:: District Court Finds Abatie Standard Consistent With MetLife v. Glenn Requirements
Subsequent to the Court’s order determining the applicable standard of review, the United States Supreme Court issued its decision in Metropolitan Life Ins. Co. v. Glenn, S. Ct. , 2008 WL 2444796, setting forth therein the procedure to be followed by a reviewing court where “a plan administrator both evaluates claims for benefits and pays benefits claims.” See id. at *5. In analyzing the issue, the Supreme Court held the standard of review remains deferential rather than de novo, see id. at *7, and that structural conflict is a “factor” to be “taken into account” along with any other relevant factors, see id. at *8.
Hoskins v. Bayer Corp., 2008 U.S. Dist. LEXIS 48791, 10-11 (N.D. Cal. June 25, 2008)
A California district court has essentially found the approach taken in Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir. 2006), consistent with that recently articulated by the U.S. Supreme Court in MetLife v. Glenn. Adding to the observation excerpted above, the court went on to say:
As the Supreme Court further explained, such conflict “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,” and “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.” See id. at *9.
Comparing Abatie and MetLife, the court opined as follows:
This Court sees no inconsistency between the Ninth Circuit’s holding in Abatie, on which this Court earlier relied, and the Supreme Court’s recent decision in Metropolitan Life, and, accordingly, will proceed in accordance with this Court’s order of October 1, 2007. Further, in light of Metropolitan Life and Abatie, the Court will construe the parties’ respective motions for summary judgment as motions for judgment under Rule 52 of the Federal Rules of Civil Procedure, in order that the Court, in applying the proper standard of review under such authority, may weigh evidence relevant to any conflict of interest bearing on defendant’s exercise of discretion.
The court characterized the standard under Abatie as a “tempered” one in cases of structural conflicts of interest, with the review of the administrator’s warranting a commensurate level of skepticism. Thus,
In Abatie, the Ninth Circuit held that where “the wording of the Plan confers discretion on the Plan administrator” and “the Plan administrator has a conflict of interest,” an “abuse of discretion review, tempered by skepticism commensurate with the Plan administrator’s conflict of interest, applies.” See id. at 959. As the Ninth Circuit further observed, “an insurer that acts as both the Plan administrator and the funding source for benefits operates under what may be termed a structural conflict of interest.” See id. at 965. Such “inherent conflict of interest, even if merely formal and unaccompanied by indicia of bad faith or self-dealing” requires an abuse of discretion review “informed by the nature, extent, and effect on the decision-making process of any conflict of interest that may appear in the record.” Id. at 967.
The level of skepticism with which a court views a conflicted administrator’s decision may be low if a structural conflict of interest is unaccompanied, for example, by any evidence of malice, of self-dealing, or of a parsimonious claims-granting history.” Id. at 968.
It was this latter point that the court took as central to its determination of the issue before it.
. . . the Court, assuming, arguendo, the existence of a structural conflict, finds no reason to accord such conflict any significant weight, as plaintiff has failed to submit evidence demonstrating malice, self-dealing or a parsimonious claims-granting history on the part of defendant. See Metropolitan Life, S. Ct. , 2008 WL 2444796 at *9 (recognizing structural conflict ordinarily will be less important where administrator “has taken active steps to reduce potential bias”); Abatie, 458 F.3d at 969 (noting level of skepticism “may be low if a structural conflict of interest is unaccompanied, for example, by any evidence of malice, self-dealing, or of a parsimonious claims-granting history”).
Note: The court did not view the conflict issue as warranting additional discovery beyond the record.
Although “[t]he district court may, in its discretion, consider evidence outside the administrative record to decide the nature, extent, and effect on the decision-making process of any conflict of interest[,] the decision on the merits . . . must rest on the administrative record once the conflict (if any) has been established, by extrinsic evidence or otherwise.” Id. at 970.
This notwithstanding some evidence challenging the evaluation relied upon the the defendant -
Plaintiff first argues that the protocol used in the December 17, 2004 FCE, established by VerNova, Inc., is unreliable. In that regard, plaintiff submits a declaration from Moon, the evaluator who performed the FCE, who attests that VerNova had, on an unspecified number of occasions, added comments and conclusions to his reports without his prior authorization, and that he had some concerns about whether the protocol in general had been properly validated. (See Moon Decl. PP 3-6.)
The defendant had met this evidence with a declaration minimizing the relevance of the foregoing, a strategem that obviously paid off to its advantage -
Defendant, in response, submits a supplemental declaration by Moon, in which Moon states he “do[es] not have any information or knowledge that VerNova did or did not alter or modif[y] any of [his] comments or statements” in the FCE report he prepared with respect to plaintiff, (Moon Supp. Dec. P 4), nor does he “have any information which could lead [him] to state a different conclusion than that which is stated in the [FCE] report,” (id. P 5).
See also - For an overview of the pre-MetLife holdings in the various circuits, see:: The Elusive ERISA Standard Of Review – Conflicts, Metaphors & Reversals
