and Submitted April 5, 2017 Pasadena, California
from the United States District Court For the Central
District of California Consuelo B. Marshall, District Judge,
Presiding D.C. No. 2:14-cv-04203-CBM-MRW
Matthew G. Kleiner (argued), San Diego, California, for
Christian J. Garris (argued), Los Angeles, California, for
Before: Milan D. Smith, Jr. and N. Randy Smith, Circuit
Judges, and Gary Feinerman, District Judge. [*]
Retirement Income Security Act
panel vacated the district court's judgment in favor of
the plaintiff in an action under the Employee Retirement
Income Security Act, challenging the termination of
short-term disability benefits.
panel held that the district court erred by reviewing the
denial of the plaintiff's benefits claim de novo, rather
than for an abuse of discretion. The short-term disability
plan included a discretionary clause, and thus by its terms
called for abuse of discretion review. The panel held that
California Insurance Code § 10110.6, which invalidates
such discretionary clauses in insurance plans, applied even
though the disability plan was self-funded. ERISA, however,
preempted § 10110.6 insofar as it applied. The panel
remanded for the district court to review the benefits denial
under the correct standard.
FEINERMAN, DISTRICT JUDGE.
Yvette Williby worked for The Boeing Company, which provided
her with short-term disability payments through a plan that
it self-funded. Defendant-Appellant Aetna Life Insurance
Company administered the plan. After Aetna determined that
Williby was not disabled and terminated her benefits, Williby
brought suit under the Employee Retirement Income Security
Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461.
Applying de novo review, the district court held
that Aetna improperly denied Williby's claim. See
Williby v. Aetna Life Ins. Co., No. 2:14-CV-042032015 WL
5145499 (C.D. Cal. Aug. 31, 2015). Aetna appeals, contending
that the district court should have reviewed the denial only
for abuse of discretion. Aetna is correct, so we vacate and
remand to the district court for reconsideration under the
proper standard of review.
short-term disability (STD) benefit plan for its employees
pays them between sixty and eighty percent of their salary
if, because of a disability, they cannot perform their usual
job responsibilities or other similar work at Boeing. The STD
plan is self-funded, meaning that Boeing does not purchase an
insurance policy to cover its plan obligations; rather,
Boeing pays benefits from its own coffers, and retains Aetna
to administer the plan. See FMC Corp. v. Holliday,
498 U.S. 52, 54 (1990) (describing self-funded ERISA plans).
There is a 26-week limit on STD benefits, after which the
employee must apply for long-term disability (LTD) benefits.
plan expressly provides Aetna with "full discretionary
authority to determine all questions that may arise, "
including whether and to what extent a plan participant is
entitled to benefits. This provision is known as a
"discretionary clause." See Standard Ins. Co.
v. Morrison, 584 F.3d 837, 840-41 (9th Cir. 2009)
(describing discretionary clauses). The presence of a
discretionary clause typically means that a court reviewing
an adverse benefits determination will do so only for abuse
of discretion. See Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 115 (1989); Abatie v. Alta
Health & Life Ins. Co., 458 F.3d 955, 963 (9th Cir.
2006) (en banc).
worked for Boeing as a Supply Chain Specialist, a position
that required her to problem-solve, interact with customers
and vendors, conduct research, and assess technical issues.
In September 2011, she was briefly hospitalized after
suffering either a stroke or a stroke-like episode. In
November 2012, Williby found herself experiencing chronic
headaches and other problems that caused her difficulty at
work. In December 2012, she saw a neurologist, Dr. David
Edelman, who performed various assessments. Computerized
cognitive tests showed that Williby's overall cognitive
function fell within a normal range, and an MRI revealed no
"acute infarct"-brain tissue damage-and no
hemorrhage. But Williby's executive functions-the ability
to organize information and to respond quickly and
accurately-"predicted a moderate likelihood of 'mild
cognitive impairment.'" Dr. Edelman found that
Williby suffered from "migraine, acute but ill-defined
cerebrovascular disease, and vascular dementia uncomplicated,
" and on those premises concluded that she should go on
disability "pending further testing." On December
12, 2012, Williby left her employment at Boeing, never to
approved Williby for STD benefits from December 20, 2012
through February 28, 2013 based on Dr. Edelman's testing
and conclusions. However, Aetna denied Williby STD benefits
for the period from February 28, 2013 through June 2013. Dr.
Vaughn Cohan, the Aetna-retained neurologist responsible for
the denial, reviewed the file, spoke with Dr. Edelman by
telephone, and concluded that Williby could still work
because, despite her executive function impairments, her
cognitive function was normal overall, the MRI showed no
"acute" abnormalities, and she had not undergone
formal neuropsychological testing to follow up on Dr.
Edelman's initial tests.
several points between April and November 2013, Dr. Edelman
reaffirmed his conclusion that Williby was unable to work.
Also, between June 2013 and December 2013, Williby saw a
second neurologist, a neuropsychologist, a psychologist, and
a psychiatrist, all of whom agreed that she exhibited
cognitive impairment and the majority of whom specifically
determined that it disabled her from working.
Aetna terminated Williby's STD benefits, she appealed the
decision within Aetna, armed with the additional doctors'
reports. Aetna hired an occupational medicine specialist and
a neuropsychologist to review the case. Both reviewers
concluded that there was insufficient objective documentation
of Williby's disability, with the occupational medicine
specialist explaining that any impairment was
"self-reported" and "primarily based on mood
disorder/behavioral issues, " and the neuropsychologist
concluding that "the provided information did not
include sufficient findings to corroborate"
Williby's claimed cognitive impairments or their
interference with her work. Aetna upheld its decision to deny
benefits in February 2014, determining that "there was
insufficient medical evidence to support continued
disability" after February 28, 2013.
then sued Aetna in the Central District of California for
"breach of plan and recovery of plan benefits"
under ERISA, invoking ERISA's jurisdictional provision,
29 U.S.C. § 1132(e). A ...