ERISA - ADMINISTTRATOR - CONFLICT OF INTEREST - DISCRETIONARY BENEFIT DETERMINATIONS
READ THE CASE: Metropolitan Life Ins. Co. v. Glenn (2008), 544 U.S. ____.
On June 19, 2008, the United State Supreme Court issued its opinion AFFIRMING the 6th Circuit decision rendered in Metro. Life Ins. Co. v. Glenn.
HOLDING OF THE COURT:
1. Firestone Tire & Rubber Co. v. Bruch, 489 U. S. 101, sets out
four principles as to the appropriate standard of judicial review under
§1132(a)(1)(B):
(1) A court should be “guided by principles of trust
law,” analogizing a plan administrator to a trustee and considering a
benefit determination a fiduciary act, id., at 111–113;
(2) trust law principles require de novo review unless a benefits plan provides otherwise, id., at 115;
(3) where the plan so provides, by granting “the administrator or fiduciary discretionary authority to determine eligibility,” “a deferential standard of review [is] appropriate,” id., at 111,115; and
(4) if the administrator or fiduciary having discretion “is operating under a conflict of interest, that conflict must be weighed as a ‘facto[r] in determining whether there is an abuse of discretion,’ ” id.,
at 115. Pp. 3–5.
2. A plan administrator’s dual role of both evaluating and paying
benefits claims creates the kind of conflict of interest referred to in
Firestone. That conclusion is clear where it is the employer itself that
both funds the plan and evaluates the claim, but a conflict also exists
where, as here, the plan administrator is an insurance company. For
one thing, the employer’s own conflict may extend to its selection of
an insurance company to administer its plan. For another, ERISA
imposes higher-than-marketplace quality standards on insurers, requiring
a plan administrator to “discharge [its] duties” in respect to
discretionary claims processing “solely in the interests of the [plan’s]
participants and beneficiaries,” 29 U. S. C. §1104(a)(1); underscoring
the particular importance of accurate claims processing by insisting
that administrators “provide a ‘full and fair review’ of claim denials,”
Firestone, supra, at 113; and supplementing marketplace and regulatory
controls with judicial review of individual claim denials, see
§1132(a)(1)(B). Finally, a legal rule that treats insurers and employers
alike in respect to the existence of a conflict can nonetheless take
account of different circumstances by treating the circumstances as
diminishing the conflict’s significance or severity in individual cases.
3. The significance of the conflict of interest factor will depend upon
the circumstances of the particular case. Firestone’s “weighed as a
‘factor’ ” language, 489 U. S., at 115, does not imply a change in the
standard of review, say, from deferential to de novo. Nor should this
Court overturn Firestone by adopting a rule that could bring about
near universal de novo review of most ERISA plan claims denials.
And it is not necessary or desirable for courts to create special burden-
of-proof rules, or other special procedural or evidentiary rules, focused
narrowly upon the evaluator/payor conflict. Firestone means
what the word “factor” implies, namely, that judges reviewing a benefit
denial’s lawfulness may take account of several different considerations,
conflict of interest being one. This kind of review is no
stranger to the judicial system. Both trust law and administrative
law ask judges to determine lawfulness by taking account of several
different, often case-specific, factors, reaching a result by weighing all
together. Any one factor will act as a tiebreaker when the others are closely balanced. Here, the Sixth Circuit gave the conflict some
weight, but focused more heavily on other factors: that MetLife had
encouraged Glenn to argue to the Social Security Administration that
she could do no work, received the bulk of the benefits of her success
in doing so (being entitled to receive an offset from her retroactive
Social Security award), and then ignored the agency’s finding in concluding
that she could do sedentary work; and that MetLife had emphasized
one medical report favoring denial of benefits, had deemphasized
other reports suggesting a contrary conclusion, and had
failed to provide its independent vocational and medical experts with
all of the relevant evidence. These serious concerns, taken together
with some degree of conflicting interests on MetLife’s part, led the
court to set aside MetLife’s discretionary decision. There is nothing
improper in the way this review was conducted. Finally, the Firestone
standard’s elucidation does not consist of detailed instructions,
because there “are no talismanic words that can avoid the process of
judgment.” Universal Camera Corp. v. NLRB, 340 U. S. 474, 489.
Pp. 8–13. 461 F. 3d 660.
Affirmed.
(Bold emphasis added by blog administrator)
