MELANIE STRATTON; JEFFREY STRATTON, her husband v. E. I. DUPONT DE NEMOURS & CO. On Appeal from the United States District Court for…

PRECEDENTIAL
UNITED STATES COURT OF
APPEALS FOR THE THIRD CIRCUIT
No. 03-2609
MELANIE STRATTON;
JEFFREY STRATTON, her husband
Appellants
v.
E. I. DUPONT DE NEMOURS & CO.
On Appeal from the United States
District Court for the Western District of
Pennsylvania
(D.C. No. 02-cv-02131)
District Judge: Hon. Arthur J. Schwab
Argued March 8, 2004
Before: SLOVITER, NYGAARD,
Circuit Judges and OBERDORFER,
District Judge*
(Filed April 6, 2004 )
Stella L. Smetanka
Jonathan Will (Argued)
Law Student Specially Admitted
Pursuant to Third Cir. LAR 46.3
University of Pittsburgh School of Law
210 South Bouquet Street
Sennott Square - Room 5220
Pittsburgh, PA 15260
Attorneys for Appellants
Raymond M. Ripple (Argued)
Donna L. Goodman
E.I. DuPont de Nemours & Company
Legal Department
Wilmington, DE 19898
Attorneys for Appellee
OPINION OF THE COURT
SLOVITER, Circuit Judge.
Appellant Melanie Stratton appeals
from the order of summary judgment
entered on behalf of defendant E.I. DuPont
de Nemours & Co. (“DuPont”). Stratton
filed this suit pursuant to the Employee
Retirement Inc om e S ec ur ity A ct
(“ERISA”), 29 U.S.C. § 1132(a)(1)(B),
seeking repayment of medical benefits she
incurred for a surgical procedure to treat
her temporomandibular joint dysfunction
(“TMJ”).1 We have jurisdiction to hear
this appeal under 28 U.S.C. § 1291.
* Hon. Louis F. Oberdorfer, Senior
District Judge, United States District
Court for the District of Columbia,
sitting by designation.
1 Stratton also included a bad faith
claim under Pennsylvania law that is not
at issue in this appeal.

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I.
Stratton had health insurance
through an employer-sponsored health
plan of DuPont, her husband’s employer.
The plan covering Stratton excludes
“[c]harges for services or supplies not
medically necessary for the diagnosis and
treatment of the illness or injury.” J.
App. at 26.2 It defines the term
“medically necessary” as a “service or
supply which is reasonable and necessary
for the diagnosis or treatment of an
illness or injury, in view of the customary
practice in the geographical area, and is
given at the appropriate level of care.” J.
App. at 15. It is undisputed that first
Aetna U.S. Healthcare (“Aetna”), the
insurance carrier for DuPont, and
ultimately DuPont had discretion to
administer the plan with regard to
medically necessary services and
supplies.
The facts set forth hereafter are
taken from the record on the summary
judgment motion and are not in dispute.
In 1990, Stratton’s doctors
diagnosed her with TMJ, and for the next
ten years she suffered from headaches
and the inability to open and close her
mouth, chew, yawn, and laugh without
pain. She underwent many forms of
conservative treatment, including splint
therapy, orthodontia, dental work,
analgesics and muscle relaxants. After
these treatments met with only temporary
relief, Dr. Donald J. Macher, an oral
surgeon, suggested that Stratton undergo
arthroplasty surgery for her TMJ. The
full medical term for this surgery is
“Right and Left Temporomandibular
Joint Reconstructive Arthroplasty,” J.
App. at 156, and it is an invasive
procedure that involves repositioning
discs, lysis of adhesions, and the
insertion of a previously constructed
splint into the mouth.
On or about November 13, 1999,
Aetna initially denied coverage for the
surgery but in late December requested
that Stratton submit an updated magnetic
resonance image (“MRI”) so that her
request could be further considered. The
most recent MRI in Stratton’s record
until that date was taken February 8,
1990; at Aetna’s request, Stratton
obtained an updated MRI on January 3,
2000. Stratton submitted the updated
MRI, which a specialist at Aetna, Dr.
George Koumaras, reviewed. On
January 6, 2000, Aetna denied coverage
for the requested surgery on the ground
that there were more conservative and
medically appropriate treatments
available, such as arthrocentesis or
arthroscopic surgery. Arthrocentesis
involves anesthetizing the affected TMJ
and then flushing the joint with a sterile
solution to lubricate the joint surfaces
and reduce inflammation, see American
Academy of Orofacial Pain, at
http://www.aaop.org/info_arthro.htm;
arthroscopy involves inserting an
imaging and therapy device into the
2 We use “J. App.” to cite to the
Joint Appendix, and “App.” to cite to
Appellants’ Appendix.

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affected TMJ. See id. at
http://www.aaop.org/info_surgery.htm.
Stratton nevertheless went ahead with the
arthroplasty surgery on January 13, 2000
and covered the cost of $9,829.05
herself.
Following her surgery, Stratton
continued to appeal the denial of benefits
within Aetna, which waited to review the
post-operative report and any other
information pertinent to the surgery
before making a final decision on her
appeal. Aetna had three physicians
review her claim, including Dr. Hendler
– an independent physician from the
University of Pennsylvania who is Board
Certified in Oral and Maxillofacial
Surgery, specializes in TMJ, and was not
involved in the original decision. Dr.
Hendler also decided that less invasive
surgeries would have been more
appropriate. Aetna denied Stratton’s
claim on February 10, 2000.
Stratton appealed to DuPont.
DuPont reviewed the documents on
which Aetna had based its denial and its
own files to see how similar cases had
been handled in the past to ensure that its
plan was being administered consistently.
On the basis of the record before it,
DuPont upheld Aetna’s denial of
coverage and informed Stratton of this
decision on April 18, 2000. The District
Court held that the plan grants discretion
to determine eligibility for benefits,
which triggers the arbitrary
and capricious standard of
review, diminished perhaps
to a slightly less deferential
standard because of the
slight conflict of interest.
But even under a
heightened standard of
review, the record before
the administrator (Aetna)
and, on appeal to the
DuPont Medical Care Plan,
supports the denial of
coverage for plaintiff’s
TM J surgery.
App. A at 6 (District Court Opinion).
On appeal, we must consider
whether the District Court properly
reviewed the denial of coverage under a
“slightly less deferential” arbitrary and
capricious standard, App. A at 6, and
whether it properly granted the summary
judgment motion. We exercise plenary
review over a district court’s grant of
summary judgment. Skretvedt v. E.I.
DuPont de Nemours & Co., 268 F.3d
167, 173-74 (3d Cir. 2001). Summary
judgment is proper if there is no genuine
issue of material fact and if the moving
party is entitled to judgment as a matter
of law when viewing the facts in the light
most favorable to the non-moving party.
Fed. R. Civ. P. 56(c); Celotex Corp. v.
Catrett, 477 U.S. 317 (1986). We apply
the same standard that the District Court
should have applied. Farrell v. Planters
Lifesavers Co., 206 F.3d 271, 278 (3d
Cir. 2000).
Because the District Court
reviewed the claim under the appropriate
standard and did not err as a matter of

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law, we will affirm its decision.
II.
A. Standard of Review
Stratton’s first argument on appeal
is that the District Court should have
used a heightened arbitrary and
capricious standard, but it is unclear that
this would entail closer scrutiny of the
decision of the employer than the
“slightly less deferential” arbitrary and
capricious standard of review employed
by the District Court in the instant case.
App. A at 6. The standard of review in
cases brought under ERISA for benefits
denied is not always easy to apply. In the
seminal case on this issue, the Supreme
Court stated that “a denial of benefits
challenged under [ERISA, 29 U.S.C.] §
1132(a)(1)(B) must be reviewed under a
de novo standard unless the benefit plan
expressly gives the administrator or
fiduciary discretionary authority to
determine eligibility for benefits or to
construe the plan’s terms.” Firestone
Tire & Rubber Co. v. Bruch, 489 U.S.
101, 102 (1989). In cases where an
administrator exercises discretion,
“[t]rust principles make a deferential
standard of review appropriate” and the
Court suggested that we review such
exercises of discretion under the arbitrary
and capricious standard. Id. at 111-12.
The Supreme Court continued, “[o]f
course, if a benefit plan gives discretion
to an administrator or fiduciary who is
operating under a conflict of interest, that
conflict must be weighed as a factor in
determining whether there is an abuse of
discretion.” Id. at 115 (internal quotation
and citation omitted).
Attempting to distill this direction
into a workable standard, we have held
that “when an insurance company both
funds and administers benefits, it is
generally acting under a conflict that
warrants a heightened form of the
arbitrary and capricious standard of
review.” Pinto v. Reliance Standard Life
Ins. Co., 214 F.3d 377, 378 (3d Cir.
2000). This “heightened” form of review
is to be formulated on a sliding scale
basis, which enables us to “review[ ]the
merits of the interpretation to determine
whether it is consistent with an exercise
of discretion by a fiduciary acting free of
the interests that conflict with those of
beneficiaries.” Pinto, 214 F.3d at 391
(quoting Doe v. Group Hospitalization &
Med. Servs., 3 F.3d 80, 87 (4th Cir.
1993)). In employing the sliding scale
approach, we take into account the
following factors in deciding the severity
of the conflict: (1) the sophistication of
the parties; (2) the information accessible
to the parties; (3) the exact financial
arrangement between the insurer and the
company; and (4) the status of the
fiduciary, as the company’s financial or
structural deterioration might negatively
impact the “presumed desire to maintain
employee satisfaction.” Pinto, 214 F.3d
at 392.
Our examination of the factors set
forth in Pinto in light of the
circumstances in this case leads us to
conclude that the District Court did not
err in holding that the instant case

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“triggers the arbitrary and capricious
standard of review, diminished perhaps
to a slightly less deferential standard
because of the slight conflict of interest.”
App. A at 6. We assume there was a
sophistication imbalance between the
parties. There is no reason why Stratton
would have had ERISA or claims
experience, whereas DuPont, a large,
successful company with many
employees, had numerous such claims.
In fact, DuPont reviewed its record of
claims before denying Stratton’s claim.
It follows that this factor weighs in favor
of heightening the standard. Regarding
information accessibility, Stratton has
alleged no information imbalance, nor
should one be inferred. A review of the
record shows a conscientious effort on
the part of Aetna to keep Stratton
apprised of the information it had at its
disposal and the reasons animating its
decision to deny benefits. This second
factor does not alter the arbitrary and
capricious standard.
The third factor, the exact
financial arrangement between the
insurer and the company, requires more
attention. The conflict alleged is that the
plan is funded by the employer, DuPont,
on a case-by-case basis instead of on a
fixed price basis that has been actuarially
determined. Theoretically, then, DuPont
may have some incentive to deny
coverage on individual requests,
assuming that it has no interest in
“avoid[ing] the loss of morale and higher
wage demands that could result from
denials of benefits.” Nazay v. Miller,
949 F.2d 1323, 1335 (3d Cir. 1991).
However we have noted that a situation
in which the employer “establish[es] a
plan, ensure[s] its liquidity, and create[s]
an internal benefits committee vested
with the discretion to interpret the plan’s
terms and administer benefits” does not
typically constitute a conflict of interest.
Pinto, 214 F.3d at 383. This describes in
large part the mechanism DuPont chose
to fund and administer its benefits plan.
Although the case-by-case
decisionmaking, which as Stratton points
out means that each claim dollar avoided
is a dollar that accrues to DuPont, may
leave room for some bias, the fact that
DuPont structured the program by using
Aetna to hear the claim initially provides
the safeguard of neutral evaluation. In
fact, the physicians to whose opinions
Stratton objects were affiliated with
Aetna, not DuPont. This factor thus
counsels for only a slightly heightened
standard.
The final factor regarding the
status of the fiduciary is not relevant.
Stratton alleges no facts regarding the
financial health or long term plans of the
company that would undermine the
“presumed desire to maintain employee
satisfaction.” Pinto, 214 F.3d at 392.3
3 At oral argument DuPont argued,
pursuant to Romero v. SmithKline
Beecham, 309 F.3d 113, 118 (3d Cir.
2002), that the $9,829.05 claim is
sufficiently de minimus compared to
DuPont’s profits to negate any inference
of conflict. Because this was not

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Stratton alleges no facts that would give
rise to an inference of conflict other than
the fact that DuPont both funds and
ultimately administers its own plan after
outsourcing the initial phases of
administration. Given this, the District
Court properly heightened the arbitrary
and capricious standard slightly to
accommodate what appears to be a
potential, even if negligible, chance of
conflict.
It is easier to decide which
standard to use than to apply it because it
is not clear how to employ a slightly
heightened form of arbitrary and
capricious review.
We acknowledged that
there is something
intellectually unsatisfying,
or at least discomforting, in
describing our review as a
heightened arbitrary and
capricious standard. . . .
The routine legal meaning
of an arbitrary and
capricious decision is . . . a
decision without reason,
unsupported by substantial
evidence or erroneous as a
matter of law. Once the
conflict becomes a factor
however, it is not clear how
the process required by the
typical arbitrary and
capricious review changes.
Does there simply need to
be more evidence
supporting a decision,
regardless of whether that
evidence was relied upon?
Pinto, 214 F.3d at 392 (internal
quotations omitted).
Finding this wanting, we decided
that “we can find no better method to
reconcile Firestone’s dual commands
than to apply the arbitrary and capricious
standard, and integrate conflicts as
factors in applying that standard,
approximately calibrating the intensity of
our review to the intensity of the
conflict.” Id. at 393. We concluded that
we “will expect district courts to consider
the nature and degree of apparent
conflicts with a view to shaping their
arbitrary and capricious review of the
benefits determinations of discretionary
decisionmakers.” Id.
Taking our cue from the
somewhat enigmatic Pinto language, we
will scrutinize carefully any allegations
that Aetna erred in the manner in which
it reviewed Stratton’s claim, as such
errors might confirm Stratton’s
discussed in the briefs, and because there
is no evidence of record regarding
DuPont’s financial health, we decline to
discuss the issue here. We noted in Pinto
“that when more money was at stake–i.e.,
when a large class of beneficiaries
requested and was denied benefits–the
potential conflict might invite closer
scrutiny.” Pinto, 214 F.3d at 386. No
such large sum of money is at stake in
the instant case.

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contention that there was a conflict of
interest. This would comport with the
sliding scale inquiry used in the Fourth
Circuit, which gives the fiduciary
decision “some deference, but this
deference will be lessened to the degree
necessary to neutralize any untoward
influence resulting from the conflict.”
Group Hospitalization & Medical Servs.,
3 F.3d at 87.
B. Summary Judgment
Of particular significance is our
precedent holding that a court may not
substitute its own judgment for that of
plan administrators under either the
deferential or heightened arbitrary and
capricious standard. Smathers v. Multi-
Tool, Inc./Multi-Plastics, Inc., 298 F.3d
191, 199 (3d Cir. 2002) (citation
omitted). Even under the heightened
standard, “a plan administrator’s decision
will be overturned only if it is clearly not
supported by the evidence in the record
or the administrator has failed to comply
with the procedures required by the
plan.” Id. at 199 (quoting Orvosh v.
Program of Group Ins. for Salaried
Employees of Volkswagen of Am., Inc.,
222 F.3d 123, 129 (3d Cir. 2000)).
Stratton does not argue that either Aetna
or DuPont deviated from required
procedures.
Stratton makes three principal
arguments with regard to DuPont’s
denial of her claim: that Aetna’s
physicians did not give Stratton’s claim
individualized review, that these same
physicians failed to consider that less
invasive treatments had not worked for
Stratton in the past, and finally that they
failed to accord sufficient deference to
the opinion of her treating physician.
These arguments are unpersuasive.
In her briefs and during oral
argument, Stratton asserts that an e-mail
submitted by Dr. Koumaras, which
stated, “studies have shown that 85% of
those cases operated on regarding
respositioning of the disc do fail and the
disc usually relocates itself to the
dislocated position,” J. App. at 200,
demonstrates that Aetna made its
determination of benefits based on a
generalized review not focused on
Stratton’s individual experience.
However, the statistical likelihood that
the surgery will be successful is relevant
to deciding whether it is “medically
necessary.” Also, Dr. Koumaras’
medical opinion was based on his
experience in and knowledge of the field,
an important predicate for
recommendation of individual treatment.
Furthermore, there are documents of
record that show that Stratton’s claim did
receive individualized attention. One
such document, a letter in which Dr.
Koumaras quotes the independent
physician Dr. Hendler, indicates that the
Aetna physicians scrutinized the medical
evidence at least as closely, if not more,
than did Dr. Macher. It noted,
Plain films [of an MRI
taken in 1990] did not
indicate any evidence of
degenerative joint disease .
. . . A recent MRI was

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obtained after
recommendations by
[Aetna] reviewers . .
. . Performing
surgery of this
magnitude without a
current MRI would,
in fact, be a
deviation of
standard of care.
On January 3, 2000,
a MRI revealed
minimal disc
displacement.4 In
light of the patient’s
failure to respond to
conservative
(nonsurgical)
therapy and based
on the clinical
findings offered in
Dr. Macher’s
records, less
invasive
arthrocentesis
and/or arthroscopic
surgery would be
considered the
procedure of choice.
. . .”
J. App. at 100.
Careful scrutiny of the record
reveals that the criticism that Aetna paid
insufficient attention to Stratton’s claim
is unwarranted. The record here is
detailed and comprehensive because
DuPont and Aetna took many steps in
considering Stratton’s claim: Aetna
invited additional information and
medical history by Stratton, Dr. Macher,
and her previous treating physician, Dr.
R.H. Tallents, after first denying
coverage, reviewed the TMJ post-
operative report, and finally had three
physicians, one of whom was not
involved in the original decision, review
the information submitted before finally
denying Stratton’s request. Aetna’s
request of an updated MRI which it then
reviewed rebuts Stratton’s contention
that its consideration of her claim was
general as opposed to individual.
It is undisputed that Stratton
attempted neither arthrocentesis5 nor
4 At oral argument, Stratton’s
counsel argued that Koumaras
incorrectly characterized the 2000 MRI
as showing disc displacement only on the
left side. However, the observation of
the “normal temporomandibular joint
disc-condyle relationship on the right”
referred to the 1990 MRI, not the 2000
MRI. J. App. at 182.
5 Appellants’ counsel asserted
during oral argument that because there
is no medical finding of record that
Stratton’s joint contained excess fluid, a
recommendation that she undergo
arthrocentesis was medically
inappropriate. But arthrocentesis is not a
fluid-draining procedure; it is a
procedure in which a sterile solution is
inserted into the joint and then drained
away. This discussion is of no moment,
however, because this argument

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arthroscopic surgery, both of which are
less invasive treatments than the
arthroplasty she chose to undergo and
both of which Aetna physicians
recommended in lieu of the arthroplasty.
Stratton argues that “to say that [she]
refused conservative treatment is a gross
mischaracterization of her medical
history,” Appellant’s Br. at 14, because
over the years, she had undergone several
conservative courses of treatment,
including an occlusal splint, analgesics,
and muscle relaxants. But this argument
itself mischaracterizes the record.
DuPont notes in an affidavit of Jean
Opreska, a Health Care Benefits
Consultant and Qualified Benefits
Consultant for DuPont, that “Aetna still
recommended denial of benefits because
Ms. Stratton refused more conservative
medical treatment.” J. App. at 91.
Because the only more conservative
medical treatments recommended by
Aetna were “less invasive arthrocentesis
and/or arthroscopic surgery,” J. App. at
100, we can assume that it was to these
treatments that Opreska’s affidavit
referred–not to the treatments previously
undertaken by Stratton.
Aetna specifically acknowledged
Stratton’s “failure to respond to
conservative (non-surgical) therapy,” J.
App. at 122, which presumably meant
that she continued to suffer from
headaches and other pain whenever she
opened or closed her mouth, chewed,
yawned, or laughed. It was in light of
this failure and “based on the clinical
findings offered in Dr. Macher’s
records” that Aetna’s physicians
recommended these two less invasive
surgical procedures. J. App. at 122. We
are not in a position, nor are we
permitted, to decide which of the three
procedures was best tailored to Stratton’s
case. But a review of the record shows
that DuPont acknowledged and
considered that the more conservative
treatments had not worked for Stratton in
the past and that its suggestion that she
undergo less invasive procedures was not
based on oversight.
The final argument Stratton makes
is that Aetna, DuPont, and the District
Court failed to accord sufficient
deference to the opinion of her treating
physician, Dr. Macher, who
recommended the arthroplasty. Just last
Term, the Supreme Court in Black &
Decker Disability Plan v. Nord, 123 S.
Ct. 1965, 1967 (2003), held that “plan
administrators are not obliged to accord
special deference to the opinions of
treating physicians.” In so holding, the
Court also stated,
Plan administrators, of
course, may not arbitrarily
refuse to credit a claimant’s
reliable evidence, including
the opinions of a treating
physician. But we hold,
courts have no warrant to
require administrators
automatically to accord
regarding the medical propriety of
arthrocentesis was not mentioned in the
Appellants’ briefs.

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special weight to the
opinions of a
claimant’s
physician; nor may
courts impose on
plan administrators
a discrete burden of
explanation when
they credit reliable
evidence that
conflicts with a
treating physician’s
evaluation.
Id. at 1972.
As Stratton notes, Dr. Macher in
his post-operative report stated that he
“did not feel that arthroscopy or
arthrocentesis would provide sufficient
mechanical relief of the problems within
the joint and thus [ ] discussed [with
Stratton] the risks, benefits and
alternatives of TMJ arthroplasties.” J.
App. at 115. Aetna’s physicians did not
arbitrarily refuse to credit this opinion;
they simply disagreed with Dr. Macher’s
recommended treatment. It appears that
they may have been wary of Dr.
Macher’s initial recommendation
because he made that recommendation
before he had an updated MRI. See J.
App. at 122. Aetna acknowledged that
Stratton had not responded to her
previous course of treatment but
concluded that less invasive forms of
surgery would be more appropriate
because repositioned discs usually
migrate back to their original position.
See J. App. at 200 (referring to studies
that have shown that 85% of such cases
revert to prior position). A professional
disagreement does not amount to an
arbitrary refusal to credit.
The Supreme Court in Black &
Decker Disability Plan, in discussing the
relative inclinations of consulting
physicians engaged by a plan and treating
physicians stated, of the latter, that “a
treating physician, in a close case, may
favor a finding” for the patient. 123 S.
Ct. at 1971. The Court eschewed
deciding whether “routine deference to
the claimant’s treating physician would
yield more accurate [claim]
determinations,” because such a
determination “might be aided by
empirical investigation of the kind courts
are ill equipped to conduct.” Id. The
professional disagreement between
Aetna’s consulting physicians and
Stratton’s physician seems grounded in
differing conclusions based on the
review of Stratton’s MRI, past medical
history, and the likelihood that the
chosen course of action would be
successful or not. Because Black &
Decker Disability Plan holds that plan
administrators are not obliged to defer to
the treating physician’s opinion, the
District Court did not err in upholding
the decision of the plan administrators.
Having carefully considered the
arguments put forth by Stratton that
Aetna and DuPont erred in denying her
claim, as the intensified degree of
scrutiny requires we do, we cannot hold
that the denial of benefits in this case
was “clearly not supported by the
evidence in the record.” Smathers, 298

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F.3d at 199.
CONCLUSION
For the reasons set forth, we will
affirm the District Court’s order granting
summary judgment to DuPont.

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