Woo v. Deluxe Corp., 144 F.3d 1157 (8^th Cir. 1998)-Woo was a hard worker at Deluxe. Woo also suffered from multiple sclerosis. Woo never told her employer or even her children of her illness. In the summer of 1993, she began to suffer symptoms of another potentially debilitating and fatal disease, systemic scleroderma. Because of her undiagnosed symptoms, Woo resigned in November 1993. The employer rep noted in his notes of the exit interview that Woo was leaving to pursue other opportunities.. Woo stated on an exit questionnaire "[i]n good conscience, I find it inaccurate to call this a voluntary separation on my part."

IN February 1994 Woo finally saw a physician familiar with systemic scleroderma who diagnosed her as being disabled from the condition since September 1993. Hartford, the claims administrator, because of the outstanding and loyal service of Woo's, denied the claim finding that Woo was not disabled when she resigned. Woo sued and the district court granted summary judgment to the plan.

Woo argued for a less deferential standard of review. The Eighth circuit held that to obtain a less deferential review, Woo must present material, probative evidence demonstrating that (1) a palpable conflict of interest or a serious procedural irregularity existed, which (2) caused a serious breach of the plan administrator's fiduciary duty to her. See Buttram v. Central States, S.E. & S.W. Areas Health & Welfare Fund, 76 F.3d 896, 900 (8^th Cir. 1996). To satisfy the second part of this requirement, Woo must only show that the conflict or procedural irregularity has "some connection to the substantive decision reached." Id. at 901; see also Layes v. Mead Corp., 132 F.3d 1246, 1250 (8^th Cir. 1998). Our inquiry thus turns to whether Woo's evidence satisfies this two-part gateway requirement. We find that it does. Woo presented evidence showing that Hartford has a financial conflict. Deluxe sponsors and funds the LTDP during the first two years of a qualifying disability. After that two-year period, Hartford insures the plan for the remaining period of disability. Accordingly, when Hartford, as plan administrator, denies benefits, it will receive a direct financial benefit as plan insurer, if the disability extends beyond two years. Moreover, Hartford denied Woo's claim without seeking any independent medical review. Under these facts, we find that Woo has shown a sufficient connection between Hartford's financial conflict and the denial of her benefits to trigger a less deferential review. See Buttram, 76 F.3d at 900-01.

Woo additionally presented evidence that Hartford merely had an in-house medical consultant review Woo's claim for benefits. We interpret this as an allegation that Hartford has failed to use proper judgment or thoroughly investigate her claim. See Restatement (Second) of Trusts _ 187 cmt. h (1959). Hartford argues that it had no duty to have a scleroderma specialist review her claim because the contemporaneous notes of the physicians that treated her prior to November 5, 1993, made no mention of disability. However, Hartford was confronted with medical evidence of an uncommon disease and the opinions of two treating physicians stating that, in retrospect, Woo had been disabled from her job before she resigned. We hold that, under these circumstances, Hartford failed to use proper judgment by not having a scleroderma expert review her claim. See Hightshue v. AIG Life Ins. Co., 135 F.3d 1144, 1148 (7th Cir. 1998). This serious procedural irregularity also had a sufficient connection to the decision reached to trigger a less deferential review because Hartford's "actual decision was reached without reflection and judgment." Buttram, 76 F.3d at 901.

Eight circuit adopted the sliding scale standard of review in circumstances in which there is a conflict of interest. To apply the "sliding scale" approach, the evidence supporting the plan administrator's decision must increase in proportion to the seriousness of the conflict or procedural irregularity. See Ellis v. Metropolitan Life Ins. Co., 126 F.3d 228, 233 (4th Cir. 1997). Here, we find Hartford's failure to use proper judgment, when combined with the financial conflict, to be egregious conduct. We will thus require that the record contain substantial evidence bordering on a preponderance to uphold Hartford's decision.

Case remanded back to district court with order to award benefits without allowing Hartford the opportunity to gather additional evidence.