FILED
                                                             United States Court of Appeals
                                                                     Tenth Circuit

                                                                     April 22, 2009
                      UNITED STATES COURT OF APPEALS
                                                  Elisabeth A. Shumaker
                                                                     Clerk of Court
                             FOR THE TENTH CIRCUIT


    JANICE M. FARR,

                Plaintiff-Appellant,
                                                          No. 08-3209
    v.                                       (D.C. No. 6:07-CV-01242-MLB-DWB)
                                                           (D. Kan.)
    HARTFORD LIFE AND
    ACCIDENT INSURANCE
    COMPANY,

                Defendant-Appellee.


                             ORDER AND JUDGMENT *


Before McCONNELL, McKAY, and GORSUCH, Circuit Judges.



         After two years of providing disability benefits to plaintiff Janice Farr

pursuant to a group insurance policy, defendant Hartford Life and Accidental

Insurance Company terminated Ms. Farr’s benefits because it determined she was

no longer disabled. Following an unsuccessful administrative appeal, Ms. Farr



*
       After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
brought this action for judicial review under the civil enforcement provision of

the Employee Retirement Income Security Act (“ERISA”), see 29 U.S.C.

§ 1132(a)(1). On cross-motions for summary judgment, the district court

concluded Hartford’s termination of benefits was supported by substantial

evidence and dismissed the case. Ms. Farr appeals, and we affirm.

                                           I.

       Ms. Farr had worked as a registered nurse for Via Christi Health Systems

for almost twenty years when she filed for disability benefits in July 2004, citing

fatigue and pain associated with fibromyalgia. Disability benefits were provided

under an insurance policy issued by Hartford to Via Christi as part of its

employee welfare benefit plan (“Plan”). The Plan designates Hartford as the

claims administrator and grants it full discretion and authority to determine

eligibility for benefits.

       In order to receive benefits under the Plan, an employee must demonstrate

she is disabled as that term is defined in the policy. The policy states that for the

first two years after ceasing work, “[d]isability or [d]isabled means . . . you are

prevented by . . . sickness . . . from performing one or more of the Essential

Duties of Your Occupation.” 1 Admin. R. at 102 (emphasis added). “After that,

you must be so prevented from performing one or more of the Essentials Duties of

1
      There is a ninety day period of time during which an employee must be
disabled before benefits become payable, which is called the Elimination Period,
but Ms. Farr’s condition during this time is not at issue in this appeal.

                                          -2-
Any Occupation.” 

In Ms. Farr’s case, “your occupation”

means the job of a registered nurse as it is recognized in the general workplace,

not necessarily the specific job that she performed for Via Christi. See 

“Any occupation” under the policy “means an occupation for which [she is]

qualified by education, training or experience” with a baseline earnings potential.

      Hartford approved Ms. Farr’s application for benefits, beginning in October

2004. Towards the end of the initial two-year period, however, it informed

Ms. Farr it was reviewing her case to determine her continued eligibility under

the “any occupation” definition of disability. Ultimately, based on medical

evidence and an Employability Analysis Report (“EAR”) prepared by a

third-party rehabilitation service, Hartford determined there were occupations

within Ms. Farr’s physical capabilities for which she was qualified. It therefore

terminated her benefits effective November 30, 2006. Ms. Farr retained counsel,

who filed an appeal on her behalf. Following additional medical and labor market

survey reports, Hartford upheld its denial of benefits and rejected the appeal.

Ms. Farr then filed this lawsuit in the district court, which concluded that

Hartford’s decision to terminate her benefits was both procedurally proper and

supported by substantial evidence. This appeal followed.




                                          -3-
                                          II.

      We review the district court’s grant of summary judgment de novo. Fought

v. UNUM Life Ins. Co. of Am., 

, 1002 (10th Cir. 2004) (per curiam).

Where, as here, the ERISA plan, “gives the administrator or fiduciary

discretionary authority to determine eligibility for benefits or to construe the

terms of the plan,” our review of the administrator’s decision, like the district

court’s, is limited to examining whether its action was arbitrary or capricious.

Firestone Tire & Rubber Co. v. Bruch, 

, 115 (1989); 

. Where a fiduciary operates under a conflict of interest,

however, this court applies a “sliding scale approach” that decreases the level of

deference in proportion to the level of conflict. Chambers v. Family Health Plan

Corp., 

, 825-26 (10th Cir. 1996).

      Under this less deferential standard, the plan administrator bears the
      burden of proving the reasonableness of its decision pursuant to this
      court’s traditional arbitrary and capricious standard. In such
      instances, the plan administrator must demonstrate that its
      interpretation of the terms of the plan is reasonable and that its
      application of those terms to the claimant is supported by substantial
      evidence.

(citation omitted). Here, Hartford operated under an

inherent conflict of interest as both the insurer and administrator under the Plan.

It therefore carries the burden of demonstrating that its decision to terminate

Ms. Farr’s benefits was reasonable and supported by substantial evidence.




                                          -4-
      Substantial evidence is of the sort that a reasonable mind could
      accept as sufficient to support a conclusion. Substantial evidence
      means more than a scintilla, of course, yet less than a preponderance.
      The substantiality of the evidence is evaluated against the backdrop
      of the administrative record as a whole.

Adamson v. UNUM Life Ins. Co. of Am., 

, 1212 (10th Cir. 2006)

(citations omitted).

                                         III.

      Advancing the following arguments, Ms. Farr urges us to reverse the

district court because she claims Hartford’s decision to terminate her benefits was

not supported by substantial evidence. First, she argues that in the course of

investigating her case, Hartford improperly restricted access to her treating

physicians. Second, she claims the district court erred in adopting Hartford’s

definition of the term sedentary. Third, she challenges the independent medical

examination report issued by Dr. Michael Munhall, arguing it was improperly

revised to support Hartford’s termination decision and then not produced in a

timely fashion. Finally, she challenges the EAR, arguing there is an inherent

conflict between its conclusions and Hartford’s initial award of benefits. The

district court squarely addressed her first two arguments in its thorough

memorandum and order, dated June 28, 2008, and as we cannot improve upon its

persuasive reasoning, we adopt it here and likewise reject these arguments on

appeal. Ms. Farr’s final two arguments are discussed below.




                                         -5-
                             A. Dr. Munhall’s Report

      In the Fall of 2006, as Ms. Farr’s initial two-year period of disability was

coming to an end, Hartford, through the Network Medical Review Company

(“NMR”), referred Ms. Farr to Dr. Michael Munhall for an independent medical

examination. Dr. Munhall examined Ms. Farr on October 2 and issued his report

on October 8. The report begins by listing seven doctors whose records

Dr. Munhall reviewed and goes on to detail his own examination of Ms. Farr

before concluding that she is capable of performing sedentary work.

      In summary, it is my opinion within a reasonable degree of medical
      probability that Janice Farr has no conclusive medical history,
      laboratory examination, radiology or neuromuscular/structural
      evidence to provide a diagnosis of autoimmune disease, Lyme
      disease or rheumatologic disease. Janice presents with overlapping
      symptoms and features consistent with any number of connective
      tissue and soft tissue syndromes. It is my opinion that Janice has no
      objective neuromuscular or structural deficit to preclude full-time
      employment without restriction. Nevertheless, it is my opinion that
      Janice does have symptomatic suggestion of a soft tissue pain
      syndrome such as fibromyalgia that yields, most likely, the capacity
      to work full time at a sedentary level.

Admin. R. at 294.

      Dr. Munhall also completed a physical capacities evaluation (“PCE”), dated

October 5, setting forth his medical opinions concerning Ms. Farr’s ability to

perform certain tasks. In one section, concerning her abilities in the areas of

“handling,” “fingering,” and “feeling,” Dr. Munhall checked boxes indicating

Ms. Farr could perform these functions “occasionally.” 

Just below


                                         -6-
that section, he reiterated his opinion that she was capable of performing at a

“sedentary full duty” level. 

11, Marcia Goodrich of NMR sent an

email informing Hartford that Ms. Farr’s medical examination was complete, but

that Ms. Goodrich was addressing some concerns with the doctor. On October 13,

NMR faxed a copy of Dr. Munhall’s report and PCE to Hartford. Later that day,

however, Ms. Goodrich faxed Hartford another copy of the PCE, which had been

altered to state that Ms. Farr could handle, finger, and feel “frequently” instead of

only “occasionally.” 

Ms. Goodrich wrote on the fax cover sheet that

she had “called Dr. Munhall and he OK’d the changes.” 

      Ms. Farr seizes on the revised report as an opportunity to charge Hartford

with foul play, arguing Dr. Munhall’s change is so clearly advantageous to

Hartford that it cannot possibly be trusted to reflect his true medical opinion. But

as Hartford points out, there is no evidence to support this theory. Hartford

claims Ms. Goodrich requested clarification from Dr. Munhall because his

opinion regarding Ms. Farr’s ability to work full time at a sedentary level was not

consistent with a finding that she can handle, finger, and feel only occasionally.

Hartford claims Dr. Munhall agreed and revised the PCE to be consistent with his

other findings.

      It is not clear from the record how the report actually came to be altered,

but there is certainly nothing to indicate Hartford asked Dr. Munhall or

Ms. Goodrich to make the change. What is clear, however, is that Dr. Munhall’s

                                          -7-
revised opinion concerning Ms. Farr’s gross and fine motor skills is consistent

with the balance of her medical records, including those of Dr. Georgia Ohlberg,

whom she identified as her treating physician during the relevant time period.

More importantly, Dr. Munhall’s ultimate conclusion that Ms. Farr’s fibromyalgia

does not preclude her from performing full time sedentary work is wholly

consistent with her medical history as set forth in the administrative record.

      Dr. Ohlberg treated Ms. Farr throughout the period of her disability. She

completed a PCE in August 2005 in which she checked boxes to indicate Ms. Farr

could handle, finger, and feel frequently. She further noted Ms. Farr’s “total

body inflamatory [sic] state ha[d] improve[d] but [was] easily aggravated by

prolonged activities.” 

In February 2006, Dr. Ohlberg completed

another PCE, this time indicating Ms. Farr could handle, finger, and feel

“constantly.” 

She reiterated that Ms. Farr’s inflammation was

improving but quick to worsen with prolonged activities. That same month,

Ms. Farr was examined by Dr. Grant Padley, an orthopedic surgeon, who noted

her “[d]exterity [was] preserved,” and that there was “no evidence of

osteoarthritis of the hands.” 

Dr. Padley did note, however, that

Ms. Farr exhibited discomfort during his evaluation of her low back and neck and

complained of multiple joint aches. His report does not offer a diagnosis.

      On July 20, 2006, Dr. Ohlberg wrote to Hartford concerning Ms. Farr’s

progress. She reported it was taking Ms. Farr an hour to get out of bed in the

                                         -8-
morning due to inflammation and that while her walking had improved, she

continued to experience joint pain. She nonetheless concluded Ms. Farr could

climb stairs and reach with her arms “constantly.” 

Dr. Ohlberg noted,

however, that Ms. Farr believed her inflammation worsened with prolonged

exposure to other people. On July 31, Dr. Ohlberg opined Ms. Farr could walk

for up to three to four hours a day. In August, Hartford asked Dr. Joseph Tuthill

for his medical opinion concerning Ms. Farr’s physical capabilities. After

reviewing her medical records and speaking with Dr. Ohlberg, Dr. Tuthill issued a

report, dated September 11, 2006, concluding there were no medically supported

restrictions that would prevent Ms. Farr from performing full time work.

      Based on current medical opinions of these doctors, a review of Ms. Farr’s

medical history, and his own examination, Dr. Munhall concluded in October

2006 that Ms. Farr was capable of working full time in a sedentary occupation.

This ultimate determination was reached before the revisions to his PCE

concerning Ms. Farr’s gross and fine motor skills, and, importantly, it is in

complete harmony with the medical evidence, including the opinion of the single

physician with long-term experience treating Ms. Farr’s fibromyalgia.

Dr. Munhall’s conclusion is also in accord with the opinion of Dr. Phillip Marion,

whom Hartford consulted during Ms. Farr’s administrative appeal. After

reviewing Ms. Farr’s medical records and speaking with Dr. Ohlberg, Dr. Marion

concluded: “There remains no objective physical impairment from a physical

                                         -9-
medicine and rehabilitation perspective to support any specific occupational

restrictions/limitations.” 

In sum, when considered in light of the

record as a whole, Ms. Farr’s challenge to Dr. Munhall’s report is simply

insufficient to cast doubt as to the genuineness and reliability of his medical

opinion. 2

                       B. The Employability Analysis Report

       Hartford terminated Ms. Farr’s disability benefits based, in part, on a

November 2006 EAR, which identified no less than fifteen occupations within

Ms. Farr’s physical capabilities and qualifications, including nursing. Ms. Farr

contends there is an irreconcilable conflict between Hartford’s initial

determination of disability, which depended on a finding that she could not

perform her own occupation as a nurse, and the EAR’s identification of nursing as

2
       We also reject Ms. Farr’s argument that she was somehow prejudiced by
Hartford’s alleged late disclosure of Dr. Munhall’s revised report. Our review of
the administrative record comports with the district court’s findings concerning
Hartford’s disclosure of Dr. Munhall’s opinion. Specifically, in its November 27,
2006, denial letter, Hartford informed Ms. Farr that according to Dr. Munhall she
could handle, finger, and feel frequently. Ms. Farr’s attorney acknowledged as
much in his letter to Hartford, dated May 15, 2007, in which he challenged
Dr. Munhall’s ultimate conclusions, but not, interestingly, his findings concerning
Ms. Farr’s gross and fine motor skills. In short, we agree with the district court’s
finding that Ms. Farr suffered no prejudice by virtue of Hartford’s late disclosure
of an actual copy of the revised report. It is clear from the record that Hartford
substantially complied with its obligation to produce documents under 29 C.F.R.
§ 2560.503-1(h)(2)(iii). See Gilbertson v. Allied Signal, Inc., 

, 634
(10th Cir. 2003) (noting our willingness “to overlook administrators’ failure to
meet certain procedural requirements when the administrator has substantially
complied with the regulations and the process as a whole fulfills the broader
purposes of ERISA”).

                                         -10-
one of the jobs she is capable of performing. The district court refused to hear

this argument, however, because Ms. Farr had failed to raise it during her

administrative appeal. “The court may not consider new arguments, from either

party, in its determination of plaintiff’s claim[.]” App’x. at A32, (citing Flinders

v. Workforce Stabilization Plan of Phillips Petroleum Co., 

(10th Cir. 2007)). Ms. Farr contends the district court’s interpretation of

Flinders was overly broad, arguing that it does not preclude a litigant from

making new arguments on judicial review, but only from offering evidence

outside the administrative record. Hartford continues to press its waiver

argument under the rubric of administrative exhaustion.

      This circuit, like others, has recognized an exhaustion rule for ERISA

claims derived not from an explicit statutory directive but from “ERISA’s overall

structure of placing primary responsibility for claim resolution on fund trustees.”

McGraw v. Prudential Ins. Co. of Am., 

, 1263 (10th Cir. 1998). We

have, accordingly, applied a rule barring ERISA claims that were not previously

pursued administratively (i.e., claim exhaustion). But we have not extended this

rule to bar subsidiary arguments urged on judicial review in support of a claim

itself fully exhausted in the administrative process (i.e., issue exhaustion). 3

3
      We are aware of two circuit cases squarely addressing this issue. In both,
the courts explicitly rejected an issue exhaustion requirement in the ERISA
context. Wolf v. Nat’l Shopmen Pension Fund, 

, 186 (3d Cir. 1984)
(“The Pension Fund cites no case, nor are we aware of any case which holds that
                                                                       (continued...)

                                          -11-
      Flinders did not present this issue directly because it dealt with a plan

administrator’s attempt during the litigation to offer a new rationale for its denial

of benefits; it did not involve new arguments or theories advanced by the ERISA

claimant. Reversing the district court’s award of summary judgment to the

administrator, we concluded its denial of benefits must stand or fall solely on the

rationale articulated at the administrative level. See 

Therefore, we

held it was improper for the district court to consider a novel justification

advanced for the first time in litigation. We relied on a statutory provision

mandating that an administrator’s denial of a claim must be in writing and must

“[set] forth the specific reasons for such denial[.]” 29 U.S.C. § 1133(1); 

. And we reasoned this rule was intended to protect ERISA

claimants from being “sandbagged by after-the-fact plan interpretations devised

for purposes of litigation.” 

(quotation omitted). In

dicta, we noted our interpretation was “consistent with the converse rule that a

claimant may not urge new grounds outside the administrative record that would

support the award of benefits.” 

The question raised here is

whether “new grounds” means simply new evidence or whether it includes

3
 (...continued)
a district court cannot decide a claim relying on a theory different from that
presented to the Trustees of the Pension Fund. . . . [Plaintiff] should not be denied
our consideration of this claim simply because she relies on an alternate theory.”);
Vaught v. Scottsdale Healthcare Corp. Health Plan, 

, 631 (9th Cir.
2008) (analogizing to social security cases and concluding that “issue exhaustion
is not applicable in the ERISA context”).

                                         -12-
arguments and theories, which would be tantamount to imposing an issue

exhaustion requirement on ERISA plaintiffs.

      The parties have thus presented an interesting and complex issue, but as we

conclude its resolution is not critical to the outcome of this case, we leave if for

another day. Simply put, it is irrelevant to our disposition whether, at the time

her benefits were terminated, Ms. Farr possessed the functional capacities to

resume working as a nurse. Under the Plan, Hartford was entitled to terminate

her benefits after two years if she could perform “Any Occupation,” Admin. R. at

102, and the EAR concluded she could perform many, both within and outside the

health care industry, see 

As explained above and in the district court’s

order, Ms. Farr has not effectively challenged the assumptions underlying the

EAR’s conclusions, including that she can handle, finger, and feel frequently.

Consequently, even if we accept her irreconcilable conflict argument, her

opposition to the EAR does not reach far enough to materially undermine the

overall determination under review, whether Hartford’s decision to terminate her

benefits was arbitrary and capricious. On the record before us, we cannot say that

it was. The judgment of the district court is therefore AFFIRMED.


                                                 Entered for the Court


                                                 Monroe G. McKay
                                                 Circuit Judge


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