author: STEPHEN A. HIGGINSON, Circuit Judge: GREGG COSTA, Circuit Judge,

text:
    ARIANA M., Plaintiff-Appellant v. HUMANA HEALTH PLAN OF TEXAS, INCORPORATED, Defendant-Appellee
    No. 16-20174
    United States Court of Appeals, Fifth Circuit.
    FILED April 21, 2017

      Peter S. Sessions, Esq., Kantor & Kan-tor, L.L.P., Northridge, CA, Amar B. Ra-val, Plummer Law Group, Houston, TX, for Plaintiff-Appellant.
    Carlos Ramon Soltero, Ellen Burkholder Cochran, Rachael Kelly Padgett, McGin-nis, Lochridge & Kilgore, L.L.P., Austin, TX, for Defendant-Appellee.
    Before PRADO, HIGGINSON, and COSTA, Circuit Judges.
   STEPHEN A. HIGGINSON, Circuit Judge:

Plaintiff-Appellant Ariana M. challenges Defendant-Appellee Humana Health Plan of Texas’s denial of coverage for continued partial hospitalization. After reviewing the administrative record, the district court granted Defendant’s motion for summary judgment. We AFFIRM.

I.

Plaintiff is a dependent eligible for benefits under the Eyesys Vision Inc. group health plan (the “Plan”), which is insured and administrated by Humana. The Plan’s benefits include coverage for partial hospitalization for mental health treatment. However, benefits are payable only for treatments that are “medically necessary.” “Medically necessary” is defined as

health care services that a health care practitioner exercising prudent clinical judgment would provide to his or her patient for the purpose of preventing, evaluating, diagnosing or treating an illness or bodily injury, or its symptoms. Such health care service must be:
• In accordance with nationally recognized standards of medical practice;
• Clinically appropriate in terms of type, frequency, extent, site and duration, and considered effective for the patient’s illness or bodily injury;
• Not primarily for the convenience of the patient, physician or other health care provider; and
• Not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of the patient’s sickness or bodily injury.
For the purpose of medically necessary, generally accepted standards of medical practice means standards that are based on credible scientific evidence published in peer-reviewed medical literature generally recognized by the relevant medical community, Physician Specialty Society recommendations, the views of physicians practicing in relevant clinical areas and any other relevant factors.

Plaintiff has a long history of mental illness, eating disorders, and engaging in self-harm. On April 15, 2013, Plaintiff was admitted to Avalon Hills’s intensive partial hospitalization program. Partial hospitalization refers to a level of care in which a patient attends medical programming for approximately eight hours per day. This form of care is more intensive than either intensive outpatient or outpatient care.

Defendant initially found the treatment medically necessary and approved partial hospitalization through April 19, 2013, ultimately extending authorization through June 4, 2013, for a total of 49 days. On June 5, 2013, Defendant denied continued partial hospitalization treatment, finding that it was no longer medically necessary. In making its determination, Defendant asked two doctors to review Plaintiffs medical treatment, using the Mihalik criteria, a privately licensed review criteria created by the Mihalik Group.

Plaintiff filed her Complaint on November 7, 2014. On February 12, 2015, Plaintiff filed a motion to determine the standard of review, arguing that Defendant’s denial of benefits should be reviewed de novo. Defendant responded, conceding that de novo review applies to plan term interpretations; however, Defendant also noted that under Fifth Circuit law, even when de novo review applies, factual determinations are reviewed for abuse of discretion. Noting the parties’ agreement, the district court granted Plaintiffs motion. Defendant next filed a motion for summary judgment along with the administrative record. Plaintiff responded. The district court granted the motion for summary judgment. Plaintiff appealed.

II.

Plaintiff argues that the district court erred by applying an abuse of discretion, instead of a de novo, standard to assess Defendant’s factual determinations. We disagree.

The Employee Retirement Income Security Act of 1974’s (“ERISA”) text “does not directly resolve” the question of the appropriate standard of review of an ERISA plan administrator’s decision to deny plan benefits. Conkright v. Frommert, 559 U.S. 506, 512, 130 S.Ct. 1640, 176 L.Ed.2d 469 (2010). In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), the Supreme Court held that “[cjonsistent with established principles of trust law, ... a denial of benefits challenged under [ERISA] is to be reviewed under a de novo standard unless the benefit plan gives the administrator ... discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Id. at 115, 109 S.Ct. 948. Accordingly, where an ERISA plan delegates discretionary authority to the plan administrator (a “discretionary clause”) courts review the plan administrator’s decisions for abuse of discretion. See, e.g., Barhan v. Ry-Ron Inc., 121 F.3d 198, 201 (5th Cir. 1997).

In Pierre v. Connecticut General Life Insurance Co./Life Insurance Co. of North America, 932 F.2d 1552 (5th Cir. 1991), we interpreted Firestone to “not require de novo review for factual determinations” and instead found that “an abuse of discretion standard of review is appropriate” for reviewing a plan administrator’s factual determinations. Id. at 1553. Accordingly, in this Circuit, “with or without a discretionary] clause, a district court rejects an administrator’s factual determinations in the course of a benefits review only upon the showing of an abuse of discretion.” Dutka ex rel. Estate of T.M. v. AIG Life Ins. Co., 573 F.3d 210, 212 (5th Cir. 2009); see also Green v. Life Ins. Co. of N. Am., 754 F.3d 324, 329 (5th Cir. 2014) (quoting Dutka and noting that the standard of review for factual determinations is abuse of discretion regardless of the presence of a discretionary clause).

Plaintiff argues that Pierre deference does not apply here because Texas’s anti-discretionary clause law mandates de novo review. Texas Insurance Code Section 1701.062(a) provides that “[a]n insurer may not use a document described by Section 1701.002 [among other things, policies for health and medical insurance] in this state if the document contains a discretionary clause.” Tex. Ins. Code § 1701.062(a). Under the statute, discretionary clauses include any provision that “purports or acts to bind the claimant to, or grant deference in subsequent proceedings to, adverse eligibility or claim decisions or policy interpretations by the insurer” or “specifies ... a standard of review in any appeal process that gives deference to the original claim decision or provides standards of interpretation or review that are inconsistent with the laws of this state, including the common law.” Tex. Ins. Code § 1701.062(b)(1), (2)(D).

Plaintiff argues that these provisions, taken together, required the district court to review Humana’s factual findings de novo. We disagree. The plain text of the statute provides only that a discretionary clause cannot be written into an insurance policy; it does not mandate a standard of review. As always, statutory interpretation begins “with the plain language and structure of the statute.” Coserv Ltd. Liab. Corp. v. Sw. Bell Tel. Co., 350 F.3d 482, 486 (5th Cir. 2003). Texas’s anti-discretionary clause law, by its terms, does not mandate a standard of review. Instead, it provides only that an insurer “may not use a document ... if the document contains a discretionary clause.” Tex. Ins. Code § 1701.062(a). That is, Texas’s anti-discretionary clause law concerns what language can and cannot be put into an insurance contract in Texas. It does not mandate a specific standard of review for insurance claims. See Am. Council of Life Insurers v. Ross, 558 F.3d 600, 609 (6th Cir. 2009) (“[It is not] necessarily the case ... that, if Michigan can remove discretionary clauses, it will be allowed to dictate the standard of review for all ERISA benefits claims. All that today’s case does is allow a State to remove a potential conflict of interest.”); Curtis v. Metro. Life Ins. Co., No. 15-CV-2328, 2016 WL 2346739, at *10 (N.D. Tex. May 4, 2016) (applying Texas’s anti-discretionary clause law, but finding that factual findings should be reviewed for abuse of discretion); Garza v. United Healthcare Ins. Co., No. 16-CV-0853, ECF No. 30 (S.D. Tex. Jan 31, 2017) (same); Unum Life Ins. Co. of Am., v. Mohedano, No. 13-CV-446, 2017 WL 713791, at *5 n.7 (S.D. Tex. Feb. 23, 2017) (“District courts continue to follow [Pierre’s] mandate regarding factual determinations even where the discretionary clause is void.”).

Accordingly, we find that Texas’s anti-discretionary clause law does not change this court’s normal Pierre deference.

III.

Plaintiff next argues that the district court erred in granting Defendant summary judgment even if an abuse of discretion standard applies. Plaintiff raises two issues. First, she argues that Defendant erred by using the Mihalik criteria, instead of the raw Plan terms or the American Psychiatric Association’s Practice Guidelines, to assess medical necessity. Second, she argues that under any criterion, her continued partial hospitalization was medically necessary. We disagree.

“Standard summary judgment rules control in ERISA cases.” Cooper v. Hewlett-Packard Co., 592 F.3d 645, 651 (5th Cir. 2009) (quoting Vercher v. Alexander & Alexander Inc., 379 F.3d 222, 225 (5th Cir. 2004)). “We review a ‘district court’s grant of summary judgment de novo, applying the same standards as the district court.’ ” Green, 754 F.3d at 329 (quoting Cooper, 592 F.3d at 651). “Summary judgment is appropriate when ‘there is no genuine dispute as to any material fact and the movant is entitled to judgment as, a matter of law.’ ” Id. (quoting Fed. R. Civ. P. 56(a)). “This court reviews de novo the district court’s conclusion that an ERISA plan administrator did not abuse its discretion in denying benefits. ...” Anderson v. Cytec Indus., Inc., 619 F.3d 505, 511 (5th Cir. 2010). “A plan administrator abuses its discretion if it acts ‘arbitrarily or capriciously.’ ” Truitt v. Unum Life Ins. Co. of Am., 729 F.3d 497, 508 (5th Cir. 2013) (quoting Meditrust Fin. Servs. Corp. v. Sterling Chems., Inc., 168 F.3d 211, 214 (5th Cir. 1999)). “A decision is arbitrary and capricious only if it is ‘made without a rational connection between the known facts and the decision or between the found facts and the decision.’ ” Id. (quoting Meditrust, 168 F.3d at 215). “In addition to not being arbitrary and capricious, the plan administrator’s decision to deny benefits must be supported by substantial evidence.” Anderson, 619 F.3d at 512. “Substantial evidence is more than a scintilla, less than a preponderance, and is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Corry v. Liberty Life Assurance Co. of Bos., 499 F.3d 389, 398 (5th Cir. 2007) (quoting Ellis v. Liberty Life Assurance Co. of Bos., 394 F.3d 262, 273 (5th Cir. 2004)).

A.

Plaintiff contends that the plan administrator should not have used the Mihalik criteria to determine medical necessity because the criteria were not mentioned in the Plan’s definition of medical necessity. Plaintiff further contends that the Mihalik criteria are inconsistent with the Plan’s terms because they are not consistent with “nationally recognized standards of medical practice.” We disagree.

First, the fact that the Plan does not expressly incorporate the Mihalik criteria does not indicate that their use in the claims adjudication procedure was improper. Instead, the Mihalik criteria simply provide Defendant’s claims adjudicators guidance in carrying out the terms of the Plan. Importantly, nothing in the Mihalik criteria’s definition of medical necessity is inconsistent with the Plan’s terms as the following table indicates:

What the Mihalik criteria add to the Plan definition is additional guidance for determining medical necessity in specific sitúa-tions. But even these additions map onto the Plan definition of medical necessity:

The Mihalik criteria further list a number of specific treatment initiation and treatment continuation criteria, all of which fit comfortably within the Plan’s definition of medically necessary. For example, the Mihalik criteria instruct a physician reviewing a request for mental health treatment to consider, among other things, “[w]ith treatment at this level, the individual is capable of controlling behaviors and/or seeking professional help when not in a structured treatment setting[],” and “[i]f the services being proposed have been attempted previously without significant therapeutic benefit, there is a clinically credible rationale for why those same services could be effective now.” These questions simply add context to the Plan’s definition of medically necessary.

Importantly, “an insurer’s reliance on a pre-published plan to determine what is ‘medically necessary’ can be reasonable under ERISA.” Quality Infusion Care Inc. v. Aetna Life Ins. Co., 257 Fed.Appx. 785, 736 (5th Cir. 2007) (unpublished) (citing Dowden v. Blue Cross & Blue Shield of Tex., Inc., 126 F.3d 641, 644 (5th Cir. 1997)). And this practice appears to be commonplace. See, e.g., Love v. Dell, Inc., 551 F.3d 333, 337 (5th Cir. 2008) (“As was ValueOptions’ policy, its reviewers employed the American Society of Addiction Medicine, Inc. Patient Placement Criteria for the Treatment of Substance Related Disorders, Second Edition Revised, in evaluating Love’s claims.”); Dowden, 126 F.3d at 644 (“Relying upon learned publications, Dr. Benjamin V. Carnovale, along •with other medical and legal staff developed a written policy for the uniform processing of the claims of silicone breast implant patients. Consistent with the insurance contract, the policy also enumerates which procedures are medically necessary.”).

Put another way, we hold that an insurer is permitted to rely on medical review criteria to make coverage decisions so long as those criteria are not inconsistent with the plan’s terms.

Second, Plaintiff is incorrect that the Mihalik criteria do not represent nationally recognized standards of medical practice. Instead, the record indicates that the Mi-halik criteria are intended to represent nationally recognized standards of medical practice, were created in consultation with a group of doctors and health professionals from across the country, and were based on extensive medical literature. Plaintiff does not point to any record evidence indicating that the Mihalik criteria do not represent a nationally recognized standard of medical practice. Plaintiff additionally argues that Defendant should have used the guidelines created by the American Psychiatric Association. But Plaintiff does not contend that the Plan documents or ERISA require the use of any particular representation of the national standard of care. Accordingly, because the record supports finding that the Mihalik criteria are in line with national standards, the district court did not err in finding that Defendant’s consideration of the Mihalik criteria was proper.

B.

The parties next dispute whether Plaintiffs continued partial hospitalization was medically necessary. The question of whether a proposed treatment is medically necessary is a factual determination and therefore reviewed for abuse of discretion. Meditrust Fin. Servs., 168 F.3d at 214 (“The Plan persuasively argues that the decision to deny benefits based on lack of medical necessity involves a review of the facts in Revels’s hospital records and a determination of whether there is factual support for her claim.... [Tjhese medical assessments do not constitute an issue of contract interpretation. Deciding the medical progress of a patient through analysis of medical reports and records is similar to the factual determinations we have reviewed for abuse of discretion in other ERISA cases. Therefore, we affirm the district court’s conclusion that it should review the Plan’s decision for abuse of discretion because the Plan made a factual determination.” (footnote omitted)).

Plaintiff contends that the district court erred in finding that Defendant’s medical necessity determination was not an abuse of discretion because “[t]he treatment records clearly demonstrated that Ariana’s PHP treatment at Avalon Hills was medically necessary because she exhibited self-harm as well as urges to engage in risky behavior severely detrimental to her health.” We disagree.

Two medical reviewers considered Plaintiffs claim and concluded that continued partial hospitalization was not medically necessary. The two reviewing doctors agreed that Plaintiff was not an imminent danger to herself or others and that Plaintiff was medically stable. Doctor Prabhu further stated that Plaintiff could have received effective outpatient (as opposed to partial hospitalization) care. These conclusions were supported by substantial record evidence. Both doctors spoke directly with Plaintiffs treating physicians and reviewed relevant medical literature before making their coverage decisions.

Plaintiff disputes the reviewing doctor’s conclusions, pointing to record evidence that she was “really not progressing very well,” was “at [a] high risk of relapse,” and was likely to continue restricting (not eating enough food) and over-exercising. However, the reviewing doctors were aware of this information. Indeed, the continued medical risks Plaintiff faced were extensively documented in Doctor Pra-bhu’s report. Nonetheless, the reviewing doctors found that an outpatient course of treatment was the most cost-effective way to mitigate Plaintiffs medical risk. Specifically, Doctor Prabhu found that Plaintiff could “be safely treated in a less restrictive setting.”

By the time that Plaintiff was denied continued coverage, the reviewing doctors found that her condition had stabilized. Indeed, both reviewing doctors noted that Plaintiff had improved enough during her course of treatment to no longer be an imminent danger to herself or others. Doctor Prabhu noted that Plaintiff had “made progress about her self harm (still has the thoughts and urges but doesn’t anymore).” Doctor Hartman agreed, noting that “[t]he patient denies suicidal ideation/homicidal ideation (SI/HI) or psychosis.” During her time at Avalon, Plaintiff also reached a healthy weight. Based on this improvement, Doctor Prabhu concluded that Plaintiff “appear[ed] to be at her baseline behaviors.” Additionally, both doctors agreed that Plaintiffs progress in partial hospitalization treatment- had stalled because Plaintiff was not invested in her course of treatment.

Moreover, that Plaintiffs doctors disagreed with Defendant’s assessment of the proper level of care for Plaintiffs condition does not create a genuine issue of material fact. See, e.g., Anderson, 619 F.3d at 517 (“[ERISA plan administrator] was not obliged to accept the opinions of [plaintffs] treating physicians.”); Medi-trust Fin. Servs., 168 F.3d at 215 n.7 (upholding denial of benefits despite disagreement between reviewing doctors and treating physicians). Indeed, our law is clear that “an administrator does not abuse its discretion by relying on the medical opinions of its consulting physicians instead of the medical opinions of a claimant’s treating physicians.” Corry, 499 F.3d at 402 (5th Cir. 2007).

It was not unreasonable on this record to conclude that Plaintiff could be treated with a less costly, equally effective outpatient treatment. Because the plan’s definition of medical necessity requires that the treatment not be “more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of the patients sickness or bodily injury!,]” substantial evidence supports Defendant’s finding that further treatment at Avalon Hills was not medically necessary.

IV.

We have considered Plaintiffs remaining arguments and find them without merit. The district court’s order granting Defendant summary judgment is AFFIRMED.

GREGG COSTA, Circuit Judge,

joined by EDWARD C. PRADO and STEPHEN A. HIGGINSON, Circuit Judges, specially concurring:

As any sports fan dismayed that instant replay did not overturn a blown call learns, it is difficult to overcome a deferential standard of review. The deferential standard of review our court applies to ERISA decisions often determines the outcome of disputes that are far more important than a sporting event: decisions made by retirement and health plans during some of life’s most difficult times, as this case involving a teenager with a serious eating disorder demonstrates. So it is striking that we are the only circuit that would apply that deference to factual determinations made by an ERISA administrator when the plan does not vest them with that discretion. Compare Pierre v. Conn. Gen. Life Ins. Co. of N. Am., 932 F.2d 1552, 1562 (5th Cir. 1991), with Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 250-51 (2d Cir. 1999); Luby v. Teamsters Health, Welfare & Pension Trust Funds, 944 F.2d 1176, 1183-84 (3d Cir. 1991); Reinking v. Phila. Am. Life Ins. Co., 910 F.2d 1210, 1213-14 (4th Cir. 1990) (overruled on other grounds by Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1030 (4th Cir. 1993)); Rowan v. Unum Life Ins. Co. of Am., 119 F.3d 433, 435-36 (6th Cir. 1997); Ramsey v. Hercules, Inc., 77 F.3d 199, 203-05 (7th Cir. 1996); Walker v. Am. Home Shield Long Term Disability Plan, 180 F.3d 1065, 1070 (9th Cir. 1999); Shaw v. Conn. Gen. Life Ins. Co., 353 F.3d 1276, 1285 (11th Cir. 2003) (all applying de novo review when the plan does not grant discretion).

Pierre did not have the benefit of this robust ease law. It was writing largely on a blank slate as only one other circuit (the Fourth) had at that time ruled on the standard to apply to factual determinations in ERISA cases when the plan did not delegate discretion to the administrator. 932 F.2d at 1556-57. The unanimous view of the six other circuits that have weighed in on the other side of the split Pierre created, as well as other developments during the quarter century since we decided the question, calls our view into doubt.

Pierre turned largely on an interpretation of a then-recent Supreme Court case, Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). Pierre had to decide whether the de novo standard of review discussed in Firestone applies only to interpretations of plan terms or also includes factual determinations of benefit eligibility. Pierre, 932 F.2d at 1556 (noting conflicting language in Firestone on this question). In addition to every other circuit reading Firestone differently, a more recent Supreme Court decision — even if it does not “unequivocally direct[]” us to overrule our precedent— counsels against Pierre’s reading. Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 128 S.Ct. 2343, 171 L.Ed.2d 299 (2008), lists the following as one of the “principles of review” that Firestone set forth: “Principles of trust law require courts to review a denial of plan benefits ‘under a de novo standard’ unless the plan provides to the contrary.” Id. at 110-111, 128 S.Ct. 2343 (quoting Firestone, 489 U.S. at 115, 109 S.Ct. 948). A “denial of plan benefits” may and often 'does encompass a denial based on factfinding. Glenn treats de novo review as the general standard without limiting it to denials “based on plan term interpretations,” the phrase that appeared in one Firestone passage on which Pierre placed much importance. Pierre, 932 F.2d at 1556 (quoting Firestone, 489 U.S. at 108, 109 S.Ct. 948).

Apart from Glenn’s implication that Pierre’s deference is not warranted, one of the primary reasons we cited for that deference — that trust law draws a distinction between judicial review of a trustee’s legal and factual decisions — has not withstood scrutiny. Trust law traditionally provided different standards of review based on whether a decision was mandatory or discretionary according to the trust document, not whether that decision was factual or legal. Ramsey, 77 F.3d at 203. In a thorough discussion citing treatises on trust law as well as nineteenth century British and American cases, the Seventh Circuit found no basis for distinguishing legal questions from factual ones because “[e]ver since the English courts of equity developed the trust instrument, trustees have been answerable to the beneficiaries for a host of factually specific decisions, including reviews of accounts and investment decisions.” Id. Another reason Pierre gave for finding a fact/law distinction in trust law — that factual decisions are “necessary or appropriate” for plan administration and thus are granted deference under the Restatement (Second) of Trusts (see Pierre, 932 F.2d at 1558) — applies with equal force to plan interpretations. See Rowan, 119 F.3d at 436 (concluding that the Restatement language Pierre relied on “does not provide any basis for distinguishing between court review of factual determinations and review of interpretations of claim language”). One prominent scholar argues that Firestone got trust law wrong: “classic trust law assumed that the trustee had discretion unless the trust instrument or some particular doctrine of trust law provided otherwise,” whereas Firestone says that the default standard is de novo and the plan has to grant discretion. Ramsey, 77 F.3d at 203-04 (citing John H. Langbein, The Supreme Court Flunks Trusts, 1990 Sup. Ct. Rev. 207, 219). So Pierre may well be correct in reading trust law as providing deferential review for fact-based decisions when the plan was silent. It failed to recognize, however, that Firestone “reversed the presumption.” Id. at 204. As “there was and is no [trust law] distinction based on the kind of decision the trustee is making,” id., trust law’s congruity for review of legal or factual questions would seem to support applying Firestone’s de novo standard to review of denials of any sort.

Pierre’s analogy to the limited factual review appellate courts give trial courts and administrative agencies has also been questioned. That deference is to a neutral factfinder, whereas ERISA plan administrators often have conflicts of interest as many both decide and pay claims. Perez v. Aetna Life Ins. Co., 96 F.3d 813, 823-24 (6th Cir. 1996), vacated for reh’g en banc, 106 F.3d 146 (6th Cir. 1997); see also Rowan, 119 F.3d at 436. As the Seventh Circuit has explained, district courts and administrative agencies “enjoy [] a well established set of procedural protections that stem from the Constitution and individual statutes. Plan administrators, in contrast, neither enjoy the acknowledged expertise that justifies deferential review for agency cases, nor are they unbiased fact finders like the courts.” Ramsey, 77 F.3d at 205 (internal citation omitted). Glenn reinforced this distinction, holding that judicial review should take account of a plan administrator’s conflict even under the abuse of discretion review that governs when a plan grants discretion. 554 U.S. at 115, 128 S.Ct. 2343. Granting those conflicted deci-sionmakers deference even when the plan does not call for it would “afford less protection to employees and their beneficiaries than they enjoyed before ERISA was enacted.” Rowan, 119 F.3d at 436 (quoting Firestone, 489 U.S. at 114, 109 S.Ct. 948).

Pierre also voiced concerns about courts’ ability to conduct de novo review of factual determinations, believing that it would be a “difficult and uncertain exercise on a cold record.” 932 F.2d at 1559. In the place of speculation, we now have the experience of seven other circuits. No administrative difficulties are evident from these circuit’s de novo review of benefit denials that rest on factual determinations. Doctors’ reports provide district courts with guidance on determining factual issues, and courts can appoint independent experts to evaluate complicated medical evidence. See, e.g., Walker v. Am. Home Shield Long Term Disability Plan, 180 F.3d 1065, 1070-71 (9th Cir. 1999). When doctors’ reports reach differing conclusions, it is well within the capabilities of a district court to determine which is more credible. See Grady v. Paul Revere Life Ins. Co., 10 F.Supp.2d 100, 113-14 (D. R. I. 1998) (evaluating how much exposure a reviewing doctor had with the claimant to decide whether the reviewing doctor’s diagnosis was credible). That evaluation of medical testimony is something federal courts are much more familiar with now than when Pierre was decided given the advent of Daubert hearings. See Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993).

The pillars supporting Pierre may have thus eroded. This question concerning the standard of review for ERISA cases is not headline-grabbing. But it is one that potentially affects the millions of Fifth Circuit residents who rely on ERISA plans for their medical care and retirement security. When decisions by those plans are challenged in court, Pierre matters now much more than it did. Texas’s anti-delegation statute (assuming it is not preempted) means that the abuse of discretion standard is no longer dictated for most cases by plan provisions vesting discretion, but by Pierre’s default deference. And the circuit split on that default standard undermines the uniform treatment of ERISA plans — sometimes the same plan offered by employers in different states — that the federal statute seeks to achieve. Gobeille v. Liberty Mut. Ins. Co., — U.S. -, 136 S.Ct. 936, 944, 194 L.Ed.2d 20 (2016).

The default standard for judicial review of fact-based ERISA decisions was a significant enough question for two Justices to vote to review Pierre after it created a split with the Fourth Circuit. Pierre, 502 U.S. 973, 973-74, 112 S.Ct. 453, 116 L.Ed.2d 470 (1991). The lopsided split that now exists cries out for resolution.

      . Texas has also adopted administrative rules that are substantively identical to the Insurance Code. See 28 Tex. Admin. Code §§ 3.1201-3.1203.

      . Plaintiff argues that the court should reexamine Pierre. Nonetheless, Plaintiff concedes that "one panel of this Court cannot overrule another, and that the ultimate resolution of the issue in this Court would likely require en banc consideration.” Plaintiff is not alone in her criticism of Pierre; indeed, Pierre has been rejected by most other Circuit Courts. Moreover, Pierre is likely to become more important as more states adopt anti-discretionary clause statutes. Under Firestone, courts defer to discretionary clauses in plan documents. Until states began banning discretionary clauses, Pierre's impact was limited because this court was likely to defer to a plan administrator's factual determination under the terms of the plan — not under Pierre.

      . This court also considers a plan administrator's conflict of interest in assessing whether the plan administrator abused its discretion. Truitt, 729 F.3d at 508. Plaintiff made a conflict of interest argument below, but no longer presses the argument on appeal.

      . See National Football League, Official Playing Rules of the National Football League, R. 15, § 2, art. 3 (2016) (“A decision will be reversed only when the Referee has clear and obvious visual evidence available that warrants the change.”); see also Major League Baseball, Official Baseball Rules, R. 8.02(c) (2016).

      . Other circuits place considerable weight on the broad language Firestone used when describing review of an administrator's factual decision: "we hold that a denial of benefits ... is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Firestone, 489 U.S. at 115, 109 S.Ct. 948 (emphasis added). A plan administrator generally makes factual determinations when determining the eligibility for benefits, so this language has been read broadly to apply de novo review to factual findings. See, e.g., Ramsey, 77 F.3d at 202. Circuits also emphasize that deferring to the administrator when the plan does not vest her with fact-finding authority would "afford less protection to employees and their beneficiaries than they enjoyed before ERISA was enacted.” Rowan, 119 F.3d at 436 (quoting Firestone, 489 U.S. at 114, 109 S.Ct. 948).

      . In re Tex. Grand Prairie Hotel Realty, LLC, 710 F.3d 324, 331 (5th Cir. 2013) (quoting Reed v. Fla. Metro. Univ., Inc., 681 F.3d 630, 648 (5th Cir. 2012) (noting this as the high standard needed for us to conclude that a Supreme Court opinion overrules our precedent)).


source: Caselaw Access Project

author: JAMES L. DENNIS, Circuit Judge:

license: Public Domain

text:
    SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee Cross-Appellant v. LIFE PARTNERS HOLDINGS, INCORPORATED, Defendant-Appellant Brian D. Pardo; R. Scott Peden, Defendants-Appellants Cross-Appellees
    No. 14-51353
    United States Court of Appeals, Fifth Circuit.
    FILED April 21, 2017

      Benjamin M. Vetter, Hope Hall Augusti-ni, Senior Litigation Counsel, U.S. Securities & Exchange Commission, Washington, DC, for Plaintiff-Appellee Cross-Appellant.
    Richard Barrett Phillips, Jr., Thompson & Knight, L.L.P., Charles Thomas Frazier, Jr., Esq., Alexander Dubose Jefferson & Townsend, L.L.P., Dallas, TX, Dana Livingston, Alexander Dubose Jefferson & Townsend, L.L.P., Austin, TX, for Life Partners Holdings, Incorporated.
    Charles Alfred Mackenzie, Esq., Law Office of C. Alfred Mackenzie, Waco, TX, for Brian D. Pardo and Robert Scott Pe-den.
    Before STEWART, Chief Judge, and JONES and DENNIS, Circuit Judges.
   JAMES L. DENNIS, Circuit Judge:

The Securities and Exchange Commission (SEC) brought this enforcement action against Life Partners Holdings, Inc. (LPHI) and two of its senior officers, Brian Pardo and Scott Peden, alleging violations of reporting and anti-fraud provisions of the federal securities laws. LPHI is in the business of facilitating the sales of existing life insurance policies to investors. The SEC alleges that LPHI knowingly-underestimated life expectancies for the insureds in public filings with the SEC.

Relevant to this appeal, a jury found the defendants liable for violations of section 17(a) of the Securities Act of 1933 and section 13(a) of the Securities Exchange Act of 1934. The district court sustained the jury’s verdict as to section 13(a) but set aside the verdict as to section 17(a). In its final judgment, the district court imposed civil penalties on the defendants and issued injunctions restraining them from committing additional violations of the relevant securities laws. However, the district court declined to order Pardo to reimburse LPHI for compensation under section 304 of the Sarbanes-Oxley Act. The appellants, Pardo and Peden, challenge both the jury’s verdict and the district court’s judgment. The SEC cross-appeals, challenging the court’s judgment.

I

LPHI is a publicly held company that, through its wholly owned subsidiary, Life Partners, Inc. (LPI), engaged in the business of facilitating “viatical” and “life settlement” transactions. Pardo is LPHI’s majority shareholder, and, during the time relevant to this appeal, he was also the chairman of the board of directors and chief executive officer of both LPI and LPHI. Peden was president of LPI, gener-' al counsel of both LPI and LPHI, and a director of LPHI. As officers of LPHI and LPI, both Pardo and Peden participated in creating the various reports filed by LPHI with the SEC, and they both signed, and Pardo certified, the filed reports.

LPHI derived its revenue from commission fees it collected when facilitating the sale of existing life insurance policies or fractional interests in such policies to individual and institutional investors. In a typical transaction, the life insurance, policy owner, the insured, sold the policy for an amount less than the death benefit but more than the cash surrender value of the policy. The purchaser of the policy undertook to pay future premiums to maintain the policy until the insured died. Thus, the purchaser would realize a profit if, when the policy matured upon the death of the insured, the policy benefits paid were greater than the purchase price plus any additional costs, including the premiums paid by the purchaser to maintain the policy. An insured’s life expectancy estimate (LE) was therefore of critical importance in determining the policy’s sale price. And, if an insured lived longer than expected, thereby increasing the cost of maintaining the policy, the purchaser received a lower return or even lost money.

LPHI evaluated policies, obtained LEs for each policy, and determined the sale price, from which it received its commission fees. LPHI priced policies such that shorter LEs promised greater returns to purchasers. In order to ensure that policies were maintained during the insured’s LE period, LPHI required purchasers to place a certain amount of funds in escrow, from which premium payments were to be made during this period. If an insured lived past his or her LE, the purchaser was required to make additional premium payments in order to keep the policy from lapsing. In addition to facilitating sales to institutional and individual purchasers, LPHI acquired interests in life insurance policies for its own investment portfolio.

Starting in 1999, LPHI obtained LEs from a sole service provider, Dr. Donald Cassidy, a board-certified oncologist and internal medicine physician. Cassidy calculated an insured’s LE by using the Center for Disease Control general population mortality table to determine the anticipated life span for the insured and adjusting that anticipated life span based on his medical judgment after reviewing the insured’s medical records. Cassidy reported his result in a range of years, and LPHI used the top end of the range as the insured’s LE. In public' filings with the SEC, LPHI identified certain risks associated with its underestimation of LEs. In March 2011, after the SEC launched an investigation regarding LPHI’s LEs, the company started acquiring LEs from another provider, a company called 21st Services, in addition to Cassidy.

In 2013, the SEC brought an enforcement action against LPHI, Pardo, and Pe-den, alleging that they knowingly used materially underestimated, or “short,” LEs in connection with life settlement policies and that they misrepresented an existing reality of materially and systematically short LEs as a contingent risk in LPHI’s public filings with the SEC between 2007 and 2011. The SEC claimed that the defendants violated the anti-fraud provisions in section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j, and section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a). The SEC also contended that LPHI, aided and abetted by Pardo and Peden, violated the reporting requirements of section 13(a) of the Securities Exchange Act, 15 U.S.C. § 78m(a), and the SEC’s rules thereunder, 17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.13a-13. As to- Pardo only, the SEC alleged that he violated 17 C.F.R. § 240.13a-14. Finally, the SEC asked that Pardo be ordered to reimburse LPHI for certain compensation and trading profits under section 304(a) of the Sarbanes-Oxley Act of 2002 (SOX), 15 U.S.C. § 7243(a).

At trial, Larry Rubin, the SEC’s expert witness, testified that LPHI’s LEs were materially and systematically short based on various analyses he conducted using LPHI’s data. Relevant to this appeal, the jury subsequently found that LPHI, Par-do, and Peden violated section 17(a) of the Securities Act, that LPHI violated section 13(a) of the Securities Exchange Act and rules thereunder, and that Pardo and Pe-den aided and abetted LPHI’s section 13(a) violations. However, the jury found that the defendants did not violate section 10(b) of the Securities Exchange Act. The defendants then moved the district court for judgment as a matter of law.

Ultimately, the district court denied the defendants’ motion for judgment as a matter of law as to section 13(a) violations, but it granted the motion for judgment as a matter of law as to section 17(a) violations and set aside the jury’s verdict as to the latter. The SEC moved for reconsideration of the court’s section 17(a) ruling, but the district court denied that motion. At the remedies stage, the district court imposed second-tier civil penalties on the defendants and issued injunctions restraining the defendants from committing additional violations of the relevant securities laws. However, the district court declined to order Pardo to reimburse LPHI for compensation under section 304 of SOX and later denied the SEC’s motion for reconsideration of this ruling.

The appellants, Pardo and Peden, challenge the district court’s denial of judgment as a matter of law on the SEC’s section 13(a) claim. They also argue that the district court erred in imposing second-tier penalties, in assessing their amounts, and in issuing the injunctions. The SEC cross-appeals, challenging the court’s grant of judgment as a matter of law on the SEC’s section 17(a) claim and the court’s refusal to order SOX reimbursements.

II

We discuss the appellants’ challenges, first to the jury’s verdict and then to the district court’s judgment, before turning to discuss the SEC’s cross-appeal.

A

The appellants challenge the jury’s verdict that LPHI violated the reporting requirements of section 13(a) and that Pardo and Peden aided and abetted this violation, arguing that it was not supported by substantial evidence. As part of their challenge to the sufficiency of the evidence, the appellants contend that the district court abused its discretion in denying their motion to exclude the testimony of Rubin, the SEC’s expert witness. We discuss this issue before turning to the assessment of the sufficiency of the evidence as a whole.

1

Rubin, the SEC’s expert witness, is an actuary with thirty years of actuarial experience, specializing in the life settlement industry. Using data from LPHI, Rubin conducted different analyses, each leading him to conclude that LPHI’s LEs were materially and systematically short. First, Rubin reviewed LPHI’s “actual results” by conducting a cohort analysis of life insurance policies facilitated by LPHI; Rubin divided LPHI’s portfolio of policies into separate groups according to year of issuance and analyzed the performance of each yearly cohort. Rubin testified that this analysis did not require actuarial training to conduct. Based on this analysis, Rubin concluded that the LEs LPHI used to facilitate the sale of life insurance policies were systematically and materially short, “[rjegardless of how policies are analyzed (e.g., length of life expectancy estimate, retail investors versus institutional investors, pre-HIV/AIDS triple cocktail therapies versus post-HIV/AIDS triple cocktail therapies, [or] senior life settlements versus viaticáis ...).”

Next, Rubin conducted an “actual-to-expected,” or “A/E,” analysis, using actuarial methods and published mortality tables to compare the number of deaths expected based on the LEs at a given point in time to the actual number of deaths that occurred. Based on this analysis, Rubin calculated an actual-to-expected performance ratio of 13% for the life settlements LPHI facilitated between 2004 and 2008. Rubin explained that 100% would mean perfect performance, that 80% is considered very poor performance, and that in thirty years as an actuary he had never seen an A/E performance ratio as low as 13%. Applying three standard deviations, Rubin calculated a 41% performance ratio with a 99% confidence that the actual ratio is no higher.

Finally, Rubin calculated “calibrated life expectancies.” He explained this analysis in the following way:

To determine an appropriately developed life expectancy estimate or “calibrated life expectancy,” I applied the actual to expected mortality ratio with the adjustment for three standard deviations described previously to the respective underlying mortality table (2005 CDC and 2008 VBT) and summed the resulting probability of survival from the age the policy was transferred to [LPHI] to the end of the valuation period (i.e., end of the particular calendar year) for each life. The purpose of a calibrated life expectancy is to calculate and reflect appropriate adjustments to the initial life expectancy estimates using data gleaned from an underwriter’s historical performance, as reflected by the underwriter’s actual to expected mortality ratios. These adjustments result in an A/E ratio of 100%. This means given the three standard deviations, I am only 1% confident that the LEs used by [LPHI] are correct and 99% confident they are still too short.

Based on this analysis, again, Rubin concluded that LPHI’s LEs for life settlements were materially and systematically short. In his deposition, Rubin indicated that his analysis was “governed by the Actuarial Standards Board” (ASB).

The appellants challenge the district court’s admission of Rubin’s expert testimony, arguing that it was both unreliable and irrelevant. “A trial judge has wide latitude in determining the admissibility of expert testimony ... and his or her decision will not be disturbed on appeal unless ‘manifestly erroneous.’ ” Whitehouse Hotel Ltd. P’ship v. C.I.R., 615 F.3d 321, 330 (5th Cir. 2010) (alterations and some internal quotation marks omitted) (quoting Watkins v. Telsmith, Inc., 121 F.3d 984, 988 (5th Cir. 1997)). “‘Manifest error’ is one that ‘is plain and indisputable, and that amounts to a complete disregard of the controlling law.’” Guy v. Crown Equip. Corp., 394 F.3d 320, 325 (5th Cir. 2004) (quoting Venegas-Hernandez v. Sonolux Records, 370 F.3d 183, 195 (1st Cir. 2004)).

Expert testimony is admissible only “if it is both relevant and reliable.” Pipitone v. Biomatrix, Inc., 288 F.3d 239, 244 (5th Cir. 2002) (citing Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993)). The reliability prong requires that an expert opinion “be grounded in the methods and procedures of science.” Johnson v. Arkema, Inc., 685 F.3d 452, 459 (5th Cir. 2012) (internal quotation marks omitted) (quoting Curtis v. M&S Petroleum, Inc., 174 F.3d 661, 668 (5th Cir. 1999)). “This requires some objective, independent validation of the expert’s methodology.” Moore v. Ashland Chem. Inc., 151 F.3d 269, 276 (5th Cir. 1998) (en banc) (citing Daubert v. Merrell Dow Pharmaceuticals, Inc., 43 F.3d 1311, 1316 (9th Cir. 1995) (on remand)). “The relevance prong requires the proponent to demonstrate that the expert’s ‘reasoning or methodology can be properly applied to the facts in issue.’ ” United States v. Kuhrt, 788 F.3d 403, 420 (5th Cir. 2015) (quoting Curtis, 174 F.3d at 668).

The appellants advance two basic arguments attacking the reliability of Rubin’s expert opinion. First, they argue that his opinion — particularly his A/E analysis — was not based on recognized methodologies that “had been tested, subjected to peer review and publication, or generally accepted by the life settlement provider industry.” Second, the appellants argue that Rubin’s analysis relies on data from both viatical and life settlements, thereby “skew[ing] the results in ‘favor’ of the viatical policies that went long,” and preventing him from offering a reliable evaluation of life-settlement LEs alone.

As to the recognition of Rubin’s methodology, the lack of scientific consensus or peer review does not necessarily render expert testimony unreliable. Pipitone, 288 F.3d at 246. In Daubert, on remand from the Supreme Court, the Ninth Circuit held that an expert may satisfy the reliability prong by:

explaining] precisely how they went about reaching their conclusions and point to some objective source — a learned treatise, the policy statement of a professional association, a published article in a reputable scientific journal or the like — to show that they have followed the scientific method, as it is practiced by (at least) a recognized minority of scientists in their field.

43 F.3d at 1319.

Here, Rubin’s report explains his different analyses in detail, and he has indicated that his analysis was governed by the ASB. The record includes an ASB document, a May 2013 “Exposure Draft” of a document titled, “Proposed Actuarial Standard of Practice: Life Settlements Mortality.”- This proposed standard of practice was subsequently adopted by the ASB with a few changes. See Actuarial Standards Bd., Actuarial Standard op Practice No. 48: Life Settlements Mortality (“ASOP 48”), at iv-v, available at http:// goo.g]/i63ygl. Rubin’s A/E analysis appears consistent with the recommendations contained in ASOP 48.

The appellants point to the ASB’s May 2013 Exposure Draft, not to point out any discrepancies between Rubin’s analyses and the ASB’s then-proposed standard of practice, but to' support their proposition that there were “no specific guidelines or practices for calculating A/E results in the life settlement industry.” The appellants fail to recognize, however, that the ASB created the standard of practice for the purpose of “provid[ing] guidance to actuaries ... evaluating mortality experience associated with life settlements.” ASOP 48, at 1. This document is the kind of objective source referenced in Daubert, and it offers the opportunity to evaluate Rubin’s analy-ses against a benchmark of an objective body’s guidelines. See 43 F.3d at 1319.

Next, as to the appellants’ argument that Rubin’s analysis did not isolate the data relating to life settlements, Rubin clearly distinguishes between life settlements and viaticáis in a number of places in his report and testimony. Rubin’s report shows an analysis of A/E performance ratios and calibrated life expectancies for life settlements only. At trial, he also testified regarding the A/E ratio for life settlements only, as well as the average LPHI LE for life settlements. The appellants’ challenge to Rubin’s opinion as to LPHI’s LEs for life settlements is therefore unfounded.

Accordingly, we find that the district court did not abuse its discretion in finding Rubin’s opinion sufficiently reliable to be admitted. To the extent the appellants wish to dispute Rubin’s conclusions, they had ample opportunity to cross-examine Rubin at trial and to introduce contrary evidence. See Daubert, 509 U.S. at 596, 113 S.Ct. 2786 (‘Vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.”).

Turning to the relevance prong, the appellants argue that Rubin’s expert opinion was irrelevant because he conducted a “hindsight, results-oriented analysis” without examining Cassidy’s methodology. Citing Turnbow v. Life Partners, Inc., 2013 WL 3479884, 2013 U.S. Dist. LEXIS 97275 (N.D. Tex. July 9, 2013), the appellants argue that Rubin’s analyses were not probative of the reasonableness of Cassi-dy’s LEs and were therefore not relevant to the issues presented in this case. The SEC responds that Rubin’s opinion is relevant to the issues involved in this case: whether LPHI’s LEs were materially and systematically short and whether LPHI, Pardo, and Peden knew that they were so. The SEC argues that Turnbow is inappo-site because the relevant issue there was whether LPHI “breached its fiduciary and/or contractual duties by using estimates produced by Dr. Cassidy,” and answering that question “require[d] an examination of the reasonableness of Dr. Cassidy’s methods, not an ex post facto analysis of the accuracy of Dr. Cassidy’s results.” at *6, 2013 U.S. Dist. LEXIS 97275, at *23. We agree with the SEC on these points: the SEC’s theory of the case at trial was that LPHI misrepresented the known fact that its LEs were short as an unmaterialized contingent risk. Whether Cassidy’s methodology was “reasonable” at the time is peripheral under this theory. Rubin’s opinion was certainly probative of the SEC’s allegations that the LEs were materially short, which is at the heart of this ease. Thus, we find no abuse of discretion in the district court’s determination that Rubin’s opinion was relevant, and, overall, we find no abuse of discretion in the admission of Rubin’s opinion.

2

The appellants argue that there was insufficient evidence to support the jury’s verdict that LPHI violated the reporting requirements of section 13(a) of the Securities Exchange Act and that Pardo and Peden aided and abetted such violation. The appellants therefore challenge the district court’s denial of judgment as a matter of law as to this claim.

We review a district court’s denial of a judgment as a matter of law de novo, applying the same standard the district court applied. MM Steel, L.P. v. JSW Steel (USA) Inc., 806 F.3d 835, 843 (5th Cir. 2015). Courts may grant judgments as a matter of law only if the “facts and inferences point ‘so strongly and overwhelmingly in the movant’s favor that reasonable jurors could not reach a contrary conclusion.’” Id. (quoting EEOC v. Boh Bros. Constr. Co., 731 F.3d 444, 451 (5th Cir. 2013)). We can reverse a denial of judgment as a matter of law only if “the jury’s factual findings are not supported by substantial evidence or if the legal conclusions implied from the jury’s verdict cannot in law be supported by those findings.” Am. Home Assurance Co. v. United Space All, LLC, 378 F.3d 482, 486-87 (5th Cir. 2004). “Substantial evidence is something more than ‘a scintilla of evidence.’ ” MM Steel, 806 F.3d at 843 (Hunnicutt v. Wright, 986 F.2d 119, 122 (5th Cir. 1993)).

Section 13(a) and Rules 13a-l and 13a-13 require issuers of registered securities to file with the SEC annual reports on Form 10-K and quarterly reports on Form 10-Q. 15 U.S.C. § 78m(a); 17 C.F.R. §§ 240.13a-1, 240.13a-13. Rule 12b-20 requires the issuer to disclose any material information as may be necessary to ensure that the reports are not misleading. 17 C.F.R. § 240.12b-20. Here, the SEC alleged that, from January 2007 through November 2011, LPHI and the appellants “misrepresented, failed to disclose, and/or made misleading omissions” in public filing with the SEC “regarding: (i) a material risk to the Company’s business, (ii) a material trend impacting the Company’s revenues, and (iii) the Company’s revenue recognition policies.” Specifically, as noted above, the SEC’s primary theory at trial was that LPHI misrepresented the allegedly known fact that its LEs were short as an unmaterialized contingent risk.

Section 20(e) of the Securities Exchange Act permits the SEC to bring an action against “any person that knowingly provides substantial assistance” to a primary violator of the securities laws. 15 U.S.C. § 78t(e) (2006). To prove a violation of this section, the SEC must prove: (1) a primary violation of the securities laws; (2) that the aider and abettor had knowledge of this violation and of his or her role in furthering it; and (3) that the aider and abettor knowingly provided substantial assistance in the commission of the primary violation. See Abbott v. Equity Group, Inc., 2 F.3d 613, 621 (5th Cir. 1993); see also SEC v. Goble, 682 F.3d 934, 947 (11th Cir. 2012); SEC v. Shanahan, 646 F.3d 536, 547 (8th Cir. 2011); SEC v. DiBella, 587 F.3d 553, 566 (2d Cir. 2009).

The appellants attack the jury’s findings as to the first two elements, i.e., that LPHI violated section 13(a) and the SEC’s rules thereunder by misrepresenting the risk that its LEs were short and that the appellants knew of this misrepresentation. First, as to the finding of a primary violation by LPHI, the appellants argue that the SEC provided no competent evidence to establish that LPHI’s LEs were short. And, the appellants contend, even if LPHI’s LEs were short, this does not establish a misrepresentation. To establish a misrepresentation, they imply, the SEC had to prove that underestimated LEs actually harmed LPHI’s business. The appellants also claim that there was no misrepresentation because LPHI priced its policies to remain profitable even if the insured lived several years beyond his or her LE.

These arguments are meritless. Rubin’s testimony that LPHI’s LEs were systematically and materially short was plainly sufficient for the jury to conclude that this was the case. Moreover, in order to show that LPHI misrepresented a material risk to its business, as the SEC alleged, the SEC need not show that the relevant risk was actually realized. See SEC v. Recile, 10 F.3d 1093,1098 n.16 (5th Cir. 1993) (“Materiality is defined as what a reasonable investor would consider important in making his investment decision.”); SEC v. Blavin, 760 F.2d 706, 711 (6th Cir. 1985) (“[T]he Commission is not required to prove that ... the misrepresentations caused any investor to lose money.”). Further, that LPHI’s policies remained profitable even when the insured lived past LE is irrelevant: when a policy exceeded LE, purchasers were required to pay additional premiums to maintain the policy and therefore received a lower rate of return; and LPHI recognized in its filings with the SEC that underestimation of LEs posed a risk to its business.

Second, the appellants argue that they had no knowledge of any violation of section 13(a) by LPHI because they did not know during the relevant time that the LEs LPHI used to facilitate its life settlements were short. However, the record contains sufficient evidence to allow a reasonable fact finder to conclude that the appellants knew that LPHI’s LEs were short.

Initially, there is evidence in the record tending to show that the appellants knew that the LEs LPHI used in life settlement policies were short. In August 2008, Mark Embry, the company’s chief information officer, conducted an analysis of life settlement transactions completed by LPHI in 2004. Embry’s analysis showed that out of thirty-seven policies sold in 2004, none had matured and twenty-one would exceed their LEs by the end of 2008. Embry reported his findings to the appellants, noting that he does not “see any trends or anomalies that indicate 2004 as an off year.” Pardo replied, “Mark, this information is highly confidential and should not be distributed to anyone beyond those copied.” According to Embry’s testimony, Pardo did not discuss the email or report with him further. The appellants argue that Pardo’s response to Embry indicated his concern that the data was not reliable; however, the jury was entitled to discredit this contention and conclude that Pardo was aware that LPHI’s life-settlement LEs were short but wished to conceal this information from the public.

Moreover, this direct evidence of the appellants’ knowledge of short life-settlement LEs is fortified by additional indirect evidence from which the jury could reasonably infer such knowledge. For instance, the record suggests the appellants had actual knowledge that the LEs LPHI used in viatical policies were short. In 2003, LPHI’s audit committee expressed concern over “the small number of policies paying off during” the previous nine months and recommended that the board discuss with management the possibility of “obtaining an independent review” of LPHI’s “underwriting criteria.” Further, in May 2007, the Colorado Securities Commissioner initiated an enforcement action against LPI, alleging that viatical insureds outlived its LEs at a “high frequency rate.” Lastly, Nina Piper, the company’s chief financial officer, testified that she offered to “grade” Cassidy but Pardo told her not to do it. Nevertheless, in November 2007,.on her own initiative and against Pardo’s prior instruction, Piper conducted an analysis of all life insurance policies facilitated by LPHI from January 2002 through November 2007. According to Piper, her analysis showed that only two percent of the insureds died within Cassidy’s LEs. She testified that she informed the appellants of her findings; Pardo turned away and appeared angry, and Peden later told her that they have “fixed the problem” by moving the company from viaticáis to life settlements. Though it may be plausible that the appellants believed that the problem with Cassidy’s LEs was isolated to viaticáis, the jury reasonably could have inferred that the appellants knew that Cassidy’s LEs were simply not reliable.

Moreover, record evidence suggests that LPHI and the appellants could easily have learned that LPHI’s life-settlement LEs were short if they had assessed Cassidy’s LEs for accuracy, but there is evidence suggesting that they consciously chose not to do so despite having concerns. The record shows that LPHI used a proprietary system called “LifeApps,” which stored all the information regarding its life insurance policies, including Cassidy’s LEs and the date of maturity, if and when available. LifeApps allowed LPHI to generate reports on the maturities of policies relative to LEs. And, as evidenced by his August 2008 analysis, Embry actually generated such reports using LifeApps. According to Rubin, the SEC’s expert witness, in 2008, a simple analysis of LPHI’s data would have made it “crystal clear they have a problem.” As mentioned above, Piper testified that she offered to “grade” Cassidy but Pardo told her not to do so. Although one of the defendants’ attorneys suggested, in cross-examining Piper, that Pardo simply thought Piper had “more important things to do,” the jury could have reasonably inferred that Pardo wished to avoid assessments of Cassidy’s LEs because he knew that such assessments would not be favorable.

Around November 2008, Peden became aware that several companies that provided actuarial LEs lengthened their LEs after concluding that their current calculations were producing short LEs. That month, Peden emailed himself a reminder to “call [Cjassidy on accuracy.” But Peden never called Cassidy to discuss whether the changes other LE providers have made affected his LEs in any way. Nevertheless, when an investment advisor asked Pedén if the changes another LE provider made to its methodology affected LPHI, Peden replied that these change had no effect on LPHI “because our medical consultant uses a different methodology.” From these facts, too, the jury reasonably could have inferred that the appellants consciously chose not to evaluate Cassidy’s LEs, even though they had concerns regarding their accuracy.

Overall, there is more than a scintilla of evidence in the record that LPHI and the appellants knew that LPHI’s life-settlement LEs were materially short. Coupled with the evidence that those LEs were, in fact, systematically and materially short, and that LPHI misrepresented this known fact as a mere potential risk, the evidence is sufficient to support the jury verdict that the appellants aided and abetted LPHI’s violation of section 13(a) and Rules thereunder. Accordingly, we affirm the district court’s refusal to set aside the jury verdict on this issue.

B

We now turn to consider the appellants’ appeal of the district court’s judgment. They challenge the court’s (1) imposition of second-tier civil penalties, (2) calculation of the number of violations to which they were held responsible, and (3) issuance of injunctions against them. We discuss each of these challenges in turn.

1

We review the district court’s imposition of civil penalties for an abuse of discretion. SEC v. United Energy Partners, Inc., 88 Fed.Appx. 744, 747 (5th Cir. 2004) (citing R&W Tech. Serv. Ltd. v. CFTC, 205 F.3d 165, 177 (5th Cir. 2000)). The Securities Exchange Act provides a three-tiered, escalating structure for assessing civil penalties. See 15 U.S.C. § 78u(d). As relevant here, first-tier penalties for natural persons are capped at either $6,500 or $7,500 for each violation, depending on the date of the relevant violation. See 15 U.S.C. § 78u(d)(3)(B)(i); 17 C.F.R. §§ 201.1003-04. Also as relevant here, second-tier penalties have a much higher cap, of $65,000 or § 75,000, depending on the date of the violations. See 15 U.S.C. § 78u(d)(3)(B)(ii); 17 C.F.R. §§ 201.1003-04. Second-tier penalties may only be imposed for violations that involve “fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.” 15 U.S.C. § 78u(d)(3)(B)(ii). The third tier is not implicated in this case.

Based upon the jury’s verdict on the appellants’ aiding and abetting of LPHI’s violation of section 13(a) and rules thereunder, the district court assessed second-tier civil penalties of $6,161,843 against Pardo and $2,000,000 against Peden, finding that their conduct was, at the very least, reckless. The appellants argue that the district court erred in imposing second-tier penalties because the jury verdict did not establish any “fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement” on their part, as the statute requires. 15 U.S.C. § 78u(d)(3)(B)(ii). They insist that, pursuant to the Seventh Amendment, only the jury can find the predicate facts for the imposition of second-tier violations. Citing Tull v. United States, 481 U.S. 412, 107 S.Ct. 1831, 95 L.Ed.2d 365 (1987), the SEC argues in response that a jury need only determine the defendant’s liability and that the actual amount of civil penalties is left to the discretion of the district court.

In Tull, the Supreme Court held that the Seventh Amendment grants a right to a jury trial on liability for civil penalties under the Clean Water Act, 33 U.S.C. §§ 1251, 1319(d), Tull, 481 U.S. at 425, 107 S.Ct. 1831, but determined that Congress could constitutionally authorize judges to assess the amount of civil penalties, see Tull, 481 U.S. at 426-27, 107 S.Ct. 1831. Courts of appeals have since applied Tull in the context of civil penalties under the Securities Exchange Act as well. See SEC v. Capital Sols. Monthly Income Fund, LP, 818 F.3d 346, 354-55 (8th Cir. 2016) (defendant in securities action was entitled to a jury trial on liability but not on the amount of civil penalties); SEC v. Lipson, 278 F.3d 656, 662 (7th Cir. 2002) (same). At the remedies stage, trial judges may make factual findings and rely on such findings in assessing the amount of civil penalties so long as the court’s findings do not conflict with the jury’s findings as to liability. See Capital Sols. Monthly Income Fund, 818 F.Sd at 354-55 (affirming civil penalties judgment because the defendant “has not shown how the district court’s factual findings conflict with the jury’s findings”); Lipson, 278 F.3d at at 662 (“[I]t was for the judge to decide, consistent with the jury’s finding of liability, ... the amount of the civil penalty.”).

The appellants claim that the district court’s finding that their conduct was reckless conflicts with the jury’s finding that they were not liable for section 10(b) violations. Rather than conflict with the jury’s verdict, however, the district court’s finding of recklessness was required by it. As we noted above, to find that the appellants aided and abetted LPHI’s violations of section 13(a), the jury had to find that they had knowledge of LPHI’s violation and of their role in furthering it. See Abbott v. Equity Group, Inc., 2 F.3d 613, 621 (5th Cir. 1993). And, as previously explained, the SEC’s theory at trial was that LPHI violated section 13(a) by misrepresenting the known fact that its LEs were short as a contingent risk. The appellants were LPHI’s top officers and the ones who created, signed, and certified filings containing the relevant misrepresentations. If the appellants had knowledge of LPHI’s violations and of their role in furthering them, as the jury found, they also necessarily exhibited “deliberate or reckless disregard of a regulatory requirement.” 15 U.S.C. § 78u(d)(3)(B)(ii). Accordingly, we affirm the district court’s imposition of second-tier penalties.

2

In assessing the amount of civil penalties, the district court determined that Pardo was responsible for sixty-eight individual violations and that Peden was responsible for eighty-five violations. The district court reached these numbers by multiplying the number of statutory and regulatory provisions the appellants had violated by the number of LPHI’s false filings with the SEC.

The appellants raise multiple challenges to the district court’s calculations. First, they argue that the jury verdict does not establish that it found more than a single violation in a single public filing. The appellants highlight that the jury was only asked to decide whether LPHI (and therefore the appellants) committed “one or more violations of section 13(a).” Thus, they contend that the district court could only have imposed penalties for a single violation.

As we have explained in discussing the district court’s imposition of second-tier penalties, the appellants had no Seventh Amendment right to a jury trial at the remedies stage of this securities action, and the court acted within its power to make factual findings not in conflict with the jury’s verdict. See Tull, 481 U.S. at 425, 107 S.Ct. 1831; Capital Sols. Monthly Income Fund, 818 F.3d at 354-55; Lipson, 278 F.3d at 662. Thus, the jury’s verdict, which established at least one violation of section 13(a) by the defendants, did not preclude a finding of multiple violations by the district court.

Next, the appellants contend that the district court abused its discretion in calculating the total number of violations for which each appellant was responsible by multiplying the number of false filings with the SEC by the number of statutes and rules those filings violated. They claim that section 13(a) and the relevant rules thereunder cannot give rise to “discrete” violations because they are interdependent.

However, the appellants did not properly object to this calculation below. In response to the SEC’s contention below that Pardo and Peden were responsible for eighty-five and sixty-eight violations, respectively, the appellants argued, “In essence, ... there is only one primary violation: the failure to disclose information in SEC reports. At most, then, Defendants could be charged with no more than 17 violations.” This somewhat opaque objection to the application of the SEC’s suggested calculation in the appellants’ case was not sufficient to put the district court on notice of the appellants’ broader claim on appeal that the district court’s methodology was legally erroneous as a general matter. See United States v. Vontsteen, 950 F.2d 1086, 1091 (5th Cir. 1992) (holding that general plea for leniency was not sufficient to put the district court on notice of the defendant’s particular claim on appeal).

We review unpreserved challenges in civil cases for plain error. E.g., Crawford v. Falcon Drilling Co., 131 F.3d 1120, 1123 (5th Cir. 1997). To satisfy the plain-error standard, the appellants must show that (1) there was error; (2) the error was clear and obvious; (3) the error affected their substantial rights; and (4) the error seriously affects the fairness, integrity, or public reputation of judicial proceedings. See Puckett v. United States, 556 U.S. 129, 135, 129 S.Ct. 1423, 173 L.Ed.2d 266 (2009). Only if those four prongs are satisfied does this court have discretion to remedy the error. See id. We find no occasion to exercise such discretion in this case, as any error in the district court’s use of the challenged methodology was not plain.

The relevant civil-penalty provision of the Securities Exchange Act provides maximum penalty amounts “for each violation,” 15 U.S.C. § 78u(d)(3)(B), but the term “violation” is not defined in the statute. Neither below nor on appeal have the appellants pointed to any authority that stands for their position that section 13(a) and the SEC Rules thereunder cannot establish discrete violations under § 78u. The appellants therefore have not met their burden to establish a plain error. See United States v. Jackson, 549 F.3d 963, 978 (5th Cir. 2008) (a question of first impression cannot form the basis for plain error); United States v. Hull, 160 F.3d 265, 272 (5th Cir. 1998) (no plain error where proponent’s theory requires extension of precedent).

Nevertheless, the SEC concedes that section 13(a) cannot serve as the basis for an independent violation in this case. It also concedes that the district court’s calculation was flawed because it included purported violations of Rule 13a-l, which pertains to Form 10-Ks, in connection with Form 10-Qs and purported violations of Rule 13a-13, which pertains to Form 10-Qs, in connection with Form 10-Ks. In light of these concessions by the SEC, we vacate the district court’s assessment of civil penalties against the appellants. We remand the case specifically for recalculation of the number of violations without the flaws conceded by the SEC and for reassessment of the amounts of civil penalties imposed on the appellants.

3

As part of its judgment, the district court granted injunctive relief, enjoining the appellants from future violations of section 13(a) and from aiding and abetting such violations through certain specified conduct. The appellants challenge these injunctions, arguing that there was no evi-dentiary basis to support the need for them and that they are impermissibly broad.

We review the grant of a permanent injunction for abuse of discretion. SEC v. Gann, 565 F.3d 932, 939 (5th Cir. 2009). A permanent injunction is appropriate only if a “defendant’s past conduct gives rise to an inference that, in light of present circumstances, there is a ‘ “reasonable likelihood” of future transgressions.’ ” Id. at 940 (quoting SEC v. Zale Corp., 650 F.2d 718, 720 (5th Cir. 1981)). In deciding this issue, the court must consider “the (1) egregiousness of the defendant’s conduct, (2) isolated or recurrent nature of the violation, (3) degree of scienter, (4) sincerity of [the] defendant’s recognition of his transgression, and (5) likelihood of the defendant’s job providing opportunities for future violations.” Id. Applying these factors, the district court determined that the appellants’ conduct was egregious, constituted a knowing or reckless violation of the securities laws, and was recurrent in that the appellants caused LPHI to file multiple misleading reports. The court also recounted evidence that indicated the appellants’ indifference to proceedings against them, in that they had taken no steps to correct obvious deficiencies in the management of LPHI even after the trial.

The appellants argue that the SEC presented no evidence establishing a reasonable likelihood of future violations, noting that LPHI began using two sets of LEs in March 2011 and that the SEC failed to prevail on the vast majority of its claims below. The appellants’ arguments regarding this issue are meritless. The cessation of the violations does not preclude a finding of reasonable likelihood of future violations, as it does not establish a lack of opportunities for future violations. Gann, 565 F.3d at 940. And the appellants do not even address the district court’s determinations regarding scienter, the recurrent nature of their violations, and their lack of remorse. Accordingly, the district court did' not abuse its discretion in concluding that there was a reasonable likelihood of future violations by the appellants.

As to the substance of the injunctions, the appellants argue that they are impermissible, overly broad, “obey-the-law” injunctions. Federal Rule of Civil Procedure 65(d)(1) provides, “Every order granting an injunction ... must set the reasons why it was issued; state its terms specifically; and describe in reasonable detail ... the act or acts sought to be restrained or required.” Rule 65(d) therefore prohibits “general injunction[s] which in essence order[] a defendant to obey the law.” Meyer v. Brown & Root Constr. Co., 661 F.2d 369, 373 (5th Cir. 1981).

The appellants make no attempt to address the language of the district court’s injunctions and explain, in light of relevant authority, why this language is overly broad. Accordingly, they have forfeited their argument in this respect. See, e.g., L & A Contracting Co. v. S. Concrete Servs., Inc., 17 F.3d 106, 113 (5th Cir. 1994) (deeming a party’s challenge abandoned for inadequate briefing). At any rate, the district court’s injunction is not overly broad. “[I]njunctions are problematic when they order a defendant to obey the law but do not simultaneously indicate what law the defendant needs to obey.” In re Rodriguez, 695 F.3d 360, 369 (5th Cir. 2012) (citing Meyer, 661 F.2d at 373). They are not problematic when they order a defendant to obey a specific law. See id. (citing Meyer, 661 F.2d at 373). The district court’s injunctions in this case ordered the appellants to obey section 13(a) by refraining from specified conduct. Accordingly, we affirm the district court’s injunctions.

Ill

We now reach the SEC’s cross-appeal, which challenges the district court’s setting aside of the jury’s verdict as to section 17(a) as well as the court’s refusal to order Pardo to make SOX reimbursements.

A

As part of its allegations at trial, the SEC claimed that the appellants violated section 17(a) of the Securities Act. The SEC specifically alleged that, in public filings with the SEC in January and February of 2007, the appellants “misrepresented, failed to disclose, and/or made misleading omissions regarding [LPHI’s] revenue recognition policy.” Following trial, the jury found that LPHI and the appellants violated section 17(a). Ultimately, however, the district court granted the appellants’ post-judgment motion for judgment as a matter of law as to this claim and set aside the verdict, finding that there was not “a single piece of evidence that supported] the jury’s conclusion that [the appellants] violated Section 17 in January and February of 2007 by misleading investors about LPHI’s revenue recognition practices.” The SEC moved for reconsideration, pointing to a January 2007 quarterly report and asserting that this public filing was sufficient to sustain the jury’s section 17(a) verdict, but the district court denied the motion.

We review the district court’s grant of judgment as a matter of law de novo, applying the same legal standards as the district court. Hurst v. Lee Cty., Miss., 764 F.3d 480, 483 (5th Cir. 2014). As previously explained, courts may grant judgments as a matter of law only if the “facts and inferences point ‘so strongly and overwhelmingly in the movant’s favor that reasonable jurors could not reach a contrary conclusion.’ ” MM Steel, L.P. v. JSW Steel (USA) Inc., 806 F.3d 835, 843 (5th Cir. 2015) (quoting EEOC v. Boh Bros. Constr. Co., 731 F.3d 444, 451 (5th Cir. 2013)). Judgment as a matter of law is appropriate where “the jury’s factual findings are not supported by substantial evidence,” Am. Home Assurance Co. v. United Space All., LLC, 378 F.3d 482, 486-87 (5th Cir. 2004), which means “something more than ‘a scintilla of evidence,’ ” MM Steel, 806 F.3d at 843 (quoting Hunnicutt v. Wright, 986 F.2d 119, 122 (5th Cir. 1993)). In reviewing the district court’s grant of judgment as a matter of law, we consider all of the evidence in the light most favorable to the SEC, the non-movant, drawing all factual inferences in its favor. Meadows v. SEC, 119 F.3d 1219, 1226 (5th Cir. 1997).

Section 17(a) provides in pertinent part:

It shall be unlawful for any person in the offer or sale of any securities ...
(1) to employ any device, scheme, or artifice to defraud, or
(2) to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made ... not misleading, or
(3) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.

15 U.S.C. § 77q(a). Liability under section 17(a)(1) “attaches only upon a showing of severe recklessness.” Meadows, 119 F.3d at 1226. However, a showing of negligence is sufficient to establish liability under sections 17(a)(2) and 17(a)(3). Id. at 1226 n.15.

On appeal, the SEC reurges that the January 2007 quarterly report was sufficient to support the jury’s verdict. This quarterly report incorporated LPHI’s annual report for the prior fiscal year and advised that the quarterly report “should be read in conjunction with the financial statements and the summary of significant accounting policies and notes” in the annual report. The SEC argues that this quarterly report included the same kind of misleading information (or suffered from the same kind of misleading omissions) as the other filings from 2007 through 2011 that formed the basis for the jury’s section 13(a) verdict.

The appellants attempt to distinguish the January 2007 filing from the other filings that supported the section 13(a) verdict based on its timing and the implication for the appellants’ knowledge. According to the appellants, even assuming that they knew that LPHI’s LEs were short in November 2011, for instance, they may not have known that this was the case in January 2007.

However, as the appellants themselves stressed at oral argument, unlike liability under section 17(a)(1), liability under section 17(a)(2) or 17(a)(3) does not require proof of scienter. Thus, the jury properly could have found that the appellants committed violations of section 17(a)(2) or 17(a)(3). Consequently, we conclude that that the jury’s verdict is supported by substantial evidence. The record shows: well before 2007, the appellants knew that they had a problem with viatical LEs; LPHI had the ability to easily assess the accuracy of its LEs; Piper offered to “grade” Cassidy’s LEs, but Pardo instructed her not to do so; and Rubin testified that by 2007 it was “becoming clear” that LPHI had a problem with its life-settlement LEs. This is more than a scintilla of evidence that the appellants negligently misrepresented the risk of underestimated LEs in its January 2007 quarterly report, which incorporated LPHI’s prior annual report.

The appellants advance no other basis to set aside the jury’s section 17(a) verdict. Accordingly, the jury’s verdict must stand. We therefore reverse the district court’s grant of judgment as a matter of law as to section 17(a) and remand for determination of appropriate remedies.

B

In 2011, LPHI restated its financial statements for fiscal years 2009 and 2010 because its prior quarterly and annual reports did not comply with generally accepted accounting principles (GAAP). The restatement explained that LPHI’s Board of Directors, Audit Committee, and management concluded that LPHI needed to restate its consolidated financial statements for 2009, 2010, and the first three quarters of 2011, to properly state, inter alia, investment in policies, which “had been incorrectly accounted for under [GAAP].” Investment in policies refers to the value of life insurance policies in LPHI’s own investment portfolio. LPHI further stated that its restatement of its consolidated financial reports was related, in part, to “impairment expense for owned policies.” Further explaining the adjustments for impairment expense, the restatement reported:

We improved the method by which we calculate impairment on Investment in Policies. Impaired value is based on estimates of life expectancy and the effect of that determination on future premiums and the date of expected receipt of proceeds from policy maturities. We improved our methodology for estimating life expectancies by adding more actuarial data, and our application of the improved methodology generally increased life expectancies for the policies we held for investment.

The restatement also contains an explanation of a disagreement between LPHI and Ernst & Young, its auditor, regarding LPHI’s revenue recognition policy. The restatement indicates that LPHI accepted Ernst & Young’s new position and applied the new revenue recognition policy both prospectively and in restating its prior financial statements.

Section 304(a) of SOX provides that “[i]f an issuer is required to prepare an accounting restatement due to the material noncompliance of the issuer, as a result of misconduct, with any financial reporting requirement under the securities laws, the chief executive officer ... shall reimburse the issuer” for certain types of compensation and trading profits. 15 U.S.C. § 7243(a). The SEC asked the district court to order Pardo to reimburse LPHI $13,340,371 because the company issued accounting restatements due to material noncompliance with securities regulations. The SEC maintained that this material noncompliance was the result of misconduct, namely, the prior knowing use of understated LEs in calculating the impairment value of life settlements owned by LPHI. The district court declined to order reimbursement under SOX, concluding that the evidence did not establish that LPHI’s noncompliance with financial reporting requirements was caused by misconduct rather than by good faith reliance on its auditor. The SEC moved for reconsideration, but the district court denied the motion. On appeal, the SEC challenges the district court’s determination that LPHI’s noncompliance was not necessarily caused by misconduct.

Causation is a question of fact this court reviews for clear error. Urbach v. United States, 869 F.2d 829, 831 (5th Cir. 1989). A district court’s findings are clearly erroneous when they are not plausible in light of the record as a whole or when this court is “left with the definite and firm conviction that a mistake has been made.” Chemtech Royalty Assocs., L.P. v. United States, 766 F.3d 453, 460 (5th Cir. 2014) (internal quotation marks omitted) (quoting Streber v. Comm’r of Internal Revenue, 138 F.3d 216, 219 (5th Cir. 1998)).

The SEC argues that LPHI’s use of Cassidy’s materially short LEs caused defects that made its financial statement GAAP noncompliant. Specifically, it claims that LPHI’s knowing use of materially short LEs to prepare its financial statements led to its reporting inaccurate results for its investment in policies and impairment of investments in policies. LEs affected the purchase price and the amount of premiums that had to be paid to keep policies from lapsing, therefore factoring into the initial value of the policies. LEs also factored into the determination of impairment because when an insured significantly exceeds LE, policy costs and projected future premiums exceed the estimated maturity value. The SEC points out that LPHI’s “improved methodology” for calculating LEs had a dramatic effect on its impairment charges, increasing them from $151,810 to $2,255,698 in 2009 and from $281,882 to $2,139,183 in 2010. Thus, the SEC argues, LPHI’s knowing use of materially short LEs caused its noncompliance with financial reporting requirements, leading to its obligation to issue a restatement. That LPHI may have been required to restate its revenues due to its auditor’s change of position, the SEC contends, does not mean that LPHI was not also required to issue the restatements as a result of its prior use of materially short LES, which resulted in GAAP noncompliant statements.

In response, the appellants point primarily to LPHI’s accession to Ernst & Young’s position regarding revenue recognition policies, asserting that this was the cause for the restatement and thus that the district court did not err in concluding that the restatement resulted from good faith reliance on LPHI’s auditor. As to the SEC’s argument that LPHI’s use of short LEs also required the restatement, the appellants posit that LPHI’s adoption of improved LE methodologies and the use of updated LEs for determining asset impairment were not related to any issue with Cassidy’s LEs. The appellants do not dispute the SEC’s argument that the use of short LEs rendered the relevant financial reports GAAP noncompliant.

We agree with the SEC that LPHI’s restatements were not required solely because of its good-faith reliance on LPHI’s auditor. LPHI’s knowing use of materially underestimated LEs rendered its financial statements noncompliant and thus also required a restatement. As the language of the statute makes clear, it is not the actual issuance of a restatement that must be caused by misconduct; rather, it is the requirement of a restatement that must be “due to the material noncompliance of the issuer, as a result of misconduct,” with financial reporting requirements. 15 U.S.C. § 7243(a). LPHI’s actual motivation in issuing the restatement is therefore of no moment.

At any rate, LPHI actually issued a restatement using “improved” methodologies to test for impairments, and this restatement explicitly tied these new methodologies to the changed calculations of impairment on investment in policies. The appellant’s contention that the use of new methodologies — after the SEC had launched its investigation into LPHI’s use of materially short LEs — had nothing to do with LPHI’s prior knowing use of materially short LEs is highly implausible in light of the record.

Based on the foregoing, we see no basis in the record on which the district court could conclude that the restatements were not required by LPHI’s misconduct in connection with its underestimated LEs; therefore, we conclude that the district court clearly erred in this respect. Accordingly, we reverse the district court’s judgment and remand for the court to determine the appropriate amount of SOX reimbursements.

IV

For the forgoing reasons, we AFFIRM the district court’s denial of judgment as a matter of law on the SEC’s section 13(a) claim; VACATE the district court’s civil penalties; AFFIRM the district court’s injunctions; REVERSE the district court’s grant of judgment as a matter of law on the SEC’s section 17(a)(1) claim; and REVERSE the district court’s denial of SOX reimbursements as to Pardo. We remand the case for the district court to reassess the amounts of civil penalties, determine appropriate SOX reimbursement amounts, and provide appropriate - remedy for the appellants’ section 17(a) violations consistent with this opinion.

      . LPI’s activity constituted LPHI's entire business activity. For purposes of this appeal, there is no meaningful difference between the two entities; therefore, this opinion refers to both entities as LPHI, unless otherwise noted.

      . A viatical settlement is the sale of an existing life insurance policy on the life of an individual with a terminal illness. A life settlement is the sale of an existing life insurance policy on the life of an individual who is at least sixty-five years old and has a life expectancy of ten years or less but does not have a terminal illness.

      . The defendants had moved to exclude Rubin’s testimony as unreliable and irrelevant, but the district court ultimately denied their motion.

      . In Daubert, the Supreme Court provided "an illustrative, but not an exhaustive, list of factors that courts may use in evaluating the reliability of expert testimony:'' (1) whether the theory or technique has been tested; (2) whether the theory or technique has been subjected to peer review; (3) the known or potential rate of error of the method used and the existence and maintenance of standards controlling the technique’s operation; and (4) whether the theory or method has been generally accepted by the scientific community. Pipitone, 288 F.3d at 244; see also Curtis v. M&S Petroleum, Inc., 174 F.3d 661, 669 (5th Cir. 1999).

      . As noted above, we have adopted the Ninth Circuit's requirement in Daubert of an objective, independent validation of the expert’s methodology. See Moore, 151 F.3d at 276 (citing Daubert, 43 F.3d at 1316).

      . We take judicial notice of the ASB’s adoption of ASOP 48. See United States v. Herrera-Ochoa, 245 F.3d 495, 501 (5th Cir. 2001) (an appellate court may take judicial notice of facts, even if such facts were not noticed by the trial court).

      . In its brief on appeal, the SEC also briefly argues that the jury could have concluded that LPHI violated section 13(a) by misrepresenting the source of its LEs in claiming that "to foster the integrity of LPHI’s pricing systems, [it used] both in-house and outside experts, including medical doctors and published actuarial data.” However, beyond a conclusory assertion, the SEC makes no argument and cites no authority to establish that any such misrepresentation would have been material. This argument is therefore forfeited. See, e.g., L & A Contracting Co. v. S. Concrete Servs., Inc., 17 F.3d 106, 113 (5th Cir. 1994) (deeming a party’s challenge abandoned for being inadequately briefed).

      . The Dodd-Frank Act of 2010 amended Section 20(e) to add the words "or recklessly” after "knowingly.” Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub.L. No. 111-203, 124 Stat. 1376, § 9290 (codified at 15 U.S.C. § 78t(e)). In this case, the jury was instructed on the pre-Dodd-Frank version.

      . Pardo testified that he had asked the company’s data department to check the data, -but the only evidence in the record that the data was rechecked is an analysis Embry conducted in 2013, which according to Embry showed that his original analysis was wrong. At trial, the SEC attempted to impeach Em-bry's 2013 analysis, arguing that the document containing the analysis was "misrepre-sentative,” but the district court disallowed the SEC’s questioning, ruling that the document containing the analysis "speaks for itself.” Regardless of the accuracy of Embry’s later analysis, however, the jury could have reasonably inferred that his August 2008 analysis alerted Pardo and Peden to problems with LPHI’s life-settlement LEs.

      . The Clean Water Act provided that violators of certain sections of the Act “shall be subject to a civil penalty not to exceed $10,000 per day” during the period of the violation. Tull, 481 U.S. at 414, 107 S.Ct. 1831.

      . The appellants make this argument notwithstanding the fact that they conceded in response to the SEC’s requested penalties, below, that the district court could find as many as seventeen violations.

      . Specifically, the district court’s order restrains the appellants from “filing forms with the Commission containing false statements of material fact or failing to include material information that is necessary to make the statements not misleading” and from "knowingly providing substantial assistance to an issuer that fails to file timely with the Commission all accurate and complete information, documents, and reports required by the rules and regulations prescribed by the Commission.”

      . Though the jury's verdict form refers specifically to section 17(a)(1), the appellants concede that this was a clerical error and that the jury's finding pertained to section 17(a) generally.

      . Securities Exchange Act Rules 13a-l and 13 a-13 require issuers to file quarterly and annual reports in prescribed forms, and the prescribed forms, in turn, require that LPHI’s reports include financial statements that comply with GAAP. See SEC v. Jasper, 678 F.3d 1116, 1120 (9th Cir. 2012) (Forms 10-Q and 10-K require financial statements "prepared in accordance with GAAP”); see also 17 C.F.R. § 210.4-01(a)(l) (GAAP noncompliant financial statements filed with the SEC are presumptively misleading unless the SEC provides otherwise).

      . LPHI began acquiring interests in life insurance policies for its own portfolio in 2005. By February 28, 2011, LPHI held interests in over 1,300 policies with an aggregate face value of over $32,000,000.

      . "Impairment is an accounting principle that describes a permanent reduction in the value of a company’s asset.... When testing for impairment, the total profit, cash flow or other benefit that’s expected to be generated by a specific asset is periodically compared with that same asset's book value. If it’s found that the book value of the asset exceeds the cash flow or benefit of the asset, the difference between the two is written off and the value of the asset declines on the company’s balance sheet.” Investopedia.com (Impairment), Investopedia Inc., available at http:// www.investopedia. com/terms/i/impairment, asp (last accessed April 21, 2017).

      . Starting in 2011, LPHI began using actuarial LEs purchased from a second provider, in addition to Cassidy’s LEs.

      . There is no dispute that the remaining elements of section 304(a) were satisfied in this case.