefits out of its own funds. See

Blankenship, 644 F.3d at 1355. Because there was a conflict of interest, the fifth

step of the framework is inapplicable.

Turning to step six, we must take Aetna’s conflict of interest into account to

determine whether Aetna’s decision to terminate benefits was arbitrary and

capricious. We have explained that even when a plan administrator has a conflict

of interest, “courts still owe deference to the plan administrator’s discretionary

decision-making as a whole.” Id. (internal quotation marks omitted). Put

differently, a structural conflict of interest is only “a factor” in our review, and our

“basic analysis still centers on assessing whether a reasonable basis existed for the

administrator’s benefits decision.” Id. (internal quotation marks omitted). Even

considering Aetna’s conflict as a factor, we cannot say that its decision to deny

benefits was unreasonable or arbitrary and capricious given the surveillance video

and the physician’s assessments contained in the administrative record.

IV. CONCLUSION

For the foregoing reasons, we affirm the district court’s judgment.

AFFIRMED.