385 F. 3d 654 - Jones v. Metropolitan Life Insurance Company

This action arose from Defendant-Appellee, Metropolitan Life Insurance Company ("MetLife")'s, denial of Plaintiff-Appellant, Dolores K. Jones ("Jones")'s, claim for benefits under a Personal Accident Insurance ("PAI") policy in an employee benefits plan ("Plan") provided by General Motors ("GM") and governed by the Employee Retirement Income Security Act of 1974 ("ERISA"). Jones appeals the district court's judgment granting MetLife's motion for judgment on the administrative record and denying Jones's dispositive motion. Jones first asserts on appeal that the district court should have evaluated under a modified-arbitrary-and-capricious standard the denial of PAI benefits to Jones because MetLife was operating under a conflict of interest, as it was both the insurer and an administrator of the Plan. Jones next asserts on appeal that the district court erred by accepting MetLife's definition of the term "accident," which requires a claimant to demonstrate "unusual activity" or an "external force or event." Jones argues that MetLife's definition is arbitrary and capricious, and that the district court should have applied the federal-common-law definition of accident promulgated by the First Circuit in Wickman v. Northwestern National Insurance Co., 908 F.2d 1077, 1088 (1st Cir.), cert. denied, 498 U.S. 1013, 111 S.Ct. 581, 112 L.Ed.2d 586 (1990), which merely requires the claimant to demonstrate that the injury was neither subjectively expected nor objectively foreseeable.

For the following reasons, we REVERSE the district court's judgment granting MetLife's motion for judgment on the administrative record and REMAND this case to the district court with instructions to remand this claim to MetLife for reconsideration of Jones's medical evidence in light of this opinion.

This action arose from MetLife's denial of Jones's claim for PAI benefits under a Plan provided by GM and insured by MetLife. The parties agree as to which provisions of the Plan are relevant to this appeal. First, the parties agree that, through the following provision, GM has expressly reserved and delegated to MetLife discretionary authority to interpret the Plan and to evaluate claims under the Plan:

(b) Administration and Amendment

(1)The Corporation, as the Program Administrator, shall be responsible for the administration of the Program. The Corporation reserves the right to amend, modify, suspend or terminate the Program in whole or in part, at any time by action of its Board of Directors or other committee or individual expressly authorized by the Board to take such action.... The Program Administrator expressly reserves the right to construe, interpret and apply the terms of this Program. In carrying out its responsibilities under the Program, the Carrier also shall have discretionary authority to interpret the terms of the Program and to determine eligibility for and entitlement to Program benefits in accordance with the terms of the Program. Any interpretation or determination made by the Program Administrator or the Carrier, pursuant to such discretionary authority, shall be given full force and effect, unless it can be shown that the interpretation or determination was arbitrary and capricious. The determination of the Corporation or, in the event of an appeal, of the Carrier, shall be final and binding on the Corporation, the insurance company and the Employee or the Employee's designated beneficiary.

Joint Appendix ("J.A.") at 268 (GM Plan). The parties also agree that the above-quoted provision requires that courts give some deference to MetLife's interpretation of the Plan and evaluation of claims under the plan, and therefore, that this court should evaluate MetLife's denial of benefits under some permutation of the arbitrary-and-capricious standard. The parties disagree, however, over whether the denial of benefits should be evaluated under a less deferential, modified-arbitrary-and-capricious standard because MetLife was operating under a conflict of interest, as it was both the insurer and an administrator of the Plan.

Second, the parties agree that Jones's claim for PAI benefits must be determined under the following provision:

(i)Payment of Benefits

If, while insured for Personal Accident Insurance, an Employee, Spouse or Dependent Child sustains accidental bodily injuries, and within one year thereafter shall have suffered loss of life or any other loss set forth in subsection (e), as a direct result of such bodily injuries independently of all other causes, the Carrier shall pay the benefit specified for all such Losses....

...

Only one amount, the largest to which the beneficiary is entitled, will be paid for all losses suffered by one covered individual resulting from one accident.

J.A. at 333 (GM Plan). The Summary Plan Description provides:

If you become totally and permanently disabled as a result of an accidental injury while you are an active employee you will be paid the full benefit amount of any personal accident insurance (PAI) you elected in monthly installments of 2% of that amount less any amount paid for losses previously sustained, provided you submit evidence satisfactory to the insurance company. "Total and permanent disability" under PAI means the total and permanent inability, as caused by an accidental injury, to engage in regular employment or occupation for remuneration or profit, as based on medical evidence satisfactory to the insurance company.

J.A. at 88 (GM Summ. Plan Description). The parties agree that Jones's claim for PAI benefits turns upon the definition of the term "accident," and that the term "accident" is not defined in the Plan or the Summary Plan Description. The parties disagree, however, over whether the definition proffered by MetLife in the course of denying Jones's claim is arbitrary and capricious.

Jones worked as an industrial nurse for GM. On February 22, 1999, Jones injured her knee at work. On September 1, 2000, Jones submitted to MetLife a claim form requesting PAI benefits. On that form, Jones described the circumstances leading to her knee injury as follows: "BENDING DOWN AND SQUATTING TO GIVE FIRST AID TO EMPLOYEE — FELT SHARP PAIN IN MY RIGHT KNEE IMMEDIATELY AFTER I STOOD FROM SQUATTING POSITION." J.A. at 60 (claim form). Also on that form, Jones indicated that she became disabled on June 1, 1999, and was certified unable to work on May 31, 2000.1

On December 5, 2000, MetLife wrote to Jones informing her that her claim for PAI benefits had been denied because Jones's description of her knee injury "does not constitute an accident for purposes of the payment of Total and Permanent Disability Benefits under [Jones's] Personal Accident Insurance" and because Jones's "physician has not indicated that [Jones is] totally and permanently disabled due to [her] injury." J.A. at 65 (MetLife letter 12/5/2000). In its December 5, 2000 letter, MetLife stated that it would "gladly consider any additional information you wish to submit supporting your claim.... The additional information will be re-evaluated and Metropolitan Life will advise you of its findings." J.A. at 66 (MetLife letter 12/5/2000). On December 19 and 26, 2000, Jones sent to MetLife additional documentation supporting her claim, including a doctor's receipts that indicate her diagnosis was "tear knee medial meniscus," her Social Security award letter for disability insurance, a claim form for PAI benefits that her treating physician, Dr. Salamon, had completed in more detail, and a statement from Jones's physician. J.A. at 87 (Jones letter 12/26/2000).

On February 9, 2001, MetLife wrote to Jones again informing her that her claim for PAI benefits had been denied because" `bending down and squatting', is not sudden, unexpected and unforeseen. Therefore, it does not constitute an accident for purposes of the payment of Total and Permanent Disability Benefits under you[r] Personal Accident Insurance." J.A. at 63 (MetLife letter 2/9/2001). In its February 9, 2001 letter, MetLife informed Jones that she could appeal this decision and could include in that appeal "any additional information that [she] wish[ed] to be considered." J.A. at 64 (MetLife letter 2/9/2001).

On April 9, 2001, Jones wrote to MetLife appealing the December 5, 2000 and February 9, 2001 denials of her claim for PAI benefits. In her April 9, 2001 letter, Jones explained that "while in the course of my employment, and in an emergency first aid situation, that while I bent down to a squatting position in order to administer first aid that I hypo extended my knee causing a rip and tear to the medial meniscus"2 and stated that Taber's Cyclopedic Medical Dictionary defines "accident injury" as "`[o]ccurring suddenly, unexpectedly, inadvertently; under unforeseen circumstances.'" J.A. at 67 (Jones letter 4/9/2001) (emphasis added). Jones further stated in her April 9, 2001 letter that she felt "that an unexpected tear in the medial meniscus received during the course of performing [her] job clearly constitutes an accident .... [and that] MIOSHA3 deems [her] injury an accident." J.A. at 67-68. In her April 9, 2001 letter, Jones also requested that MetLife send her a copy of the PAI policy and inform her of MetLife's definitions of the terms "accident" and "total and permanent disability" in order to enable Jones to provide MetLife with appropriate documentation of her injury.

On May 7, 2001, MetLife wrote to Jones denying her appeal. In its May 7, 2001 letter, MetLife stated:

The [PAI] plan itself does not define the word "accident" or "accidental," but applicable federal law does. Under applicable federal law, "accident" means an unforeseen undesigned sudden or unexpected event of an unfortunate character. However, injuries resulting from natural and ordinary activities are not "accidental" when there are no external forces or events to trigger the injuries. For example, a knee injury from bending and/or squatting does not constitute an accident.

In your case, there was no outside occurrence that caused your injury. In the course of your employment as a registered nurse, you bent down and squatted to give first aid to an employee. Consequently, your knee injury was natural and not accidental. (While MIOSHA may have deemed your injury to be an accident, a determination by MIOSHA is not binding on the Plan.)

...

... Since we have determined that your injury was not accidental, there was no need to closely examine your medical evidence.

J.A. at 69-70 (MetLife letter 5/7/2001).

On February 22, 2002, Jones filed a complaint in the district court seeking judicial review of MetLife's denial of her claim for PAI benefits. The parties each filed motions for judgment. The district court granted MetLife's motion for judgment on the administrative record and denied Jones's dispositive motion. The district court had jurisdiction pursuant to 29 U.S.C. § 1132(a)(1)(B) and (e), as Jones sought to recover benefits allegedly due under the terms of an ERISA plan. This court has jurisdiction pursuant to 28 U.S.C. § 1291, as Jones filed a timely notice of appeal.

The parties agree that when there is no evidence of a conflict of interest, both the district court and this court review de novo an administrator's denial of benefits pursuant to an ERISA plan, unless the plan clearly grants to the administrator discretion to construe the terms of the plan or to make benefit determinations. Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 613 (6th Cir.1998) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989)). The parties also agree that if a plan expressly grants to the administrator such discretion, and there is no evidence of a conflict of interest, both the district court and this court must review the administrator's denial of benefits under the highly deferential arbitrary-and-capricious standard of review. Moos v. Square D Co., 72 F.3d 39, 41 (6th Cir.1995). Moreover, the parties agree that when reviewing an administrator's denial of benefits pursuant to an ERISA plan, both the district court and this court may typically review only evidence contained in the administrative record. Wilkins, 150 F.3d at 619.

Jones first asserts on appeal that the district court erred by reviewing under the arbitrary-and-capricious standard the denial of her claim for PAI benefits, arguing that MetLife had a conflict of interest due to its status as both the insurer and an administrator of the Plan. In response, MetLife argues that Jones has not preserved her argument that the district court should have modified the arbitrary-and-capricious standard, as Jones conceded in the district court that the arbitrary-and-capricious standard applies and failed to raise in the district court MetLife's alleged conflict of interest.

We conclude that Jones failed to preserve her argument that the district court should have reviewed under a modified-arbitrary-and-capricious standard MetLife's denial her claim for PAI benefits.4 Jones conceded below that the denial of her claim for PAI benefits should be evaluated under the arbitrary-and-capricious standard and did not assert below that this standard should be modified due to MetLife's alleged conflict of interest. In her dispositive motion below, Jones stated, "[Jones] concedes that the case at bar should be reviewed under the arbitrary and capricious standard.... When it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary and capricious.... In other words, if the decision is `rational in light of the plan's provisions' it should be upheld." J.A. at 567 (Pl's Dispositive Mot.) (internal citations omitted). Additionally, in her response to MetLife's motion for judgment on the administrative record, Jones stated, "[Jones] admits that under the GM Plan, discretionary authority has been retained by [MetLife] and that the standard of review is pursuant to an arbitrary and capricious standard." J.A. at 583 (Pl's Resp.). Therefore, we will evaluate under the deferential arbitrary-and-capricious standard of review MetLife's denial of Jones's claim for PAI benefits.

It is true that, "[r]eview under [the arbitrary and capricious] standard is extremely deferential and has been described as the least demanding form of judicial review." McDonald v. Western-Southern Life Ins. Co., 347 F.3d 161, 172 (6th Cir.2003). "Under this deferential `arbitrary and capricious' standard, we will uphold a benefit determination if it is `rational in light of the plan's provisions.'" Univ. Hosps. of Cleveland v. Emerson Elec. Co., 202 F.3d 839, 846 (6th Cir.2000) (quoting Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376, 381 (6th Cir.1996)). The arbitrary-and-capricious standard, however, does not require us merely to rubber stamp the administrator's decision. McDonald, 347 F.3d at 172. Under the arbitrary-and-capricious standard, both the district court and this court must exercise review powers. Id.

Jones next argues on appeal that the district court erred by concluding that MetLife's definition of the term "accident" is not arbitrary or capricious. Jones asserts that the district court should have applied the federal-common-law definition of accident promulgated by the First Circuit in Wickman, which merely requires the claimant to demonstrate that the injury was neither subjectively expected nor objectively foreseeable. In response, MetLife argues that the district court properly held that MetLife's definition of the term "accident" is not arbitrary or capricious. MetLife asserts that Wickman is distinguishable, in that there the insured's "injuries resulted from an occurrence outside the usual course of events." Appellee's Br. at 32. MetLife argues that several federal cases decided under the arbitrary-and-capricious standard have upheld administrators' interpretation of "accident" as requiring "unusual activity" or an "external force or event."

At the outset, we note that because the Plan expressly granted to MetLife authority to interpret the Plan, we must give deference to MetLife's interpretation of ambiguous and general terms of the Plan. See Admin. Comm. of the Sea Ray Employees' Stock Ownership & Profit Sharing Plan v. Robinson, 164 F.3d 981, 986 (6th Cir.1999), cert. denied, 528 U.S. 1114, 120 S.Ct. 931, 145 L.Ed.2d 810 (2000); Moos, 72 F.3d at 42-43. Discretion to interpret a plan, however, does not include the authority to add eligibility requirements to the plan. See Univ. Hosps. of Cleveland, 202 F.3d at 849-50.5 We conclude that MetLife acted arbitrarily and capriciously when it interpreted the term "accident" in a manner that adds requirements not found in the Plan documents or supported by federal common law.

The Plan documents do not define the term "accident." Specifically, the Plan documents do not require that an insured be engaged in "unusual activity" or meet with an "external force or event" in order for her injury to be considered an accident. MetLife could have expressly included such a requirement. Indeed, many of the insurance policies discussed in the cases cited by the parties did contain such a requirement. Because the policy at issue in this case did not include an "unusual activity" or "external force or event" requirement, MetLife attempts to rely upon federal common law to supply this requirement.

As evidenced by the cases cited in the parties' briefs, the definition of the term "accident" has been heavily litigated throughout history. The cases cited by Jones are of two varieties — (1) those in which the insured had engaged in risky behavior and the question being reviewed was whether the resulting injury was accidental;6 and (2) those in which an event had triggered an injury and the question being reviewed was whether a preexisting condition prevented the injury from being considered accidental.7 In the cases cited by MetLife, the proximate cause of the injury was not obvious and the requirement that the insured have been engaged in unusual activity or that there have been some external force is intended to ensure that the injury resulted from an accident, rather than from natural causes.8 In most of the cases cited by MetLife, the insured died from a heart attack. Many of these cases hold that there is a presumption that a heart attack is caused by natural causes, which may be rebutted by evidence of unusual activity, unforeseen trauma, or external force. MetLife cites no cases, nor could we find any, suggesting that there is a presumption that a knee injury or similar ailment is caused by natural causes. When there is no presumption that an injury resulted from natural causes, federal common law does not require proof aimed at rebutting such a presumption.

Contrary to MetLife's assertion, federal common law — from pre-Erie diversity cases to present day ERISA cases — focuses upon the expectations and intentions of the insured. Some of these cases adhere to the accidental means versus accidental results distinction, but hold that an injury caused by an unintended and unexpected mishap during the course of an intentional activity is caused by accident.9 Other cases reject the accidental means versus accidental results distinction and hold that an injury is accidental if it is neither subjectively expected nor objectively foreseeable. Critchlow v. First UNUM Life Ins. Co. of Am., 378 F.3d 246, 259-261 (2d Cir.2004); Padfield v. AIG Life Ins. Co., 290 F.3d 1121, 1125, 1127-30 (9th Cir.), cert. denied, 537 U.S. 1067, 123 S.Ct. 602, 154 L.Ed.2d 556 (2002); Cozzie v. Metro. Life Ins. Co., 140 F.3d 1104, 1109-110 (7th Cir.1998); Santaella v. Metro. Life Ins. Co., 123 F.3d 456, 463-65 (7th Cir.1997); Todd v. AIG Life Ins. Co., 47 F.3d 1448, 1456 (5th Cir.1995); Wickman, 908 F.2d at 1088-89. Jones presented to the administrator evidence that may pass either test. Jones presented evidence that during the course of her bending down to assist a patient, she "hypo" extended her knee. Because Jones presented evidence that her injury was caused by an unintended and unexpected mishap, she has presented evidence that her injury was caused by an accident. Additionally, Jones presented evidence that she did not subjectively expect to injure her knee while bending down to assist a patient during her normal work activities and that this expectation was objectively reasonable. Because Jones presented evidence that her knee injury was neither subjectively expected nor objectively foreseeable, Jones has presented evidence that she suffered an accidental injury.

In this case, MetLife added an eligibility requirement under the guise of interpreting the term "accident" that does not exist in either the Plan documents or federal common law; therefore, MetLife's interpretation of the Plan is arbitrary and capricious. When denying Jones's claim for PAI benefits, MetLife applied an arbitrary-and-capricious definition of the term "accident." Moreover, in its May 7, 2001 denial of Jones's request for administrative review, MetLife indicated that it had not determined whether Jones was totally and permanently disabled. Because application of the correct definition of accident and the ultimate resolution of Jones's claim requires additional findings of fact, we will remand this case to MetLife. Compare Univ. Hosps., 202 F.3d at 852, with Williams v. Int'l Paper Co., 227 F.3d 706, 715-16 (6th Cir.2000).

For the foregoing reasons, we REVERSE the district court's order granting MetLife's motion for judgment on the administrative record and REMAND this case to the district court with instructions to remand this claim to MetLife for reconsideration of Jones's medical evidence in light of this opinion.