:: Returning The ERISA Case To The Plan Administrator: Administrative Agency Analogies (Part 1)

We note that although circuits vary on how they approach the issue of finality in cases involving ERISA remand orders, [ see Metzger v. UNUM Life Ins. Co. of America, 476 F.3d 1161 (C.A.10 (Kan.)) (Feb 21, 2007)] (describing the circuit split), Graham would fare no better under most of those approaches. The majority of circuits have relied on one of the analogues invoked in Rekstad or the collateral order doctrine in deciding whether a decision to remand a benefits decision to a plan administrator is final. . . . Accordingly, we dismiss this appeal for lack of jurisdiction under 28 U.S.C. § 1291. Graham v. Hartford Life And Accident Ins. Co. — F.3d —-, 2007 WL 2405264 (C.A.10 (Okla.)) (August 24, 2007)

One of the ironies of ERISA jurisprudence lies in the variety of judicial conclusions as to how claims must be advanced and evaluated under its purportedly “comprehensive and reticulated” scheme. Graham v. Hartford underscores this point in the Tenth Circuit’s review of the variety of channels open to parties after a determination on a claim for benefits by a plan administrator.

The Tenth Circuit has been at some pains of late in attempting to articulate a standard for deciding whether parties may appeal a determination by a district court “remanding” a claim for benefits to the plan administrator for further proceedings. Whether the Court succeeded in its goal or simply added additional layers of criteria to the analysis will be left to the reader.

In this Part 1, the Tenth Circuit view will be addressed – Part 2 will provide an overview by circuit courts of appeal.

The Question of Finality

The Tenth Circuit begins its analysis with a seemingly basic premise:

As a general rule, federal appellate courts have jurisdiction solely over appeals from “ final decisions of the district courts of the United States.” 28 U.S.C. § 1291. A final decision is one that “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 89 L.Ed. 911 (1945). The issue is one of appellate jurisdiction.

From there, however, matters move from firm principles to thorny analogies to administrative law with federal courts borrowing first one principle and then another. All the while, however, the court’s simultaneously disclaim any strict congruence of ERISA administrative proceedings to any particular administrative model.

Shirley Graham’s Claim For Benefits

Shirley Graham’s case began as a unremarkable claim for benefits under a long term disability plan administered by Hartford Life & Accident Insurance Company (“Hartford”). The claim was filed on state law theories in federal court based upon diversity jurisdiction. As it turned out, however, the district court concluded that ERISA governed the case inasmuch as the plan in question, sponsored by the National Rural Letter Carriers’ Association, was not an exempt governmental plan.

The district court ultimately concluded that Hartford’s denial of Graham’s claim was arbitrary and capricious. Instead of awarding benefits, however, the court “remanded the claim to Hartford for a ‘full and fair redetermination.’”

The Decision To Remand

Here the case ambiguities began.

What remained of her case in federal district court? The status of the case was left to some speculation, as the Tenth Circuit observed:

The district court did not state whether or not it would retain jurisdiction over the matter. However, the docket entries administratively entered for this decision indicate that the court was “dismissing/terminating” the case.

Appeal To The Tenth Circuit

On appeal, Graham challenged both the decision to remand, the court’s earlier decision that ERISA preempted her state law claim, and the court’s denial of her request for attorney’s fees. But then the question arose central to our discussion – were the district court’s decisions to remand and denying attorneys’ fees appealable?

The Court held that they were not.

The Basic Issue Restated

As noted at the outset, the analysis begins with whether the decisions were “final decisions”:

We have jurisdiction “of appeals from all final decisions of the district courts of the United States.” 28 U.S.C. § 1291. “It is well settled that we can only address the underlying merits of a lawsuit if it meets the requirements for appellate jurisdiction outlined in 28 U.S.C. § 1291.” Albright v. UNUM Life Ins. Co., 59 F.3d 1089, 1092 (10th Cir.1995). “A final decision is one that ‘ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’ “ Rekstad v. First Bank Sys., 238 F.3d 1259, 1261 (10th Cir.2001) (quoting Catlin v. United States, 324 U.S. 229, 233 (1945)).

No Hard-And-Fast Rule

The Tenth Circuit prefers a “case by case” approach to the issue. The Court “has declined to adopt a hard-and-fast rule regarding whether a district court’s order remanding a benefits determination to a plan administrator is final, and therefore appealable, under 28 U.S.C. § 1291.”

“The decision should be made on a case-by-case basis applying well-settled principles governing ‘final decisions.’ “ Rekstad, 238 F.3d at 1263; see also Metzger v. UNUM Life Ins. Co., 476 F.3d 1161, 1164 (10th Cir.2007) (same)

Nonetheless, the Court has clearly indicated that, with few, but significant exceptions, it will view district court decisions to remand as non-final.

In Rekstad v. First Bank System, Inc., 238 F.3d 1259, 1263 (10th Cir.2001), for example, the Court stated:

Unless an order meets the requirements of our “practical finality rule,” we generally deem the order non-final for purposes of our review. Id. (quotation omitted). Under that rule, an order is final only if finality is “necessary to ensure that the court of appeals [is] able to review an important legal question which the remand made effectively unreviewable.” Id. (quotations omitted).

Whence From Here?

After the remand, the issue returns to Hartford’s jurisdiction as plan administrator. Hartford offered reassurances to the Court which were noted as follows:

Hartford’s redetermination of Graham’s claim-which, Hartford assured the court at oral argument, would be de novo-may lead to an award of benefits for Graham. If Hartford again determines that Graham is ineligible for benefits, she may return to district court to argue that Hartford’s decision violates ERISA. We observe that Hartford has conceded that if its benefits determination on remand “is unfavorable to [Graham], she may simply move to reopen the case, or file an amended complaint to address any dissatisfaction with Hartford’s decision on remand.”

Note: Graham’s case did not meet the terms of the practical finality rule, which was the only exception available in Tenth Circuit jurisprudence:

Graham articulates no argument that a remand of her benefits claim to Hartford falls within the practical finality exception employed by this circuit.FN4 We discern nothing on appeal that is “urgent” or presents a “danger of injustice” if not immediately appealable.

Policy Argument - Graham made an interesting policy argument, but the Court found it unpersuasive:

Graham also contends that the order is a final judgment, because to hold otherwise allows a plan administrator to delay awarding benefits with impunity, since the administrator is not penalized for improperly denying benefits in the first instance. But the mere fact that ERISA does not expressly penalize a plan administrator for its initial arbitrary and capricious denial-an issue of statutory design that rests in the hands of Congress-does not warrant a change in our jurisprudence surrounding finality.

The Court’s observation begs the question, of course, of whether Congress ever intended that the judiciary create the administrative procedural framework cobbled together in varying forms depending on venue.

Split In The Circuits - The venue was not a particular significance in the view of the Court. Noting the split in the circuits, the Court opined:

. . . Graham would fare no better under most of those approaches. The majority of circuits have relied on one of the analogues invoked in Rekstad or the collateral order doctrine in deciding whether a decision to remand a benefits decision to a plan administrator is final.

See also -:: Review of Claim Denials (Unit 1): The Tenth Circuit Explains Its View On When “Remands” To Plan Administrators May Be Appealed

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