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April 11, 2000


The opinion of the court was delivered by: Jenkins, District Judge.



Before the Court is defendant's motion for summary judgment. For the reasons outlined ill this memorandum and order, the Court hereby GRANTS defendant's motion.


This is an ERISA denial of benefits case, brought by Steven Martin ("Martin"). Beginning ill 1997, Martin, who was then a senior underwriter at AIG insurance company, began to consult physicians regarding neck and shoulder pain and fatigue. Martin underwent surgery on his right rotator cuff in February 1997, and saw several practitioners for, chronic pain thereafter. In September 1997, Martin submitted a claim for total disability to AIG's ERISA plan, which is funded and managed by defendant Continental Casualty Company ("Continental").*fn1

The record reflects four separate administrative denials of Martin's disability claim. To support his initial claim, Martin submitted his hospital records from two treating physicians. Continental reviewed Martin's claim, and denied it on November 13, 1997. Before appealing of right, Martin submitted follow-up reports from two doctors to the initial reviewer. On December 24, 1997, Continental upheld its initial denial after considering the additional information.

Martin then availed himself of his appeal right, and Continental's appeals board submitted his file to an independent physician for review. Based in part on the reviewing physician's conclusion that Martin had not demonstrated total disability within the meaning of the policy language, Continental denied Martin's appeal on March 30, 1998.

After his appeal was denied, Martin filed this lawsuit. During the pendency of this litigation, Martin was initially diagnosed by one doctor as having post-polio syndrome. On the basis of this diagnosis, the parties stipulated to a de novo review of Martin's claim, including the new evidence. Martin submitted the reports of five additional practitioners. Continental reviewed the submission de novo, and on July 1, 1999 again denied Martin's claim.*fn2

Now before the Court is Continental's motion for summary judgment. Relying on the stipulation of the parties, Continental asserts that an abuse of discretion/arbitrary and capricious standard applies, and that Continental's denials of coverage comply with this standard as a matter of law.

Martin concedes that the policy on its face reserves discretion to the plan, and therefore has no qualm with the abuse of discretion as the nominal standard of review.*fn3 However, Martin claims that because Continental itself funds the plan, thereby creating the potential for self-interested decisionmaking, serious questions as to a conflict of interest arise and, under Ninth Circuit law, the de novo standard ultimately should apply. Martin argues that Continental's denials reflect an unreasonable treatment of his claim under either standard. Martin alleges that Continental engrafted standards not within the purview of plan language to deny his claim, namely (1) that "objective medical evidence" be offered to support his claim and (2) that the evidence demonstrate he was not well enough to fill a "sedentary position." Moreover, Martin alleges that in denying his claim, Continental impermissibly overlooked objective evidence that supported the grant of permanent disability status.


I. Evidentiary Analysis

A. Plan Language

Continental's plan provides benefits to beneficiaries for, inter alia, total disability. That term is defined as follows:

"The Insured Employee because of Injury or Sickness is:

(1) Continuously unable to perform the substantial and material duties of his regular occupation;

(2) Under the regular care of a licensed physician other then himself;

(3) Not gainfully employed in any occupation for which he is or becomes qualified for by education, training or experience."

In the plan's denial letters to Martin, it is stated that "the attending physician must be able to provide objective medical evidence to support his/her opinion as to why you are not able to perform the duties of your occupation. Medical evidence means medical signs and findings established by medically acceptable diagnostic techniques which show the existence of a medical impairment that results from an anatomical, physiological, or psychological abnormality which could reasonably be expected to produce pain, or other ...

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