APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH (D.C. NO. 2:06-CV-00882-DAK).
The opinion of the court was delivered by: Hartz, Circuit Judge
Before HARTZ, HOLLOWAY, and TYMKOVICH, Circuit Judges.
Terri Hancockchallenges the denial by Metropolitan Life Insurance Company (MetLife) of accidental-death-and-dismemberment (AD&D) benefits for the death of her mother, Verla Hancock. Applying arbitrary-and-capricious review, the United States District Court for the District of Utah affirmed MetLife's decision. On appeal Ms. Hancock contends (1) that judicial review of MetLife's decision should be de novo because the clause of her mother's benefit plan giving MetLife discretion in reviewing claims does not comply with a Utah insurance regulation governing discretion-granting clauses; (2) that even if the discretion-granting clause is valid, judicial deference to the MetLife decision should be significantly reduced because of procedural irregularities in processing the claim and MetLife's conflict of interest; and (3) that MetLife's decision should be reversed regardless of the judicial standard of review.
Exercising jurisdiction under 28 U.S.C. § 1291, we affirm. As the parties agree, Verla Hancock's benefit plan is governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001--1461. ERISA preempts the Utah insurance regulation relied upon by Ms. Hancock; she has not shown any procedural irregularities in MetLife's review of her claim; and MetLife's decision was not arbitrary and capricious, even taking into account its conflict of interest.
On November 18, 2004, having not heard from her mother for several days, Ms. Hancock went to her mother's house to check on her. She found Verla Hancock's body on the bathroom floor. The body was already in advanced stages of decomposition. According to the police report, [Verla Hancock] was lying on the floor with her head under the toilet. Her pants were pulled down and there was what appeared to be feces on the floor and also on her back, staining her shirt.
There was a shower chair in the bathroom that had been knocked over and one leg of it was lying across the right side of her face and there was an open storage container that was lying next to her body with misc items scattered around the floor. There was also a prescription bottle of what was later identified as Oxycontin next to her right hand. It appeared to have fallen out of the storage container. That was the only prescription bottle found in the bathroom.
Admin. R. at 226--27. Elsewhere in the house, police found eight other kinds of prescription drugs. Ms. Hancock told police that her mother had suffered from diabetes, hypertension, sleep apnea, and depression. Ms. Hancock also saidthat her mother had been addicted to painkillers and had overdosed on Oxycontin and Lortab in August 2003 (though she did not know whether the reason for the overdose was attempted suicide or inadvertence). Additionally, police interviewed three neighbors and Verla Hancock's brother, who said that he had last spoken with his sister five days before she was found.
Although the medical examiner thought that Verla Hancock may have overdosed on Oxycontin, there was "no evidence of excessive amounts of Oxycontin or other intoxicants" in the toxicology results. Id. at 217. Nor did the autopsy find any "evidence of natural disease, injury or intoxication sufficient to explain death." Id. The medical examiner's report concluded that the cause of death was undetermined, and Verla Hancock's death certificate so stated.
Verla Hancock participated in a group-benefits plan (the Plan) sponsored by her employer, Intermountain Health Care. MetLife is the Plan's insurer and claim fiduciary. As claim fiduciary, MetLife resolves benefit claims and reviews appeals.
Verla Hancock's coverage under the Plan included basic life insurance, optional additional life insurance, and AD&D benefits.The Plan pays AD&D benefits for loss of life if (1) the insured is injured in an accident that occurs while she is under AD&D coverage; (2) "that accident is the sole cause of the injury"; (3) "that injury is the sole cause of [death]"; and (4) "[death] occurs not more than one year after the date of that accident." Id. at 40. Under the Plan, AD&D benefits "will be paid when [MetLife] receive[s] notice and satisfactory proof of that loss." Id. at 43. Excluded from AD&D coverage is loss that "in any way results from, or is caused or contributed to by . . . physical or mental illness, diagnosis of or treatment for the illness." Id. at 45--46. The Plan also provides for an appeals process entitling an unsuccessful claimant "to request that MetLife conduct a review of the adverse benefit determination." Id. at 68.
Of central importance to this appeal, the Plan grants MetLife "discretionary authority to interpret the terms of the Plan and to determine eligibility for and entitlement to Plan benefits in accordance with the terms of the Plan." Id. at 69. The Utah insurance commissioner, however, has attempted to limit by regulation such grants of discretion. Utah Admin. Code r.590-218 (2003) (Rule 590-218) prohibits discretion-granting clauses in insurance forms other than those relating to benefit plans governed by ERISA; and permits them in ERISA plans only if their language is "substantially similar" to the safe-harbor language set forth in the regulation, id. § 5(2).
C. MetLife's Claim Determination
Ms. Hancock is her mother's Plan beneficiary. On January 20, 2005, MetLife received her claim for life and AD&D payments. It approved the claims under basic and optional coveragebut denied AD&D benefits. Its March 22 notification letter to Ms. Hancock explained that because accidental death had not been established, she was ineligible for AD&D benefits.
On May 19 Ms. Hancock sent MetLife a letter appealing the denial of AD&D benefits. She provided her own observations of the scene of death and reported on two conversations with those who had investigated the death: according to her letter, the investigating detective said that "it looked like [Verla Hancock] slipped, fell, and hit her head," and the medical examiner told her that it "was entirely possible" that Verla Hancock "slipped, fell and hit her head hard enough to render her unconscious but not hard enough to fracture her skull." Admin. R. at 174. MetLife denied her appeal on September 1. It characterized Ms. Hancock's evidence as conjecture and reiterated that she had not shown that her mother's death had been caused by an accident.
Ms. Hancock obtained counsel and appealed again on February 6, 2006. This time she submitted copies of the police report, police photographs of the scene, autopsy documents, and an investigative report prepared by MRA Forensic Sciences, a firm she had hired. MetLife agreed to conduct further administrative review but had rendered no decision by June 27, when Ms. Hancock's counsel demanded that MetLife pay AD&D benefits within ten days or be sued. On September 12, 2006, still without word on her appeal, Ms. Hancock filed suit against MetLife in Utah state court, alleging breach of contract, breach of the duty of good faith and fair dealing, and other claims. One day later, MetLife sent her a letter reaffirming its denial of benefits. The case was later removed to federal court on MetLife's motion.
The district court was presented with three motions by the parties. On December 10, 2007, Ms. Hancock moved for a partial summary judgment on the standard of review, contending that the court should review de novo the denial of benefits by MetLife. She arguedthat Rule 590-218 deprived MetLife of any discretionary authority that would justify judicial deference. On February 8, 2008, MetLife moved for a bench trial on the papers. It argued that its decision was reasonable and supported by substantial evidence. About two weeks later, Ms. Hancock moved for summary judgment. She characterized MetLife's denial of benefits as an "attempt to invoke a policy exclusion, presumably that there was insufficient evidence to support the claim,"Aplt. App., Vol II. at 263, and asserted that MetLife had the burden of establishing the factual basis for the exclusion. She also argued that MetLife had a conflict of interest and had committed procedural irregularities in handling her claim.
The district court issued an opinion addressing each motion and ruling on the merits. See Hancock v. Metro. Life Ins. Co., No. 2:06-CV-00882DAK, 2008 WL 2996723 (D. Utah Aug. 1, 2008). It denied Ms. Hancock's motion for partial summary judgment, holding that ERISA preempted Rule590-218 and that MetLife was entitled to arbitrary-and-capricious review. Responding to Ms. Hancock's summary-judgment motion, the court determined that MetLife's denial was basednot on a Plan exclusion but on Ms. Hancock's failure to satisfy her burden to show that a covered loss had occurred. Finally, denying Ms. Hancock's summary-judgment motion and granting MetLife's motion to resolve the merits, the court held that MetLife's decision to deny AD&D benefits was not arbitrary and capricious. It therefore dismissed Ms. Hancock's claims.
On appeal Ms. Hancock raises two issues: (1) whether MetLife is entitled to deferential review, and (2) whether its decision survives our review. ...