Demer v. IBM Corp., No. 13-17196 (9th Cir. 2016)
Annotate this CasePlaintiff filed suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., against the Plan and MetLife, claiming that MetLife, the claim administrator and insurer of the Plan, improperly denied his claim for long-term disability (LTD) benefits. The district court granted defendants' cross-motion for summary judgment. The court concluded that the abuse-of-discretion review should be tempered with some skepticism because plaintiff has offered evidence of a conflict of interest where the independent physician consultants (IPCs) have earned a substantial amount of money from MetLife and have performed a substantial number of reviews for the company as well. The court further concluded that, taking into account the totality of the circumstances, MetLife abused its discretion in denying plaintiff's claim. In this case, the evidence included the financial conflict of interest of the IPCs on whom MetLife relied; the substantial evidence of plaintiff's mental limitations due to pain medication and physical limitations; and the IPCs’ reviews of plaintiff's condition, without having examined him and without explaining why they rejected his credibility, particularly in regard to evidence corroborating his credibility (both medical and nonmedical). Accordingly, the court reversed and remanded with instructions to the district court to remand this case to MetLife so that it may re-evaluate the merits of plaintiff's LTD claim.
Court Description: Employee Retirement Income Security Act. The panel reversed the district court’s summary judgment in favor of the defendants in an action under the Employee Retirement Income Security Act, challenging the denial of a claim for long-term disability benefits. The panel held that Metropolitan Life Insurance Company (“MetLife”), the ERISA plan’s claims administrator and insurer, had a conflict of interest such that the court’s abuse- of-discretion review should be tempered by some skepticism because of the financial conflict of the independent physician consultants (“IPCs”) upon whom MetLife relied. The panel held that MetLife abused its discretion because it did not find that the plaintiff’s mental capacity was affected in any way by the medications he was taking for his physical pain, and improperly rejected the credibility of his complaints of fatigue and difficulty concentrating based on the opinions of two IPCs who did not examine him and did not explain why they rejected his credibility. The panel held that in light of the totality of the circumstances, including the financial conflict of interest of the IPCs and substantial evidence of the plaintiff’s physical limitations, MetLife abused its discretion in denying the plaintiff’s claim for benefits. DEMER V. IBM CORP. LTD PLAN 3 The panel remanded the case to the district court, with instructions to remand to MetLife to re-evaluate the merits of the plaintiff’s long-term disability claim. Judge Bybee dissented from Part II.B of the majority opinion, addressing the financial conflict of the IPCs. Because that section was not otherwise necessary to the majority’s opinion, he concurred in the judgment. Judge Bybee wrote that MetLife should not be penalized for following the court’s prior case law instructing ERISA plan administrators to mitigate structural conflicts of interest by walling off their claims administrators from their financial offices and seeking medical evaluations from outside, independent physicians.
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