ERISA - ADMINISTRATOR - CONFLICT OF INTEREST - DISCRETIONARY BENEFIT DETERMINATIONS
*NOTE:
SINCE THIS POST, THE SUPREME COURT HAS ISSUED ITS OPINION AFFIRMING THE 6TH CIRCUIT DECISION.
SEE UPDATED POST OF JULY 15, 2008 AND THE RECENT SUPREME COURT DECISION IN:
Metropolitan Life Ins. Co. v. Glenn, (2008) 554 U.S. ____.
The U.S. Supreme Court heard oral arguments on Wednesday, April 23rd, 2008 in the appeal of the Ohio case from the 6th Circuit: Metropolitan Life Ins. Co. v. Glenn, (6th Cir., Ohio 2006), Case No. 05-3918
The two questions to be addressed by the Supreme Court are stated as follows:
"If an administrator that both determines and pays claims under an ERISA plan is deemed to be operating under a conflict of interest, how should that conflict be taken into account on judicial review of a discretionary benefit determination?"
"Whether the Sixth Circuit erred in holding, in conflict with two other Circuits, that the fact that a claim administrator of an ERISA plan also funds the plan benefits, without more, constitutes a "conflict of interest" which must be weighed in a judicial review of the administrator's benefit determination under Firestone Tire & Rubber v. Bruch, 489 U.S. 101 (1989)?"
THE SIXTH CIRCUIT RULING:
The 6th Circuit ruled that the ERISA plan administrator had a conflict of interest, that when coupled with the other factors taken into account resulted in the determination that the denial of the petitioner's claim rose to a level of "arbitrary and capricious."
The 6th Circuit reviewed the administrator's decision under the highly deferential standard (i.e. arbitrary and capricious). They determined that the plan administrator’s determination to deny benefits to Glenn could not be sustained.
[The] obligation under ERISA to review the administrative record in order to determine whether the plan administrator acted arbitrarily and capriciously in making ERISA benefits determinations . . . inherently includes some review of the quality and quantity of the medical evidence and the opinions on both sides of the issues. Otherwise, courts would be rendered to nothing more than rubber stamps for any plan administrator’s decision as long as the plan [administrator] was able to find a single piece of evidence – no matter how obscure or untrustworthy – to support a denial of a claim for ERISA benefits.
The Court concluded that MetLife’s decision to deny long-term benefits in this case was not the product of a principled and deliberative reasoning process. MetLife acted under a conflict of interest and also in unacknowledged conflict with the determination of disability by the Social Security Administration. In denying benefits, it offered no explanation for crediting a brief form filled out by Dr. Patel while overlooking his detailed reports. This inappropriately selective consideration of Glenn’s medical record was compounded by the fact that the occupational skills analyst and the independent medical consultant were apparently not provided with full information from Dr. Patel on which to base their conclusions. Moreover, there was no adequate basis for the plan administrator’s decision not to factor in one of the major considerations in Glenn’s pathology, that of the role that stress played in aggravating her condition and, in the language of the MetLife policy, in preventing her return to “gainful work or service for which [she is] reasonably qualified taking into consideration [her] training, education, experience, and past earning.” Taken together, these factors reflect a decision by MetLife that can only be described as arbitrary and capricious.
THE UNITED STATES SUPREME COURT WILL DECIDE:
On April 23rd, the U.S. Supreme Court heard oral arguments, where it appeared as though the Court was first and foremost concerned with what weight was to be given the fact that an administrator (and fiduciary) has a clear conflict of interest. When reviewing an administrator's decision to deny benefits, the conflict of interest of that administrator is a factor to be considered. However, how much weight? and under what circumstances? were the Supreme Court's foundational concerns. For, how could they move on to addressing the specific factors of the case at hand until they knew what weight they were to give the conflict, and under what circumstances that conflict become a relevant factor. Does a conflict merely tip the scales when all other factors supporting the declination of benefits are equal? And, does a conflict always presuppose that the denial was based upon that conflict?
We will continue to follow this important case and supplement once the Opinion of the Court has been rendered.
READ THE UNITED STATES SUPREME COURT ORAL ARGUMENTS HERE.
READ THE 6TH CIRCUIT UNDERLYING DECISION HERE.
READ THE UNITED STATES SUPREME COURT ISSUES TO BE DECIDED HERE.
