Erisa and Plan Administrator Conflicts - Analysis and Best Practices of the U.s. Supreme Court's Decision in Glenn

• Publication year: 2009
• Pages: 36
• Citation: Vol. 22 No. 2 Pg. 36

Utah Bar Journal Volume 22.

Vol. 22, No. 2, 36. ERISA and Plan Administrator Conflicts - Analysis and Best Practices of the U.S. Supreme Court's Decision in Glenn

Utah Bar Journal
Vol. 22, No. 2
March/April 2009

ERISA and Plan Administrator Conflicts - Analysis and Best Practices of the U.S. Supreme Court's Decision in Glenn

by Michael P. Barry

INTRODUCTION

In the health care benefits industry, plan administrators commonly fill the dual roles of evaluating benefit claims and paying claims. This scenario, however, can cause administrators to face an inherent conflict of interest. In 1989 the U.S. Supreme Court established the standard of judicial review for such conflicts in Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989). The Firestone Court found that under the principles of trust law, a conflict of interest is just one of several factors a court should weigh to determine whether an administrator has engaged in an "abuse of discretion." See id. 108-16.

In its most recently completed term, the Supreme Court again confronted the issue of a conflicted administrator in Metropolitan Life Insurance Co. v. Glenn, 128 S.Ct. 2343 (2008). This time around, the Supreme Court considered how much weight a conflict should receive on judicial review. This article will take an in-depth look at Glenn, and discuss the best practices for plan administrators, fiduciaries, and employers in light of this case.

FACTS AND PROCEDURE

Wanda Glenn was an employee of Sears, Roebuck and Company (Sears). See id. at 2346. During the time of her employment, Sears sponsored a long-term disability (LTD) plan administered by Metropolitan Life Insurance Company (MetLife) and operated pursuant to the Employee Retirement Income Security Act of 1974 (ERISA). See id. The terms of the LTD plan allowed MetLife (as administrator) discretionary authority to determine whether an employee's claim for benefits was valid, while allowing MetLife (as insurer) to pay valid benefit claims. See id.

In June 2000, Glenn applied for LTD benefits due to a "severe dilated cardiomyopathy," id., a disease of the heart muscle that causes general fatigue and shortness of breath. MetLife initially granted Glenn a 24-month benefit after determining that she could not perform the material duties of her own job. See id. MetLife also directed Glenn to apply for Social Security disability benefits. See id. It deserves mention that MetLife would be entitled to receive some of these potential Social Security payments as an offset to its more generous benefits. See id. In April 2002, the Social Security Administration (SSA) granted Glenn permanent disability payments retroactive to April 2000. See id. at 2346-47.

Glenn subsequently applied for additional LTD benefits with MetLife beyond 24 months. See id. at 2347. But to qualify for these additional benefits, Glenn would need to satisfy a stricter standard - that she was incapable of performing not only her own job with Sears, but...