Standard of Review
At issue is how the Court reviews the decision
to deny or terminate benefits.
A de novo standard is good for the insured/employee/beneficiary.
A deferential standard is good for the insurance company or employer or plan.
- Varity v. Howe (US Supreme Court 1996)116 S. Ct. 1065 CT:USSC, DT:19960319 Reiterates an ERISA beneficiary's right to sue for Breach of Fiduciary Responsibility, but isn't a case involving LTD.
- Harte v. Bethlethem Steel Corp (98-2052 3rd Circuit 2/00) (Regarding ambiguities in plan provisions -- see also Contra Proferentem, reliance) A Fiduciary not only has a negative duty not to misrepresent material facts to Plan beneficiaries, but also a corresponding affirmative duty to speak when the trustee knows that silence might be harmful. The Fiduciary Duty ..."extends to those material facts known to the fiduciary but unknown to the beneficiary which the beneficiary must know for its own protection." The case is also excellent for stating that a Plaintiff may succeed on a claim under Section 502(a)(3) [Section 1132 (a)(3)] of ERISA "when he adduces evidence that (1) a plan provision is material; (2) it is susceptible of multiple reasonable interpretations; (3) the plaintiff relied on it to his detriment; and (4) the company did not timely notify the plaintiff of its interpretation.
- Kimber v. Thiokol Corp (10th Circuit, 11/99)(98-4106) This cases is NOT good for plaintiffs/insureds. However, it is very good for getting up to speed on "arbitrary and capricious" precedent. If you can successfully negotiate the obstacles thrown up by the 10th Circuit in this case, you'll have a real shot at closing with the enemy. Only then do you get a chance to destroy him.
(fresh look) Reviewed this case tonight, and noticed that something that was not addressed in the decision because it didn't apply was nonetheless in there. "...Second, deference is decreased when a plan administrator fails to gather or examine relevant evidence." Also,
"The Plan specifically permits the administrator to 'employ one or more persons to render advice with regard to any responsibility [the administrator] has under the Plan.' (Leading to the obvious question, what happens when it does not?) One more thing...
"...We now hold that when a plan administrator has discretion to interpret the plan and the standard of review is arbitrary and capricious, the doctrine of contra proferentem is inapplicable. (Cites Morton v. Smith, 91 F. 3d 867, 7th Circuit 1996.) (Contra Proferentem) "...is only used when courts undertake a de novo review of plan interpretations. (Exception: 5th Circuit's application of contra proferentem to ERISA cases involving insurance policies.)
Doctrine of reasonable expectations is inapplicable to the review of an ERISA disability benefits plan under the arbitrary and capricious standard. [Cites Hightsue (7th Cir) and Estate of Shockley (9th Cir).]
- Tremain v. Bell Industries (9th Circuit, 11/99) "Tremain contends the district court erred in applying the arbitrary and capricious standard to review MetLife's decision to terminate her long-term disability benefits. Tremain also contends the district court erred in refusing to consider evidence outside the administrative record. ... We reverse the district court's summary judgment, and remand for a trial in which the district court is directed to review de novo the termination of Tremain's benefits under the Bell Plan, and determine the amount of any unpaid benefits that might be due to her." (Met Life was the insurer, and the case has some interesting other stuff in it like Met applying standards from the WRONG plan, etc.)
- Ladd v. ITT Corporation (7th Circuit, 6/98) An odd case, but it gives insight as to how MetLife operates in conjunction with the IME system through Network Medical Review Company (NMR). This Case should be read by anyone who is suing Met Life and had IMEs Coordinated by NMR for Met. Of additional interest is an "almost" application of judicial estoppel to what MetLife did in this case. Namely, they first supported the plaintiff's efforts to gain SSDI benefits, even giving her legal help. Then, they "repudiated the basis of their first victory in order to win a second victory" (in her suit against them for denying her LTD benefits). A very intersting case.
- Matkin v. Healthsource Provident Administrators, Inc., 152 F.3d 514 (6th Circuit, 1998) This is sometimes referred to as Killian v. Healthsource. It is an ERISA medical benefits case. Only reason it is here is because it discusses the 6th Circuit's feelings in 1998 concerning standard of review in an ERISA case. It's not particularly a claimant's decision, even though the (deceased) plaintiff "won."
- Woo v. Delux Corp (8th Circuit, 05/98) Discussion of insurance company's financial conflict of interest and denial of benefits. Also, this Circuit adopt the "sliding scale" approach. Also discusses the need to have experts in a claimant's disease or condition review claims, as opposed to just any generalist doctor.
(paraphrasing) To obtain a less deferential standard of review, plaintiff must present material probative evidence demonstrating palpable conflict of interest or serious procedural irregularity (which has some connection to the decision reached) and which caused a serious breach of the plan administrator's fiduciary duty.
- Kearney v. Standard (9th Circuit, 4/98) 98 C.D.O.S. 2958, No. 96-16539 CT:USCA 9, DT:19980421 ABS: An ERISA administrator with a conflict of interest is to afforded very little deference. The court need not limit itself to evidence before the administrator. This case was reheard by the 9th Circuit en banc, and 11 judges produced 6 opinions, confusing the issue even further. Here are those opinions.
- Lang v. Applied Remote Technology LTD Plan and Standard Insurance Company (9th Circuit, 3/97) 97 CDOS 7320, No. 96-56080 CT:USCA 9, DT:19970911 ABS: Under Firestone, a plan administrator's decision is entitled to the deference specified in the contract, unless the member can show a material probability that it was affected by conflict of interest, and administrator can't adequately rebut. Then a de novo standard is used instead of 'arbitrary & capricious'. Some of the decision: "...We conclude that the inconsistencies in the reasons Standard gave for its refusals to lift the "mental disorder" limitation constitute material, probative evidence that its decision was affected by self-interest...That does not end our inquiry, however, because once the claimant has met her initial burden of producing evidence from which it could be inferred that the plan's decision was tainted, the burden shifts to the plan administrator to show that its decision was in fact in furtherance of its fiduciary responsibilities. Atwood, 45 F.3d at 1323. Standard offers no explanation that its decision was made for the benefit of other plan participants and beneficiaries. Nor do we perceive any indication in the record of such a motivation. We therefore conclude that Standard's decision to limit benefits on the basis of a determination that Lang's disability was due to a "mental disorder" is not entitled to deference and is subject to de novo review...If we were according Standard's interpretation the deference ordinarily due an administrator vested with discretion to interpret the plan, we would have to uphold Standard's interpretation as reasonable. In this case, however, Standard is no longer entitled to such deference, because Lang has satisfied her burden of showing the presence of a taint, and Standard has not rebutted it."
- Bernstein v. Capital Care (4th Circuit, 12/95) 70 F.3d 783 CT:USCA 4, DT:19951204 ABS: ERISA plan administrator denied benefits upon inadequate data. Discussion of Standard of Review and Conflict of Interest. (Modified Abuse of Discretion Standard -- sliding scale?) Standard of Review important because, among other things, it controls whether the district court may consider evidence that was not presented to the plan administrator.
- Booton v. Lockheed (9th Circuit, 4/97) No. 95-56381 CT:USCA 9, DT:19970411 ABS: Benefit denials by an ERISA plan administrator are entitled to deference only if the plan complies with the notice requirements of 29 C.F.R. @ 2560.503-1(f). "ERISA plan administrators do not have unbounded discretion... In simple English, what {29 C.F.R. 2560.503-1 (f)] calls for is a meaningful dialog between ERISA plan administrators and their beneficiaries." See also Donato and Halpin, earlier 7th Circuit cases.
- Brown v. Blue Cross Blue Shield of Alabama (11th Circuit, 4/90) Analysis of ERISA Standards of Review, in light of Firestone. Reiterates 11th Circuit's stance that the arbitrary and capricious standard may be a range, not a point. Also, this gem: "A decision made by the issuing company on behalf of a plan based on a contract of insurance ... inherently implicates the hobgoblin of self-interest."
- Firestone v. Bruch (US Supreme Court, 1989)489 U.S. 101 CT:USSC, DT:19890221 ABS: De novo review is the appropriate standard for reviewing denial of benefits, unless the plan gives the administrator discretionary authority, when a deferential standard is appropriate. The arbitrary and capricious standard should not be imported into ERISA on a wholesale basis. If a plan gives discretion to a fiduciary, however, the conflict of interest must be weighed as a factor in determining whether there is an abuse of discretion. ERISA explicitly authorizes suits against fiduciaries and plan administrators to remedy statutory violations, including breaches of fiduciary duty and lack of compliance with plans.
Note: This case is expressly limited to 1132(a)(1)(B).
- Lee v. Blue Cross (11th Circuit, 1/94) 10 F.3d 1547 CT:USCA 11, DT:19940106 ABS: An ERISA plan administrator denied benefits. Excellent outline of Standard of Review and Conflict of Interest. Also a very nice discussion of Contra Proferentem (see next section on Actual Review)
- Bendixen v. Standard Life (9th Circuit, 8/99) 99 C.D.O.S 6138 97-55572 CT:USCA 9, DT:19990707 ABS: ERISA administrator's conflict of interest will not affect deferential standard of review, unless it is "serious". Ruling in favor of Insurance Co, but a very nice discussion of determination of Standard of Review under Firestone Tire v. Bruch and Kearney v. Standard and other cases cited below. This is a "must read" if your case is being brought in a federal district court within the 9th Circuit. Also the opinion was written by a judge (Lee) visiting from the 8th Circuit, so some implications there too one would guess.
- Snow v. Standard Insurance (9th Circuit 1996) A CFS case. Contains some discussion of Expert Evidence. Mostly, "When an ERISA plan administrator has discretion to determine whether a claimant has met the eligibility requirements of the plan, the administrator's decision will be overturned only if it has abused its discretion. In reviewing the administrator's decision, the district court must limit itself to the record before the administrator when it made that decision and must determine whether the correct decision was made. If the administrator's factual determinations were clearly erroneous, that constitutes an abuse of discretion, but courts will not find clear error when substantial evidence in the record supports those determinations. The administrator need not be a modern Rhadamanthus; he need only refrain from being arbitrary or capricious."
- Howard v. Shay (100 F. 3d 1484 9th Circuit 1996) Concerns an ESOP, but discusses conflicted fiduciaries and ERISA's investigative requirements vis a vis the use of outside "Experts." Helpful in understanding "Snow," above.
- Donato v. Metropolitan Life Ins. Co. 19 F. 3d 375 (7th Circuit, 1994) MCS type case. Donato lost, but the case is very instructive on several levels and is cited a lot. Emphasizes that arbitrary and capricious means "downright unreasonable." "Under the deferential standard the plan's decision to deny [claimant] benefits is reviewed only to determine whether it was downright unreasonable." Case Cites Halpin, below, which should be read as well.
- Halpin v. W.W. Grainger, Inc 962 F. 2d 685 (7th, 1992) (Too old a case to be on the web) Cited in Donato, above, this case talks about 29 C.F.R. Section 2560.503-1 (f), saying "These requirements insure that when a claimant appeals a denial to the plan administrator he will be able to address the determinative issues and have a fair chance to present his case."
- Palmer v. University Med. Group, 994 F.Supp. 1221 (D. Or. 1998): When an administrator fails to disclose the basis of the decision and that failure interferes with the claimant's ability to present evidence supporting his claim, a court should not defer to the administrator's decision or rely upon its fact-finding.
- Regula v. Delta Family-Care, 266 F.3d 1130 (9th Cir. 2001): Applied the "Treating Physician Rule" of SSDI to ERISA.
- See also in the Judy Morris section of this Case Law Site:
- Chambers v. Family Health Plan Corp, 100 F. 3d 818 (10th Cir. 11/96)
- Duncan v. Continental Cas. Co., Northern District of California, 1997.
- Egert v. Connecticut Gen. Life Ins. Co, 900 F. 2d 1032 (7th Cir., 1990)
- Monroe v. Pacific Telesis Group 971 F. Supp. 1310 (C.D. Cal 1997)
- Postma v. The Paul Revere Life Ins. Co. WL 641335 at 8 (N.D. Ill 1998)
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