Post v. Hartford Ins Co (3rd Cir. 2007)

D o n a ld P. Russo, Esquire (Argued) 1 1 7 East Broad Street P .O . Box 1980 B e th le h e m , PA 18016 C o u n s e l for Appellant B ria n P. Downey, Esquire (Argued) P e p p e r Hamilton 2 0 0 One Keystone Plaza N o rth Front and Market Streets P .O . Box 1181 H a rris b u rg , PA 17108-1181 S tace y I. Gregory, Esquire P e p p e r Hamilton 1 8 th & Arch Streets 3 0 0 0 Two Logan Square P h ila d e lp h ia , PA 19103 C o u n s e l for Appellee OPINION OF THE COURT AMBRO, Circuit Judge Carol Post believes that she is entitled to long term d is a b ility benefits under her former employer's disability plan.

H e r treating physicians maintain that she is disabled. On the o th e r hand, Hartford Insurance Company, the plan administrator (w h o also happens to fund the plan), has hired reviewing p h ys ic ia n s who maintain that Post is not disabled. In other w o rd s, the central issue in this case--whether Post is d is a b le d -- is a "battle of the experts." "B attle-o f -th e- e x p e r t s " cases are often easy for a re v iew in g court. If the trial court's standard of review is a rb itra ry and capricious, then Hartford usually wins when it has p ro d u c e d sufficient evidence supporting its position. It cannot b e said to have acted arbitrarily, and summary judgment in its f a v o r is appropriate. On the other hand, if the standard is de n o v o , then summary judgment for either party must be vacated b e c au s e there is credible evidence on both sides of the key fact q u e s tio n .

But this case, a claim that ERISA benefits were im p ro p erly denied, is anything but easy, for the trial court's sta n d a rd of review is neither arbitrary and capricious (at least in its traditional form) nor de novo. In these cases, district courts m u st select a standard of review that accords with the extent to w h ic h the plan administrator operates under a conflict of in te re st. Here we conclude that the District Court did not select th e proper standard of review, and so we vacate and remand for c o n s id e ra tio n under the standard we deem to apply.

W e affirm, however, the Court's grant of summary ju d g m e n t on Post's claim for breach of fiduciary duty because it is barred by res judicata.

I. F a c ts and Procedural History C a ro l Post was in a serious car accident in November 1 9 9 3 , just a few days after having major dental surgery. At the tim e , she was employed as a dentist by Overlook Hospital in S u m m it, New Jersey. She sustained a whiplash injury in the a c cid e n t, but she nonetheless attempted to return to work soon a f t e rw a rd . After six days of working, she was forced to stop b e c au s e of intractable pain. Overlook, however, offered for her t o try working as a pharmacist for a while (as she has both d e n tis try and pharmacy degrees), and she accepted. She re tu rn e d to work in December 1993, but was forced to take n e a rly a day off each week because of pain. After nine months o f off-and-on working, she resigned due to pain in September 1 9 9 4 . During this period, she tried numerous physical therapy tre a tm e n ts , none of which significantly improved her condition.

S h e returned to work again in January 1995, but resigned four m o n th s later because of continuing pain. She has not worked s in c e .

P o s t's medical record is voluminous. Between 1993 and 2 0 0 3 , she visited 14 doctors. Her pain management regimens ra n g e d from traditional treatments like prescription drug c o m b i n a tio n s , trigger-point injections, and various forms of p h ys ic a l therapy, to more exotic treatments like acupuncture and b i o f e e d b a c k . She reports that none has given her significant re lie f . Her primary treating physician is currently Dr. Carolyn B ritto n , a professor of neurology at Columbia University.

A c c o rd in g to Dr. Britton, Post suffers from chronic posttra u m a tic pain syndrome characterized by severe myofacial p a in ; regular, debilitating headaches accompanied by sensitivity to light, nausea, and vomiting; irritable bowel syndrome; and in so m n ia. Dr. Britton believes that this syndrome is directly a ttrib u ta b le to Post's car accident and that it renders her disabled f ro m any sustained employment.

In keeping with Dr. Britton's determination, Post's view o f the record is that it indicates that she sustained a traumatic w h ip la sh injury that sensitized her central nervous system, thus trig g e rin g the development of chronic pain syndrome. This is D r. Britton's diagnosis, and it is supported by a number of other e v a lu a tio n s in the record.

Hartford, on the other hand, believes that the record in d ic a te s that Post suffered no more than a whiplash injury that h as now healed. While it concedes that Post continues to report p a in , it contends that the record contains no reliable diagnosis of a recognized debilitating condition. In support of its view, H a rtf o rd primarily relies on the reports of Dr. Ekaterina M a lie v sk a ia , its reviewing physician, and Dr. Christopher L yn c h , who performed an independent medical examination.

H a rtf o rd also cites the opinions of Drs. Michael John Fiore and J o e l Harris,1 who evaluated Post in 1994 and 1996, respectively.

1 Dr. Harris's conclusion on the issue of disability is, at best, u n c le a r . On a Hartford form, he indicated that Post could sit, s ta n d , walk, and drive for one hour each in an eight-hour w o rk d a y. The form asked that he circle for each activity a n u m b e r between one and eight. Zero was not an option. In any e v e n t, his responses indicate that she could sit, stand, walk, and d riv e for a total of four of eight hours. It is unclear how she c o u ld maintain employment without sitting, standing, walking, o r driving for the other four hours of a typical day.

In addition Dr. Harris noted that Post could not lift or c a rry any weight at all, not even one pound. Nor could she c lim b , balance, stoop, kneel, crouch, crawl, reach, handle, f in g e r, or feel.

H a r t f o rd and our dissenting colleague focus on the fact th a t, in a section asking what degree of work Post could tolerate, H a rris checked "sedentary work." This was the least intensive o p tio n available. The form did not provide a way of responding th a t the patient could not tolerate work at all.

In the comments section of the form, Dr. Harris wrote: S e v e re pain -- head, neck, & lower jaw.

B a c k pain limits any mobility without s e v e re pain. Cannot sit in chair for tre a tm e n t without pain.

T h e s e comments and responses render the form, at the least, a m b i g u o u s as to Post's condition. Read most fairly, the great w eig h t of the form indicates a significant level of disability. It ta k e s a highly selective reading to conclude that it indicates that P o s t was capable of working (without sitting, standing, walking, This case is governed by the Employee Retirement In c o m e Security Act ("ERISA"), 29U.S.C. §§ 10011461, b e c a u s e Overlook Hosiptal's disability plan (the "Plan") is an " e m p lo ye e welfare benefit plan" as defined by 29U.S.C.

§ 1002(1). Post filed a disability claim with Hartford, O v e rlo o k 's disability carrier, soon after she ceased working in 1 9 9 5 . Hartford approved her claim, subject to periodic renewal.

T o be considered "totally disabled" under the Plan after D e c em b e r 6, 1997, she had to be "prevented by [d]isability from d o in g any occupation or work for which [she was] or could b e c o m e qualified." From 1995 until 2002, Hartford paid out benefits. In A u g u s t 1998, the Social Security Administration approved P o st's application for disability benefits, citing intractable c e rv ic a l pain, chronic pain syndrome, and fibromyalgia 2 as the or driving, for half of the workday).

2 In the words of Judge Posner, fibromyalgia is a common, but elusive and mysterious, disease, m u c h like chronic fatigue syndrome, with which it shares a number of features. See Frederick W o lf e et al., "The American College of R h e u m a to lo g y 1990 Criteria for the Classification o f Fibromyalgia: Report of the Multicenter C rite ria Committee," 33 Arthritis & Rheumatism 1 6 0 (1990); Lawrence M. Tierney, Jr., Stephen J.

M c P h e e & Maxine A. Papadakis, Current re le v a n t diagnoses. Soon after Post was approved for Social S e c u rity benefits, Hartford asked her to submit a copy of the a d m i n is tra tiv e decision so that it could offset her benefits. She re sp o n d e d through counsel that Hartford was not entitled to an o f f se t under the plain language of the Plan, but she did provide H a rtf o rd with a copy of the decision. Hartford eventually re le n te d and accepted Post's reading of the Plan.

F o r reasons not apparent from the record, sometime in la te 1999 Hartford took a renewed interest in Post's claim. The c o m p a n y surveilled her and reported in its claim notes that s u rv e illa n c e was unsuccessful, as she was not seen leaving her h o u s e . Hartford also began requesting copies of Post's tax re c o rd s, ostensibly to take a non-Social Security income offset, a s the Plan allowed. It provides that "Hartford has the right to re q u ire , as part of Proof of Loss: (1) your [Post's] signed s ta te m e n t identifying all Other Income Benefits, and (2) [ s]a tis f a c t o ry proof to the Hartford that you and your D e p e n d e n ts have duly applied for all Other Income Benefits w h ich are available. The Hartford reserves the right to d e te rm in e if proof of loss is satisfactory." Hartford contends th a t the "proof . . . that you . . . have duly applied for all Other In c o m e Benefits" language gives it the right to demand tax re tu rn s , though it is not clear how a tax return would reflect w h e th e r Post had applied for other income benefits. The plain la n g u a g e of this provision does not authorize the review of tax re tu rn s . (Incidentally, the tax returns confirm that Post was not re c e iv in g any income during the disputed period.) In June 2001, Hartford determined that Post should s u b m it to an independent functional capacity evaluation to c o n f irm her disability. This was permissible under the Plan.

H a r tf o r d hired a third-party service to notify Post of its request a n d to set up the evaluation. Because Post had requested that all c o m m u n ic a tio n go through counsel, the service's operator p h o n e d her attorney to schedule the evaluation. Here, the c o n f u sio n began. As Hartford's counsel explained at oral a rg u m e n t, apparently the service's operator told Post's attorney th a t Post had requested that he be phoned to schedule the e v a lu a tio n -- m e a n in g simply that Post had requested that all c o m m u n ic a t io n go through him. Post's attorney took the s ta te m e n t to mean that Post had requested the evaluation; thus, w h e n he spoke with Post and found that she knew nothing about it, he relayed to the service that she had not requested it. It then re p o r ted to Hartford that Post had refused an evaluation in v io la tio n of the Plan. No written request was ever made.

In lieu of a functional capacity evaluation, Hartford re f erre d Post's file to its medical director, Dr. Malievskaia. She c o n d u c te d a paper review and concluded that Post was not d is a b le d because of a lack of objective findings, specifically the ab sen ce of 11 of 18 potential trigger points that would support a diagnosis of fibromyalgia.

In January 2002, Hartford terminated Post's benefits. In its termination letter, Hartford quoted the Plan's termination tr ig g e r s, putting the following in bold font: "the date you refuse to be examined, if The Hartford requires an examination." The le tte r went on to cite as the bases for termination Post's alleged fa ilu re to submit to an evaluation at Hartford's request and Dr.

M a lie v sk a ia 's conclusion that Post was not disabled. The letter a ls o invited Post to file an appeal within 60 days and to send any d o cu m en ts that she believed relevant. In March 2002, Hartford d e n ie d Post's appeal. Hartford, however, recognized the c o n f u sio n over scheduling the evaluation and offered to revisit its decision if she agreed to one. In the meantime, Post had sued H a rtf o rd for wrongful denial of benefits, and undergoing an e v a lu a tio n became part of a settlement agreement. The se ttle m e n t fully resolved that lawsuit.

B e c au s e Post's treating physicians refused to write a p re sc rip tio n for a full-scale functional capacity evaluation, citing th e damage it might cause given Post's condition, Hartford a g re e d to a less strenuous examination. To perform the exam, H a rtf o rd hired Dr. Christopher Lynch. The record does not r e f le c t any board certifications or specialties, only that he is a p h ys ic ia n . His examination consisted primarily of testing Post f o r the 18 trigger points for fibromyalgia. Finding tenderness b u t no definite trigger points, Dr. Lynch concluded that she did n o t have fibromyalgia or any other disabling condition. After he su b m itted his report, Hartford issued a final denial of Post's c la im . Hartford specifically directed Dr. Lynch not to submit h is report to Post, so she had no opportunity to respond to it.

P o s t then filed this suit in the District Court. In it, she claim s that Hartford violated 29U.S.C. § 1132(a)(1) and (2).

S u b p ara g rap h 1132(a)(1)(B) allows an ERISA plan beneficiary to sue "to recover benefits due to him under the terms of his p lan , to enforce his rights under the terms of the plan, or to c la rif y his rights to future benefits under the terms of the plan." P a ra g ra p h 1132(a)(2) allows a beneficiary to sue for breaches of f id u c ia ry duties that cause losses to the plan.

T h e District Court granted summary judgment in H a r tf o r d ' s favor on the § 1132(a)(1)(B) claim, ruling that Post c o u ld not establish that Hartford acted arbitrarily and c a p ric io u s ly in denying her benefits. The Court also granted H a rtf o rd summary judgment on the § 1132(a)(2) claim on the g ro u n d that it was barred by res judicata. Specifically, the C o u r t noted that it had dismissed that claim with prejudice in P o st's previous suit, and so she could not revive it in this suit.

P o s t appeals both rulings.3 II. D e c id in g § 1132(a)(1)(B) Claims A. T h e Sliding Scale Standard of Review E R IS A does not specify the standard of review that a trial c o u r t should apply in an action for wrongful denial of benefits.

In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113 (1 9 8 9 ), the Supreme Court held that the default standard of r e v ie w in all § 1132(a)(1)(B) cases is de novo. The Court noted in a dictum that when a plan by its terms gives the administrator d i s c r e t io n , which the plan at issue in Firestone did not, the a d m i n is tra to r's decisions are upheld unless they abuse that d is c re tio n . Id. at 115. On the issue of conflicts of interest, the C o u rt noted that "if a benefit plan gives discretion to an a d m i n is tra to r or fiduciary who is operating under a conflict of in ter e st, that conflict must be weighed as a `facto[r] in d e te rm in in g whether there is an abuse of discretion.'" Id.

(q u o tin g Restatement (Second) of Trusts § 187 cmt. d (1959)).

A d d re ss in g conflicts of interest in the post-Firestone era, m o st courts of appeals have adopted a "sliding scale" standard o f review. This approach grants the administrator deference in a c co r d a n c e with the level of conflict. Thus, if the level of c o n f lic t is slight, most of the administrator's deference remains in ta c t, and the court applies something similar to traditional a rb itra ry and capricious review; conversely, if the level of c o n f lic t is high, then most of its discretion is stripped away.

D o e v. Group Hospitalization & Med. Servs., 3 F.3d 80, 87 (4th C ir. 1993).

In Judge Becker's scholarly opinion in Pinto v. Reliance S ta n d a r d Life Insurance Co., 214 F.3d 377, 392 (3d Cir. 2000), w e cast our lot with the sliding scale approach. Among the e lev e n courts of appeals that have reported decisions in this a re a , six have adopted some version of the sliding scale.4 Id.; V e g a v. Nat'l Life Ins. Servs., Inc., 188 F.3d 287, 296 (5th Cir. 1 9 9 9 ) (en banc); Woo v. Deluxe Corp., 144 F.3d 1157, 116162 (8 th Cir. 1998); Chojnacki v. Georgia-Pacific Corp., 108 F.3d 8 1 0 , 815 (7th Cir. 1997); Doe, 3 F.3d at 87; Miller v. Metro. Life In s . Co., 925 F.2d 979, 984 (6th Cir. 1991). In addition, the N in th Circuit Court of Appeals follows a "substantially similar" a p p ro a c h , though it rejects the sliding-scale metaphor. Abatie v . Alta Health & Life Ins. Co., 458 F.3d 955, 967 (9th Cir. 2006) (e n banc) (choosing simply to note that "[a] district court, when f a ce d with all the facts and circumstances, must decide in each c a s e how much or how little to credit the plan administrator's re a so n for denying insurance coverage"). In Pinto, we held that th e sliding scale approach was most faithful to Firestone's c o m m a n d that the level of conflict be considered as a factor in s h a p in g arbitrary and capricious review. 214 F.3d at 392.

B. C o n to u r s of the Sliding Scale T h e premise of the sliding scale approach is that courts s h o u ld examine benefit denials on their facts to determine w h e th e r the administrator abused its discretion. Id. at 391. To a p p ly the approach, courts first consider the evidence that the a d m in istra to r acted from an improper motive and heighten their le v e l of scrutiny appropriately. Id. at 392. Second, they review th e merits of the decision and the evidence of impropriety to g e th e r to determine whether the administrator properly e x e rc is e d the discretion accorded it. Id. at 394. If so, its d e c is io n stands; if not, the court steps into the shoes of the a d m in is tra to r and rules on the merits itself.

At its best, the sliding scale reduces to making a c o m m o n -s e n se decision based on the evidence whether the a d m i n is tra to r appropriately exercised its discretion. This theme, ra th e r than getting bogged down in trying to find the perfect p o in t on the sliding scale, should be district courts' touchstone.

C. S o r tin g Individual Cases D e te rm in in g how to apply heightened arbitrary and c a p ric io u s review requires considering both structural and p ro c e d u ra l factors. Pinto, 214 F.3d at 39293. The structural in q u iry focuses on the financial incentives created by the way th e plan is organized, whereas the procedural inquiry focuses on h o w the administrator treated the particular claimant. While th ere is no magic to the order in which these inquiries are c o n d u c ted , our previous cases have considered structure first.

W e do the same.

1. S t r u c tu r a l factors O u r concern with structure derives from the common law o f trusts. As the Supreme Court noted in Firestone, the law of tru sts requires that courts take a trustee's self-interest into a c co u n t. 489 U.S. at 115 (quoting Restatement (Second) of T ru sts § 187 cmt. d (1959)). The Court based this p ro n o u n c e m e n t primarily on the Second Restatement. Since th e n , the ALI has published the Third Restatement, which f u rth e r clarifies that while it is permissible for a trustee to act u n d e r a structural conflict of interest, its discretionary decisions " w ill be subject to especially careful scrutiny." Restatement (T h ird ) of Trusts § 37 cmt. f(1) (2003). Under ERISA, plan a d m i n is tra to rs are, for most purposes, treated like common-law tru s te e s . Firestone, 489 U.S. at 110. Like common-law tru s te e s, plan administrators are accorded discretion and judicial d e f e re n c e (if the plan so provides); in return, they assume f id u c ia ry duties of care and loyalty to their beneficiaries. 29 U .S .C . § 1104(a). So long as we have no reason to doubt the a d m i n is tra t o r 's faithfulness to those duties, this model works w e ll. We, however, are wary of according a fiduciary deference w h e n the structure of the plan gives it financial incentives to act a g a in s t the participants' interest. See Restatement (Third) of T ru s ts § 50 illus. 1.

A s an initial note, federal courts of appeals are split on th e issue of what is a structural conflict. We have long held that a structural conflict arises when the administrator has a nontriv ia l financial incentive to act against the interests of the b e n e f ic ia rie s . Pinto, 214 F.3d at 389. Such a conflict is, by its e lf , sufficient to heighten our review.5 Id. at 390. Our C o u rt's holdings are in line with black-letter trust law. The S e c o n d Restatement, on which the Supreme Court relied in F ir e sto n e , defines a "conflict" as merely "an interest in the tru s te e conflicting with that of the beneficiaries." Restatement (S e c o n d ) of Trusts § 187 cmt. d (1959). This statement is w o rd e d broadly--almost to the point of being tautological--but it applies by its own terms to a situation in which the a d m in istra to r has an interest (e.g., in profit or a better bottom lin e ) that is adverse to the interests of beneficiaries seeking p a ym e n t .

In sharp disagreement, the Court of Appeals for the S e v e n th Circuit holds that it is improper to label those situations " c o n f lic ts of interest." See Rud v. Liberty Life Assur. Co. of B o s to n , 438 F.3d 772, 776 (7th Cir 2006) (Posner, J.). The p ro b le m , it argues, is that we generally assume that parties to a c o n t ra c t are self-interested, and it is inimical to the law of c o n tra c ts to confuse self-interest with a conflict of interest. Id.

T h is is no doubt logical, yet the Supreme Court has held that E R IS A places us in the realm of trust law, not contract law.

F ir e s t o n e , 489 U.S. at 11011. Moreover, were we to apply c o n tr a c t law, we would review plans de novo from the start, for th e re is no analog to fiduciary discretion in the common law of c o n tra c ts . But we are not, and our position, in strict accordance w ith Supreme Court precedent, follows the common law of t r u s ts .

P i n to listed four non-exclusive structural factors for c o u rts to consider: (1) the sophistication of the parties, (2) the in f o rm a tio n accessible to the beneficiary, (3) the financial a rra n g e m e n t between the employer and administrator, and (4) t h e financial status of the administrator. 214 F.3d at 392. In s u b s e q u e n t cases, we have also considered the administrator's c laim evaluation process, according more deference to a d m in is tra to rs that use an independent body to evaluate claims (th u s lessening the effect of any conflict). Stratton v. E.I.

D u P o n t De Nemours & Co., 363 F.3d 250, 255 (3d Cir. 2004).

A ll of these factors relate to whether the plan is set up so that the a d m i n is tra to r has strong financial incentives routinely to deny claim s in close cases--in short, whether the administrator's in ce n tiv es make treating it as an unbiased fiduciary c o u n te rin t u i t i v e . Pinto, 214 F.3d at 388. We emphasize that c o u rts should focus on this question and not get bogged down in f a c to rs, for this is anything but a mechanistic test. Rather, it is a broad-based inquiry into whether the structure of the plan ra ise s concerns about the administrator's financial incentive to d e n y coverage improperly. This makes sense, as ERISA plans c o m e in many forms.

We have held that two aspects of some plans' financial s tru c tu re raise particular concern: (1) when a plan is funded on a case-by-case basis, Skretvedt v. E.I. DuPont & De Nemours C o ., 268 F.3d 167, 174 (3d Cir. 2001), and (2) when it is funded a n d administered by an outside insurer, Pinto, 214 F.3d at 390.

C a s e -b y-c a s e funding simply means that the administrator pays c la im s out of its operating budget, rather than from segregated m o n ie s that the employer sets aside according to an actuarial f o rm u la . This raises concerns because it means that each dollar p a id out is a dollar out of the administrator's pocket. Stratton, 3 6 3 F.3d at 254. Thus, the administrator has a financial in c e n tiv e to deny claims.

T h is concern is compounded when it is an outside in s u re r, rather than the employer, that funds and administers the p la n , for we presume that employers have at least some selfi n te r e st in seeing that benefits are paid fairly. After all, e m p lo ye e s' morale will suffer if they perceive that their benefits are illusory. When the plan is funded by an outside insurer, h o w e v e r , the employer is a step removed from the process, m a k in g it less likely to feel the full effects of employee d is s a tis f a c tio n with claims handling. Pinto, 214 F.3d at 389.6 W e have also noted that when the claimant is a former e m p l o ye e , any dissatisfaction with the claims handling process is less likely to translate into a significant financial disincentive f o r the employer. Id. at 388. In addition, when the employer is in financial difficulty, the dissatisfaction of employees is less lik e ly to be an incentive favoring them because paying off c re d ito rs will probably take priority over keeping up employee m o ra le . Id. at 392.

Im p o rta n tly, under Pinto, the structural analysis does not 6 It is worth noting that we have held that when the employer b o th funds and administers the plan, but pays benefits out of a f u lly funded and segregated ERISA trust fund rather than its o p e ra tin g budget, no structural conflict of interest is created.

V ita le , 420 F.3d at 282; Bill Gray Enters., Inc. Employee Health & Welfare Plan v. Gourley, 248 F.3d 206, 21718 (3d Cir. 2 0 0 1 ). a s k about the administrator's behavior. Indeed, as Pinto held, th e structure alone can require heightened review. 214 F.3d at 3 9 0 . Pinto itself concerned a structure in which the plan a d m i n is tra to r was an outside insurance company that received a n actuarial premium from the employer. Id. Thus, what the in s u re r/a d m i n is tra to r paid out came directly off its bottom line.

P in to noted that this structure creates a high level of financial c o n f lic t of interest, as the insurer/administrator has a strong in c e n tiv e to construe claims in a light most favorable to it. Id. a t 389. Thus, Pinto held that this structure alone gives rise to h e ig h te n e d scrutiny. Id. at 390.

W h e n there is a structural conflict of interest mitigated by in d e p e n d en t claim evaluation and no evidence of procedural b ia s , we have heightened our review only slightly. Stratton, 363 F .3 d at 25456. The animating logic of that case is that while th e re was a conflict of interest, there was also good reason to b e lie v e that it was of little moment, and so we held that we w o u ld defer to the administrator unless its decision was clearly u n re a so n a b le or not a product of an exercise of discretion at all.

W h e n structural bias is not mitigated by independent c la im evaluation, we have heightened our review a bit more.

S e e Smathers v. Multi-Tool, Inc./Multi-Plastics, Inc. Employee H e a lth & Welfare Plan, 298 F.3d 191, 199 (3d Cir. 2002).

T h e re , we emphasized that we were not free to substitute our ju d g m e n t for that of the fiduciary. Nevertheless, because the re c o rd revealed that the administrator had not adequately su p p o rte d its decision, we concluded that it had not properly e x e rc is e d its discretion. Id. at 200.

It is worth noting that we have not reported a case in w h ic h structural factors alone warranted anything more than m o d e r a te ly heightening our review. This is not fortuitous.

S tru c tu r a l conflicts of interest warrant more searching review, b u t in the absence of evidence that bias infected the particular d e c is io n at issue, we defer to an administrator's reasonable and c a re f u lly considered conclusions. See Orvosh v. Program of G r o u p Ins. for Salaried Employees of Volkswagen of Am., Inc., 2 2 2 F.3d 123, 129 (3d Cir. 2000).

2. P r o c ed u r a l Factors A s Pinto held, courts must also examine the process by w h ic h the administrator came to its decision to determine w h e th e r there is evidence of bias. 214 F.3d at 393. This sort of e v id e n c e can come in many forms, and a review of the caselaw re v e als that we have identified numerous procedural irre g u la ritie s that can raise suspicion. The following is an illu s tra tiv e , not exhaustive, list of the irregularities identified: (1 ) reversal of position without additional medical evidence, id.; (2 ) self-serving selectivity in the use and interpretation of p h ys ic ia n s ' reports, id.; (3) disregarding staff recommendations th a t benefits be awarded, id. at 394; and (4) requesting a medical e x a m in a tio n when all of the evidence indicates disability, K o s ib a v. Merck & Co., 384 F.3d 58, 67 (3d Cir. 2004).

In considering procedural factors, the focus is whether, in this claimant's case, the administrator has given the court rea so n to doubt its fiduciary neutrality. If it has, then the court m u s t decide how much to heighten its scrutiny. If the irre g u la ritie s are minor, few in number, and not sustained, then th e y may not counsel for raising the level much at all, for minor g l itc h e s reasonably can be chalked up to low-level carelessness.

If , however, they are more serious, numerous, or regular, then th e y should raise more suspicion. Kosiba, 384 F.3d at 66; Pinto, 2 1 4 F.3d at 393. Given the administrator's familiarity with the c la im s process and the duties of a fiduciary, marked deviations f ro m procedural norms cannot but raise questions about its n e u tr a lity.

In the face of significant evidence of procedural bias, we h a v e reviewed its decision closely. Pinto, 214 F.3d at 394.

W h e n an ERISA administrator is not acting in accord with its f id u c ia ry status, we are naturally wary of according it much of th e deference that it would otherwise receive as a result of that s ta tu s . Id. Evidence that an administrator's decision was in c o rre c t, coupled with evidence it was biased, can add up to a c o n c lu s io n that its decision was not the product of reasoned d is c re tio n , but of anti-claimant bias, in which case the decision s h o u ld be reversed. Id. at 395.

In the face of non-trivial evidence of procedural bias, the s ta n d a rd of review should be raised; the more difficult question is how much. In Kosiba, we discerned non-trivial evidence of p ro c e d u ra l bias but, as it was neither egregious nor coupled with e v id e n c e of structural bias, we heightened our scrutiny only a m o d e ra te amount. 384 F.3d at 68. In Pinto, on the other hand, w e found that the evidence of procedural bias was coupled with e v id e n c e of structural bias, and so we heightened our review s u b s ta n tia lly. 214 F.3d at 394.

III. A p p ly in g the Sliding Scale to This Case A. S t r u c tu r a l Factors A d d ressin g the structural factors, the District Court s e e m e d to confuse the structural analyses in Pinto and Stratton.

P in to held that a non-trivial structural conflict gives rise to h e ig h te n e d scrutiny--that is, it pushes the standard of review a b o v e the low end of the sliding scale. 214 F.3d at 393.

S tr a tto n added that when the structural conflict is trivial, the low e n d of the scale is appropriate. 363 F.3d at 25455. What made t h e c o n f l i c t triv i a l in S t r a t t o n w a s t h a t t h e e m p l o ye r /a d m in is tra to r, while conflicted, was a step removed f ro m the claim evaluation process. Id. Here, on the other hand, th e administrator is an outside insurer that makes claims d e c isio n s itself. This is the very sort of conflict that Pinto d e c la re d to be substantial and worthy of raising the standard of re v ie w . 214 F.3d at 393. In addition, Post is a former e m p l o ye e , so it is doubtful that her dissatisfaction with the c la im s -h a n d lin g process will filter back to Overlook and tra n sla te into pressure on Hartford to deal more precisely with c la im s .

T h e District Court correctly noted that the other factors m e n tio n e d in Pinto--sophistication of the parties, accessibility o f information, and the financial status of the a d m i n is tra to r -- s e e m not to counsel in favor of heightened s c ru tin y. Following Pinto, however, the structural factors that d o present a conflict of interest are sufficient to require at least m o d e ra te ly heightened review. Id. We now proceed to whether p ro c e d u ra l factors counsel us to increase even more our degree o f review.

B. P r o c ed u r a l Factors O n the issue of procedural irregularities, the District C o u rt wrote that "procedural anomalies appear to form a pattern o f Hartford being overly aggressive in its attempts to reduce or e lim in a te Post's [disability] benefits and then attempting to re c tif y the situation when it realized its error." The Court named f o u r aspects of the process that appeared irregular, yet it u ltim a te ly concluded that they were too minor to heighten f u rth e r its scrutiny. We address each in turn and two additional m a tters brought up by Post.

F ir st, Hartford attempted to use Post's Social Security b e n e f i t s to offset her disability benefits, despite the Plan not a llo w in g such an offset. After Post's attorney protested, H a rtf o rd relented. This, of course, may have been a good-faith m istak e on Hartford's part, but it is a plan administrator's re sp o n s ib ility to know the contents of the plan. Our dissenting c o lle a g u e believes that the Plan itself was confusing enough that H a rtf o rd 's mistake was understandable. But Hartford is a large, s o p h is tic a te d insurance company, and the Plan is its own design.

T h u s , we are less willing to draw such benign inferences (p a rticu lar ly at the summary judgment stage, where we draw all re a so n a b le inferences in Post's favor) from Hartford's supposed c o n f u sio n about the contents of its own contract.

S ec o n d , Hartford terminated Post's benefits in part b e c a u se she allegedly refused to undergo a functional capacity e v a lu a tio n . The record suggests, however, that Post had not r e f u s e d an evaluation and that Hartford was quick to conclude th a t she had despite never making a written request. During the a p p e a ls process, however, Hartford relented and agreed to re c o n sid e r Post's appeal if she would agree to undergo an e v a lu a tio n . Of concern is that Hartford did not allow Post to see D r. Lynch's report before making its final decision to terminate.

T h u s she had no opportunity to allow her treating physicians to c o m m e n t on it.

Third, Hartford's decision to terminate benefits relied h e a v ily on Dr. Malievskaia's report, which was not based on a p h ys ic a l examination. While the District Court correctly noted th a t ERISA does not require that plan administrators give the o p in io n s of treating physicians special weight, Black & Decker D is a b i lity Plan v. Nord, 538 U.S. 822, 82324 (2003), courts m u s t still consider the circumstances that surround an a d m in istra to r ordering a paper review. On one hand, nothing in th e record specifically suggests that Hartford ordered this review in bad faith, as, we assume, periodic reviews are typical in the in d u s try. On the other hand, we note that at the time of the rev iew the overwhelming weight of evidence in Post's record arg u ed in her favor.7 F o u rth , Hartford surveilled Post. As the District Court n o te d , while surveillance is an aggressive tactic, nothing p ro h ib it s its use. Post argues that the bothersome point is that H a rtf o rd continued to investigate her claim despite its s u rv e illa n c e revealing that she did not leave her home. We a g re e . The fact that Post did not leave her home while she was u n d er surveillance is perfectly consistent with, and corroborative o f , her claim for disability. Yet Hartford was undeterred in c o n tin u in g to pursue evidence that Post was not disabled.

In d e e d , the very fact that its employees characterized the results o f the surveillance as "unsuccessful" suggests that its motive w a s to find evidence to deny Post's claim.

In addition to these incidents, Post cites Hartford's re q u e st for her tax returns as evidence of bad faith. As the D is tric t Court pointed out, the Plan did allow Hartford to reduce P o s t's benefits by the amount of any income she was receiving f ro m working; thus Hartford's request for proof that she was r e c e iv i n g none was not beyond the pale. Nonetheless, H a rtf o rd 's pursuit of Post's tax returns in the face of ambiguous P la n language is accurately characterized as an aggressive t a c ti c . 8 8 In this context we note that on February 29, 2000, Hartford d e m a n d e d that Post submit her 1999 tax return within 30 days.

A s any taxpayer knows, that return was not due to the IRS until A p ril 15, 2000. Perhaps this was an oversight on Hartford's p a rt, but it reinforces the impression that Hartford was on the o f f e n s e in its demands for information.

W e further note that we cannot agree with our dissenting c o lle a g u e that the Plan clearly allowed demanding tax returns on p e n a lty of forfeiture. In the Plan, Hartford specifically reserved its e lf "the right to require, as part of Proof of Loss: (1) your [ P o s t' s] signed statement identifying all Other Income Benefits, a n d (2) [s]atisfactory proof to the Hartford that you and your D e p e n d e n ts have duly applied for all Other Income Benefits w h ic h are available." Tax returns do not easily fit into either P o s t also cites Hartford's denial of benefits despite a f a v o ra b le Social Security decision as evidence of bad faith. Our C o u rt has not passed on the relevance of Social Security d e c is io n s in determining the appropriate standard of review, but o th e r courts of appeals and some district courts have held that a d i sa g r e e m e n t with the Social Security Administration is a relev an t-- tho u g h not dispositive--factor. See Glenn v. MetLife, In c ., 461 F.3d 660, 669 (6th Cir. 2006) ("[A]n ERISA plan a d m in istra to r's failure to address the Social Security A d m in is tra tio n 's finding that the claimant was `totally disabled' is yet another factor that can render the denial of further longter m disability benefits arbitrary and capricious."); Lopes v. M e tr o . Life Ins. Co., 332 F.3d 1, 6 n.9 (1st Cir. 2003); Whatley v . CNA Ins. Co., 189 F.3d 1310, 1314 n.8 (11th Cir. 1999) (per c u ria m ); Edgerton v. CNA Ins. Co., 215 F. Supp. 2d 541, 549 (E .D . Pa. 2002); Dorsey v. Provident Life & Accident Ins. Co., 1 6 7 F. Supp. 2d 846, 856 n.11 (E.D. Pa. 2001). We agree that a disagreement is relevant though not dispositive, particularly (a s here) when the administrator rejects the very diagnoses on w h ic h the Social Security benefits determination is based.9 In sum, we agree with the District Court that, on this re c o rd , each irregularity here may appear minor. But given their n u m b e r and regularity, the standard of review should be further h e ig h te n e d . As in Kosiba, we recognize that Hartford may offer p la u sib le explanations for those irregularities, but in setting the s ta n d a r d of review the issue is merely whether the process raises q u e s tio n s . See 384 F.3d at 68. In this case, the sheer number of ir re g u la r itie s coupled with Hartford's aggressive posture raise c o n c ern s , and so the standard of review must be heightened.

T h is procedural posture suggests that we move toward the high e n d of the sliding scale, much as we did in Pinto. 214 F.3d at 394. C. C o n c lu s io n B o th structural and procedural factors favor a more s e a rc h in g standard of review than was used here. In light of w h a t we believe the standard of review should be, the District C o u rt erred by applying only slightly heightened review.

M o v in g toward the high end of the sliding scale, the District C o u r t must searchingly review both the merits and the process to determine if Hartford's decision was not the product of re a so n e d , disinterested discretion. No doubt the evidence on the m e rits appears close. But a factfinder reviewing the merits c o u ld yet determine that the weight of the medical evidence s u p p o r ts Post and that it, coupled with the evidence of bias, yield s the conclusion that Hartford did not properly exercise its d is c re tio n .

IV. O th e r Issues A. Closure of the Record G e n e ra lly, only evidence in the administrative record is a d m i s s ib le for the purpose of determining whether the plan a d m in is tra to r' s decision was arbitrary and capricious. Kosiba, 3 8 4 F.3d at 67 n.5; Mitchell v. Eastman Kodak Co., 113 F.3d 4 3 3 , 440 (3d Cir. 1997); Abnathya v. Hoffman-La Roche, Inc., 2 F.3d 40, 48 n.8 (3d Cir. 1993).

In the wake of Pinto, however, we have modified that h o l d in g to allow the consideration of extrinsic evidence when d e c id in g how much to heighten our review. Kosiba, 384 F.3d a t 67 n.5. That evidence must show "potential biases and c o n f lic ts ." Id. In particular, we have noted that considering e v id e n c e of a plan's funding mechanism would be appropriate.

Id . Here, however, Post's supplemental exhibits are all medical r e p o r ts . The first five are reports from doctors that Post c o n s u lte d between 1993 (just after the accident) and 1996. See A p p ellan t's Br. 69. The last two are summaries of Post's c o n d itio n prepared by her current doctors at the request of c o u n se l in May 2005 (nearly two years after Hartford issued its f in a l denial of benefits). Id. at 1819, 28. Post has provided no e x p la n a tio n why the reports produced between 1993 and 1996 w e re not sent to Hartford for its consideration. Similarly, if she w a n te d Hartford to consider her treating physicians' responses to Dr. Lynch's report or their summaries of her medical c o n d itio n , she should have submitted them (and thus made them p a rt of the administrative record) soon after she received H a rtf o rd 's denial of benefits, but she did not. Because all of th e se documents are medical reports, they are not relevant to the issu e of bias; rather, they are only relevant to whether Hartford rea ch ed the right decision. Under Mitchell, they cannot be c o n sid e re d for that purpose because they were not submitted to H a r tf o r d and made part of the record. 113 F.3d at 440. Thus, th e District Court acted properly in not considering them.

B. T h e Section 1132(a)(2) Claim T h e doctrine of res judicata "protect[s] litigants from the b u rd e n of relitigating an identical issue with the same party or h is privy and . . . promot[es] judicial economy by preventing n e e d le ss litigation." Parklane Hoisery Co. v. Shore, 439 U.S.

3 2 2 , 327 (1979). To apply, the following three prongs must be m e t: "(1) a final judgment on the merits in a prior suit involving (2 ) the same parties or their privies and (3) a subsequent suit b a se d on the same cause of action." Lubrizol Corp. v. Exxon C o r p ., 929 F.2d 960, 963 (3d Cir. 2001). Here, the parties agree th a t prongs two and three are met; their dispute is over whether th e Court rendered a final judgment on the merits in their p re v io u s suit.

In that suit, the District Court dismissed a cause of action a lleg in g violation of 29U.S.C. § 1132(a)(2) for failure to state a claim. See Post v. Hartford Life & Accident Ins. Co., No.

C IV .A . 02-1917, 2002 WL 31741470, at *2 (E.D. Pa. Dec. 6, 2 0 0 2 ). Dismissal for failure to state a claim is a final judgment o n the merits for res judicata purposes. Federated Dep't Stores v . Moitie, 452 U.S. 394, 399 n.3 (1981). Moreover, res judicata b a rs not only claims that were brought in the previous action, b u t also claims that could have been brought. CoreStates Bank, N .A . v. Huls America, Inc., 176 F.3d 187, 194 (3d Cir. 1999).

T h u s , for Post to maintain a § 1132(a)(2) claim, she would have to explain to the Court why it could not have been brought in 2 0 0 2 . She has made no attempt to do so.

A s Hartford notes, Post's claim has the additional p ro b le m that it, too, fails properly to allege a violation of § 1132(a)(2). Post seeks to recover individually for Hartford's a lleg e d breach of fiduciary duty. Under § 1132(a)(2) this is im p o ss ib le, for that section allows beneficiaries to recover assets o n behalf of the plan only. Mass. Mut. Life Ins. Co. v. Russell, 4 7 3 U.S. 134 , 140 (1985). In other words, § 1132(a)(2) does not a u th o riz e suits for the recovery of individual benefits. Hozier v. M id w e st Fasteners, Inc., 908 F.2d 1155, 1162 n.7 (3d Cir. 1990) (" B e c a u se plaintiffs here seek to recover benefits allegedly o w e d to them in their individual capacities, their action is p lain ly not authorized by either § 409 or § 502(a)(2).").1 0 V. C o n c lu s io n W e conclude that the District Court should have applied a more searching review to this case because of the non-trivial e v id e n c e of structural and procedural bias. Because that was not th e standard applied here, we vacate the District Court's grant o f summary judgment in Hartford's favor on the § 1132(a)(1)(B) c la im and remand for further proceedings. W e affirm, however, its grant of summary judgment on th e § 1132(a)(2) claim because principles of res judicata bar that c la im .

P O S T v. HARTFORD INSURANCE COMPANY

S T A P L E T O N , Circuit Judge, dissenting: I agree with the Court that Post's claim under ERISA § 5 0 2 (a )(2 ) is barred by principles of res judicata and that in d e ter m in in g whether an administrator's denial of benefits is a rb itra ry or capricious--as contrasted with deciding the a p p ro p ria te standard of review--a district court is limited to co n sid e ratio n of the evidence that was before the administrator.

I therefore join Section IV of the Court's opinion. I disagree, h o w e v e r, with the Court's analysis of Post's claim under ERISA § 502(a)(1)(B), and with the Court's decision to reverse and re m a n d the summary judgment on that claim. I would affirm the ju d g m e n t of the District Court.

I . Merits Evidence T h e benefits decision we are asked to review was c o m m u n ic a te d to Post in a letter dated October 2, 2003. That le tte r explains at length the administrator's reasons for declining to continue disability benefits. It describes and principally relies u p o n an investigation conducted by Dr. Christopher G. Lynch, M .D . Dr. Lynch was engaged by Hartford in order to secure in d e p e n d e n t evaluation of Post's claim to "total disability" b e n e fi ts . 1 1 In the course of his investigation, Dr. Lynch p h ys ic a lly examined Post and reviewed all of the medical r e c o rd s accumulated over the preceding ten years.

T h e administrator's letter accurately reflects Dr. Lynch's r e p o r t and, like that report, is reasoned, thorough and makes a p e rs u a siv e case for the conclusion that Post, while suffering fro m chronic pain syndrome, is not totally disabled. It co n clu d es with the following quotations from Dr. Lynch's re p o rt: s h e could perform sedentary to light work as u s u a lly defined light work, lifting up to 20 p o u n d s maximum with frequent lifting or carrying o f objects weighing up to 10 pounds. She should h a v e the ability to change posture at fairly Examination of the upper extremities reveals no d e f o rm itie s. There is no focal motor, reflex or s e n so ry loss. She has normal pain free range of m o tio n in all upper extremity joints including the s h o u ld e rs . There was no tenderness over the f o re a rm or upper arm musculature.

E x a m in a tio n of the head, neck and back reveals n o deformities. Range of motion in the cervical s p in e was 15-20 degrees of left and right lateral ro ta ti o n with normal flexion and extension.

R a n g e of motion in the low back was 60+ degrees o f flexion with 5-10 degrees of extension.

P a lp a tio n over the cervical and thoracic regions re v e als no definite tenderness and no trigger p o in ts were palpated. Palpation over the lu m b o s a c ra l spine reveals no tenderness. She was so m ew h at tender over the greater trochanters b ilaterally. Motor, reflex and sensory exams were n o rm a l in the lower extremities. She has normal p a in free range of motion in all lower extremity jo in ts. Gait is normal.

J A 292-93. f re q u e n t intervals." I I . Standard of Review Evidence A . Structural Factors F o r all the foregoing reasons, we believe th a t a higher standard of review is required when rev iew in g benefits denials of insurance companies p a yin g ERISA benefits out of their own funds.

P in to , 214 F.3d at 389, 390; see also Kosiba v. Merck & Co., 3 8 4 F.3d 58, 65-66 (3d Cir. 2004).

B . Procedural Factors It is equally clear from Pinto that the "heightened" re v ie w arising from this structural conflict of interest would be " ra tc h e te d upward" if there were anomalies in the procedure by w h i c h the administrator's decision was reached that give the C o u rt reason to doubt its fiduciary neutrality. Pinto, 214 F.3d a t 394; Kosiba, 384 F.3d at 66. I believe a fair reading of the re c o rd in this case fails to suggest anything other than neutrality, h o w e v e r. To the contrary, the record affirmatively suggests that H a rtf o rd 's search for the answer to the "total disability" issue w as conducted in a fair, impartial and cooperative manner.

E a c h of the anomalies that trouble the Court appear troubling o n ly if one engages in speculation having no record support. w ith a letter calling Hartford's attention to the error: th ro u g h Post's counsel, that she had refused such an e x a m in a tio n . In short, Hartford was not a party to the m is c o m m u n ic a tio n that led to this misunderstanding and u ltim ately revised its position. Moreover, when one of Post's p h ysic ian s later expressed concern about whether an FCE would a g g r a v a te her symptoms, Hartford accommodated those c o n c ern s by agreeing to settle for the less strenuous independent m e d ic a l evaluation ("IME") that was conducted by Dr. Lynch. a rg u e d in her favor." Dr. Malievskaia was an Associate Medical D ire c to r of Medical Advisory Group ("MAG"), a medical c o n su ltin g firm that Hartford engaged in the summer of 2001 fo llo w in g EMM's June 18, 2001, letter advising of Post's re f u sa l to submit to an FCE, to "review [Post's] medical records a n d speak to [Post's] primary care physician in order to identify [ h e r] functional capabilities and address the claimant's ability to p erf o rm [a] sedentary to light occupation." JA 339. Dr.

M aliev sk aia did interview two treating physicians and submitted h e r report on September 20, 2001. That report was not relied u p o n in the October 3, 2003, decision letter that we are re v ie w in g . It was, however, relied upon in Hartford's original d e c isio n letter of January 4, 2002, the same letter that relied in p a rt on what Hartford then understood to be Post's refusal to be e x a m in e d . This context, in my view, precludes drawing an in f ere n ce against Hartford from its reliance on Dr.

M alie v sk a ia 's report. Given that Hartford believed that Post had re f u se d to be examined, and that that fact alone was a sufficient re a so n to terminate her benefits, it makes little sense to penalize H a rtf o rd for taking additional steps to ascertain Post's medical c o n d itio n . Moreover, as that report and Hartford's January 4th letter evidence, the overwhelming weight of evidence in Post's rec o rd did not argue in her favor.13 Dr. Michael Fiore noted that Post had no lacerations, bruises, s w e llin g or broken bones, diagnosed her with a "cervical s p ra in /s tra in ," and concluded that she was "not disabled" and "m ay participate in full activity as tolerated." JA 196-98. In 1 9 9 6 , Dr. Joel Harris examined Post and concluded that a lth o u g h she had severe pain in her head and neck area, she was c a p ab le of doing sedentary work. JA 265. The Court notes that s e d e n ta ry work was the "least intensive option available," but n o th in g prevented Dr. Harris from indicating, as Dr. Britton did o n the same form, JA256, that Post was incapable of doing s e d e n t a ry work. New Jersey's medical examiner found that Post " c o u ld perform medium exertional work with limited reaching." J A 46.

A lth o u g h several of Post's doctors tested her for "trigger p o in ts" and diagnosed her with fibromyalgia, their ultimate d ia g n o se s were based on self-reported symptoms, and none of th e doctors ever found the requisite eleven of eighteen trigger p o in ts needed to support such a diagnosis. There are several re f ere n c es in Post's medical records to "trigger points," all of w h ich indicate that she had fewer than eleven. JA 262 (Dr.

M u lf o rd in March 1995, finding "some trigger points in the ste rn o c le id o m a sto id and scalenes"); JA 259 (Dr. Mulford in N o v e m b e r 1995, finding "several trigger points in the upper c e r v ic a l spine at the occiput and over the cervical facets"); JA 2 5 8 (Dr. Mulford in 1996, finding "no palpable muscle spasm o r trigger points at this time"); JA 318-19 (Dr. Kaufman in May 2 0 0 0 , finding "trigger points on the right side . . . [and] Another trig g e r point in the infraspinatous region on the left side," but n o n e in several other places); JA 317 (Dr. Kaufman in October F o u r th , the Court holds that a Hartford employee's use of th e term "unsuccessful" in an internal e-mail to describe 2000 finding two trigger points); JA 293-95.0 The "trigger p o in t" test is recognized in the case law and the medical lite ra tu re as a prerequisite to a diagnosis of fibromyalgia. See S a r c h e t v. Carter, 78 F.3d 305, 306-07 (7th Cir. 1996) (d iscu ssin g the trigger point test); Chronister v. Baptist Health, 4 4 2 F.3d 648, 656 (8th Cir. 2006) (same, citing Sarchet); Stup v . UNUM Life Ins. Co. of Am., 390 F.3d 301, 303 (4th Cir. 2004) (sa m e ); Hawkins v. First Union Corporation Long-Term D isa b ility , 326 F.3d 914, 919 (7th Cir. 2003) (same); Stedman's C o n c is e Medical Dictionary for the Health Profession 361 (4th e d . 2001) (defining fibromyalgia as "a condition of chronic d if f u se widespread aching and stiffness affecting muscles and so f t tissues; diagnosis requires 11 of 18 specific tender p o in ts . . . ."). Admittedly, Post's file contained the opinions of se v e ra l treating physicians to the effect that she was completely d is a b le d , but it is not a fair assessment of the record to say that th e evidence in her favor was sufficiently overwhelming as to raise a legitimate inference of bad faith when Hartford's a d m in istra to r disagreed with those conclusions. This is not, th e re f o r e , a situation like Kosiba, where the claimant's " p h ys ic ia n 's reports uniformly supported her contentions" of d is a b ility, and there was no comparable evidence supporting the in s u re r' s contrary view at the time it ordered an examination." 3 8 4 F.3d at 67.

H a rtf o rd 's surveillance of Post counsels heightened review. The o n ly evidence in the record on this point is one line of an in te rn a l e-mail stating "Surveillance was unsuccessful as the c la im a n t was not observed leaving her home." JA227. In the C o u rt's view, the use of the word "unsuccessful" suggests that H a rtf o rd 's "motive was to find evidence to deny Post's claim." I do not agree. d e n y her disability. c a p ric io u s . Op. at 29. Suffice it to say, the administrative law ju d g e in 1998 did not have the benefit of the record before H a rtf o rd in 2003, and no review of Post's continued eligibility f o r social security benefits has been undertaken since 1998. See P a r i-F a s a n o v. ITT Hartford Life & Acc. Ins. Co., 230 F.3d 415, 4 2 0 (1st Cir. 2000). In Pinto and other cases in which courts h a v e applied heightened scrutiny to an administrator's denial of b e n e f its in the face of a social security award, they have done so n o t because of the mere fact of conflict with the SSA's d e te rm in a tio n , but because there is something suspicious about th e manner in which the SSA decision is disregarded or d is a g re e d with. In Pinto, for example, we were concerned with th e fact that the administrator showed inexplicably greater d e f e r e n c e to the SSA's determination that the claimant was not d is a b le d than to the SSA's subsequent reversal of its initial d e te rm in a tio n . Pinto, 214 F.3d 393-94. Similarly, in Harden v. A m . Express Fin. Corp., 384 F.3d 498, 500 (8th Cir. 2004), the c o u rt applied greater scrutiny where the insurance company led th e claimant to believe that it was considering his SSA records w h e n it in fact was not. In other instances, where a plan re q u ire s the beneficiary to apply for Social Security benefits and t a k e s an offset if the Social Security claim succeeds--which H a rtf o rd does not do here because of New Jersey state la w -- c o u rts have applied heightened scrutiny to ensure that the a d m i n is tra to r does not make self-servingly selective use of the S S A ' s determinations by giving weight only to those d e te rm in a ti o n s that go against the claimant. See Calvert v. F ir s ta r Fin., Inc., 409 F.3d 286, 294-95 (6th Cir. 2005) (finding th a t where the plan at issue had such a requirement, an a d m i n is tra to r's disagreement with the SSA's determination " c o u n se l[ e d ] a certain scepticism" that the court should consider a s a factor in determining whether the administrator's decision w a s arbitrary and capricious); Wilkerson v. Reliance Std. Life In s . Co., No. 99-4799, 2001 WL 484126 at *1 (E.D. Pa. Mar. 6, 2 0 0 1 ) ("[D]efendant is in the seemingly anomalous position of re q u irin g plaintiff to refund some of the disability benefits re c e iv e d from the defendant because offset by Social Security d isa b ility benefits, and then failing to give any consideration to th e continuation of Social Security benefits as evidence of c o n tin u e d total disability.") In Pinto, we adopted a "sliding scale" approach that " a llo w s each case to be examined on its facts." It teaches that d is tric t courts "should consider the nature and degree of a p p a re n t conflicts with a view to shaping their arbitrary and ca p ricio u s review of benefit determinations of discretionary d e c is io n m a k e rs ." Pinto, 214 F.3d at 393. As Pinto expressly a c k n o w le d g e d , however, "the routine legal meaning of an a rb itra ry and capricious decision is . . . a decision `without r e a so n , unsupported by substantial evidence or erroneous as a m a tte r of law,'" and "[o]nce the conflict becomes a `factor' . .

. it is not clear how the process required by the typical arbitrary a n d capricious review changes." Id. at 392. The standard of re v ie w we ultimately adopted in Pinto was of necessity an im p re c is e one: the review is to be "more penetrating the greater th e suspicion of partiality, less penetrating the smaller the s u s p i c io n is." Id. at 392-93 (quoting from Wildbur v. ARCO C h e m . Co., 974 F.2d 631 (5th Cir. 1992)). District courts, we i n s tru c te d , must "approximately calibrat[e] the intensity of [ th e ir] review to the intensity of the conflict." Id. at 393. w ill "require that the record contain substantial evidence b o r d e rin g on a preponderance to uphold [the administrator's] d e c is io n ." Woo v. Deluxe Corp., 144 F.3d 1157, 1162 (8th Cir. 1 9 9 8 ). Stated conversely, if the evidence in the administrative rec o rd renders it more likely than not that the administrator's d e c i sio n is correct, it necessarily follows that the decision must s ta n d wherever on the arbitrary and capricious sliding scale the c a s e may fall. In short, if the decision withstands de novo re v ie w , it matters not how little deference is accorded. See W illia m s v. BellSouth Telecommunications, Inc., 373 F.3d 1132, 1 1 3 9 (11th Cir. 2004) ("Because no grounds exist to disturb K e m p e r's determination under the de novo review standard, we n e e d not review it under the more deferential (`mere' or `h e ig h ten e d ' arbitrary and capricious) standard."). I I I . Disposition P o s t and her treating physicians and by seeking the counsel of a n independent consultant, Dr. Lynch. As I have earlier noted, h i s report indicates that his investigation was thorough and im p a rtia l. Dr. Lynch addressed the conclusions of Post's prior tre a tin g physicians, contrasted those conclusions with the m e d ic a l records and with his own findings after a physical e x a m in a tio n , and ultimately concluded that although she was d isa b led by some kind of pain disorder, she was not sufficiently d isab led as to meet the plan definition of total disability. Dr.

L yn c h 's report is not unassailable, but it is reasoned, consistent w ith the rest of Post's medical records, persuasively establishes th a t there is no objective evidence to support Post's claim of to ta l disability, and clearly provides a rational basis for c o n c lu d in g that she is able to perform sedentary work. Court would have no basis on remand for doing anything other th a n accepting Hartford's decision. While it is not material to m y decision to affirm, rather than remand, I note that Post, of co u rse, has no right to a jury review of the administrator's d e c is io n . Turner v. CF&I Steel Corp., 770 F.2d 43 (3d Cir. 1 9 8 5 ).

Medical Diagnosis & Treatment 1995 708-09 (1 9 9 5 ). Its cause or causes are unknown, there is n o cure, and, of greatest importance to disability law , its symptoms are entirely subjective. There a re no laboratory tests for the presence or severity o f fibromyalgia. The principal symptoms are " p a i n all over," fatigue, disturbed sleep, stiffness, a n d -- th e only symptom that discriminates b e tw e e n it and other diseases of a rheumatic c h a ra c ter -- m u ltip le tender spots, more precisely 1 8 fixed locations on the body (and the rule of th u m b is that the patient must have at least 11 of th e m to be diagnosed as having fibromyalgia) that w h e n pressed firmly cause the patient to flinch. A ll these symptoms are easy to fake, although few ap p lica n ts for disability benefits may yet be aware o f the specific locations that if palpated will cause th e patient who really has fibromyalgia to flinch. S a r c h e t v. Charter, 78 F.3d 305, 30607 (7th Cir. 1996).

3 The District Court had jurisdiction under 28U.S.C. § 1331; w e have jurisdiction under 28U.S.C. § 1291. Because this is an a p p e a l from a grant of summary judgment, our review is p len a ry. Vitale v. Latrobe Area Hosp., 420 F.3d 278, 281 (3d C ir. 2005).

4 The Tenth and Eleventh Circuit Courts, rather than a d ju s tin g the level of scrutiny, shift the burden of proof to the a d m i n is tra to r when the employee presents evidence of a conflict o f interest. Fought v. UNUM Life Ins. Co. of Am., 379 F.3d 997, 100407 (10th Cir. 2004); Williams v. BellSouth Telecomms., In c ., 373 F.3d 1132, 1138 (11th Cir. 2004). The Second Circuit C o u r t of Appeals holds that once the claimant has shown the p o ten tial for bias, the court strips away the administrator's d is c re tio n and reviews its decision de novo. Sullivan v. LTV A e ro s p a c e & Defense Co., 82 F.3d 1251, 1256 (2d Cir. 1996). T h e First Circuit Court of Appeals applies unvarnished arbitrary a n d capricious review, Doe v. Travelers Ins. Co., 167 F.3d 53,

5 7 (1st Cir. 1999), though two of the six active judges on that C o u rt have criticized this approach. Denmark v. Liberty Life A s s u r . Co. of Boston, 481 F.3d 16, 31 (1st Cir. 2007) (Opinion o f Lipez, J.) (urging adoption of the sliding scale); id. at 41 (H o w a rd , J., dissenting) (agreeing that the arbitrary and c a p ric io u s standard should be reconsidered). But see id. at 40 (O p in io n of Selya, J.) (defending arbitrary and capricious re v ie w ). The D.C. Circuit Court of Appeals has not yet decided th e issue. See Wagener v. SBC Pension Beneit Plan--Non B a r g a in e d Program, 407 F.3d 395, 402 (D.C. Cir. 2005) (noting th e circuit split).

5 In this regard, we share the view of the Fourth, Fifth, E ig h t h , Tenth, and Eleventh Circuit Courts of Appeals. See F o u g h t, 379 F.3d at 1006; Vega, 188 F.3d at 295 n.8; Armstrong v . Aetna Life Ins. Co., 128 F.3d 1263, 1265 (8th Cir. 1997); Doe,

3 F.3d at 86; Brown v. Blue Cross & Blue Shield of Alabama, In c ., 898 F.2d 1556, 1561 (11th Cir. 1990).

7 Our dissenting colleague views the record differently on th is point as well. At the time of the paper review, all of Post's tre a ti n g physicians' reports save one argued in her favor. It is tru e that Dr. Fiore in 1994 (before she filed for, and was g ra n te d , disability benefits the first time) labeled her "not d is a b le d " after a single examination, but every other d o c to r-- a n d we include Dr. Harris in this group, see supra note

1 -- in d ic a te d a high level of disability through Hartford's 2002 d e n ial of benefits. Given the regular reports indicating disability f ro m her treating physicians, we believe that the record was far in Post's favor at the time of Hartford's paper review. category. As this was Hartford's contract, it had every o p p o rtu n ity expressly to provide for the right to demand tax re tu rn s if it wished to do so. But it did not require this e x p re ss ly. Thus, we believe that threatening forfeiture for re f u sin g to provide information to which the Plan did not give it a right was, at the least, aggressive.

9 Hartford argues that its conclusion is not necessarily in co n sisten t with the Social Security Administration's d e ter m in a tio n , as Post's intractable cervical pain, chronic pain s yn d r o m e , and fibromyalgia might have healed between 1998 an d 2002 (when Hartford denied them). Perhaps, but neither Dr. M a lie v sk a ia nor Dr. Lynch directly addressed the Social S e c u rity decision, nor did either of them posit that Post had th e se disorders but recovered from them. Rather, both seemed to conclude that Post was never totally disabled. J.A. 296 (Dr. L yn c h ' s conclusions) & 34344 (Dr. Malievskaia's c o n c lu sio n s). As their conclusions appear to be in tension with th o s e of the Social Security Administration, we believe the d isa g re e m e n t is relevant.

10 While we have held that individuals can recover in their o w n capacity for breaches of fiduciary duties under § 1132(a)(3), see Bixler v. Cent. Pa. Teamsters Health & W e lfa r e Fund, 12 F.3d 1292, 1298 (3d Cir. 1993), Post brought h er claims only under § 1132(a)(1)(B) and (a)(2).

11 Under the Plan, to be considered "totally disabled" after D e c em b e r 6, 1997, Post would have to be "prevented by D is a b ility from doing any occupation or work for which [she is] o r could become qualified by: (1) training; (2) education; or (3) e x p e r ie n c e . " JA 77. When Post was originally granted benefits, th e applicable definition of "totally disabled" was that she was " p re v e n te d by Disability from doing all the material and s u b s ta n tia l duties of [her] own occupation." Under the terms of th e Plan, the definition changed once Post had been disabled for

2 4 months plus 180 days. JA 76-77, 83. D r. Lynch found that "multiple physical exams h a v e shown nothing more than tender muscles at tim e s and occasional trigger points." According to Dr. Lynch: "An equal number of examinations h a v e found no tender muscles or trigger points. T h u s , there can be no consistent physical d is a b ility over this period of time." W ith respect to the need to assign physical re stric tio n s and limitations, Dr. Lynch provided th e se remarks: "Given the multiple normal e x a m in a tio n s , including my own of today,1 2 I feel

12 Dr. Lynch's report described his observations during his e x a m in a t io n of Post as follows: O n examination today, she is alert, cooperative a n d in no distress. Affect is a bit flat. She a p p e are d to be in no distress although she stated s h e had total body pain. C itin g the restrictions and limitations identified by D r. Lynch, Ms. Post would not be prevented by d is a b ility from doing any occupation or work for w h ic h she is qualified by training, education or e x p e rie n c e . JA 289-90 (footnote added). W h ile Post stresses that several treating physicians had e x p re ss e d the opinion that she was unable to work and that the S o c ia l Security Administration found her disabled in 1998, she d o e s not point to any segment of her medical records that c o n tra d icts Dr. Lynch's characterizations of those records in th e se quotations. Nor can Post dispute the fact that Dr. Lynch is the only physician having no continuing relationship with H a rtf o rd or Post who physically examined her and studied all of h e r medical records. U n d e r the teachings of Pinto, it is clear that Hartford has a material conflict of interest. It serves as both payor and d e c is io n maker and there are no other factors that ameliorate the in c e n tiv e thus created to deny benefits. This calls for a " h e igh tenin g " of the "arbitrary or capricious" standard of review w h ich is applicable in all cases where an ERISA plan vests d iscretio n in the administrator. [ A ] heightened standard of review would appear t o be appropriate when a plan funder like an in s u ra n c e company "incurs a direct expense," the c o n s e q u e n c e s to it are direct and contemporary, a n d , while it has incentives to maintain good b u sin e ss relationships, it lacks the incentive to " a v o id the loss of morale and higher wage d e m a n d s that result [for an employer] from a d e n ia l of benefits." It is true, as the Court notes, that Hartford requested a c o p y of Post's social security award so that it could offset her s o c ia l security benefits against her disability benefits. This m is ta k e was understandable, however, and promptly corrected w h e n the error was called to Hartford's attention. The ERISA p l a n of Post's former employer, which Hartford administers, a p p e a rs to be a standard form, but with an attached state-specific sec tio n titled "Statutory Provisions," which, the Plan states, "are in c lu d e d to bring your booklet-certificate into conformity with . . . state law." JA 78. If one reads Post's benefits Plan without p a yin g careful attention to the statutory provisions, the Plan w o u ld appear to allow Hartford to use Post's Social Security b e n e fits to offset her disability benefits. In the portion of the P la n titled "Calculation of Monthly Benefit," part of step 2 of th e calculation is to "subtract all Other Income Benefits, in c lu d in g those for which you could collect but did not apply." J A 99. In the definitions section of the Plan, "Other Income B e n e f its " is defined by a list, of which item (4) of the first p a ra g ra p h is "[t]he amount of disability or retirement benefits u n d e r the United States Social Security Act to which you may be en titled because of disability retirement." JA 86. The "statutory p ro v is io n s " of the Plan reflecting New Jersey law state, h o w e v e r, that "[i]tems (3) and (4) of the first paragraph of the d e f in itio n of Other Income Benefits are deleted." JA 78. After H a r t f o rd requested the award letter, Post's counsel responded A s promised, here is the Notice of Award, a n d the language in the policy deleting Social S e c u rity Benefits from the definition of "Other In c o m e Benefits," as well as the deleted language its e lf . As you can see, pursuant to New Jersey la w , the situs of this contract, Hartford has no rig h t to take a credit or deduction for or from its o b lig a t io n due to Social Security's payments. J A 216. An internal communication at Hartford reflects that H artfo rd then researched the issue, agreed with Post's counsel's a ss e ss m e n t, and determined to "change case management" a c co rd in g ly "so that [it could] correctly administer claims under th is Policy." JA 231. It is also true, as the Court notes, that Hartford at one p o in t stated that benefits were being terminated in part because P o s t had declined to undergo a functional capacity evaluation (" F C E " ) . While Post had not at that point declined to take an F C E , Hartford's error clearly cannot be attributed to a lack of n e u tra lity on its part. On June 18, 2001, Hartford was advised in writing by Empire Medical Management ("EMM"), an in d e p e n d e n t medical firm that had attempted to arrange an FCE T h e Court cites as its second anomaly Hartford's failure to afford Post an opportunity to comment on Dr. Lynch's report b ef o re sending its October 3, 2003, letter. While the Court c o rre c tly notes that no explanation for this appears in the record, th a t is not surprising in light of the fact that Post did not m a in t a in before the District Court or before us that this was a m a tter of concern for her. Post was given a full opportunity to d e v e lo p a record before the administrator, and neither the s e c tio n of the Plan addressing her appeal rights nor E R I S A § 503(2) (addressing internal appeal rights) provides a rig h t to comment on the report of an independent medical c o n su lta n t under the circumstances of this case. T h ird , the majority finds evidence of bad faith in the fact th a t Hartford's initial decision to terminate Post's benefits "re lied heavily on Dr. Malievskaia's report," because (1) Dr. M a lie v sk a ia 's report was not based on a physical examination, an d (2) "the overwhelming weight of evidence in Post's record 13 While the evidence in Post's record indicated that she s u f f e re d from chronic pain, to be eligible for benefits at that p o i n t, Post had to be "prevented by Disability from doing any o c c u p atio n or work for which [she is] or could become qualified b y: (1) training; (2) education; or (3) experience." JA 77 (e m p h a s is added). In 1994, ten months after her initial injury, A s the Court recognizes, surveillance by an insurance c o m p a n y is not per se suspicious. See, e.g., Delta Family-Care D isa b ility & Survivorship Plan v. Marshall, 258 F.3d 834, 841 (8 th Cir. 2001) ("[T]here is nothing procedurally improper about th e use of surveillance."); Tsoulas v. Liberty Life Assurance Co. o f Boston, 454 F.3d 69, 76-77 (1st Cir. 2006) (district court p ro p e rly held that surveillance was for the purpose of objective d o cu m en tatio n of disability rather than to deny benefits). H a rtf o rd 's employee's description of the surveillance as " u n su c c es s f u l" may support an inference of bias only if one s u p p o s e s that Post's leaving her home could only produce e v id e n c e that would undermine her claim. If Post left her home to jog or play sports, that would certainly undermine her claim to disability benefits. On the other hand, if she used a w h e e lch a ir to move from her door to a waiting wheelchair t r a n s p o r t vehicle, or hobbled gingerly on crutches, that would su p p o rt her claim to disability benefits. The only reasonable in f e re n c e -- if any inference may be drawn with confidence--is th at the use of the word "unsuccessful" meant that Hartford's s u rv e ille u r was unable to observe Post at all due to the fact that s h e did not leave her home, and thus could neither confirm nor U n lik e the Court, I am unwilling to characterize H a rtf o rd 's request for tax returns as an "aggressive tactic." The P la n entitles Hartford to reduce Post's benefits by the amount of in co m e she received from working. Contrary to the majority's s u g g e stio n , there is nothing "ambiguous" about the Plan in that r e sp e c t . In Hartford's May 12 and June 19, 2000, letters to Post a n d her attorneys requesting tax returns, Hartford quoted the lan g u a g e of the policy pertaining to the calculation of Post's b en ef its, specifically emphasizing the text that directed Hartford to subtract "all other income from any employer or for any w o rk . " JA 214, 219. At the time Hartford requested Post's re tu rn s , Post was collecting "total disability" benefits under the th e o ry that she was prevented from doing any work by a d isa b lin g condition. In that light, it hardly seems unreasonable o r suggestive of bad faith for Hartford to request tax returns, as P o s t's report to the government of her employment status during h e r period of alleged total disability would be probative e v id e n c e of whether Post was in fact "prevented by Disability f ro m doing any occupation or work for which [she is] or could b e c o m e qualified." F in a lly, the Court suggests that a disagreement between H a rtf o rd 's October 3, 2003, decision and the August 11, 1998, d e c is io n of the Social Security Administration "is relevant th o u g h not dispositive" of whether the former was arbitrary and I disagree with the Court's suggestion that any of these " a n o m a lie s," either alone or in combination, should alter our s ta n d a rd of review in this case. C . Resulting Standard of Review I thus view this as a case in which the decision maker had a material, inherent conflict of interest, but in which there is no sig n if ica n t evidence regarding its processing of the claim to b e n e fits which suggests anything other than an impartial e x e rc is e of fiduciary discretion. It is clear from Pinto that such a situation calls for a "heightened" application of the arbitrary a n d capricious standard of review. It must be kept in mind, however, that the arbitrary and c a p r ic io u s standard, even when heightened, remains a d e f e re n tia l one. See Stratton v. E.I. DuPont de Nemours & Co.,

3 6 3 F.3d 250, 256 (3d Cir. 2004); Gritzer v. CBS, Inc., 275 F.3d

2 9 1 , 295 & n.3 (3d Cir. 2002). The sliding scale, throughout its e n tire range, measures the deference to be afforded the decision o f an administrator upon whom the plan has conferred discretion re g a rd in g benefits. Even where the conflict and/or procedural irreg u larities are most serious, this means only that the Court A s the Court recognizes, while Hartford's structural c o n f lic t calls for "heightened" review, in the absence of e v id e n c e of procedural bias it does not place this case at the u p p er end of the scale. Under our case law, as the Court ex p lain s, "[s]tructural conflicts of interest warrant more s e a rc h in g review, but in the absence of evidence that bias in f e cte d the particular decision at issue, we defer to an a d m i n i s t r a t o r ' s reasonable and carefully considered c o n c lu s io n s ." Op. at 21. I agree with this reading of our ju ris p ru d e n c e, and because I believe no court reviewing the re c o rd before Hartford and affording its decision this kind of d e f e re n c e , or indeed deference of any significant degree, could a p p r o p ria te ly overturn that decision, I would affirm the su m m ary judgment in its favor. P o s t's case presented difficult issues for an administrator to resolve. She originally suffered a "whiplash injury," which D r. Fiore described as a "cervical [neck] sprain/strain." JA 1969 8 . She had no bruises, lacerations, or broken bones, and m a g n e tic resonance imagery revealed no tears, nerve damage, or s lip p e d or herniated discs. Post nevertheless complained, over th e next decade, of total body pain sufficiently severe to prevent h e r from any employment. Throughout that period, she was tre a te d by physicians who prescribed medications and other th e ra p y which were expected by them to alleviate this pain, but to no avail. Her condition did not improve. Post's treating p h ys ic ia n s did not reach a consensus with regard to the cause of h e r pain. Several suggested psychiatric or psychological th e ra p ie s be undertaken, but Post declined to pursue that course. T w o physicians suggested Post suffered from fibromyalgia, but th e ir records did not reflect anything approaching the clinical e v id e n c e necessary to support that diagnosis. While several tre a tin g physicians expressed the opinion that Post was unable to perform any work, those opinions were based solely upon the p a tie n t's report of her symptoms. No clinical or other personal o b s e rv a t io n s of Post were reported in support of those opinions. G iv e n this medical history, Hartford reasonably sought in f o rm a tio n to confirm or negate Post's claims to continued b e n e fits . It did so by requesting additional information from In short, the administrative record before Hartford on O c to b e r 3, 2003 provides clear and convincing support for the c o n c lu sio n that Post had not established entitlement to c o n tin u in g benefits. That conclusion of the administrator was re a so n able and carefully considered, and I believe any reviewing c o u rt would be required by our case law to defer to it. A cc o rd in g ly, I would affirm the District Court's summary ju d g m e n t in favor of Hartford.1 4

14 I would not remand for further proceedings. Our review of th e District Court's summary judgment is plenary and, as the C o u rt recognizes, the merits decision must be made on the basis o f the administrative record. Given that record, the District

Post v. Hartford Ins Co (3rd Cir. 2007)

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