Stratton v. EI DuPont de Nemours

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Precedential or Non-Precedential: Precedential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

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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.

11