Judson Pankey v. Aetna Life Insurance Company

2 Opinion of the Court 25-11338 Insurance Company ("Aetna") thereby affirming the claims admin- istrator's decision to terminate Appellant Judson Pankey's long- term disability ("LTD") benefits. Pankey argues that the district court erred in concluding that Aetna's decision was not arbitrary and capricious. After careful review of the record, and with the benefit of oral argument, we affirm.

I. FACTUAL AND PROCEDURAL HISTORY

A. The LTD Plan

Pankey worked as a Senior Vice President and Senior Pro- ject Manager for CPH Engineers, Inc. ("CPH"). As a CPH em- ployee, Pankey received LTD coverage under an employee benefit plan (the "Plan") governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA"). The Plan was funded through Group Policy No. GP-474696-GI, a group dis- ability policy issued by Aetna. The Hartford served as the claims administrator.¹

The Plan includes the following "Test of Disability":

Test of Disability

From the date that you first became disabled and until monthly benefits are payable for 24 months you meet the test of disability on any day that:

• You cannot perform the material duties of your own occupation solely because of an

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illness, injury or disabling pregnancy-related condition; and

• Your earnings are 80% or less of your adjusted predisability earnings.

After the first 24 months of your disability that monthly benefits are payable, you meet the plan's test of disability on any day you are unable to work at any

reasonable occupation²solely because of an illness,

injury or disabling pregnancy-related condition. (emphasis in original). Thus, the Plan distinguishes between an in- itial 24-month "own occupation" period and a subsequent open- ended "any reasonable occupation" period.

The Plan advises that claimants would no longer be "consid- ered as disabled [or] eligible for long term monthly benefits" when the first of thirteen listed events occurred, including:

• The date you no longer meet the LTD test of disability, as determined by Aetna.

• The date you fail to provide proof that you meet the LTD test of disability. (emphasis in original).

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4 Opinion of the Court 25-11338 To meet the Test of Disability's earnings component, the Plan requires claimants to provide proof of income. The relevant provision advises, in part, that Aetna may require proof:

• That the person has sent Aetna copies of doc- uments showing the effective dates and amounts of other income benefits.

• Of income you receive from any work for pay or profit.

If you do not provide the proof that Aetna may re- quire, Aetna has the right to suspend or adjust this plan's benefits by the estimated amount of the other income benefits.

(emphasis in original).

The Plan clarifies when benefits are paid:

Benefits will be paid as soon as the necessary proof to support the claim is received. Written proof must be provided for all benefits.

The group policy also includes a discretionary clause for claim de- terminations, which provides as follows:

Claim Determinations; ERISA Claim Fiduciary.

For the purpose of section 503 of Title 1 of the Employee Retirement Income Security Act of 1974, as amended (ERISA), We are a fiduciary with complete authority to review all denied claims for benefits under this Policy. This includes, but is not limited to, the denial of certification of the medical necessity of hospital or medical treatment. In

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25-11338 Opinion of the Court 5 exercising such fiduciary responsibility, We shall have discretionary authority to determine whether and to what extent eligible employees and beneficiaries are entitled to benefits and to construe any disputed or doubtful terms under this Policy, the Certificate or any other document incorporated herein. We shall be deemed to have properly exercised such authority unless We abuse our discretion by acting arbitrarily and capriciously. We have the right to adopt reasonable policies, procedures, rules, and interpretations of this Policy to promote orderly and efficient administration.

(emphasis in original).

B. Pankey's Physical Disability and Initial Benefits

In September 2011, Pankey experienced "severe to profound sensorineural hearing loss," which affected his ability to hear and engage in normal conversation or speech. As a result, he stopped working for CPH. Aetna then wrote to Pankey, acknowledging that he was "totally disabled" from performing his position's re- sponsibilities. Aetna thus notified Pankey that he could receive monthly benefits effective December 26, 2011, and for up to 24 months, as long as he remained "totally disabled" from his occupa- tion. In defining "total disability," Aetna identified the Plan's Test of Disability, as well as the events upon which Pankey would no longer be considered disabled or eligible for LTD benefits. Pankey received benefits for the 24-month "own occupa- tional" period, until December 26, 2013. Once that period ended, Pankey was approved for any-reasonable-occupation benefits.

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6 Opinion of the Court 25-11338 Pankey also began receiving monthly disability payments from the Social Security Administration ("SSA") in May 2012.

C. Aetna's Termination of Pankey's Benefits³ On July 21, 2021, Aetna requested that Pankey provide sev- eral documents as "continuing proof" of his disability. Specifically, Aetna sought a completed Attending Physician's Statement ("APS") from Pankey's healthcare provider, a completed Claimant Questionnaire, and copies of his relevant tax returns or Schedule K-1 forms. Pankey neither responded nor submitted the requested documentation. Nor did he respond to Aetna's three subsequent requests for the materials—made on July 26, 2021, December 9,

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25-11338 Opinion of the Court 7 2021, and May 2, 2022—even though Aetna warned that his failure to do so could result in the termination of his benefits. After Pankey continued to withhold the requested docu- mentation, Aetna notified him on July 15, 2022, that it was termi- nating his claim for LTD benefits. Aetna's letter attributed this de- cision to "the fact that [it] didn't have enough proof of loss" to eval- uate Pankey's disability. To that end, the letter included the Plan's provisions for the Test of Disability and the end of LTD benefits eligibility, before setting forth the guidelines for an analyst to rec- ommend terminating or denying a claim:

• Information was requested from a physician or claimant;

• Ongoing Disability cannot be determined without the requested information;

• The claimant is aware of what information is needed; and

• The information has not been received after at least two (2) follow ups.

Even so, Aetna offered Pankey another opportunity to submit the requested materials, emphasizing that:

If you have additional information that you believe may change our decision, please submit the re- quired information to my attention. Specifically, you should send a completed [APS], completed Claimant Questionnaire, and tax returns/Schedule K1 forms from 2020 & 2021. If you would like this

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information considered, we must receive it as soon as possible, but no later than 180 days from the date of this letter. We'll review the information and let you know if it changes our original claim determination.

(emphasis in original). In January 2023, Pankey appealed the termination of his LTD benefits. Because Pankey did not furnish an updated Claim- ant Questionnaire or recent tax returns or Schedule K-1 forms with his appeal, Aetna twice renewed its request for those documents— first on February 3, 2023, and again on February 20, 2023.⁴But Pankey did not provide the requested documents in response to either of those letters, so the termination of his benefits was upheld on appeal in a letter dated March 8, 2023.

D. The District Court Action

On June 14, 2023, Pankey sued Aetna for benefits, pursuant to 29 U.S.C. § 1132(a)(1)(B), alleging that he was insured under a group policy Aetna issued to his employer and that Aetna, acting as the claims administrator, was responsible for the final review of claims and the payment of benefits. Pankey contended he "was and is disabled as defined by the Plan" and therefore entitled to benefits, but that Aetna terminated those benefits thereby

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25-11338 Opinion of the Court 9 breaching the Plan. After Aetna filed its Answer and the adminis- trative record, the parties cross-moved for summary judgment in their respective favor.

In his motion for summary judgment, Pankey stated that the parties did not dispute his physical disability, but instead whether the specific information Aetna requested "was required to be sub- mitted." Pankey contended that Aetna's decision to terminate his benefits was "both wrong and arbitrary and capricious[,]" because Pankey had either provided the information Aetna requested or, alternatively, the Plan was unclear and Aetna had not shown that tax returns or Schedule K-1 forms for Brown Little Development were needed to satisfy the Test of Disability. In addition, Pankey argued that Aetna's actions should be limited to reducing his bene- fits, rather than terminating them outright.

Aetna, in its motion for summary judgment, contended that the claims administrator had discretion to terminate Pankey's ben- efits given his failure to provide proof that he satisfied the Plan's Test of Disability. Aetna asserted that Pankey had "ignored seven requests, made over the course of nearly two years" to submit the requested materials. Without this information, Aetna contended that Pankey could not be considered eligible for benefits under the Plan. Hence, Aetna argued, the termination was proper and sum- mary judgment in its favor was proper as Pankey could neither es- tablish that the termination was arbitrary and capricious, nor demonstrate that a conflict of interest affected Aetna's decision.

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10 Opinion of the Court 25-11338 The magistrate judge issued a report and recommendation recommending that the district court find Aetna's termination de- cision was arbitrary and capricious and that the district court grant Pankey's motion for summary judgment and deny Aetna's motion for summary judgment.

Aetna timely filed its objections to the report and recom- mendation. The district court sustained these objections and re- jected the report and recommendation in several aspects.⁵As a preliminary matter, the district court found that the Plan's provi- sions "clearly afford[ed]" Aetna discretion to reasonably determine whether Pankey had submitted sufficient proof of eligibility. The district court determined that, if Aetna had discretion to develop its own Test of Disability, it "necessarily follows that it must also have discretion to evaluate the sufficiency of proof" that Pankey meets the test. The district court then found it reasonable for Aetna to interpret the Plan "to allow for the termination of benefits absent sufficient proof." Because Aetna's interpretation both "[fell] within

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25-11338 Opinion of the Court 11 its discretion" and was "reasonable," the district court gave it def- erence.

Turning to the parties' cross-motions for summary judg- ment, the district court clarified that its review was limited to Pankey's claim for benefits pursuant to 29 U.S.C. § 1132(a)(1)(B). The district court distilled the parties' summary judgment argu- ments down to the central question of whether Aetna's termina- tion decision was arbitrary and capricious and ultimately deter- mined that Pankey had not made such a showing. To support that conclusion, the district court recognized both Aetna's authority un- der the discretionary clause and Pankey's "continuing obligation"

to satisfy the Plan's Test of Disability. The district court empha- sized that Pankey had not provided documents Aetna had specifi- cally requested to gauge his eligibility, and it determined that Pankey had not demonstrated that Aetna's decision was "tainted"

by a conflict of interest. Given those considerations, the district court concluded that Aetna's interpretation and application of the Plan was reasonable and granted Aetna's motion for summary judgment and denied Pankey's motion for summary judgment. Pankey timely appealed the district court's order.

II. STANDARD OF REVIEW

We review "'a district court's grant of summary judgment de novo applying the same legal standards used by the district court.'" S-Owners Ins. Co. v. Easdon Rhodes & Assocs. LLC, et al., 872 F.3d 1161, 1163 (11th Cir. 2017) (quoting Galvez v. Bruce, 552 F.3d 1238, 1241 (11th Cir. 2008)). We review de novo a district court's

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"interpretation of contract language." Id. at 1164 (citing Nat'l Fire Ins. Co. v. Fortune Constr. Co., 320 F.3d 1260, 1267 (11th Cir. 2003)).

"We review de novo a district court's ruling affirming or re- versing a plan administrator's ERISA benefits decision, applying the same legal standards that governed the district court's deci- sion." Blankenship v. Metro. Life Ins. Co., 644 F.3d 1350, 1354 (11th Cir. 2011).

We can affirm a district court's ruling "on any ground sup- ported by the record." Krutzig v. Pulte Home Corp., 602 F.3d 1231, 1234 (11th Cir. 2010) (citing Bircoll v. Miami-Dade Cnty., 480 F.3d 1072, 1088 n.21 (11th Cir. 2007)).

III. ANALYSIS

On appeal, Pankey contends the district court erred in con- cluding that Aetna's termination of his benefits was not arbitrary and capricious.

To determine whether Aetna's termination decision was ar- bitrary and capricious, we apply the framework established in Blankenship v. Metropolitan Life Insurance Company, 106 F.4th at 1355. That framework involves six steps:

(1) Apply the de novo standard to determine whether the claim administrator's benefits-denial decision is "wrong" (i.e., the court disagrees with the ad- ministrator's decision); if it is not, then end the in- quiry and affirm the decision.

(2) If the administrator's decision in fact is "de novo wrong," then determine whether he was vested

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25-11338 Opinion of the Court 13 with discretion in reviewing claims; if not, end ju- dicial inquiry and reverse the decision.

(3) If the administrator's decision is "de novo wrong"

and he was vested with discretion in reviewing claims, then determine whether "reasonable"

grounds supported it (hence, review his decision under the more deferential arbitrary and capri- cious standard).

(4) If no reasonable grounds exist, then end the in- quiry and reverse the administrator's decision; if reasonable grounds do exist, then determine if he operated under a conflict of interest.

(5) If there is no conflict, then end the inquiry and af- firm the decision.

(6) If there is a conflict, the conflict should merely be a factor for the court to take into account when determining whether an administrator's decision was arbitrary and capricious.

Id.

Under our precedent, we can "skip step one," if, "at step two," we determine that the plan administrator was "'vested with discretion in reviewing claims.'" Goldfarb v. Reliance Standard Life Ins. Co., 106 F.4th 1100, 1106 (11th Cir. 2024) (citations omitted). We do so here. Through its discretionary clause, the Plan plainly grants Aetna the "discretionary authority to determine whether and to what extent eligible employees and beneficiaries are entitled to benefits[.]" In addition, and looking ahead to step four, we need not consider whether Aetna operated under a conflict of interest,

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14 Opinion of the Court 25-11338 because Pankey does not argue so on appeal. See Access Now, Inc.

v. Sw. Airlines Co., 385 F.3d 1324, 1330 (11th Cir. 2004) ("[T]he law is by now well settled . . . that a legal claim or argument that has not been briefed before the court is deemed abandoned and its mer- its will not be addressed."); see also Cagle v. Bruner, 112 F.3d 1510, 1517 (11th Cir. 1997) (determining whether there was a conflict of interest as a preliminary matter). So, our core query takes place at step three, where we consider the reasonableness of Aetna's deci- sion to terminate Pankey's benefits.⁶

Under the Plan, Pankey is entitled to disability benefits if he satisfies the Test of Disability. As relevant here, Pankey could meet this test "on any day [he is] unable to work at any reasonable occu- pation solely because of an illness, injury or disabling pregnancy- related condition." And in defining "reasonable occupation," the Plan highlighted "gainful activity" that "results in, or can be ex- pected to result in, an income of more than 60% of . . . adjusted predisability earnings." As such, the Test of Disability involved both a physical and financial component. Neither Pankey nor Aetna disputes that Pankey is physically disabled. Instead, the

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25-11338 Opinion of the Court 15 parties diverge on the test's financial component and Aetna's re- lated authorities.

Pankey needed to provide proof that he meets the Test of Disability's financial component. The Plan likewise authorizes Aetna to determine whether a claimant satisfies that test. Other provisions in the Plan underscore this allocation of authority, cau- tioning that Pankey would not be "considered as disabled" or "eli- gible" for long-term disability benefits if he did not meet the Test of Disability "as determined by Aetna." And because Aetna had clear authority to determine whether a claimant satisfies the Test of Disability, it follows, both logically and textually, that Aetna could weigh the sufficiency of proof provided by Pankey. Indeed, the Plan's language conditions benefits payments on Pankey's sub- mission of "necessary proof" and allows Aetna to modify benefits if Pankey "[did] not provide the proof that Aetna may require[.]"

Moreover, the Plan grants Aetna discretionary authority to "deter- mine whether and to what extent eligible employees and benefi- ciaries are entitled to benefits" and to "adopt reasonable policies, procedures, rules, and interpretations" of the terms. Taken to- gether, these provisions make clear that Aetna's interpretation of the scope of its authority was reasonable. Under the Plan, Aetna could determine what information was necessary to evaluate con- tinued eligibility, request supporting documentation, and assess the sufficiency of Pankey's proof.

Based on its reasonable understanding of the Plan, Aetna re- quested documentation on Pankey's income and occupational

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16 Opinion of the Court 25-11338 status, to evaluate whether he continued to satisfy the Test of Dis- ability. Though Aetna initially sought Pankey's tax returns, Pankey concedes that Aetna permitted him to fulfill its requests with Schedule K-1 forms instead. That accommodation aligns with Aetna's discretion under the Plan and indicates that Aetna was not acting in bad faith. And Aetna's rationale for seeking updated fi- nancial information is persuasive: Pankey needed to prove a con- tinuing disability, so Aetna was entitled to scrutinize whether his income or relationship with Brown Little Development had changed over time. Aetna's periodic requests for updated infor- mation were, therefore, reasonable to administer the Plan and ver- ify Pankey's continued entitlement to benefits. Those requests may have been unwelcomed, but they were not arbitrary and ca- pricious.

Nor was Aetna's ultimate decision to terminate Pankey's benefits unreasonable. Despite making seven requests, Aetna did not receive the requested tax returns or Schedule K-1 forms or the Claimant Questionnaire. These documents were needed to evalu- ate whether Pankey satisfied the Test of Disability, so his refusal to provide them justified termination under the Plan. Pankey does not dispute his refusal to comply with Aetna's requests. Instead, he argues that Aetna administered the Plan in- consistently. But we are not persuaded, because that contention finds no support. Indeed, Pankey's own refusal to furnish an up- dated Schedule K-1 form and Claimant Questionnaire was incon- sistent with the parties' prior course of conduct. Further, the

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25-11338 Opinion of the Court 17 record establishes that Pankey regularly refused to cooperate with Aetna's reasonable requests. Even after Aetna had terminated his benefits, Pankey was afforded multiple opportunities to cure the deficiencies, yet he refused to do so. On this record, we cannot conclude that Aetna's decision to terminate Pankey's benefits was arbitrary and capricious. We therefore affirm the district court's judgment.

IV. CONCLUSION

For the reasons discussed, we conclude that the district court did not err in granting Aetna's motion for summary judgment and denying Pankey's motion for summary judgment. We thus affirm the district court's order.

AFFIRMED.

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