Viera v. Life Insurance Co. of North America

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

______

No. 10-2281

______

HETTY A. VIERA,

as Executrix of the Estate of Frederick A. Viera;

HETTY A. VIERA, Individually,

Appellants

v.

LIFE INSURANCE COMPANY

OF NORTH AMERICA

______

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. No. 2-09-cv-03574)

District Judge: Honorable Eduardo C. Robreno

______

Argued April 13, 2011

Before: FISHER, JORDAN and COWEN, Circuit Judges.

(Filed: June 10, 2011)

James W. Sutton, III (Argued)

Vlasac & Shmaruk

1014 Millcreek Drive

Feasterville, PA 19053

Counsel for Appellant

Mark C. Cawley

James A. Keller (Argued)

Allison B. Newhart

Saul Ewing

1500 Market Street

Centre Square West, 38th Floor

Philadelphia, PA 19102

Counsel for Appellee

______

OPINION OF THE COURT

______

FISHER, Circuit Judge.

This appeal arises out of the 2008 death of Frederick

Viera (“Viera”) in a head-on motorcycle accident. At the

time of his death, Viera was covered under an employer-

provided accidental death and dismemberment policy

(“Policy”), issued by Life Insurance Company of America

(“LINA”), and subject to the Employee Retirement Income

Security Act (“ERISA”), 29 U.S.C. §§ 1101 et seq. Viera‟s

wife and the executrix of his estate, Hetty Viera (“Plaintiff”),

submitted a claim under the Policy following his death.

LINA denied Plaintiff‟s claim, both initially and on appeal.

2

Subsequently, Plaintiff filed suit, but the United States

District Court for the Eastern District of Pennsylvania found

for LINA on cross-motions for summary judgment. It

concluded that the Policy gave LINA discretionary authority

to determine eligibility. It therefore reviewed LINA‟s

decision under a deferential abuse-of-discretion standard and

held that LINA was entitled to summary judgment. We

conclude that deferential review was not appropriate, given

the language of the Policy, and thus remand for further

proceedings.

I.

A. Factual History

On October 14, 2008, Viera was seriously injured in a

motorcycle accident in Grand Junction, Colorado. He was

treated at St. Mary‟s Hospital and Medical Center (“St.

Mary‟s”) for approximately three hours and subsequently

died.

On the date of his death, Viera maintained the Policy,

an employer-provided accidental death and dismemberment

policy regulated under ERISA.1 The Policy was issued and

administered by LINA.

1

Viera also had an employer-provided life insurance

policy at the time of his death. Plaintiff received $350,000

from LINA on account of this claim.

3

Viera had a pre-existing chronic condition known as

atrial fibrillation, which was diagnosed prior to LINA‟s

issuing the Policy. As part of the medical treatment for this

condition, Viera received medication called Coumadin (also

known as Warfarin). Coumadin is a prescription oral anti-

coagulant drug prescribed for the prevention and treatment of

blood clots.

Following Viera‟s motorcycle accident, doctors at St.

Mary‟s made several findings regarding his treatment and

death. For example, the Final Assessment made in the

Emergency Report confirmed that Viera was “on Coumadin

with therapeutic INR2 significantly complicating trauma

management.” (App. at 160.) The Discharge Summary

prepared by Dr. Michael Bradshaw of St. Mary‟s described

Viera‟s death as caused by “multiple injuries in a head-on

motorcycle versus car accident with severe pelvic fractures,

lower extremity fractures, and a fully coumadinized patient

due to atrial fibrillation.” (Id. at 138.)

The Certificate of Death confirmed that the immediate

cause of Viera‟s death was “multiple injuries,” and it

ambiguously noted that “arteriosclerotic cardiovascular

disease” was a “condition [] contributing to death but not

related to [immediate cause].” (Id. at 227.) The autopsy

report, prepared by Robert A. Kurtzman, listed the immediate

cause of death as “multiple injuries” and listed “other

2

The International Normalized Ratio (“INR”)

measures the Coumadin levels in a person‟s blood.

4

significant conditions” including “atrial fibrillation.” (Id. at

237.)

Plaintiff submitted a claim for benefits under the

Policy to LINA on November 3, 2008. LINA denied her

claim. Key to this appeal is the language of several Policy

provisions:

“Covered Loss”:

A loss that is all of the following:

1. the result, directly and independently of

all other causes, of a Covered Accident;

2. one of the Covered Losses specified in

the Schedule of Covered Losses;

3. suffered by the Covered Person within

the applicable time period specified in

the Schedule of Benefits.

(Id. at 78) (emphasis added).

“Covered Accident”:

A sudden, unforeseeable, external event that

results, directly and independently of all other

causes, in a Covered Injury or Covered Loss

and meets all of the following conditions:

1. occurs while the Covered Person is

insured under this Policy;

5

2. is not contributed to by disease,

Sickness, mental or bodily infirmity;

3. is not otherwise excluded under the

terms of this Policy.

(Id.)

“Proof of Loss”:

Written or authorized electronic proof of loss

satisfactory to Us must be given to Us at Our

office, within 90 days of the loss for which

claim is made.

(Id. at 85) (emphasis added).

LINA denied Plaintiff‟s claim by finding that the

specific circumstances of Viera‟s death did not constitute a

covered event under the terms of the Policy. Specifically,

LINA maintained that Viera‟s accident was excluded by the

“Medical Condition Exclusion” of the Policy, which states

that:

[B]enefits will not be paid for any Covered

Injury or Covered Loss which, directly or

indirectly, in whole or in part, is caused by or

results from . . . [s]ickness, disease, bodily or

mental infirmity, bacterial or viral infection or

medical or surgical treatment thereof, except for

any bacterial infection resulting from an

accidental external cut or wound or accidental

ingestion of contaminated food.

6

(Id. at 83.) LINA concluded that Viera‟s Coumadin treatment

complicated his medical treatment and constituted a

contributing factor to his death. LINA relied on a report by

Dr. Mark H. Eaton, a medical doctor it had retained to review

the accident reports and hospital records. Dr. Eaton reviewed

the hospital records, the autopsy report, and the official Death

Certificate in reaching his conclusion. Dr. Eaton reported

that:

The cause of Mr. Viera‟s death was attributed to

the traumatic pelvic fracture which resulted in

clinically significant pelvic and retroperitoneal

hemorrhage complicated by the fact that the

claimant was systematically anti-coagulated. . . .

In my opinion [Viera‟s] Coumadin therapy

significantly contributed to his death as it is

more than likely he would have survived the

traumatic pelvic fracture if he had not been fully

anti-coagulated at the time of his injury.

(Id. at 124.) Plaintiff administratively appealed the denial of

benefits in a written letter to LINA. She chose not to

supplement the record with information supporting her claim

at that time. LINA affirmed its decision to deny benefits.

7

B. Procedural History

Plaintiff filed an ERISA action against LINA in the

Court of Common Pleas of Philadelphia County,

Pennsylvania. LINA removed the action to the United States

District Court for the Eastern District of Pennsylvania

pursuant to 28 U.S.C. §§ 1331 and 1441.3

In preparation for the litigation, Plaintiff hired an

independent expert, Dr. Aaron J. Gindea, to conduct a review

of the medical records. Dr. Gindea reported that:

The hospital staff did everything possible to

reverse the [Coumadin] effect and limit the

bleeding. Although the presence of [Coumadin]

did make the bleeding worse, it is unreasonable

to propose that, if not for the [Coumadin], the

patient likely would have survived. Therefore,

the patient‟s death WAS NOT directly or

indirectly, in whole or in part, caused by or

resulted from the [Coumadin] therapy. Rather,

it was the result of severe trauma from a motor

vehicle accident which would likely have been

fatal in the presence of or the absence of

[Coumadin].

(Id. at 320-21.)

3

We have jurisdiction pursuant to 28 U.S.C. § 1291.

8

The parties filed cross-motions for summary judgment.

The District Court granted LINA‟s motion for summary

judgment, denied Plaintiff‟s motion for summary judgment,

and directed entry of judgment in favor of LINA. It found

that LINA‟s denial of benefits was not an abuse of discretion.

Plaintiff timely appealed and argues that the District Court

should have reviewed LINA‟s decision de novo. In the

alternative, she asserts that even under a deferential standard

of review, a genuine issue of material fact exists such that

summary judgment was inappropriate. Finally, she argues

that the District Court misinterpreted the Medical Exclusion

Provision of the Policy, which she maintains cannot be read

to include atrial fibrillation or Coumadin treatment.

II.

A district court‟s determination of the proper standard

to apply in its review of an ERISA plan administrator‟s

decision is a legal conclusion which we review de novo.

Grupo Protexa, S.A. v. All Am. Marine Slip, 20 F.3d 1224,

1231 (3d Cir. 1994).

We review a district court‟s grant of summary

judgment de novo, applying the same standard the district

court applied. Alcoa, Inc. v. United States, 509 F.3d 173, 175

(3d Cir. 2007). We also review the legal interpretation of

contractual language de novo. Heasley v. Belden & Blake

Corp., 2 F.3d 1249, 1254 (3d Cir. 1993).

9

III.

A. Standard of Review of LINA’s Benefits

Denial

The Supreme Court has held that “a denial of benefits

challenged under [ERISA] is to be reviewed under a de novo

standard unless the benefit plan gives the administrator or

fiduciary discretionary authority to determine eligibility for

benefits or to construe the terms of the plan.” Firestone Tire

& Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). If the plan

gives the administrator or fiduciary discretionary authority to

make eligibility determinations, we review its decisions under

an abuse-of-discretion (or arbitrary and capricious) standard.4

Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111 (2008);

Doroshow v. Hartford Life & Accident Ins. Co., 574 F.3d

230, 233 (3d Cir. 2009). “Whether a plan administrator‟s

exercise of power is mandatory or discretionary depends upon

the terms of the plan.” Luby v. Teamsters Health, Welfare, &

Pension Trust Funds, 944 F.2d 1176, 1180 (3d Cir. 1991).

There are no “magic words” determining the scope of judicial

review of decisions to deny benefits, and discretionary

powers may be granted expressly or implicitly. Id. However,

when a plan is ambiguous, it is construed in favor of the

insured. Heasley, 2 F.3d at 1258. “The plan administrator

bears the burden of proving that the arbitrary and capricious

4

In the ERISA context, an “abuse-of-discretion”

standard of review is used interchangeably with an “arbitrary

and capricious” standard of review. Howley v. Mellon Fin.

Corp., 625 F.3d 788, 793 n.6 (3d Cir. 2010).

10

standard of review applies.” Kinstler v. First Reliance Std.

Life Ins. Co., 181 F.3d 243, 249 (2d Cir. 1999).

Under the abuse-of-discretion standard, we may

overturn an administrator‟s decision only if it is “without

reason, unsupported by substantial evidence or erroneous as a

matter of law.” Miller v. Am. Airlines, Inc., 632 F.3d 837,

845 (3d Cir. 2011) (quoting Abnathya v. Hoffmann-La Roche,

Inc., 2 F.3d 40, 45 (3d Cir. 1993)). In determining whether

an administrator abused its discretion, we must consider any

structural conflict of interest as one of several factors. Estate

of Schwing v. The Lilly Health Plan, 562 F.3d 522, 526 (3d

Cir. 2009).

In contrast, if we exercise de novo review, the role of

the court “is to determine whether the administrator . . . made

a correct decision.” Hoover v. Provident Life & Accident Ins.

Co., 290 F.3d 801, 808-09 (6th Cir. 2002) (alteration in

original) (quoting Perry v. Simplicity Eng’g, 900 F.2d 963,

965 (6th Cir. 1990)). “The administrator‟s decision is

accorded no deference or presumption of correctness.” Id. at

809. The court must review the record and “determine

whether the administrator properly interpreted the plan and

whether the insured was entitled to benefits under the plan.”

Id.

The relevant language at issue in the Policy is the

“Proof of Loss” provision, which provides: “Written or

authorized electronic proof of loss satisfactory to Us must be

given to Us at Our office, within 90 days of the loss for which

claim is made.” (App. at 85) (emphasis added). LINA argues

that this language confers discretion upon them because they

11

have expressly reserved the right to decide whether the proof

of loss is satisfactory to them. Plaintiff argues that the

language does not expressly and unambiguously confer

discretion. Specifically, Plaintiff argues that the language can

be interpreted in several different ways.5 Plaintiff argues that

the alleged ambiguity should be resolved in her favor and de

novo review should apply. The District Court rejected

Plaintiff‟s argument and held that the “relevant policy

language presents a clear grant of discretionary authority to

LINA in deciding whether sufficient proof to support a claim

has been submitted to shift the Court‟s review from de novo

to the deferential abuse of discretion standard.” Viera v. Life

Ins. Co. of N. Am., 2010 WL 1407312, at *5 (E.D. Pa. Apr. 6,

2010). We disagree.

To begin with, we distinguish the language at issue

here – in particular, the words “proof of loss satisfactory to

Us” – from language in other plans that requires submission

of “satisfactory proof,” without reference to who must be

satisfied. Most courts of appeals to consider the issue have

concluded that the mere requirement to submit “satisfactory

5

LINA makes much of Plaintiff‟s admission before

the District Court that “[t]his language clearly states that

LINA shall be the entity determining whether the loss is

satisfactory to it.” (App. at 14.) LINA argues that this

constitutes a waiver of Plaintiff‟s argument that the language

is ambiguous and, as such, must be construed against the

drafter. This single statement by Plaintiff only establishes, or

“admits,” that LINA is the decision-maker. It does not stand

for a complete concession of the de novo standard.

12

proof” does not confer discretion upon an administrator, and

thus, does not insulate the administrator from de novo review.

See, e.g., Perugini-Christen v. Homestead Mortg. Co., 287

F.3d 624, 626-27 (7th Cir. 2002) (a policy requiring

“satisfactory proof of Total Disability to [the insurer]” results

in de novo review); Kearney v. Std. Ins. Co., 175 F.3d 1084,

1089-90 (9th Cir. 1999) (en banc) (same where policy

requires “receipt of satisfactory written proof”); Kinstler, 181

F.3d at 251-52 (same where policy requires insured to

“submit[] satisfactory proof of Total Disability to [the

insurer]”).

On the other hand, courts of appeals interpreting policy

language requiring submission of “proof of loss satisfactory

to Us” have reached divergent conclusions, revealing the

ambiguity inherent in the language. The United States Court

of Appeals for the Second Circuit was the first appellate court

to suggest that “satisfactory to us” language may not be

sufficient to trigger abuse-of-discretion review. In Kinstler,

181 F.3d at 252, the court explained:

[T]he word “satisfactory,” whether in the phrase

“satisfactory proof” or the phrase “proof

satisfactory to [the decision-maker]” is an

inadequate way to convey the idea that a plan

administrator has discretion. Every plan that is

administered requires submission of proof that

will “satisfy” the administrator. No plan

provides benefits when the administrator thinks

that benefits should not be paid! Thus, saying

that proof must be satisfactory “to the

administrator” merely states the obvious point

13

that the administrator is the decision-maker, at

least in the first instance. [Therefore] we

reiterate that . . . insulation from de novo review

requires either language stating that the award

of benefits is within the discretion of the plan

administrator or language that is plainly the

functional equivalent of such wording.

Id. at 252.

Shortly thereafter, the United States Court of Appeals

for the Seventh Circuit squarely held that “satisfactory to us”

language is insufficient to confer discretion. In Diaz v.

Prudential Insurance Co. of America, 424 F.3d 635, 639-40

(7th Cir. 2005), the court broke from other courts of appeals,

and its own prior precedent,6 by holding that the “satisfactory

to us” language was no longer sufficient to compel abuse-of-

6

The Seventh Circuit had twice before held that this

language conferred discretion adequate to yield abuse-of-

discretion review. See Donato v. Metro. Life Ins. Co., 19

F.3d 375, 379-80 (7th Cir. 1994) (“satisfactory to us”

sufficiently conferred discretion); Bali v. Blue Cross & Blue

Shield Ass’n, 873 F.2d 1043, 1047 (7th Cir. 1989)

(“satisfactory to Committee” sufficiently conferred

discretion). Therefore, prior to being published, Diaz v.

Prudential Insurance Co. of America, 424 F.3d 635 (7th Cir.

2005), was circulated to all active judges under Seventh

Circuit Rule 40(e) because it changed the way the court

ascertained the proper standard of review. No judge voted to

hear the case en banc.

14

discretion review. Diaz held that the “critical question is

whether the plan gives the employee adequate notice that the

plan administrator is to make a judgment within the confines

of pre-set standards, or if it has the latitude to shape the

application, interpretation, and content of the rules in each

case.” Id. Diaz relied on language from Herzberger v.

Standard Insurance Co., 205 F.3d 327 (7th Cir. 2000), for the

proposition that Herzberger changed the course of Seventh

Circuit jurisprudence on this issue. In so holding, it

reaffirmed the safe harbor language it pioneered in

Herzberger:

[i]f a plan wishes to insulate its decision to deny

benefits from plenary review, the surest way to

do so (at least in this Circuit) is by including

language that either mimics or is functionally

equivalent to the “safe harbor” language we

have suggested: “Benefits under this plan will

be paid only if the plan administrator decides in

his discretion that the applicant is entitled to

them.”

Diaz, 424 F.3d at 637 (quoting Herzberger, 205 F.3d at 331).

However, the Diaz court went further than Herzberger by

holding that “[n]o single phrase such as „satisfactory to us‟ is

likely to convey enough information to permit the employee

to distinguish between plans that do and plans that do not

confer discretion on the administrator.” Id. at 639.

The United States Court of Appeals for the Ninth

Circuit followed the footsteps of the Seventh Circuit and held

that “satisfactory to us” language does not “unambiguously

15

provide discretion to the plan administrator.” Feibusch v.

Integrated Device Tech., Inc., 463 F.3d 880, 883 (9th Cir.

2006) (applying de novo review). The Ninth Circuit adopted

safe harbor language7 and explained that the “policy does not

unambiguously indicate that the plan administrator „has

authority, power, or discretion to determine eligibility or to

construe the terms of the Plan, [and therefore] the standard of

review will be de novo.‟” Id. at 884 (quoting Sandy v.

Reliance Std. Life Ins. Co., 222 F.3d 1202, 1207 (9th Cir.

2000)). It reasoned that the term “satisfactory to us,” “only

arguably confer[red] discretion,” and that therefore the

ambiguity must be resolved in favor of the insured. Id. It

also noted that although it endorsed the safe harbor language,

it was not requiring “magic words.” Id.

There is, however, a split among our sister courts of

appeals regarding the impact of the “satisfactory to us”

language. In contrast to the courts of appeals for the Second,

Seventh, and Ninth Circuits, the First, Eighth, and Tenth

Circuits have held that the “satisfactory to us” language

confers discretion sufficient to insulate an administrator from

de novo review. The First Circuit dealt with similar language

in Brigham v. Sun Life of Canada, 317 F.3d 72 (1st Cir.

2003). The policy at issue provided that the administrator

“must be provided with such evidence satisfactory to us as we

may reasonably require under the circumstances.” Id. at 81

7

The safe harbor language adopted was: “The plan

administrator has discretionary authority to grant or deny

benefits under this plan.” Feibusch v. Integrated Device

Tech., Inc., 463 F.3d 880, 883 (9th Cir. 2006).

16

(emphasis in original). The court noted that “[c]ircuits that

have considered similar language view the „to us‟ after

„satisfactory‟ as an indicator of subjective, discretionary

authority on the part of the administrator, distinguishing such

phrasing from policies that simply require „satisfactory proof‟

of disability, without specifying who must be satisfied.” Id.

It concluded that the language “trigger[ed] discretionary

review.” 8 Id. at 82.

Similarly, in Nance v. Sun Life Assurance Co. of

Canada, 294 F.3d 1263, 1267-68 (10th Cir. 2002), the Tenth

Circuit held that the policy language adequately conferred

discretion. The language at issue in the insurance policy

required that “[p]roof must be satisfactory to Sun Life” before

benefits would be paid. Id. at 1267. The court was careful to

“caution [] that plan drafters who wish to convey discretion to

plan administrators are ill-advised to rely on language that is

borderline in accomplishing that task.” Id. at 1268 n.3.

However, it ultimately held that the “satisfactory to Sun Life”

language “suffice[d] to convey discretion to Sun Life in

finding the facts relating to disability.” Id. at 1268; see also

Ferrari v. Teachers Ins. & Annuity Ass’n, 278 F.3d 801, 806

(8th Cir. 2002) (a plan sufficiently conferred discretion

because it “specifie[d] that the employee must provide written

8

However, the First Circuit also noted that there may

be “an increasing recognition of the need for the clearest

signals of administrative discretion.” Brigham v. Sun Life of

Can., 317 F.3d 72, 82 (1st Cir. 2003).

17

proof of continued total disability” and “that such proof must

be satisfactory to [the plan administrator]”).9

9

Additionally, it appears that the Fourth, Sixth, and

Eleventh Circuits would hold that “satisfactory to us”

language confers discretion. In Gallagher v. Reliance

Standard Life Insurance Co., the Fourth Circuit held that a

plan calling for “satisfactory proof ” did not grant discretion

but explained, in dicta, that had the plan called for “proof of

… disability that is satisfactory to [the plan administrator]” it

would require “proof of a total disability that [the plan

administrator] finds subjectively satisfactory … and [the

court] would review [the plan administrator‟s] denial of [the

insured‟s] claim for abuse of discretion.” 305 F.3d 264, 269

(4th Cir. 2002) The Sixth Circuit goes further, holding that

any plan requiring “satisfactory proof” or “satisfactory

evidence” grants discretion, regardless of whether it specifies

who must be satisfied or to whom the evidence must be

submitted. See Perez v. Aetna Life Ins. Co., 150 F.3d 550,

557 (6th Cir. 1998) (“[T]his „right to require … satisfactory

evidence‟ means, semantically, that the evidence must be

satisfactory to [the plan administrator]. … We therefore

conclude that the plan clearly grants discretion.”). The

Eleventh Circuit seems to follow a similar rule, holding,

without discussion, that a plan requiring submission of

“satisfactory proof of Total Disability to [the plan

administrator] … . gives the administrator discretion to

determine eligibility for benefits.” Levinson v. Reliance

Standard Life Ins., 245 F.3d 1321, 1324-25 (11th Cir. 2001);

see also Tippitt v. Reliance Standard Life Ins., 457 F.3d 1227,

18

We find the reasoning of the Second, Seventh and

Ninth Circuits persuasive. To be insulated from de novo

review, a plan must “communicate the idea that the

administrator not only has broad-ranging authority to assess

compliance with pre-existing criteria, but also has the power

to interpret the rules, to implement the rules, and even to

change them entirely.” Diaz, 424 F.3d at 639. We agree that

“[n]o single phrase such as „satisfactory to us‟ is likely to

convey enough information to permit [an insured] to

distinguish between plans that do and plans that do not confer

discretion on the administrator.” Id.

Specifically, the language at issue here “does not alert

the plan participant to the possibility that [LINA] has the

power to re-define the entire concept of [a covered loss] on a

case-by-case basis.” Id. Indeed, the only discretion reserved

by this single phrase, nested within a section wholly

regarding the procedural requirements for submission of a

claim, is “the inevitable prerogative to determine what forms

of proof must be submitted with a claim – something that an

administrator in even the most tightly restricted plan would

1233-34 (11th Cir. 2006) (explaining that Levinson is the law

of the Circuit and, therefore, that a plan requiring the insured

to “submit[] satisfactory proof of Total Disability to [the plan

administrator]” granted discretion to that administrator).

19

have to do.”10 Id. (emphasis in original). In other words, it is

not clear whether “satisfactory to Us” means “electronic

proof of loss [in a form] satisfactory to Us” or “electronic

proof of loss [substantively and subjectively] satisfactory to

Us.” We resolve this ambiguity in favor of the insured:

[T]he administrator‟s burden to demonstrate

insulation from de novo review requires either

language stating that the award of benefits is

within the discretion of the plan administrator

or language that is plainly the functional

equivalent of such wording. Since clear

language can be readily drafted and included in

policies, even in the context of collectively

bargained benefit plans when the parties really

intend to subject claim denials to judicial

review under a deferential standard, courts

should require clear language and decline to

search in semantic swamps for arguable grants

of discretion.

10

In this way, the “satisfactory to Us” language in the

Policy at issue here, which is completely nested within a

section regarding procedural requirements, is also

distinguishable from the full sentences at issue in Nance v.

Sun Life Assurance Co. of Canada, 294 F.3d 1263, 1267

(10th Cir. 2002) (“Proof must be satisfactory to Sun Life.”),

and Brigham, 317 F.3d at 81 (“If proof is required, we must

be provided with such evidence satisfactory to us as we may

reasonably require under the circumstances.”).

20

Kinstler, 181 F.3d at 252 (emphasis added).

If an administrator wishes to insulate its decision to

deny benefits from de novo review, we suggest that it adopt

the following “safe harbor” language: “Benefits under this

plan will be paid only if the plan administrator decides in [its]

discretion that the applicant is entitled to them.” Herzberger,

205 F.3d at 331. This is not to say that “magic words” are

required for a policy to reserve discretion. See Luby, 944

F.2d at 1180. Instead, the Policy at issue here simply does

not clearly indicate that LINA has discretion to “interpret the

rules, to implement the rules, and even to change them

entirely,” and thus the District Court erred in applying abuse-

of-discretion review rather than de novo review to LINA‟s

decision. Diaz, 424 F.3d at 639.

Because we have concluded that a de novo standard of

review applies, we need not reach Plaintiff‟s argument

regarding LINA‟s conflict of interest in being both the payor

and administrator of benefits. That issue is only pertinent to

21

an abuse-of-discretion standard of review.11 On remand, the

District Court must determine whether LINA properly denied

Plaintiff recovery under the Policy. This determination may

be based on any information before the administrator initially,

Hoover, 290 F.3d at 809, as well as any supplemental

evidence, such as Dr. Gindea‟s report. See, e.g., Luby, 944

F.2d at 1184-85 (“[A] district court exercising de novo review

over an ERISA determination between beneficiary claimants

is not limited to the evidence before the Fund‟s

administrator.”); Quesinberry v. Life Ins. Co. of N. Am., 987

F.2d 1017, 1025 (4th Cir. 1993) (district courts have

discretion during de novo review to consider evidence not

before administrator); Perry, 900 F.2d at 966 (citing 2 S.

Childress & M. Davis, Standards of Review § 15.2 (1986)).

11

We also decline to address Plaintiff‟s argument that

LINA‟s motion for summary judgment should have been

denied because a genuine issue of material fact existed. The

District Court should have the first opportunity to apply the

correct standard of review to the facts. See, e.g., Feisbusch,

463 F.3d at 886 (remanding); Diaz, 424 F.3d at 640 (same);

Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154,

1162 (9th Cir. 2001) (“Normally, upon discovering that the

district court used the wrong standard of review in evaluating

a plan administrator‟s decision to deny benefits, we would

reverse and remand.”).

22

B. The District Court’s Interpretation of Policy

Language

Although we have already determined that the District

Court erred in applying an abuse-of-discretion standard, we

consider nonetheless Plaintiff‟s second contention to provide

guidance to the District Court on remand. Plaintiff argues

that the District Court misinterpreted the Policy because the

Medical Exclusion Provision was ambiguous at best.

Specifically, she argues that LINA should not be able to apply

the Exclusion to Viera‟s Coumadin treatment based on a

canon of statutory construction, the last-antecedent rule, and

the general maxim that ambiguous contract language should

be construed against the drafter.12 The District Court rejected

this argument and held that “although a strict application of

the last-antecedent rule supports Plaintiff‟s interpretation,

sufficient indicia of contrary meaning exist to overcome this

maxim of interpretation.” Viera, 2010 WL 1407312, at *10.

We review the legal interpretation of contractual

language de novo. Heasley, 2 F.3d at 1254. The last-

antecedent rule is a canon of statutory interpretation, but we

have extended application of the rule to a life insurance

policy as well. See J.C. Penney Life Ins. Co. v. Pilosi, 393

12

Plaintiff also argued before the District Court that

summary judgment should be granted in its favor because

LINA waived its right to exclude coverage because it had

notice of Viera‟s atrial fibrillation condition prior to issuing

the Policy. (App. at 23.) The District Court rejected this

argument, and Plaintiff does not appeal it.

23

F.3d 356, 365-66 (3d Cir. 2004). The rule provides “that

qualifying words, phrases, and clauses are to be applied to the

words or phrase immediately preceding and not to others

more remote.” Stepnowski v. C.I.R., 456 F.3d 320, 324 (3d

Cir. 2006) (quoting United States v. Hodge, 321 F.3d 429,

436 (3d Cir. 2003)). In other words, if a sentence reads “A or

B with respect to C,” it should be interpreted as containing

two items: (1) “A” and (2) “B with respect to C.” Id. at 324

n.7. However, the last-antecedent rule “is not an absolute and

can assuredly be overcome by other indicia of meaning.”

Pilosi, 393 F.3d at 365 (quoting Barnhart v. Thomas, 540

U.S. 20, 26 (2003)).

The Medical Exclusion Provision at issue states:

[B]enefits will not be paid for any Covered

Injury or Covered Loss which, directly or

indirectly, in whole or in part, is caused by or

results from . . . [s]ickness, disease, bodily or

mental infirmity, bacterial or viral infection or

medical or surgical treatment thereof, except for

any bacterial infection resulting from an

accidental external cut or wound or accidental

ingestion of contaminated food.

(App. at 83.) Plaintiff argues that the placement of the

comma immediately preceding the term “bacterial or viral

infection” suggests that the term “medical or surgical

treatment thereof” would not be extended to the other terms

“sickness, disease, bodily or mental infirmity.” In other

words, Plaintiff contends that the Policy excludes coverage

only for “medical treatment” of “bacterial or viral

24

infection[s]” and does not exclude coverage for “medical

treatment” of “bodily infirmities” like atrial fibrillation. The

District Court agreed with Plaintiff‟s literal application of the

last-antecedent rule. However, the District Court ultimately

concluded that there were sufficient indicia of meaning that

contradicted Plaintiff‟s interpretation. Specifically, the

District Court pointed out that:

(1) the term “Covered Accident” does not

include an injury or accident “contributed to by

disease, Sickness, mental or bodily infirmity”;

(2) the cover page of the [] Policy states that it

is a “group accident” policy and “does not pay

benefits for loss caused by sickness;” and

(3) the scope of the [] Policy deals with

“accidental death and dismemberment.”

Viera, 2010 WL 1407312, at *10. The District Court

appropriately looked to and analyzed the indicia of meaning

in the Policy so as not to “contort the language beyond its

limits.” Pilosi, 393 F.3d at 365. Where the meaning of the

contract language is clear, the last-antecedent rule should not

be used to create ambiguity.

Plaintiff also argues that the inherent ambiguity in the

plan must be construed against LINA under the doctrine of

contra proferentem. “Whether an ambiguity exists is a

question of law.” 12th St. Gym, Inc. v. Gen. Star Indem. Co.,

93 F.3d 1158, 1165 (3d Cir. 1996). Under Pennsylvania law,

an insurance contract is ambiguous where it: “(1) is

reasonably susceptible to different constructions, (2) is

obscure in meaning through indefiniteness of expression, or

25

(3) has a double meaning.”13 Lawson v. Fortis Ins. Co., 301

F.3d 159, 163 (3d Cir. 2002). To be sure, we must construe

ambiguous policy provisions against the drafter of the

contract once a determination of ambiguity has been made,

but the language at issue here is not ambiguous. Pilosi, 393

F.3d at 363; 12th St. Gym, 93 F.3d at 1166.

As noted above, Plaintiff‟s alternative reading of the

provision under the last-antecedent rule is not reasonable.

“Disagreement between the parties over the proper

interpretation of a contract does not necessarily mean that a

contract is ambiguous.” 12th St. Gym, 93 F.3d at 1165.

Where there is only one reasonable interpretation of a

contract, that interpretation controls because

“[s]traightforward language in an insurance policy should be

given its natural meaning.” Lawson, 301 F.3d at 162. The

District Court correctly interpreted the Medical Exclusion

Provision.

IV.

For the foregoing reasons, we will reverse in part,

affirm in part, and remand to the District Court for

proceedings consistent with this opinion.

13

Neither party disputes that Pennsylvania law applies

here.

26