The saga of this case, which involved a claim of disability due to complications of diabetes, is a long one that began in 2002 when Unum initially denied the claim for benefits and upheld its decision when the plaintiff submitted her pre-suit appeal.

The case, Metzger v. Unum Life Ins.Co. of America, 2007 U.S.App.LEXIS 3755, is from the 10th U.S. Circuit Court of Appeals and was decided on Feb. 21.

When Sarah Metzger sued, the court found that Unum had denied her a ”full and fair review” and remanded the claim to allow her the opportunity to respond to the opinions of Unum’s physicians. Metzger then submitted additional evidence to rebut the doctor’s opinions, but Unum had a new set of doctors review the evidence and refused to share their opinions with her before to a new decision was rendered. Metzger filed a motion for a rule to show cause claiming that Unum’s conduct violated the court’s initial order; however, the district court ruled it lacked jurisdiction, which led to an appeal that determined the district court did have jurisdiction to enforce its orders. On remand, the district court found Unum had not breached its duty to provide a full and fair review and entered judgment in the insurer’s favor. Metzger then appealed a second time.

The first issue considered by the 10th Circuit was whether the initial remand order was a final order or whether it was interlocutory. Citing Rekstad v. First Bank System Inc., 238 F.3d 1259 (10th Cir. 2001), the court found that remand orders in ERISA cases are comparable to federal court remands to administrative agencies; and that such orders are generally considered ”nonfinal” and not subject to appellate review. However, the court acknowledged that there is a circuit split on the issue:

”Circuit courts have split over whether an order remanding a matter to an ERISA plan administrator is final. The 1st, 6th, and 11th Circuits have held that such orders are nonfinal. See Bowers v. Sheet Metal Workers’ Nat’l Pension Fund, 365 F.3d 535, 537 (6th Cir. 2004); Petralia v. AT&T Global Info. Solutions Co., 114 F.3d 352, 354 (1st Cir. 1997); Shannon v. Jack Eckerd Corp., 55 F.3d 561, 563 (11th Cir. 1995). The 7th Circuit, however, considers ERISA remand orders to be final and appealable. See Perlman v. Swiss Bank Corp. Comprehensive Disability Prot. Plan, 195 F.3d 975, 977-80 (7th Cir. 1999). In Hensley v. N.W. Permanente P.C. Ret. Plan & Trust, the 9th Circuit employed an approach similar to our ‘practical finality rule’ and held that an ERISA remand order is final when ‘appellate jurisdiction is necessary to ensure proper review of an important legal question which a remand may make effectively unreviewable.’ 258 F.3d 986, 994 (9th Cir. 2001) (overruled on other grounds by Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 966 (9th Cir. 2006)).”

In examining the specific issue presented, the 10th Circuit found the original order interlocutory in character because it was not a final judgment that disposed of all issues in the case; nor was there a certification of the order pursuant to Fed.R.Civ.P. 54(b). The district court’s final ruling in Unum’s favor was deemed appealable, however, and the court then turned to the main issue.

The court framed the issue under consideration as whether ”Unum violated 29 C.F.R. section 2560.503-1(h)(2)(iii) by failing to allow her to review and rebut its consultants’ reports prior to its final decision on administrative appeal.” The court sided with Unum on that issue; and the Court of Appeals reviewed the district court’s interpretation of the agency regulation de novo. The regulation requires a plan administrator to ”[p]rovide … upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits. Whether a document, record, or other information is relevant to a claim for benefits shall be determined by reference to paragraph (m)(8) of this section.” 29 C.F.R. § 2560.503-1(h)(2)(iii).

All parties agreed that the reports in question were available at the conclusion of the appeal process; however, they disagreed as to whether Metzger was entitled to review and respond to those reports prior to the rendering of a final determination by the insurer. Although the district court had initially sided with the plaintiff on that issue, following the remand, the court reversed course. The court reasoned that when all of the ERISA regulations are read together with one another, the regulation requiring consultation ”with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment” (29 C.F.R. § 2560.503-1(h)(3)(iii)) meant that there was no obligation to share those reports with the claimant until after the appeal was concluded. Otherwise, said the district court:

”If plaintiff were allowed to rebut the opinions of professionals consulted at [the administrative appeal] stage, then the layman claims administrator would once again be faced with the possibility of receiving new medical opinions and judgments from plaintiff’s experts. Subparagraph (h)(3)(iii) specifically requires such evidence be evaluated by qualified healthcare professionals…. Thus, if read according to plaintiff’s view, the regulations set up an endless loop of opinions rendered under (h)(3)(iii), followed by rebuttal from plaintiff’s experts, followed by more opinions under (h)(3)(iii), and so on.”

The Court of Appeals concurred, finding: ”Permitting a claimant to receive and rebut medical opinion reports generated in the course of an administrative appeal – even when those reports contain no new factual information and deny benefits on the same basis as the initial decision – would set up an unnecessary cycle of submission, review, re-submission, and re-review. This would undoubtedly prolong the appeal process.” The court also noted the cost of appeals would rise. Hence, the court held:

”[S]ubsection (h)(2)(iii) does not require a plan administrator to provide a claimant with access to the medical opinion reports of appeal-level reviewers prior to a final decision on appeal. Instead, the regulations mandate provision of relevant documents, including medical opinion reports, at two discrete stages of the administrative process. First, relevant documents generated or relied upon during the initial claims determination must be disclosed prior to or at the outset of an administrative appeal. See 29 C.F.R. § 2560.503-1(h)(2)(iii). Second, relevant documents generated during the administrative appeal – along with the claimant’s file from the initial determination – must be disclosed after a final decision on appeal. See 29 C.F.R. § 2560.503-1(i)(5). So long as appeal-level reports analyze evidence already known to the claimant and contain no new factual information or novel diagnoses, this two-phase disclosure is consistent with ‘full and fair review.’ See Sage v. Automation Inc. Pension Plan & Trust, 845 F.2d 885, 893-94 (10th Cir. 1988) (holding that a ‘full and fair review’ under ERISA requires ‘knowing what evidence the decision-maker relied upon, having an opportunity to address the accuracy and reliability of the evidence, and having the decision-maker consider the evidence presented by both parties prior to reaching and rendering his decision’); Gilbertson, 328 F.3d at 635 (stating that ERISA and its regulations contemplate a ‘meaningful dialogue’ between plan administrators and claimants) (quotation omitted).”

Although the court acknowledged that the 8th Circuit had reached just the opposite conclusion in Abram v. Cargill Inc., 395 F.3d 882 (8th Cir. 2005), the 10th Circuit took the position thatAbram was based on the pre-2000 ERISA claim regulations and the court ”did not consider the potential for circularity of review.”

The Metzger ruling is significantly undermined by the quote in the opinion taken from Sage v. Automation Inc. How can a claimant have ”an opportunity to address the accuracy and reliability of the evidence” if the insurer withholds the ultimate evidence on which it relies until after the final decision is made? Particularly if the insured faces an arbitrary and capricious standard of review and, under the standards of cases such as Semien v. Life Insurance Co. of North America, 436 F.3d 805, 813 (7th Cir.), cert. denied 166 L.Ed.2d 251 (2006), cannot conduct any discovery, insurers have the unchecked power to deliberately sandbag claimants. Professor John Langbein, the nation’s leading ERISA scholar, has expressed concern about giving insurers such broad deference and has insinuated that under the current regime insurers have been given an incentive to cut corners in order to deny meritorious claims. See, Langbein, ”Trust Law As Regulatory Law: The Unum/Provident Scandal and Judicial Review of Benefit Denials under ERISA” (Draft June 26, 2006, available at (Scheduled for publication in the Northwestern Law Review, Spring 2007).

Claimants have a difficult time enough winning meritorious ERISA cases; and when a court delivers a double whammy by not only instituting rules of procedure that eliminate the basic due process right of cross-examination, but also precludes claimants from even having a chance to address the penultimate evidence that will be used against them, there has to be serious doubt about whether the review process is ”full and fair” as 29 U.S.C. § 1133 mandates.

Although Abram is the only Court of Appeals decision to have considered this issue, two district courts have issued thoughtful opinions that concur with that ruling: Harris v. Aetna Life Insur.Co., 379 F.Supp.2d 1366 (N.D.Ga. 7/14/2005) and White v. Reliance Standard Life Ins.Co., 2007 U.S.Dist.LEXIS 4633 (N.D.Ga. 1/22/2007). Harris answered the 10th Circuit’s worry about ”endless interchanges between the fiduciary and the claimant,” by pointing out ERISA’s higher concern of encouraging a meaningful dialogue between the parties. White, too, focused on the importance of an ongoing dialogue. Thus, when one side gets to control the evidence and is able to cut off the other side’s opportunity to address that evidence, as the movie Cool Hand Luke teaches by way of Booton v. Lockheed Medical Benefit Plan, 110 F.3d 1461 (9th Cir. 1997), an ERISA-governed health benefit case: ”What we got here is a failure to communicate.”

I was counsel in Semien v. Life Insur. Co. of North America.

This article was initially published in the Chicago Daily Law Bulletin.

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