:: Eleventh Circuit Upholds ERISA’s Plan’s Benefit Denial Under Doyle Test
We have required courts to employ a six-step analysis “for use in judicially reviewing virtually all ERISA-plan benefit denials.” Williams v. BellSouth Telecomms., 373 F.3d 1132, 1137-38 (11th Cir. 2004). We have described step 3 of the six-step analysis as follows: “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).” Id. at 1138.
No question exists that Prudential had discretionary authority to determine eligibility or to construe the terms of the Plan.
Keith v. Prudential Ins. Co. of Am., 2009 U.S. App. LEXIS 21704 (11th Cir. Ala. Oct. 2, 2009)
The unpublished decision in Keith v. Prudential affords further insight into the Eleventh Circuit’s take on the proper approach to judicial review in cases of conflicted fiduciaries. The Court has previously held that Met Life v. Glenn implicitly abrogated its prior approach which involved a heightend standard of review and burden shifting. In Keith, the Court signals how this change can make a practical difference in outcomes.
The Facts
The plaintiff had appealed the district court’s judgment in favor of Prudential, the disability carrier, upholding Prudential’s denial of Keith’s claim for disability benefits under the group long-term disability plan issued and administered by Prudential.
The case had been before the Court of Appeals twice before — first to clarify the district court’s rationale in finding for the defendant, and second to review its opinion in light of the new articulation of factor analysis addressed in Doyle v. Liberty Life Assurance Co. of Boston, 542 F.3d 1352 (11th Cir. 2008) and Oliver v. Coca Cola Co., 497 F.3d 1181, vacated in part on petition for reh’g, 506 F.3d 1316 (11th Cir. 2007). See, :: Eleventh Circuit Panel Holds That Glenn Overrules Prior Precedent.
In this third review, the Court upholds the benefit denial. The opinion focused on the third and sixth factors employed by the Eleventh Circuit.
The Six Factors
For sake of context, the Eleventh Circuit previously employed the following 6-step approach in judicial review of benefit denials:
(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.
Following Glenn, step # 6 is altered such the the court merely asks whether the conflict of interest tainted plan administrator’s decision, thereby rendering its otherwise reasonable decision unreasonable.
The Case At Bar
Citing Oliver, the Court observed that “[u]nder the arbitrary and capricious standard of review, the plan administrator’s decision to deny benefits must be upheld so long as there is a ‘reasonable basis’ for the decision.” 497 F.3d at 1195 (citation omitted).
The language granting discretion was adequate in the Court’ opinion:
No question exists that Prudential had discretionary authority to determine eligibility or to construe the terms of the Plan. The Plan expressly and unambiguously states that Prudential “has the sole discretion to interpret the terms of the Group Contract, to make factual findings, and to determine eligibility for benefits.” In addition, the policy expressly state that Prudential’s decision “shall not be overturned unless arbitrary and capricious.”
The Court framed its inquiry as focused on whether there was sufficient “rational basis” under the new standard to uphold the denial:
In Oliver, we held that “[u]nder the arbitrary and capricious standard of review, the plan administrator’s decision to deny benefits must be upheld so long as there is a ‘reasonable basis’ for the decision.” 497 F.3d at 1195 (citation omitted). “
The Court then turned to the district court’s review of the benefit denial on the record presented and found itself in agreement with the lower court:
Applying Oliver in light of our remand order, the district court found that unlike the plan administrator in Oliver, Prudential never refused to consider subjective evidence of Keith’s disability. Instead, Prudential determined that Keith’s complaints were no different than they had been during the time that Keith was able to successfully perform her job duties with reasonable accommodations from her employer. After a thorough review of the policy and the medical evidence, the district court concluded that Prudential’s decision was neither arbitrary nor unreasonable. We agree.
Note: The Court found differences in Oliver and the case before it, noting that:
Contrary to Keith’s contention, the Oliver policy and the policy here differ significantly in terms of their requirements for disability. In Oliver, the plan merely required a disabled participant to submit “a written application on a form provided by his employer” as well as a “medical certification” of his disability for the claimant to receive benefits. Oliver, 497 F.3d at 1196.
The plan further provides that such proof must be “satisfactory to Prudential.” These requirements are not per se unreasonable. See Wangenstein v. Equifax, Inc., 191 F. App’x 905, 913-14 (11th Cir. 2006) (it is not unreasonable for the plan administrator to demand objective evidence where the plan administrator has discretion to determine what it considers adequate “proof” of disability).
. . . while the reviewing court must take into account an administrative conflict when determining whether an administrator’s decision was arbitrary and capricious, the burden remains on the plaintiff to show the decision was arbitrary; it is not the defendant’s burden to prove its decision was not tainted by self-interest.
Assessment - Though this does not appear in the third opinion, the district court had previously noted that the district court previously found the denial de novo wrong because (1) Keith’s treating physicians believed she was unable to work, (2) her employer recognized that she could not work in a seated position for forty hours a week, and (3) she was approved for Social Security disability benefits. Under this set of facts, it is interesting to consider whether those facts would have generated a different outcome in the Sixth or Ninth Circuits, or whether the “thorough investigation” by the defendant, noted in Keith, would have sufficed to purge the decision of any bias. See, e.g., :: File Review Of Medical Evidence After MetLife v. Glenn – A New Preference For Treating Physician Opinions?
