SUMMARY ORDER
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the District Court be AFFIRMED as to the cross-motions for summary judgment, VACATED as to attorney's fees, and REMANDED to the District Court to determine whether cross-appellant is entitled to attorney's fees.
Defendant-Appellant-Cross-Appellee Sun Life and Health Insurance Co. ("Sun Life") appeals from a February 9, 2011 judgment of the District Court denying its motion for summary judgment and granting in part the cross-motion for summary judgment of Plaintiff-Appellee-Cross-Appellant Michael Levitian. Levitian appeals the portion of the District Court's order that denied its application for attorney's fees. We assume the parties' familiarity with the underlying facts and the procedural history, some of which we briefly reiterate here.
BACKGROUND
This appeal arises out of an application for disability benefits filed by Levitian, a former employee of Assured Guaranty ("Assured"). Levitian, a database administrator and a Vice President of Information Technology at Assured, alleged that carpal tunnel syndrome and DeQuervain tendonitis prevented him from performing keyboarding tasks for more than four hours per day. Accordingly, he claimed, he was totally disabled from performing in his capacity as a database administrator. Levitian ceased working at Assured on February 17, 2006, for reasons that are in dispute.1
Upon receiving Levitian's application for long-term disability benefits, Sun Life, the long-term disability insurer for Assured's employees, commenced an investigation as to Levitian's medical condition. After initially denying Levitian's claim based on allegedly inadequate documentation of his disability, Sun Life reversed course. On November 20, 2006, based in part on an Occupational Analysis Report prepared by Sarah Coughlin (the "Coughlin Report"), which stated that Levitian's position at Assured would have required him to keyboard more than four hours per day, Sun Life awarded Levitian benefits.
On February 1, 2007, Levitian took a new position as Chief Technology Officer at Global Advertising Strategy ("Global"). At some point thereafter, Sun Life commissioned a new Occupational Analysis Report from Jacqueline Pickering (the "Pickering Report"). The Pickering Report was forwarded to Sun Life on March 14, 2008. Based upon the Pickering Report and Levitian's new position at Global, Sun Life informed Levitian on May 5, 2008, that it would cease his long-term disability benefits. Levitian's internal appeal was denied by Sun Life on August 26, 2008.
On March 26, 2009, Levitian filed the complaint in this action, alleging his entitlement to long-term disability benefits and attorney's fees pursuant to Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. §1001, et seq. After a failed attempt at mediation, the parties filed cross-motions for summary judgment on May 3 and 4, 2010.
On February 9, 2011, the District Court denied Sun Life's motion for summary judgment and granted in part and denied in part Levitian's cross-motion for summary judgment. Levitian v. Sun Life & Health Ins. Co. (US), No. 09 Civ. 2965(GBD), 2011 WL 565330 (S.D.N.Y. Feb. 9, 2011) ("Levitian I"). As the District Court understood the record, Sun Life's adverse determination was taken in three steps:
First, Sun Life determined that Levitian was a Database Administration Manager. Then, it determined that a Database Administration Manager was not required to keyboard for more than four hours a day so long as the Manager supervised a department of two or more. Finally, it determined . . . that Levitian managed a department of three. On this basis alone, Sun Life concluded he was not required to keyboard for more than four hours a day and was not disabled under the policy.
Id. at *4 (citations omitted).
The District Court then evaluated Sun Life's evidentiary support for each step of its inquiry, and held that that Sun Life's decision to deny benefits was not supported by substantial evidence. Id. at *4-5. Specifically, the Court determined that Sun Life's reliance on the Pickering Report was misplaced, and that that Report did not provide the type of evidence of Levitian's vocational capacity that could justify a revocation of benefits.2 Id. at *4. The Court further held that Sun Life was under a conflict of interest, as it both decided whether claimants were entitled to benefits and also paid those benefits. Id. Finally, the Court held that Sun Life had no valid evidentiary support for its claim that Levitian supervised more than two people as a database administrator. Id. at *4-5. Accordingly, the Court concluded that Sun Life's determination of benefits was arbitrary and capricious, and ordered Sun Life to reinstate Levitian's benefits. The Court denied Levitian's motion for summary judgment, however, insofar as it requested attorney's fees.3 Id. at *6 n.6.
This appeal followed. Sun Life alleges that the District Court erred by (1) relying on evidence outside the Administrative Record; (2) concluding that Sun Life's denial of benefits was arbitrary and capricious based upon evidence that was not presented to Sun Life during the pendency of the claim; (3) substituting its own judgment for that of Sun Life; and (4) deciding that Sun Life was arbitrary and capricious in concluding that Levitian was a manager at Assured and therefore was not required to keyboard for more than four hours per day. Levitian cross-appeals, arguing that the District Court abused its discretion in not granting him attorney's fees pursuant to Section 502(g)(1) of ERISA, 29 U.S.C. § 1132(g)(1).
DISCUSSION
A. The Motion for Summary Judgment
i. Standard of Review
We review the decision of the District Court granting summary judgment to the appellee de novo. Durakovic v. Bldg. Serv. 32 BJ Pension Fund, 609 F.3d 133, 137 (2d Cir. 2010). We therefore conduct our own independent review of the decision of Sun Life (the "Plan Administrator") under the deferential "arbitrary and capricious standard." See id. at 141 (on de novo review of a decision by the district court, conducting "arbitrary and capricious" review of Plan Administrator action); but see Conkright v. Frommert, 130 S.Ct. 1640, 1651 (2010) (deference "does not mean that the plan administrator will prevail on the merits. It means only that the plan administrator's interpretation of the plan `will not be disturbed if reasonable.'" (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111 (1989))).
We will find that a decision of a Plan Administrator is arbitrary and capricious if it is "without reason, unsupported by substantial evidence, or erroneous as a matter of law." Krauss v. Oxford Health Plans, Inc., 517 F.3d 614, 623 (2d Cir. 2008) (quotation marks omitted). Substantial evidence is "such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the [Plan Administrator] . . . and requires more than a scintilla but less than a preponderance." Durakovic, 609 F.3d at 141 (quotation marks omitted); Miller v. United Welfare Fund, 72 F.3d 1066, 1072 (2d Cir. 1995).
ii. The Plan Administrator's Action was Not Supported by Substantial Evidence
We agree with the District Court that the decision of the Plan Administrator to deny benefits was not supported by substantial evidence and was therefore arbitrary and capricious.4 The only substantive change in Levitian's case between the approval of benefits and the subsequent denial of benefits was the submission to Sun Life of the Pickering Report (hereinafter the "Report").5 Therefore, we evaluate whether the Report constitutes "substantial evidence" supporting the denial of benefits. See Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 119 (2008) ("Metro. Life") ("In explaining how a reviewing court should take account of [an administrative] agency's reversal of its own examiner's factual findings, [the Supreme] Court . . . held that the reviewing judge should take account of that circumstance as a factor in determining the ultimate adequacy of the record's support for the agency's own factual conclusion.").
The Pickering Report cannot support the denial of benefits. The Report drew a bright line tying managerial responsibility directly to the number of subordinates: if a "manager" had one subordinate, his keyboarding would likely be more than four hours per day, whereas if he had two or more subordinates, his keyboarding would likely be less than four hours per day. The Report does not provide any evidence, let alone any substantial evidence, to justify its choice to draw this line. The action of the Plan Administrator in denying benefits based upon the Report was therefore arbitrary and capricious.
We reach this conclusion in part because of Sun Life's undisputed conflict of interest. See Levitian I, 2011 WL 565330, at *4 (noting that the conflict of interest is not disputed). Where, as here, a Plan Administrator both evaluates and pays benefits, the Administrator is under a conflict of interest that must be considered by a reviewing court, along with the other factors discussed above, in determining whether a decision of the Administrator is arbitrary and capricious. Metro. Life, 554 U.S. at 117. Such a conflict should be viewed as more determinative where the Administrator relies upon one report, favoring the Administrator's position, more heavily than (or to the exclusion of) another report favoring the benefits claimant. Id. The Plan Administrator did precisely that in this case, where it discredited the Coughlin Report, which was the initial basis for the favorable (to Levitian) benefits determination, in favor of the unfavorable Pickering Report.6 We therefore affirm the judgment of the District Court as to the cross-motions for summary judgment on the substantive ERISA claim.
B. Attorney's fees
Levitian cross-appeals from the District Court's denial of attorney's fees, arguing that as a "prevailing party" he is entitled to such fees. We review the District Court's decision to deny attorney's fees for abuse of discretion. Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869, 871 (2d Cir. 1987); see also Sims v. Blot, 534 F.3d 117, 132 (2d Cir. 2008) (explaining that the term of art "abuse of discretion" includes errors of law).
The District Court relied solely upon the five-factor Chambless test previously mandatory in our Circuit in deciding to deny attorney's fees to Levitian.7 See Levitian I, 2011 WL 565330, at *6 n.6 (citing Chambless, 815 F.2d at 871). That test was abrogated by the Supreme Court in Hardt v. Reliance Standard Life Ins. Co., 560 U.S. __, 130 S.Ct. 2149 (2010). Although after Hardt courts "may [still] apply . . . the Chambless factors in `channeling [their] discretion when awarding fees' under § 1132(g)(1)," Toussaint v. JJ Weiser, Inc., 648 F.3d 108, 110-11 (2d Cir. 2011), a denial of attorney's fees after "[c]onsidering [solely] . . . the [Chambless] factors" constitutes an error of law. Levitian I, 2011 WL 565330, at *6 n.6. See also Levitian II, 2011 WL 1796317, at *1 (determining that Hardt "does not [affect] the applicability of the [Chambless] factors").
We therefore vacate the District Court's decision on attorney's fees and remand for a new determination of Levitian's entitlement to fees. On remand, regardless of the outcome of the attorney's fees issue, the District Court should explain in writing the basis for its decision as required by Connors v. Connecticut General Life Insurance Co., 272 F.3d 127, 137 (2d Cir. 2001).
CONCLUSION
Having conducted an independent review of the record, we agree with the District Court that Sun Life's reliance upon the Pickering Report indicates that its denial of benefits was not supported by substantial evidence. We further hold that the District Court erred as a matter of law by relying solely upon the abrogated Chambless test in denying Levitian attorney's fees. We therefore AFFIRM the February 9, 2011 judgment of the District Court as to the cross-motions for summary judgment on the substantive ERISA claim, VACATE that judgment with regard to attorney's fees, and REMAND the cause to the District Court to determine and explain, using the proper legal standard, whether attorney's fees are appropriate in this case.
