A Factor: Denial of Benefit Claims Under Erisa in the 11th Circuit and Georgia District Courts Two Years After Metropolitan Life Insurance Company v. Glenn
| Publication year | 2010 |
| Pages | 0012 |
by Edward A. Marshall
As previous contributors to the Journal have recognized, the Employee Retirement Income Security Act (ERISA) now permeates litigation involving the denial of life, health and disability benefits.[1] Nevertheless, the standards governing benefits claims under ERISA have long confounded and divided federal courts. The U.S. Supreme Court's decision in Firestone Tire & Rubber Co. v. Bruch"[2] had left the circuits badly fractured regarding how to address controversies in which a plan administrator, suffering under a conflict of interest (e.g., having a financial stake in the resolution of a claim, such as where the same entity determines eligibility for, and then pays benefits under, a plan), rejected a participant's entitlement to benefits.
In light of those deep divisions and the frequency with which plan administrators are alleged to suffer
under such conflicts, it was with eager anticipation that ERISA practitioners awaited the U.S. Supreme Court's decision in Metropolitan Life Insurance Co. v. Glenn,[3] which was expected to put to rest these conflicting approaches and to spell out, with clarity, the standards governing benefit denial controversies.
Unfortunately, Glenn did little to bring clarity and definition to the benefit denial analysis. Rather, the Supreme Court eschewed the structured analytical approaches adopted by many circuits, and retreated to the pronouncement in Firestone that a plan administrator's conflict of interest was simply "a factor" to be weighed in determining whether the administrator abused its discretion in rejecting a claim.[4]
This article explores the implications of Glenn in the 11th Circuit and Georgia district courts approximately two years after the decision was handed down, including its impact on the substantive resolution of claims, the discovery process and the procedural mechanisms that courts in the 11th Circuit have used to resolve challenges to a plan administrator's denial of benefits.
Benefit Denial Claims in the 11th Circuit Pre-Glenn
To fully appreciate the impact of Glenn on Georgia practitioners, it is necessary first to understand the state of the law in the 11th Circuit pre-Glenn.
For those predisposed towards multi-tiered analyses and burdenshifting frameworks, the 11th Circuit's pre-Glenn approach to ERISA benefit denial claims left little to be desired. Interpreting Firestone, the 11th Circuit had adopted three different tiers of review to resolve benefits litigation—tiers whose application revolved around a plan administrator's discretion to interpret an ERISA plan and the existence vel non of a conflict of interest. According to the 11th Circuit, "(1) de novo review applie[d] where the plan administrator ha[d] been given no discretion in deciding claims; (2) arbitrary and capricious review applie[d] where the plan administrator ha[d] discretion in deciding claims and [did] not suffer from a conflict of interest; and (3) heightened arbitrary and capricious review applie[d] where the plan administrator ha[d] discretion but suffer[ed] from a conflict of interest."[5]
In time, the 11th Circuit honed this multi-tiered approach into a six-step decision tree for adjudicating benefit controversies. As articulated in Williams v. BellSouth Telecommunications, Inc.,[6] the analysis progressed as follows:
(1) Apply the de novo standard to determine whether the claim administrator's benefits-denial decision is "wrong" (i.e., the court disagrees with the administrator's decision); if it is not, then end the inquiry and affirm the decision.
(2) If the administrator's decision in fact is "de novo wrong," then determine whether he was vested with discretion in reviewing claims; if not, end judicial inquiry and reverse the decision.
(3) If the administrator's decision is "de novo wrong" and he was vested with discretion in reviewing claims, then determine whether "reasonable" grounds supported it (hence, review his decision under the more deferential arbitrary and capricious standard).
(4) If no reasonable grounds exist, then end the inquiry and reverse the administrator's decision; if reasonable grounds do exist, then determine if he operated under a conflict of interest.
(5) If there is no conflict, then end the inquiry and affirm the decision.
(6) If there is a conflict of interest, then apply heightened arbitrary and capricious review to the decision to affirm or deny it.[7]
As explained by the 11th Circuit, the "hallmark" of the "heightened arbitrary and capricious" standard of review — implicated by the sixth step in the decision tree—was its burden-shifting requirement.[8] That is, under the "heightened arbitrary and capricious" standard of review, the plan administrator bore the burden to show that the existence of a conflict did not taint its analysis —a burden that, in practice, frequently resulted in judgments adverse to plan administrators laboring under a conflict of interest if the administrator's decision was found to be "wrong" under a de novo review.[9]
The Supreme Court's Decision in Glenn
In Glenn, the Supreme Court reviewed a decision of the 6th Circuit overturning a plan administrator's denial of a plaintiff's claim for long-term disability benefits. There, MetLife acted as the plan administrator for Sears, Roebuck & Company's long-term disability insurance plan, and was given discretion under the plan to determine eligibility for benefits.[10] Nevertheless, it also acted as the insurer of the plan, and this financial interest in the resolution of claims resulted in a conflict of interest.[11]
The 6th Circuit had considered MetLife's conflict as one factor among many in overturning its denial of benefits to the plaintiff, who suffered from severe dilated cardiomyopathy, a heart condition that resulted in fatigue and shortness of breath.[12] Taking that conflict into account, along with (a) "MetLife's failure to reconcile its own conclusion that [the plaintiff] could work in other jobs with the Social Security Administration's conclusion that she could not;" (b) MetLife's emphasis on medical opinions favorable to its denial of benefits at the expense of other, more detailed treating physician reports; (c) MetLife's failure to provide all of these less favorable treating physician reports to its reviewing experts; and (d) MetLife's failure to take account of certain evidence suggesting that stress aggravated the plaintiff's condition, the 6th Circuit concluded that MetLife, even under a deferential standard of review, had abused its discretion in rejecting the plaintiff's claim for benefits.[13] The Supreme Court accepted certiorari to determine, inter alia, "'how' any . . . conflict [of interest] should 'be taken into account on judicial review of a discretionary benefit determination.'"[14]
Endorsing the 6th Circuit's "combination of factors" approach, the Supreme Court emphasized that judicial review of benefit denials under ERISA must proceed under one of only two legal frameworks — de novo review where the plan administrator has no discretion to determine eligibility for benefits, and discretionary review where the plan administrator enjoys such discretion.[15] Channeling Firestone, the Supreme Court held that the presence of a conflict of interest is but one "factor" to be considered in resolving whether a plan administrator abused its discretion under this latter standard of review.[16]Rejecting the proposition that the presence of such a conflict fundamentally alters the analytical framework, the Court explained that it did not perceive it to be "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."[17]According to the Court, "[b]enefits decisions arise in too many contexts, concern too many circumstances, and can relate in too many different ways to conflicts —which themselves vary in kind and in degree of seriousness—for us to come up with a one-size-fits-all procedural system that is likely to promote fair and accurate review."[18] Such procedural rules, it reasoned, "would create further complexity, adding time and expense to a process that may already be too costly for many of those who seek redress."[19]
The Court, moreover, explained that the weight to be given the conflict in any particular case would vary depending on the particular facts presented.
The conflict of interest at issue . . . should prove more important (perhaps of great importance) where circumstances suggest a higher likelihood that it affected the benefits decision, including, but not limited to, cases where an insurance company administrator has a history of biased claims administration. It should prove less important (perhaps to the vanishing point) where the administrator has taken active steps to reduce potential bias and to promote accuracy, for example, by walling off claims administrators from those interested in firm finances, or by imposing management checks that penalize inaccurate decisionmaking irrespective of whom the inaccuracy benefits.[20]
Finding that the 6th Circuit's decision was consistent with the principles laid out in its opinion, the Supreme Court affirmed the lower court's decision setting aside MetLife's benefits determination.
Applications of Glenn in the 11th Circuit
Glenn and its progeny have fundamentally altered ERISA benefit denial litigation in the 11th Circuit and Georgia district courts in at least three ways. The elimination of the burden-shifting procedure has made it easier for conflicted plan administrators to demonstrate that challenged benefit denials were not arbitrary and...
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