Edward Raybourne v. CIGNA Life Insurance Company o

In the

United States Court of Appeals

For the Seventh Circuit

No. 08-2754

E DWARD R AYBOURNE,

Plaintiff-Appellant,

v.

C IGNA L IFE INSURANCE C OMPANY OF N EW Y ORK,

Defendant-Appellee.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 07 C 3205—Robert W. Gettleman, Judge.

A RGUED JULY 8, 2009—D ECIDED A UGUST 6, 2009

Before R OVNER, W OOD , and W ILLIAMS, Circuit Judges.

R OVNER, Circuit Judge. Edward Raybourne suffers

from a number of degenerative conditions in his right

foot, and especially in his great right toe. In 2003 he

stopped working because of the severe pain that these

conditions cause. Raybourne initially received long-term

disability benefits under his employer’s group benefit

plan, which is insured by Cigna Life Insurance

Company of New York. However, two years later Cigna

2 No. 08-2754

determined that he no longer qualified for benefits

because he could not meet the plan’s requirement of

showing that his disability prevented him from

performing any job. Raybourne then brought this ERISA

suit under 29 U.S.C. § 1132(a)(1)(B). The district court

concluded that Cigna did not abuse its discretion in

discontinuing Raybourne’s benefits and granted Cigna

summary judgment. The key questions in this appeal

concern the appropriate standard of judicial review and

the application of the Supreme Court’s recent pronounce-

ment in Metropolitan Life Insurance Company v. Glenn,

128 S.Ct. 2343, 2348 (2008), advising courts to take cogni-

zance of structural conflicts in ERISA cases. Although

we conclude that the district court properly reviewed

Cigna’s decision under the abuse-of-discretion standard,

we cannot be sure that it adequately accounted for

Cigna’s structural conflict of interest, as required by

Glenn. Accordingly, we vacate and remand for further

proceedings.

Background

After serving for 23 years as a Quality Control Manager

for L-3 Communications Holdings, Inc., Raybourne

stopped working in 2003 to undergo the first of four

surgeries on his right foot. The surgeries were meant to

alleviate the pain caused by a degenerative joint disease

in his right great toe.

From December 2003 through February 2006 Cigna

paid Raybourne long-term disability benefits under L-3’s

benefit plan. The L-3 plan provides long-term disability

payments for 24 months if the beneficiary’s condition

No. 08-2754 3

prevents him from performing his regular job. After 24

months a more stringent standard kicks in: the beneficiary

must be unable to perform “all the material duties of any

occupation” that he is reasonably qualified for based on

his education, training, or experience.

In June 2005—six months before the end of Raybourne’s

initial 24-month period—Cigna began to investigate

whether he qualified for further benefits under the

more stringent standard. Cigna requested updated

medical records from Raybourne’s doctors, including

Dr. Ronald Sage, a podiatrist who had performed

Raybourne’s third and fourth surgeries. Dr. Sage reported

that Raybourne could sit, stand, or walk for less than two

and a half hours in an eight-hour day. He expected

Raybourne’s condition to continue indefinitely. Cigna

submitted Raybourne’s medical files and Dr. Sage’s

reports to three case managers, who referred Raybourne

for an independent medical examination (“IME”).

The IME was conducted by Dr. J.S. Player, a board-

certified orthopedic surgeon. He reviewed the medical

files and in January 2006 he physically examined Ray-

bourne. Dr. Player noted that Raybourne walked with

a cane but observed that he maintained a normal

posture while standing and appeared comfortable sitting

for extended periods. He agreed that Raybourne had a

degenerative joint disease in his right great toe and that

he suffered from a loss of motion and strength in his

right foot. But Dr. Player concluded that Raybourne

was engaging in “symptom magnification” and had an

“abnormally high degree of perceived disability.” He

4 No. 08-2754

also concluded that Raybourne could return even to his

former job as long as he did not have to walk or climb

stairs.

In February 2006 Cigna sent Dr. Player’s IME to Dr. Sage

and asked for his comments. Dr. Sage said that he

agreed with Dr. Player’s findings based on the physical

examination, but reiterated that Raybourne could not

return to his former job because of the severity of his

foot pain. The same month, a rehabilitation specialist

retained by Cigna identified six jobs that Raybourne

could perform in the Chicago market.

By letter dated March 1, 2006, a Cigna claim manager

informed Raybourne that Cigna had decided to terminate

his long-term disability benefits. Raybourne appealed

using Cigna’s internal appeals process. He submitted

an April 2006 report from Dr. Sage confirming that his

chronic degenerative conditions left him unable to

work. He also submitted a social security form com-

pleted by Dr. Sage reporting that he suffered from “intrac-

table pain.” An appeals claim manager consulted with

Dr. R. Norton Hall, an associate medical director at

Cigna, who concluded that Dr. Sage’s report did not

establish that Raybourne was incapable of performing

all work. The manager concluded that Raybourne’s new

evidence was insufficient to overcome the conclusions

of Drs. Hall and Player that he could perform sedentary

work. Accordingly, the appeals claim manager upheld

the denial of benefits.

Six months later Raybourne filed his second internal

appeal. He argued that Cigna should disregard the IME

No. 08-2754 5

because, he said, Dr. Player had not considered his pain

or the side effects of his pain medication. He also sub-

mitted a copy of a favorable social security disability

ruling, dated three days before Raybourne’s first appeal

was denied. In that ruling, the administrative law judge

found that Raybourne’s willingness to undergo surgery

in attempts to alleviate his pain showed that the pain

was genuine and concluded that he was incapable of

performing full-time work.

As part of the review process, Cigna forwarded

Raybourne’s new evidence to a second associate

medical director, Dr. Paul Seifarth. Dr. Seifarth noted

Dr. Sage’s remark that pain would prevent Raybourne

from concentrating enough to work, but dismissed the

remark as unsubstantiated. In May 2007 an appeals

claim manager denied Raybourne’s second appeal.

This suit followed. At summary judgment, one of the

key disputed issues was the appropriate standard of

review under which the district court would review

Cigna’s decision to deny benefits. Ultimately the court

concluded that the plan conferred discretion on Cigna to

make this decision, thereby requiring review under the

abuse-of-discretion standard. The court was “disturbed” by

the discrepancy between Cigna’s decision and the

social security award and acknowledged that under a

less deferential standard of review it might overturn

Cigna’s decision. But the court concluded that Cigna had

not abused its discretion in denying Raybourne’s claim

for benefits, and accordingly, it granted Cigna summary

judgment.

6 No. 08-2754

Analysis

This court reviews a district court’s grant of summary

judgment on an ERISA claim de novo. Semien v. Life Ins.

Co. of N. Am., 436 F.3d 805, 809 (7th Cir. 2006).

A. The Proper Standard of Review under ERISA

A central question in this appeal is whether this court

should review Cigna’s decision de novo, as Raybourne

argues, or as Cigna argues, for abuse of discretion. The

answer hinges on the language of the plan documents.

See Glenn, 128 S.Ct. at 2348; Firestone Tire & Rubber Co. v.

Bruch, 489 U.S. 101, 115 (1989). De novo review is pre-

sumed to apply unless the plan documents clearly state

that the plan administrator has discretionary authority

to determine whether benefits are due. Firestone, 489

U.S. at 115; Herzberger v. Standard Ins. Co., 205 F.3d 327,

331 (7th Cir. 2000). A plan’s express grant of discretion

to the administrator lowers the standard of judicial scru-

tiny from de novo to abuse-of-discretion. Firestone, 489

U.S. at 115.

To demonstrate that the abuse-of-discretion stan-

dard applies, Cigna points to a document entitled “Em-

ployee Welfare Benefit Plan Appointment of Claim Fidu-

ciary” (hereafter, “Claim Fiduciary Appointment”),

which grants Cigna “the authority, in its discretion, to

interpret the terms of the Plan . . . to decide questions of

eligibility for coverage or benefits under the Plan.” That

grant of discretion is also described in a Summary

Plan Description (“SPD”), which states that “[t]he Plan

No. 08-2754 7

Administrator has delegated to the insurance company

the full and complete discretionary authority and respon-

sibility to decide all questions of eligibility for benefits

under the Plan.” This court has found similar (indeed,

almost identical) language to be sufficient to trigger re-

view under the abuse-of-discretion standard. See Leipzig

v. AIG Life Ins. Co., 362 F.3d 406, 408 (7th Cir. 2004);

Herzberger, 205 F.3d at 331.

Instead of suggesting that the quoted language is insuf-

ficient to confer discretion, Raybourne argues that the

Claim Fiduciary Appointment is not a plan document.

According to Raybourne, the Claim Fiduciary Appoint-

ment is an extrinsic document that he did not receive

until this litigation was underway, and it is neither incor-

porated nor referenced anywhere in the plan. But the

language of the Claim Fiduciary Agreement explains

why Raybourne did not receive it—it states that the

plan administrator must describe its discretion “in Sum-

mary Plan Descriptions furnished to Participants.” The

SPD—which describes the plan’s grant of discretion to

Cigna—explains that the “actual provisions of the Plan

are set forth in the insurance policy and the claims fidu-

ciary agreement between L-3 Communications and

Cigna.” Elsewhere we have rejected Raybourne’s assump-

tion that only the original plan (here, the underlying

insurance policy) may be considered in determining

whether a plan administrator is entitled to deference:

“often the terms of an ERISA plan must be inferred from

a series of documents none clearly labeled as ‘the

plan.’ ” Semien, 426 F.3d at 811 (citation omitted); Ruiz

v. Continental Cas. Co., 400 F.3d 986, 990-91 (7th Cir. 2005)

8 No. 08-2754

(noting that an insurance policy and a policy certificate

can be “plan documents”); see also Cagle v. Bruner, 112 F.3d

1510, 1517 (11th Cir. 1997) (noting that it is appropriate

to review trust documents “in the search for a reserva-

tion of discretion”). In Semien, we considered alongside

the original plan a fiduciary agreement similar to the

one put forth by L-3 here. 436 F.3d at 810-11. And given

that the Claim Fiduciary Appointment provides the

name of the plan and plan administrator, is signed by

representatives of the plan and Cigna, and states that

it “shall be effective” from the date of the underlying

insurance policy, it is difficult to see how it could be

anything other than a plan document.

Raybourne argues relatedly that neither the Claim

Fiduciary Appointment nor the SPD is the type of docu-

ment that this court has considered sufficient to bestow

discretion on a plan. He relies on Ruttenberg v. United

States Life Insurance Company, 413 F.3d 652 (7th Cir.

2005), and Schwartz v. Prudential Insurance Company of

America, 450 F.3d 697 (7th Cir. 2006), but both of those

cases are distinguishable. In Ruttenberg we refused to

consider a grant of discretion set forth in an application

for employee benefits because the application rep-

resented only the negotiations leading up to the insurance

contract, and the contract itself was silent on the issue of

discretion. 413 F.3d at 660. By contrast, here the Claim

Fiduciary Appointment modifies the terms of the under-

lying plan, and its grant of discretion to Cigna is

described in the SPD furnished to L-3 employees. In

Schwartz we held that a grant of discretion that appears

in an SPD but not the underlying plan is insufficient to

No. 08-2754 9

warrant deferential review because an SPD—which is

meant to be a plain language version of the underlying

plan—may not confer rights that the plan itself does

not. 450 F.3d at 699. But here the discretion described in

Cigna’s SPD does not exist in a vacuum; the Cigna SPD

refers to the Claim Fiduciary Appointment and explains

the discretion that it confers. We thus conclude that the

Claim Fiduciary Appointment is a plan document, and

accordingly, the abuse-of-discretion standard of review

applies.

B. Applying the Abuse-of-Discretion Standard of

Review After Glenn

Under the arbitrary-and-capricious standard—which,

at least for ERISA purposes, is synonymous with abuse

of discretion—this court will overturn an admin-

istrator’s denial of benefits only if it lacks any rational

support in the record. See Jenkins v. Price Waterhouse

Long Term Disability Plan, 564 F.3d 856, 861 & n.8 (7th

Cir. 2009). In other words, this court’s role is not to

decide whether it would reach the same decision as the

administrator, Davis v. Unum Life Ins. Co. of Am., 444

F.3d 569, 576 (7th Cir. 2006); rather, as long as specific

reasons for the denial are communicated to the claimant

and supported by record evidence, this court will

uphold the administrator’s decision, see Leger v. Tribune

Co. Long Term Disability Ben. Plan, 557 F.3d 823, 831 (7th

Cir. 2009).

Raybourne’s strongest argument on appeal is that the

district court insufficiently engaged the Supreme Court’s

10 No. 08-2754

recent decision in Metropolitan Life Insurance Company v.

Glenn, 128 S.Ct. 2343 (2008)—which issued just five days

before Cigna won summary judgment—in assessing

whether Cigna’s inherent conflict of interest (as a plan

administrator that both adjudicates claims and pays

awarded benefits) rendered its decision arbitrary and

capricious. In Glenn, the Supreme Court clarified that

courts should be aware of structural conflicts of interest

in reviewing plan decisions for abuse of discretion. Id. at

2348. A structural conflict is one factor among many

that are relevant in the abuse-of-discretion analysis—

including whether the administrator overemphasized

medical reports that favored its decision and whether

it gave its medical examiners all of the relevant evi-

dence—and will “act as a tiebreaker when the other factors

are closely balanced.” Id. at 2351-52. Glenn emphasizes

that courts should give additional weight to a structural

conflict where the administrator has a history of biased

claim administration or helped a claimant obtain a

social security award it then disregarded. Id. The con-

flict may be “less important (perhaps to the vanishing

point) where the administrator has taken active steps to

reduce potential bias and to promote accuracy.” Id. at 2351.

Although the Court stressed that there is no “precise

set of instructions” for weighing the relevant factors, it

emphasized that a structural conflict may not be ig-

nored. Id. at 2351-52.

Raybourne correctly points out that it is unclear

whether the district court properly accounted for Cigna’s

structural conflict of interest. In its opinion awarding

Cigna summary judgment, the district court included a

No. 08-2754 11

short footnote recognizing that Glenn issued “[a]fter this

opinion was prepared,” and stating summarily that

“nothing in [Glenn] has altered” its analysis. The district

court then denied, without explanation, Raybourne’s

motion for reconsideration in light of Glenn.

Given the district court’s cursory treatment of Glenn, we

cannot determine whether it engaged in the balancing

analysis that Glenn requires with respect to a plan ad-

ministrator’s conflict of interest. For instance, the district

court did not mention Cigna’s structural conflict in evalu-

ating and paying for claims, or explain how the conflict

weighed in the abuse-of-discretion balance. Moreover,

the court had little to say beyond acknowledging that

it was “disturbed” by the discrepancy it saw between

Cigna’s hiring of a consultant group to advocate on

Raybourne’s behalf before the SSA, and Cigna’s sub-

sequent denial of his claim for benefits despite the

SSA’s finding of disability. The court ultimately disre-

garded the discrepancy because it concluded that Cigna’s

decision was supported by the record. But after Glenn,

Cigna’s advocacy of a disability finding before the SSA

should have been treated as a “serious concern” for

the court to consider in weighing whether Cigna’s struc-

tural conflict rendered its denial of benefits arbitrary.

See DeLisle v. Sun Life Assurance Co. Of Canada, 558 F.3d

440, 446 (6th Cir. 2009).

In the wake of Glenn, other circuits have not hesitated to

remand cases so that district courts may consider the

impact of a structural conflict in the first instance. See,

e.g., Denmark v. Liberty Life Assurance Co. of Boston, 566

12 No. 08-2754

F.3d 1, 9 (1st Cir. 2009); Hackett v. Standard Ins. Co., 559

F.3d 825, 830 (8th Cir. 2009); Burke v. Pitney Bowes Inc. Long-

Term Disability Plan, 544 F.3d 1016, 1027 (9th Cir. 2008). A

remand is similarly appropriate here because the

district court’s cursory reference to Glenn casts doubt on

whether it properly analyzed Cigna’s structural conflict.

A remand will ensure that the court conducts in the first

instance the balancing analysis that Glenn requires. We

recognize that ultimately Cigna’s conflict will tip the

balance only if the district court concludes that this is a

borderline case, see Glenn, 128 S.Ct. at 2351; Jenkins, 564

F.3d at 861-62, but after weighing Cigna’s conflict

together with factors such as its pursuit of the social

security award and its willingness to discount Ray-

bourne’s subjective pain complaints, the court might

view Raybourne’s case as borderline. We thus follow the

lead of our sister circuits and remand to allow the

district court, in the first instance, to consider how

heavily Cigna’s conflict weighs in the abuse-of-discretion

balance.

The judgment of the district court is V ACATED and the

case is R EMANDED for further proceedings.

8-6-09