Although the Employee Retirement Income Security Act grants benefit claimants the right to bring a civil action to challenge benefit denials, ordinary civil procedure prescribed by the Federal Rules of Civil Procedure is not always followed in ERISA litigation, nor are court procedures uniform between the federal circuits.
The U.S. Court of Appeals for the Ninth Circuit’s recent ruling in Vicki Collier v. Lincoln Life Assurance Co. of Boston illustrated this point.
The Ninth Circuit reversed a district court ruling upholding Lincoln Life’s decision to deny Vicki Collier’s claim for long-term disability benefits. Both the U.S. District Court for the Central District of California and the court of appeals applied the de novo standard of ERISA review. However, the appellate court found the district court erred in the manner in which it applied that standard, holding:
The district court’s task is to determine whether the plan administrator’s decision is supported by the record, not to engage in a new determination of whether the claimant is disabled. Accordingly, the district court must examine only the rationales the plan administrator relied on in denying benefits and cannot adopt new rationales that the claimant had no opportunity to respond to during the administrative process.
The Ninth Circuit ruled the district court improperly permitted the insurer to raise new grounds during the litigation as the basis for the benefit denial, which ran afoul of precedent precluding plan administrators from asserting post hoc rationales that had not previously been raised during the claim process.
Specifically, the plaintiff’s credibility and an assertion that the claim was unsupported by adequate objective evidence was first raised during the litigation. And because Collier had not had the opportunity to address that issue before her lawsuit was filed, the court ruled the plaintiff was denied the statutorily mandated full and fair review of her claim.
Collier’s claim was based on a variety of musculoskeletal conditions that she alleged precluded her from working as an insurance sales agent. Despite an extensive course of treatment that included surgery, Lincoln denied Collier’s claim and maintained the denial following the plaintiff’s submission of a prelitigation appeal. The plaintiff then filed suit.
Although the court ordered that a bench trial take place instead of a plenary hearing, the matter was adjudicated based on the briefs submitted by the parties without any witness testimony. The court ruled for Lincoln and issued findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a)(1).
The court specifically found Collier’s pain complaints were not credible, which therefore undermined her doctors’ findings based on those reports. The court further determined that even if Collier’s reports were credible, her condition could be accommodated with ergonomic measures. Although the standard of appellate review from a bench trial ruling is clear error, the Ninth Circuit reversed the lower court.
Citing the ERISA statute, the court pointed to the statutory requirement, reiterated in the U.S. Department of Labor’s accompanying regulations, that a benefit denial must contain “[t]he specific reason or reasons for the denial.” Because the statute also guarantees benefit claimants the right to a full and fair review, it follows that plan administrators are not permitted to assert new grounds for the claim denial in litigation.
The court further ruled that even under de novo review, the court is to base its decision on the claim record and is permitted to allow additional evidence “only when circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision.” Consequently, the court reiterated precedent holding “that a plan administrator may not hold in reserve a new rationale to present in litigation” and added that it was an error for a district court to countenance such actions.
Although the district court maintained that its job was to evaluate conflicting evidence, the Ninth Circuit determined that “credibility determinations are not inherently part of the de novo review,” adding that “[i]f the denial was not based on the claimant’s credibility, the district court has no reason to make a credibility determination.”
While the Collier decision makes sense from a fairness perspective because it precludes defendants from ambushing the plaintiffs with new grounds for a denial that they lacked an opportunity to rebut during the claim process, the decision is in considerable tension with rulings from the U.S. Court of Appeals for the Seventh Circuit. That court has taken an entirely different view of de novo review in ERISA cases that is more akin to civil procedure norms that call for a plenary hearing of civil actions.
In a 2012 case I litigated and lost, Susan Marantz v. Permanente Medical Group Inc. Long Term Disability Plan also involved a disability claim brought under the ERISA law. A U.S. District Court for the Northern District of Illinois permitted the defendant to rely on videotape surveillance even though the benefit denial letters did not mention that evidence as a basis for the claim denial.
The Seventh Circuit affirmed a bench trial ruling adverse to the plaintiff, and rejected the exact position taken by the Ninth Circuit in Collier. The court explicitly found that the ERISA statute and regulations do not “appear to require the plan to identify each and every piece of evidence that it relied upon in reaching its decision to deny benefits.”[11
Marantz further pointed out that the de novo standard of review in the ERISA context requires a court to “come to an independent decision on both the legal and factual issues that form the basis of the claim.” The Seventh Circuit added, “[T]he district courts are not reviewing anything; they are making an independent decision about the employee’s entitlement to benefits.”
Hence, the court ruled the surveillance videos could be used to challenge the plaintiff’s claim even though that evidence had not been cited as grounds for the benefit denial. The court added that “any procedural foibles [Life Insurance Company of North America] may have made are irrelevant” on de novo review.
The position taken by the Seventh Circuit makes the prelitigation appeal that most courts deem mandatory essentially irrelevant, while the Ninth Circuit’s view is more protective of claimants and consistent with the statutory requirement that the reasons for a claim denial be spelled out in order for claimants to have a meaningful full and fair review. The issue is much broader, though.
Many disability benefit claims are like the Collier case — they involve symptoms such as pain and fatigue that are inherently subjective since they cannot be objectively measured. Without the opportunity for the court to hear witness testimony, how is the court supposed to evaluate the credibility of a claimant’s allegations?
The application of the clearly erroneous standard of appellate review from findings of fact and conclusions of law made by a court following a bench trial makes sense because the district judge is in a better position than the reviewing court to assess the testimony of witnesses who have been subject to direct and cross-examination. But the bench trial conducted by the district court in the Collier case was not a trial, so how was the court able to determine the plaintiff’s credibility?
It thus seems unwarranted for an appellate court to utilize the clear error standard of review in the absence of witness testimony. In a comparable context, the U.S. Court of Appeals for the Sixth Circuit has issued a string of decisions questioning the value of reports from nonexamining doctors hired by insurance companies in ERISA cases due to the inability of a doctor who has not seen the claimant to evaluate the validity of claimants’ pain and other symptom allegations.
While it may be expedient to conduct a trial on the papers, especially when the claim record is thorough and well documented, the Seventh Circuit’s view is closer to norms of civil procedure where the ultimate decision is made by the trier of fact following a plenary hearing.
One potential alternative resolution of Collier would have been for the Ninth Circuit to have remanded the case to the district court to conduct a bench trial with witnesses. In the absence of live testimony in Collier, and given the conflict between the Seventh and Ninth Circuit rulings on this issue, it is evident that neither circuit has offered a fully satisfactory solution that harmonizes the ERISA statute and the Federal Rules of Civil Procedure, which can only come with a complete reappraisal of ERISA civil procedure.
Mark D. DeBofsky is a shareholder at DeBofsky Law.
This article was first published by Law 360 on December 1, 2022
 ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B).
 Federal Rules of Civil Procedure 1 (“These rules govern the procedure in all civil actions and proceedings in the United States district courts, except as stated in Rule 81. They should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.”) and 2 (“There is one form of action — the civil action.”)
 Collier v. Lincoln Life Assur. Co. of Boston, 2022 U.S. App. LEXIS 32042, 2022 WL
17087828 (9th Cir. November 21, 2022).
 Harlick v. Blue Shield of California, 686 F.3d 699, 719-20 (9th Cir. 2012).
 29 U.S.C. § 1133(2).
 Fed. R. Civ. P. 52(a)(6).
 29 U.S.C. § 1133(1); 29 C.F.R. § 2560.503-1(g)(1)(i). The regulations also provide that if no reasons are raised after the claimant appeals an initial denial, the claimant has the right to a rebuttal. 29 C.F.R. § 2560.503-1(h)(4)(ii).
 Citing Opeta v. Nw. Airlines Pension Plan for Cont. Emps., 484 F.3d 1211, 1217 (9th Cir. 2007). The court also cited decisions from the First and Sixth Circuits expressing the same view of the scope of de novo review – Orndorf v. Paul Revere Life Ins. Co., 404 F.3d 510, 517-18 (1st Cir. 2005) and Perry v. Simplicity Eng’g, 900 F.2d 963, 965-67 (6th Cir. 1990).
 The Supreme Court has held on multiple occasions that civil actions require plenary hearings rather than being conducted as file review proceedings. See, e.g., United States v. First City National Bank, 386 U.S. 361, 368 (1967); Chandler v. Roudebush, 425 U.S. 840 (1976); and Kappos v. Hyatt, 566 U.S. 431 (2012).
 Marantz v. Permanente Med. Group, Inc. Long Term Disability Plan, 687 F.3d 320 (7th Cir. 2012).
 687 F.3d at 328.
 Id. (citing Diaz v. Prudential Ins. Co. of Am., 499 F.3d 640, 643 (7th Cir. 2007)).
 Id. The Seventh Circuit also ruled in another ERISA disability benefit case, Krolnik v. Prudential Ins. Co. of Am., 570 F.3d 841, 843 (7th Cir. 2009), that litigation under ERISA by plan participants seeking benefits should be conducted just like contract litigation, for the plan and any insurance policy are contracts.[(citing Firestone Tire & Rubber Co. v. Bruch,] 489 U.S. [101,] at 112-13 [(1989)].In a contract suit the judge does not “review” either party’s decision. Instead the court takes evidence (if there is a dispute about a material fact) and makes an independent decision about how the language of the contract applies to those facts.
 But see, Wallace v. Oakwood Healthcare, Inc., 954 F.3d 879 (6th Cir. 2020) (Thapar, J., concurring) (questioning the judicially created administrative exhaustion requirement in ERISA claims)
 See, e.g., Shaw v. AT&T Umbrella Plan No. 1, 795 F.3d 538 (6th Cir. 2015)
 The Marantz ruling was issued following a trial with witnesses, including the plaintiff, who was subjected to cross-examination.
 Such an approach was ordered in Rodriguez v. McGraw-Hill Companies, Inc., 297 F. Supp. 2d 676 (S.D.N.Y. 2004) to permit the court to assess the claimant’s credibility.