:: Uncertainty Attends Benefit Claims Review On The Eve Of MetLife Decision
In remanding this matter to the district court for further consideration in light of Abatie, we alert the district court to the United States Supreme Court’s grant of certiorari in Glenn v. Metlife, 461 F.3d 660 (6th Cir.2006), cert. granted in MetLife v.. Glenn, No. 06-923, — S.Ct. —-, 2008 WL 161473 (Jan. 18, 2008), which involves review of a discretionary denial of benefits by a plan administrator laboring under a structural conflict of interest.
The Court granted certiorari on the following specific question, which might affect the district court’s analysis on remand: “If an administrator that both determines and pays claims under an ERISA plan is deemed to be operating under a conflict of interest, how should that conflict be taken into account on judicial review of a discretionary benefit determination?†The district court may wish to stay its review of Dine’s claims until the Court has issued its decision in Glenn, which is scheduled for argument on April 23, 2008.
Dine v. Metropolitan Life Ins. Co., Slip Copy, 2008 WL 565322 (C.A.9 (Cal.)) (March 03, 2008)
As the date approaches on which the Supreme Court will hand down a decision as to the proper standard of review in conflict of interests cases, judges and litigants alike will be increasingly affected by a potential change in the governing legal principles. In this recent Ninth Circuit opinion, the Court suggested that the district court stay a decision until that guidance is available.
As to the application of its current rule in such cases, the Ninth Circuit found the district court’s approach unacceptable. The Court vacated the district court’s decision, stating:
The district court was correct to apply an abuse of discretion standard in reviewing MetLife’s decision to deny benefits because the plan unambiguously provides MetLife with absolute discretion in making benefits decisions. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). However, when conducting its review for abuse of discretion, the district court analyzed MetLife’s “structural†conflict of interest (as both the funding source and the administrator of the disability plan) using a two-part burden-shifting methodology.
Of course the district court did not have all the necessary information to get it right. The Ninth Circuit had changed the rules of decision in Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir.2006) (en banc).
The Ninth Circuit observed:
After the district court’s decision, this court disapproved the burden-shifting methodology in Abatie, 458 F.3d at 967. The district court also did not discuss what weight it gave to Dine’s claims that MetLife violated ERISA’s procedural requirements, which is now required under Abatie. Id. at 972. Further, the district court was deprived of the recognition in Abatie that the district court may, in its discretion, weigh facts and circumstances outside the administrative record when evaluating what effect the plan administrator’s conflict of interest had on its decision-making process. Id. at 970. Because Abatie so significantly alters the abuse of discretion analysis, and allows the district court to consider facts beyond the administrative record, we hold that the district court should apply Abatie in the first instance. We therefore vacate the judgment and remand to the district court for reconsideration in light of Abatie and, if appropriate, for the receipt of additional evidence.
Note: This case contains an interesting undercurrent in view of the recent trend to eliminate discretionary clauses in insurance contracts. The Court noted:
The district court properly held that the California Department of Insurance’s Notice of Withdrawal of Approval and Order for Information dated February 27, 2004 (the “CDI Noticeâ€) does not compel de novo review of MetLife’s decision. Dine argues that the CDI Notice retroactively renders unenforceable the clause in the plan that grants MetLife discretion over benefits decisions. This court recently rejected the same argument in Saffon v. Wells Fargo & Co. Long Term Disability Plan, 511 F.3d 1206 (9th Cir.2008), where it held that “[e]ven if federal law permitted states to nullify an ERISA plan’s grant of discretionary authority, California law doesn’t authorize the Commissioner to do so retroactively.†Id. at 1211 (citing Cal. Ins.Code § 10291.5(f)).
In this connection, see :: Insurance Policy “Discretionary Clauses†After Rush Prudential – An Endangered Species?
Practice Tip - The Ninth Circuit decision offers an option that litigants will need to consider as the MetLife eclipse draws near. Will the Court alter the law in any significant way? Will the change be advantageous and to whom? Whether to request a stay of proceedings will depend on your answers to these questions.
See also - For more on the confused state of affairs in this area of the law, see :: The Elusive ERISA Standard Of Review – Conflicts, Metaphors & Reversals. For more on the MetLife case, see :: U.S. Supreme Court Grants Certiorari In ERISA Standard Of Review Case
