# Amicus Curiae Brief — Black & Decker Disability Plan v. Nord

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0606%3A10

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2003
- **Citation:** 538 U.S. 822

## Text

yn,
by

No.02-469 | mew as
FEB 24 203
IN THE

Supreme Court of the United States

2> >a

THE BLACK & DECKER DISABILITY PLAN,
Petitioner,

KENNETH L. NORD,
Respondent.

ON PEZPTION E@R WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

BRIEF OF DELTA FAMILY-CARE DISABILITY AND
SURVIVORSHIP PLAN AND DELTA AIR LINES, INC.
AMICI CURIAE IN SUPPORT OF PETITIONER
THE BLACK & DECKER DISABILITY PLAN

D. Michael Keen Hunter R. Hughes
Deborah D. Brown Counsel of Record
DELTA AIR LINES, INC. J. Timothy McDonald
Legal Department ROGERS & HARDIN LLP
1030 Delta Boulevard 2700 International Tower
Atlanta, Georgia 30320 229 Peachtree Street, N.E.
(404) 715-2386 Atlanta, Georgia 30303
(404) 522-4700

Counsel for Amici Curiae

ician

i
QUESTION PRESENTED
t erred in holding that the treating-phys

rule must be applied in deciding claims for disability

ircul

Whether the United States Court of Appeals for the
benefits under the Employee Retirement Income Secu-

rity Act of 1974, 29 U.S.C. § 1001 et seq.

Ninth C

il

TABLE OF CONTENTS
PAGE
QUESTION PRESENTED ....................... i
INTEREST OF THE AMICI CURIAE........... l
STATEMENT OF THE CASE OF THE
ADEICT CURIAR.. 2c csccccccccsccesoesesunnnne 2
SUMMARY OF ARGUMENT ................... 8
LEGAL, ARGUDGEBINE «0 cccocscocccccestpeccsunsena 9
I. THE TREATING PHYSICIAN RULE
CANNOT BE RECONCILED WITH
THIS COURT’S DECISION IN
FIRESTONE ...cccccccccecscssncessesannnenen 9
Il. THE TREATING PHYSICIAN RULE
CANNOT BE RECONCILED WITH
ERISA GENERALLY ..........cccccccccecee 12
III. THE NINTH CIRCUIT IMPROPERLY
IMPORTED A SOCIAL SECURITY
REGULATION INTO ERISA ............... 16
CONCLUSION 2... cccccccccsvecsesenscsssesnuennen 21

ill
TABLE OF AUTHORITIES

Cases: PAGE

Abnathya v. Hoffmann-La Roche, Inc.,
PE ee BOO UP cccccccccccccccsccccs 10

Alessi v. Raybestos-Manhattan, Inc.,
EE 18

Curtiss-Wright Corp. v. Schoonejongen,
eect coeneccecee: 13, 14

Darland v. Fortis Benefits Ins. Co.,
317 F.3d 516 (6th Cir. 2003), petition for

rehearing en banc filed (Feb. 5, 2003)...... 19
Elliott v. Sara Lee Corp., 190 F.3d 601

iteceecabeasecdscecccesceces 10
Firestone Tire & Rubber Co. v. Bruch,

EE cncccecencéccesceccccecs passim
Gallo v. Amoco Corp., 102 F.3d 918

i eeeacnccencenesecccecce 10

Hale v. Trustees of United Mine Workers’
Health & Retirement Funds, 23 F.3d 899
EEE ee 19

Harris trust & Savings Bank v. Salomon
Smith Barney Inc., 530 U.S. 238
EEE EEE T TTT TT TTT TTT 13

Heckler v. Campbell, 461 U.S. 458 (1983) ...... 17, 18

Intermodal-Rail Employees Ass'n v. Atchison,
Topeka and Santa Fe Railway Co..,
ince caccocceccecctcoeces 12, 16

iv
PAGE

Madden v. ITT Long-Term Disability
Plan for Salaried Employees,
914 F.2d 1279 (9th Cir. 1990)............... 18

Marshall v. Delta Family-Care Disability
and Survivorship Plan. ~ 58 F.3d 834

(8th Cir. 2001) ...... + duteddassadacaenes 2, 10, 19
McKenzie v. General Tel. Co. of Ca.,

41 F.3d 1310 (9th Cir. 1994) ................ 10
Metropolitan Life Ins. Co. v. Massachusetts,

Gee We Hele Gren cncescecensesessscenss 12,17
Miller v. Metropolitan Life Ins. Co.,

925 F.2d 979 (6th Cir. 1991) ................ 10
Nord v. Black & Decker Disability Plan,

296 F.3d 823 (9th Cir. 2002) ................ 2,3
Pagan v. NYNEX Corp., 52 F.3d 438, 442

I a aa ce 10, 19
Paramore v. Delta Air Lines, Inc.,

129 F.3d 1446 (11th Cir. 1997).............. 10, 19
Pegram v. Herdrich, 530 U.S. 211 (2000)........ 14

Regula v. Delta Family-Care Disability
and Survivorship Plan, 266 F.3d 1130

Ls eee nee passim
Salley v. El. duPont de Nemours & Co.,

966 F.2d 1011 (Sth Cir. 1992)............... 10
Terry v. Bayer Corp., 145 F.3d 28

Ch De stccconsctcncsdscsocsnasanesecnr 10

Turner v. Delta Family-Care Disability
and Survivorship Plan, 291 F.3d 1270
(11th Cir. 2002) (per curiam) ...............

Varity Corp. v. Howe, 516 U.S. 489 (1996)......

Woolsey v. Marion Labs., Inc., 934 F.2d 1452
SPU EEEED Scctecassencessennduccesedeens

Statutes:

Employee Retirement Income Security Act
of 1974 (“ERISA”), 29 U.S.C. § 1001 ......

ERISA §§ 204(b)(1), 29 U.S.C. §§ 1054(b)(1) ..
ERISA §§ 301-08, 29 U.S.C. §§ 1081-86........
ERISA § 502(a)(1), 29 U.S.C. § 1102(a)(1).....
ERISA § 504(a)(1), 29 U.S.C. § 1104(a)(1).....
ERISA § 506(b), 29 U.S.C. § 1106(b) ...........
ERISA § 509 (a), 29 U.S.C. § 1109(a)...........
SD elie Bp Se cccccccccccccccccccssccscssse
42 U.S.C. § 42S(EMZMA) .... nc ecrccccccccecees

Regulations:

20 C.F.R. § 404.1-.2127, 416.101-2227 .........
es Oe ED Sinccdcccsdccascceccosses
ey OP A cecdccccccdececctesescssss
Ps 0 EE ccnccicnennscossoedsoncnss

PAGE

Legislative History:

H.R. Rep. No. 93-1280, p. 297 (1974), 1974
U.S.C.C.A.N. 4639, 5077, 5078.............

Miscellaneous:

Administrative Office of the United States
Courts, U.S. Courts of Appeals—
Appeals Terminated on the Merits
During the 12-Month Period Ending
March 31, 2002, www.uscourts.gov/
caseload2002/tables/bOSmar02.pdf.........

G. Bogert & G. Bogert, Law of Trusts &
Trustees (rev. 2d ed. 1980)..................

A. Scott & W. Fratcher on Trusts (4th ed. 1987).

PAGE

14

14
14

IN THE

Supreme Court of the United States
No. 02-469

oie

THE BLACK & DECKER DISABILITY PLAN,

Petitioner,

KENNETH L. NorpD,
Respondent.

ON PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

ois

BRIEF OF DELTA FAMILY-CARE DISABILITY AND
SURVIVORSHIP PLAN AND DELTA AIR LINES, INC.
AMICI CURIAE IN SUPPORT OF PETITIONER
THE BLACK & DECKER DISABILITY PLAN

INTEREST OF THE AMICI CURIAE'

The Delta Family-Care Disability and Survivorship
Plan (the “Plan”) is a non-contributory employee welfare
benefit plan, established and maintained pursuant to the

' Petitioner and Respondent have consented to the filing of this
Brief. No counsel for a party authored this Brief in whole or in part.
No persons or entities other than the Amici Curiae made a monetary
contribution to the preparation or submission of this Brief.

2

Employee Retirement Income Security Act of 1974
(“ERISA”), as amended, 29 U.S.C. § 1001 et seq.’ It is
sponsored by Delta Air Lines, Inc. (“Delta”). The Plan
provides short-term disability, long-term disability and
survivorship benefits to over 80,000 non-pilot employ-
ees of Delta and their beneficiaries. The Plan has par-
ticipants in almost every state and is currently subject to
a split in the Circuits on the Question Presented. Com-
pare Regula v. Delta Family-Care Disability and Sur-
vivorship Plan, 266 F.3d 1130, 1139 (9th Cir. 2001) (2 to
1 decision) (applying treating-physician rule to ERISA
disability cases) with Turner v. Delta Family-Care Dis-
ability and Survivorship Plan, 291 F.3d 1270, 1274 (11th
Cir. 2002) (per curiam) (rejecting Regula and the treat-
ing-physician rule in ERISA disability cases) and Mar-
shall v. Delta Family-Care Disability and Survivorship
Plan, 258 F.3d 834, 842 (8th Cir. 2001) (same). The Plan
is also the Petitioner in Delta Family-Care Disability
and Survivorship Plan v. Regula, No. 01-1840 (June 13,
2002), which presents the same Question Presented as
well as a second question.

STATEMENT OF THE CASE
OF THE AMICI CURIAE

This Court has granted certiorari to the United States
Court of Appeals for the Ninth Circuit to review that
Court’s decision in Nord v. Black & Decker Disability
Plan, 296 F.3d 823 (9th Cir. 2002). In that case, a panel
of the Ninth Circuit, in an opinion written by Judge
Betty Fletcher, followed its prior decision in Regula v.
Delta Family-Care Disability and Survivorship Plan,
266 F.3d 1130 (9th Cir. 2001), also written by Judge

2‘ The text of the brief will only cite to sections of ERISA as
codified in the United States Code. Parallel citations to sections of
ERISA are found in the Table of Authorities. See supra at v.

3

Fletcher, and applied the so-called “treating-physician
rule” to a case involving an ERISA claim for long-term
disability benefits under the Black & Decker Disability
Plan.

Because the Court in Nord merely applied the treating-
physician rule that it had created in Regula, Nord,
296 F.3d at 829, much of the analysis and reasoning
behind its creation of that new ERISA rule is found in
the Regula decision. The analysis in Regula, in turn,
reflects various assumptions regarding the Plan that the
Ninth Circuit majority made without any record evi-
dence. Before explaining why the treating-physician rule
should be inapplicable to ERISA disability cases and
should be rejected by this Court, a description of the
Plan’s actual operation with respect to claims such
as Frank Regula’s, as opposed to the Ninth Circuit’s
unfounded assumptions, is necessary. This description
reflects the experiences of the Plan’s agents regarding
the Plan’s operation during the time period that Frank
Regula’s benefits were discontinued and he completed
the exhaustion of administrative remedies (i.e., the Plan
Year ending June 30, 1996). The description is stated in
general terms because there may be specific claims with
respect to which the Plan acted differently based upon
the unique facts of that particular claim.

1. The Plan provides short-term, long-term and sur-
vivorship benefits to participating non-pilot Delta
employees. To receive short-term disability benefits, a
participant must generally be unable to perform their
own job at Delta. With exceptions not relevant here,
short-term disability benefits last for a maximum of 26
weeks. After short-term disability benefits are exhausted,
a participant may apply for long-term disability benefits.
The standard for long-term disability is more rigorous.
It requires a participant to be unable to perform any part-

4

time or full-time work of any type for any employer,
including self-employment. This standard is markedly
different than the Social Security Administration stan-
dard for the payment of disability benefits. See infra at
17-18.

2. The Plan is administered by the Administrative
Committee of Delta Air Lines, Inc. (“Administrative
Committee”). The Administrative Committee is the
Plan’s Named Fiduciary and is vested with the discretion
to decide claims under the Plan. See Regula, 266 F.3d at
1144. The Administrative Committee is composed of
Delta employees as authorized by ERISA. See Firestone
Tire & Rubber Co. v. Bruch, 489 U.S. 101, 105 (1989).

The Administrative Committee is more familiar with
terms and application of the Plan than any entity outside
the Plan or any Court. In the year relevant to Regula’s
appeal to the Administrative Committee for the contin-
uation of his benefits, the Administrative Committee
heard 51 appeals regarding the denial or discontinuation
of disability benefits under the Plan. Over 25 percent of
the appealed decisions were reversed in favor of the
Claimant.’ This figure does not include other appeals
decided in favor of claimants by the Administrative Sub-
committee which provides the first level of review under
the Plan.‘

The Plan is funded by irrevocable contributions that
Delta makes to a qualified trust based upon expected
claims. The assets of the trust far exceeded the claims

3 For comparison’s sake, this is far greater than the 9.5% rever-

sal rate of the federal Courts of Appeals. See, Administrative Office
of the United States Courts, U.S. Courts of Appeals—Appeals Ter-
minated on the Merits During the 12-Month Period Ending March 31,
2002. www.uscourts. gov/caseload2002/tables/605mar02.pdf.

4 — Only those appeals denied by the Administrative Subcom-

mittee may be appealed to the Administrative Committee.

made under the Plan in the Plan year relevant to Reg-
ula’s claim. In the Plan year ending June 30, 1996, the
trust’s assets were $350,315,163.00 against claims of
$28,935,736.00. Thus, Delta had essentially pre-paid all
of the claims made against the Plan (and then some) in
those years with funds that could not revert to Delta.
Delta did this even though neither ERISA, nor any other
law, requires Delta to provide this funding through irre-
vocable contributions or otherwise. See, e.g., 29 U.S.C.
§§ 1081-86 (limiting ERISA’s funding requirement to
certain defined pension benefit plans).

After a claimant? is approved for the receipt of long-
term disability benefits, the Plan provides that those ben-
efits are continued upon its periodic receipt of additional,
current information regarding the claimant’s condition.
At the time Regula’s benefits were discontinued, this
information was usually required to be provided every
three to twelve months. See, e.g., Regula, 266 F.3d at
1134 (noting that Regula was required to submit updated
information every three months).

Once a claimant begins to receive long-term disability
benefits, there are generally only two occurrences that
lead to a thorough re-examination of eligibility for dis-
ability benefits. The first is a report to the Plan from a
third party that the claimant is actually working while
receiving benefits or engaging in activities inconsistent
with the claimed disability. As a result, despite the med-
ical evidence submitted by the claimant’s physician,
these claimants may well be ineligible for benefits under
the Plan depending upon the result of the Plan’s subse-
quent investigation. The second circumstance that nor-
mally precedes a re-examination of a claimant’s eligibility

5 The term “claimant” as opposed to “participant” is used to
distinguish a participant who has filed a claim from the other par-
ticipants in the Plan.

6

is the claimant’s own physician’s indication that the
claimant can perform some work or that claimant’s con-
dition is improving to a substantial degree.

In the first case, when there has been a report that a
claimant is actually working or engaging in activities
inconsistent with the claimed disability, the Plan will
usually first ask the claimant’s own physician for an
update on claimant’s condition and also schedule ain
examination with an independent medical expert. In the
second case, where the claimant’s own physician indi-
cates that claimant is improving or may be able to return
to work, depending on the Plan’s evaluation of the infor-
mation, the claimant’s benefits may be immediately dis-
continued or the claimant may be sent to an independent
evaluation for additional examination. The latter often
occurs when the claimant’s physician only opines that
the claimant is unable to perform his own job as opposed
to any occupation.

3. The Plan does not have as employees its own
physicians for the purpose of performing medical exam-
inations. Typically, the Administrative Committee uses
a third-party service that provides references to physi-
cians who have attained certain qualifications in the rel-
evant specialty. On occasion, the Plan itself may directly
select a physician if the Plan is aware that the physician
is an expert in the relevant field and is otherwise suitable
to examine the claimant. Ironically, of those independent
medical examiners selected by the Plan, some are physi-
cians who have treated other claimants and whose
reports and analysis were seen as thorough, reasoned and
well-founded by the Plan’s agents, regardless of whether
the physician thought that the claimant was disabled. Of
those qualified physicians from whom the Plan received
an opinion, the thoroughness of the opinion is the pri-

7

mary factor that leads the Plan to seek additional opin-
ions from that physician in other claims.

The Ninth Circuit’s decision in Regula begins its anal-
ysis from the simple misguided assumption: Claimant’s
physician good, independent physician bad. See Regula,
266 F.3d at 1139 & 1143. Given the Plan’s processes, as
described above, the Ninth Circuit’s assumption was sur-
prising and unsupported. The Ninth Circuit analysis also
starts from another false, unsupported assumption—that
Delta repeatedly sends its claimants to the same inde-
pendent physicians because they routinely find claimants
not disabled. Jd. at 1144. Not only was this argument not
advanced by Regula, but there is no record evidence for
it and the Ninth Circuit provided no citation to the
record or otherwise to validate this assumption.

It is true that, as in the Regula case, when there are
orthopaedic injuries involved the Plan usually finds it
more relevant to seek the opinion of an orthopaedist
rather than some other type of medical professional such
as a chiropractor, though the Plan accepts and analyzes
each opinion on its own merits. This reasonable prefer-
ence is also ignored by the Ninth Circuit’s analysis. All
told, there is no factual basis for the Ninth Circuit’s
assumptions that the Plan’s independent medical exam-
iners are biased, less capable or repeatedly used by the
Plan because the Plan believes they will find a claimant
able to work.

Finally, the Plan’s experience shows that using a pref-
erence in favor of the treating physician’s opinion would
result in a situation where the Administrative Committee
could not fulfill its fiduciary duty. It is not unusual that an
employee claiming an inability to work, seeks to return to
work immediately after disability benefits are discontin-
ued. Since a physician’s clearance is generally required to
return to work, that claimant’s physician often has a sudden

8

change of opinion and releases the claimant to work.
Given this knowledge, the Plan Administrator could be
forced to disregard its fiduciary duty if mandated to
defer to the treating physician’s view.°®

SUMMARY OF ARGUMENT

The treating-physician rule is contrary to this Court’s
decision in Firestone Tire & Rubber Co. v. Bruch, 489
U.S. 101 (1989) and ERISA. It conflicts with Firestone’s
holding that decisions of a fiduciary vested with dis-
cretion will not be disturbed if they are reasonable. Jd. at
111. It fails to recognize the fiduciary relationship of a
Plan Administrator and needlessly interferes with fidu-
ciary administration of the Plan by dictating the weight
of certain evidence. As applied, the rule effectively gives
the claimant’s physician the right to control receipt of
benefits, as opposed to the Plan Administrator. This
strips the ERISA claims fiduciary of its discretion and
transfers that discretion to the claimant’s physician. The
fiduciary obligation and responsibility, however, remain
with the now powerless fiduciary, while the claimant’s
physician, who is devoid of any fiduciary obligation to
the Plan and the other participants, wields the Plan’s
purse strings. For the reasons outlined below, this rule is
unnecessary given the safeguards of ERISA, and its
application serves to stand ERISA’s framework and this
Court’s decision in Firestone on their respective heads.

The Ninth Circuit attempted to justify its decision by
stating that the rule increases the consistency between

© Additionally, the Plan has seen claimants return to work in
order to qualify for special benefits that accompany various voluntary
resignation programs. These claimants too, had physicians who con-
sistently opined the claimant could not work until the special program
became available.

ee

9

ERISA disability decisions and Social Security Act, 42
U.S.C. §§ 401-33, disability decisions. This ignores the
fact that Congress lets ERISA Plan sponsors set the stan-
dard for disability in an ERISA Plan, but fixed a specific
standard for disability under Social Security. Not only
has Congress expressed no intent that these decisions
should be “consistent”, but it has established vastly dif-
ferent decision-making processes for each which reflects
an expectation of divergent results. The entire structure
of the Social Security Act was aimed at providing a
detailed regulatory complex that left administrative law
judges with only a narrow range of discretion to decide
individual cases. The regulatory addition of the treating
physician rule to the Social Security disability regula-
tions, therefore, did not significantly affect the discre-
tion of Social Security Act administrative law judges to
decide claims under the Social Security Act. On the
contrary, the ERISA Plan Administrator is subject to a
discrete set of claims regulations promulgated by the
Department of Labor which leaves the Plan Adminis-
trator’s broad discretion intact.

Thus, the application of this rule affects a significant
reduction in the discretion accorded to Plan Adminis-
trators under ERISA. The Ninth Circuit’s desire to treat
the two the same lacks any basis in logic, not to mention
law.

LEGAL ARGUMENT

I. THE TREATING PHYSICIAN RULE CANNOT
BE RECONCILED WITH THIS COURT’S DECI-
SION IN FIRESTONE

Before examining the treating physician rule’s com-
patibility with ERISA, it is important first to under-
stand the rule’s effect. Following this Court’s decision in

10

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101
(1989), the federal courts of appeals reached a consen-
sus as to the standard of review applicable to cases in
which the Plan administrator was vested with sufficient
discretion to invoke the arbitrary or capricious standard
of review. Virtually all of the courts of appeals have held
that the substantial evidence test, which requires that the
evidence supporting a decision be less than a prepon-
derance of evidence, but more than a scintilla, applies
when the applicable standard is arbitrary or capricious.
See, e.g., Terry v. Bayer Corp., 145 F.3d 28, 41 (ist Cir.
1998); Pagan v. NYNEX Corp., 52 F.3d 438, 442 (2nd
Cir. 1995); Abnathya v. Hoffmann-La Roche, Inc., 2 F.3d
40, 45 (3d Cir. 1993); Elliott v. Sara Lee Corp., 190 F.3d
601, 608 (4th Cir. 1999); Salley v. EI DuPont de Nemours
& Co., 966 F.2d 1011, 1016 (Sth Cir. 1992); Miller v.
Metropolitan Life Ins. Co., 925 F.2d 979, 984 (6th Cir.
1991); Gallo v. Amoco Corp., 102 F.3d 918, 921 (7th Cir.
1996); Delta Family-Care Disability and Survivorship
Plan v. Marshall, 258 F.3d 834, 841-43 (8th Cir 2001);
McKenzie v. General Tel. Co. of Ca., 41 F.3d 1310, 1316
(9th Cir. 1994); Woolsey v. Marion Labs., Inc., 934 F.2d
1452, 1460 (10th Cir. 1991); Paramore v. Delta Air
Lines, Inc., 129 F.3d 1446, 1452 (11th Cir. 1997).

The Ninth Circuit’s decisions in Nord and Regula sup-
planted this Firestone standard by adopting the treating-
physician rule. As crafted by the Ninth Circuit, that rule
requires that when the treating physician and the inde-
pendent physician are in conflict, the Plan administrator
and/or the reviewing court must presume that the treat-
ing physician is correct and the independent physician is
wrong unless there is substantial evidence, accompanied
by “specific, legitimate” reasons for crediting the inde-
pendent physician more than the treating physician. See
Regula, 266 F.3d at 1140. Thus, while there might be

1]

more than substantial evidence in the record as a whole
to support the Plan’s decision, all of that evidence would
be irrelevant if between the treating physician and the
independent physician the evidence was at equipoise. Jd.

The consequence of violating the treating physician
rule, as demonstrated in Regula, is the application of a
de novo standard of review. /d. at 1145 (“If the Plan fails
to carry its burden [of showing that any alleged conflict
did not affect the Plan’s decision] then we review de
novo its decision denying benefits.”) This is directly
contrary to Firestone which holds that a conflict never
results in de novo review, though it may reduce the def-
erence afforded to the administrator. Firestone, 489 U.S.
at 115. The rule further violates Firestone by conflating
various steps in the process of reviewing a benefits
claim decision. After Firestone, a court should first
inquire as to whether the Plan’s terms vest discretion in
the Plan Administrator. Jd. at 115. If such discretion was
vested in the Plan Administrator, then the Court would
move on to see whether or not there was a conflict of
interest which would affect the degree of deference
afforded to the Plan Administrator. /d. Finally, depend-
ing on which standard of review would apply, the benefit
decision would be reviewed either for reasonableness
under the abuse of discretion standard, or de novo
because the Plan did not vest discretion in the adminis-
trator. See id. The Ninth Circuit’s decision applies the
treating physician rule to the middle step in the analysis,
such that if the treating physicians opinion is not fol-
lowed, there is little, if any, chance that the fiduciary is
not operating under a conflict of interest. The Ninth Cir-
cuit’s decision to create this rule for ERISA was one
of judicial fiat and is not based on any precedent or logic. As
demonstrated below, it is virtually impossible to avoid de novo
review because even objectively supportable and reasonable
factors were not accepted by the Ninth Circuit in Regula.

12

In practice, the rule is demonstrably draconian. In
Regula, the Plan stated that the independent medical psy-
chiatrist’s opinion that Regula was malingering was
based on two factors: (1) the overall examination; and
(2) Regula’s refusal to consider prescription drug treat-
ment. This finding was unrebutted by the “treating” psy-
chologist. See id. at 1135 (describing conflicting opinions
but not noting that claimant’s physician disagreed with
or considered the finding of malingering). Further, the
“treating” psychologist (1) indicated an improper bias in
favor of Regula by assailing the report of an orthopedist
and, therefore opining outside her area of expertise in
the process, id. at 1135; and (2) proffered inconsistent
opinions, id. at 1153 (Brunetti, J., dissenting). Moreover,
the Plan preferred the opinion of the orthopedist to that
of a chiropractor because it gave more credence to the
opinions of medical doctors as opposed to osteopaths.
(Appendix to Petition in 01-1840 at 109a (no current
opinion from an M.D.)). Yet, even this was not enough
for the Ninth Circuit majority as it held that not even
these reasons were “specific, legitimate” reasons based
on substantial evidence in the record. Regula, 266 F.3d
at 1146-47. Given the virtually insurmountable level of
evidence required by this Ninth Circuit rule as shown in
its application, it is totally inconsistent with this Court’s
ruling in Firestone.

Il. THE TREATING PHYSICIAN RULE CANNOT
BE RECONCILED WITH ERISA GENERALLY

The Ninth Circuit’s rule is also inapplicable given
ERISA’s structure. To the extent the rule is outcome
determinative, it regulates the substantive content of an
employee welfare benefit plan contrary to ERISA. See
Intermodal-Rail Employees Ass'n v. Atchison, Topeka
and Santa Fe Railway Co., 520 U.S. 510, 515 (1997)
(quoting Metropolitan Life Ins. Co. v. Massachusetts.,

13

471 U.S. 724, 732 (1985)). To the extent it portends to
merely affect the claims regulation process, it is incon-
sistent with the claims regulations issued by the Depart-
ment of Labor for ERISA benefit claims. See 29 U.S.C.
§ 2560.503-1. As a result, there is no interstice for the
Ninth Circuit to create federal common law in this
instance.

The rule is also inconsistent with the structure of ERISA
when one focuses on the fiduciary duties assigned to those
who administer the Plan. Decisions under ERISA plans
are made by fiduciaries. See Firestone, 489 U.S. at 105.
These fiduciaries are subject to ERISA’s high standards
that require them to act only in the best interest of Plan
participants and beneficiaries. 29 U.S.C. § 1104(a)(1).
ERISA prohibits fiduciaries from acting in the best
interest of the Plan sponsor/employer. See 29 U.S.C.
§ 1106(b). ERISA likewise prohibits self-dealing and
dealings with parties in interest. See Harris Trust &
Savings Bank v. Salomon Smith Barney Inc., 530 U.S.
238, 242 (2000). Failing to comply with these rules sub-
jects ERISA fiduciaries to personal liability. 29 U.S.C.
§ 1109(a).

Concomitant with this high level of responsibility is a
broad recognition of the fiduciary discretion to make
decisions under the plan when the terms of the plan vest
that discretion in the fiduciary (as it is undisputed by
Respondent they both did in the Black & Decker
and Delta Plans). See Firestone, 489 U.S. at 111. When
that discretion is committed to the fiduciary, the fidu-
Ciary’s interpretation will not be disturbed so long as
it reasonable. Jd. As such, this Court has recognized that
the fiduciary has obligation first to follow the terms
of the Plan. See Curtiss-Wright Corp. v. Schoonejongen,
514 U.S. 73, 83 (1995). This is consistent with ERISA’s
requirement that each benefit Plan be established and

14

maintained “pursuant to a written instrument.” 29 U.S.C.
§ 1102(a)(1); Curtiss-Wright, 514 U.S. at 83. This
requirement enables the participant to examine the
Plan documents and determine their rights and obliga-
tions under the Plan. Cwrtiss-Wright, 514 U.S. at 83
(quoting H.R. Rep. No. 93-1280, at 297 (1974), 1974
U.S.C.C.A.N. 4639, 5077, 5078).

On the other hand, physicians who provide reports and
opinions to benefit plans are subject to none of ERISA’s
fiduciary obligations. Instead, their obligations flow
directly to their patients, and rightly so, regardless of the
terms of the Plan. See Pegram v. Herdrich, 530 U.S. 211,
218 (2000). Indeed, this Court has previously held that
even where the physician’s decision regarding eligibil-
ity for a Plan benefit is mixed with a decision about
medical treatment, the decision is not subject to ERISA’s
fiduciary obligations. Pegram, 530 U.S. at 231. Instead,
the fiduciary duty still lies with the Plan Administrator
which is solely responsible for making decisions about
“distributing [benefits] to [participants and] beneficia-
ries.” Id. at 231 (citing G. Bogert & G. Bogert, Law of
Trusts & Trustees §§ 551, 741-47, 751-75, 781-99 (rev.
2d ed. 1980); 2A, A. Scott & W. Fratcher on Trusts,
§§ 176, 181 (4th ed. 1987); 3 id., §§ 188-93; 3A id.,
§ 232).

Against this backdrop of (1) a clear assignment of
fiduciary duties and obligations to the Plan Adminis-
trator; and (2) a clear statement to Plan participants that
they must look to the Plan Administrator as the arbiter of
the Plan, the Ninth Circuit’s decision improperly shifts
the decision-making power to a non-fiduciary. This is
contrary to ERISA’s fiduciary scheme.

The Ninth Circuit’s decision also violates the funda-
mental structure of ERISA which carefully balances the
fiduciary’s decision-making power with the heavy bur-

15

den of fiduciary responsibility and liability. In trans-
ferring only the decision-making power, but leaving the
fiduciary duty responsibility and obligations on the Plan
Administrator, the Ninth Circuit has shattered the Con-
gressional design. The result is that a party with no bur-
den to follow ERISA is empowered to make the
decisions that will affect the Plan participants, while the
party that has all of the burden to make the correct deci-
sion essentially has little or no power to make the cor-
rect decision. The problem with this separation is not
merely theoretical and has manifested itself in the Ninth
Circuit’s decisions.

The Regula case is a prime example. In that case, the
Plan specifically stated that it was not crediting
Claimant’s treating psychologist because she had opined
outside her area of expertise in apparent bias and sym-
pathy for Claimant. Additionally, after first stating that
Regula was psychologically ready to return to work sub-
ject to his orthopaedic limitations, she suddenly changed
her opinion when the orthopaedic limitations were
removed. Further, the Plan explained that with respect to
the physicians, it credited the position of the
orthopaedist over the chiropractor because of a prefer-
ence for orthopaedists to make orthopaedic decisions.
The Ninth Circuit held that this simply was not good
enough to defeat the treating physician rule.

The result of the Ninth Circuit’s decision in Regula
was to shift the power to decide whether Regula’s ben-
efits would continue to (1) Regula’s psychologist opin-
ing outside her areas of expertise; and (2) Regula’s
chiropractor, neither of whom had any obligation to
actually follow the terms of the Plan. While they have a
heavy incentive to opine in favor of their own patient’s
interests, and arguably an ethical obligation to do so,
they owe no duty to any of the other participants or ben-

16

eficiaries in the Plan who have a right to know that the
claims of others will be decided under the terms of the
Plan by the Plan Administrator and that the assets of the
Plan will not be squandered on the claims of participants
who are not qualified for the Plan’s benefits in accor-
dance with those terms. Conversely, the Administrative
Committee is the one entity that is in a better position to
understand exactly how the Plan is evenly applied across
all participants and beneficiaries. It also has the fidu-
ciary responsibility under ERISA to decide claims. It
now, however, has virtually no decision-making author-
ity when the claimant’s physician opines favorably to the
claimant. Yet, the Plan Administrator still remains
responsible to all of the other participants and benefi-
Ciaries to see that the Plan is administered and its assets
spent in accordance with its terms.

The treating physician rule cannot be applied to an
ERISA plan fiduciary, consistent with ERISA’s structure.
Under this rule, decisions regarding eligibility for ben-
efits will not be made by the ERISA-fiduciary Plan
Administrator, but by the physicians of claimants who
are currently seeking benefits. These physicians are
complete strangers to the Plan with no knowledge of
how the Plan’s disability standard has been applied pre-
viously nor responsibility to apply the terms so that the
Plan’s assets are preserved only for those participants
eligible for the benefits. As a result, the Ninth Circuit’s
rule clearly contravenes ERISA’s fundamental allocation
fiduciary responsibility.

Ill, THE NINTH CIRCUIT IMPROPERLY

IMPORTED A SOCIAL SECURITY REGULA-

TION INTO ERISA

ERISA does not regulate the substantive content of
employee welfare benefit plans. Jntermodal-Rail Employ-
ees Ass'n v. Atchison, Topeka and Santa Fe Railway Co..,

17

520 U.S. 510, 515 (1997) (quoting Metropolitan Life Ins.
Co. v. Massachusetts., 471 U.S. 724, 732 (1985)). This
was one way that Congress addressed the chief concern
that in establishing ERISA it did not want “to create a
system that is so complex that administrative costs, or
litigation expenses, unduly discourage employers from
offering welfare benefit plans in the first place.” Varity
Corp. v. Howe, 516 U.S. 489, 497 (1996). Congress did
give the Department of Labor the ability to create reg-
ulations regarding how ERISA benefit claims are to
be decided and the Department has issued 29 C.F.R.
§ 2560.503-1 as a result. This regulation imposes a
mechanism for benefit claimants to administratively
appeal adverse benefits decisions. It includes the right of
the claimant to submit information in support of the
claim and to know the basis for the Plan administrator's
decision. Jd. That claim regulation specifically requires
the Plan to consult an independent medical physician
when it is not persuaded by the treating physician's
opinion. Id. § 2560-503-1(h)(3)(iii) & (4). The regula-
tion does not require that any deference be paid to the
treating physician’s opinion. See id.

Congress acted much differently in creating a public
welfare benefit system under the Social Security Act.
Within the Social Security Act, Congress has established
an elaborate, highly-regulated public disability benefit
authority. See, e.g., 42 U.S.C. §§ 401-34; 20 C.F.R.
§ 404.1-.2127, 416.101-2227. Unlike the Delta Plan in
Regula, the Social Security Act provides benefits even
when an individual might be able to perform some work.
Heckler v. Campbell, 461 U.S. 458, 461-62 (1983) (exis-
tence of jobs claimant can perform does not preclude
disability finding). Unlike ERISA Plans, which often
look at the effect of a given condition on an individual,
the Social Security Act grids automatically entitle
claimants with certain impairments to receipt of benefits

18

even if individuals with that impairment may actually be
able to work. See 20 C.F.R. § 404.1520(d). The Social
Security Act also requires a specified analysis of the job
qualifications of an individual who does not meet one of
these absolute criteria. 42 U.S.C. § 423(d)(2)(A); 20
C.F.R. § 404.1520(f). Much of this structure is necessary
because of the sheer volume—in the millions of claims
per year—that the Social Security Administration han-
dles. Heckler, 461 U.S. at 464 n.2.

Despite the obvious dissimilarity of the Social Secu-
rity Act and ERISA benefit schemes, the Ninth Circuit
held that it was only “common sense” that the results
under both should be consistent. This is wrong on at
least two levels.

First, as this Court held in Firestone, ERISA is not
based on the Social Security Act. Rather Congress
intended to incorporate much of the Labor Management
Relations Act’s fiduciary law into ERISA. See Firestone,
489 U.S. at 109. Conversely, in drafting ERISA, Congress
was only concerned with the Social Security Act in terms
of the calculation of pension benefits, not welfare bene-
fits. See 29 U.S.C. §§ 1054(b)(1)(B)(iv), 1054(b)(1)(C),
1054(b)(1)(G); Alessi v. Raybestos-Mahhattan, Inc., 451
U.S. 504, 514-15 (1981) (same).

Second, given that the eligibility standards for bene-
fits under an ERISA Plan are almost always different
than, and usually stricter than, the Social Security stan-
dard, as is the case with Delta’s Plan, there is no reason
why consistency between ERISA and Social! Security
Act decisions should be expected. The end result of this
consistency, of course, would be to reverse every Court
of Appeals (including the Ninth Circuit’s prior panel
opinion in Madden v. ITT Long-Term Disability Plan For
Salaried Employees, 914 F.2d 1279, 1285 (9th Cir. 1990))
which has held that an ERISA disability plan is not

19

bound by decisions of the Social Security, or any other,
governmental benefit program. See Delta Family-Care
Disability and Survivorship Plan v. Marshall, 258 F.3d
834, 842 n.11 (8th Cir 2001) (under the same Plan at
issue in Regula, because of the discretion granted to the
ERISA Plan Administrators, the administrator is not
bound by governmental disability decisions) need not be
followed by the Plan); Paramore v. Delta Air Lines, Inc.,
129 F.3d 1446, 1452 n. 5(11th Cir. 1997) (also con-
cerning the same Plan as at issue in Regula and distin-
guishing the Social Security Act); Pagan v. NYNEX
Pension Plan, 52 F.3d 438, 442-43 (2d Cir. 1995) (dif-
fering standards of disability between governmental and
private Plans to preclude similar results); Hale v.
Trustees of United Mine Workers’ Health & Retirement
Funds, 23 F.3d 899, 902 (4th Cir. 1994) (same). In fact,
this result has already occurred in one court of appeals.
See Darland v. Fortis Benefits Ins. Co., 317 F.3d 516,
529-30 (6th Cir. 2003) (holding that an ERISA Plan
which offsets benefits by Social Security Benefits may
be estopped from not following the Social Security dis-
ability decision), petition for rehearing en banc filed
(Feb. 5, 2003).

The reasoning behind the Ninth Circuit’s rule sup-
plants ERISA welfare benefit law with the law of the
Social Security Act. The error of this position is mani-
fest. Why would Congress have gone to such detail to
set up two drastically different schemes if it wanted
them to be the same? The answe. is that Congress did
not mean for them to be the same and it therefore made
them drastically different. As a result, the Ninth Cir-
cuit’s rule has no place.

The Ninth Circuit also thought that ERISA and the
Social Security Act were similar because both ERISA
Plan Administrators and Administrative Law Judges

20

under the Social Security Act have discretion in decid-
ing benefit claims. It is wrong to conclude, however, that
the narrow discretion under the highly regulated Social
Security scheme is the same as the broad discretion of a
Plan Administrator under ERISA. By analogy, both an
adult and a child exercise discretion in deciding what to
eat, but because the adult can drive and likely has
greater wealth, the adult’s discretion would involving
choosing between numerous restaurants within a city. At
the same time, the child’s discretion would likely be
between the types of food readily available in the home.
The Ninth Circuit would equate these acts of choice
because they both involve “discretion”. The Ninth Cir-
cuit is just as wrong in justifying importation of the
treating-physician rule from Social Security Act by com-
paring the discretion of an Administrative Law Judge
under the Social Security Act and the discretion of a
Plan Administrator under ERISA.

=~

21

CONCLUSION

For the foregoing reasons, this Court should reverse
the United States Court of Appeals for the Ninth Cir-
cuit’s decision in Nord v. Black & Decker Disability
Plan, hold that the treating-physician rule does not apply
as a matter of law pursuant to ERISA and order the
Ninth Circuit to enter judgment in favor of The Black &
Decker Disability Plan.

This 24th day of February, 2003.

HUNTER R. HUGHES
Counsel of Record
J. TIMOTHY MCDONALD
ROGERS & HARDIN LLP
2700 International Tower
229 Peachtree St., N.E.
Atlanta, Georgia 30303
(404) 522-4700

D. MICHAEL KEEN, Esq.
DEBORAH D. BROWN, Esq.
DELTA AIR LINES

Legal Department

1030 Delta Boulevard
Atlanta, Georgia 30320
(404) 715-2386

Counsel for Petitioners

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0606%3A10. Public record. Not legal advice.