Can a district court consider new arguments justifying claim denial that were not articulated in the initial claim denial or appeal? NO. In fact this new Ninth Circuit decision indicates for the first time that it is “clear error” for a district court to adopt “newly presented rationale when applying de novo review.”

Even rationale focused on a claimant’s credibility must be affirmatively stated in the claim denial, if considered, or it will be deemed a “newly presented rationale” and must be excluded from consideration by the district court if asserted in the litigation.

Here’s the newest case that highlights the point: Collier v. Lincoln Life Assurance Company of Boston, __ F.4th __ (9th Cir. November 21, 2022)(“[District court clearly errs by adopting newly presented rationale (for denying a Long Term Disability claim) when applying de novo review.”)

FACTS: Collier sought ERISA-governed Long Term Disability benefits claiming neck, and back pain prohibited her from doing her insurance sales occupation. Based on a medical record and vocational review, which concluded Collier could work full-time in her sedentary job, Lincoln denied her claim and she appealed. She then brought suit and the district court affirmed the denial.

DISTRICT COURT HELD: Collier’s claim properly denied because: (1) Collier was not credible in reporting her pain symptoms, (2) Collier’s medical providers based their opinions on Collier’s pain complaints, which were not credible, and (3) restrictions she might have could be accommodated with ergonomic equipment.

NINTH CIRCUIT HELD: REVERSED

  1. Applying de novo review, the Ninth Circuit concluded: “[T]he district court must examine only the rationales the plan administrator relied on in denying benefits and cannot adopt new rationales that the claimant had no opportunity to respond to during the administrative process.” Op. at 7. (Emph. added).
  2. “We have expressed disapproval of post hoc arguments advanced by a plan administrator for the first time in litigation.” Op. at 8.
  3. “Lincoln did not cite Collier’s lack of credibility or the lack of objective evidence when it denied her claim initially and on review.” Op. at 8.
  4. “Although we have held that a plan administrator may not hold in reserve new rationale to present in litigation, we have not clarified whether the district court clearly errs by adopting newly presented rationale when applying de novo review. We do so now.” Op. at 9.
  5. “The district court erred because it relied on new rationales to affirm the denial of benefits—rationales that Lincoln did not assert during the administrative process.” Op. at 7.

Key Take Away: When drafting claim denial letters, and the record legitimately calls into question the claimant’s credibility, it is strongly advised to mention that issue in the claim denial.