As Abatie and Glenn materially altered the standard of review applicable to the review of a plan administrator’s denial of benefits under ERISA, permitting consideration of evidence outside of the administrative record to determine the appropriate weight to accord the conflict of interest factor, we vacate the judgment and remand to the district court for further proceedings, including reconsideration of Wilcox’s discovery requests.

Wilcox v. Wells Fargo and Company LTD Plan, (9th Cir.) (July 23, 2008)

The open-ended nature of the inquiry into the existence and effect of structural conflicts of interest in MetLife v. Glenn suggests the possibility, if not the probability, that judges hostile to broad discovery will fall back upon the status quo.

After all, the existence of a conflict is but one factor to be considered, and that without any particular weight assigned to it – and furthermore even a palpable conflict’s effect can be effaced “to the vanishing point” but yet unidentified countermeasures. Here we have a very flexible standard indeed.

On the other hand, the opinion also gives rise to a contrary course, and that is what one finds in the recent unpublished Ninth Circuit opinion noted on the Alaska Employment Law Blog.

At issue was the scope of discovery into a structural conflict of interest in the context of a long term disability claim.

The district court denied the request to conduct discovery in order to obtain and present evidence of Defendants’ conflict of interest, on the rationale that:

“[s]uch limited discovery would not itself be unduly burdensome” but concluded that “the need for efficiency and economy in ERISA cases generally dictates that no discovery be permitted until a showing of need has been made.”

The court, having relied on the discredited opinion in Atwood v. Newmont Gold Co., Inc., 45 F.3d 1317 (9th Cir. 1995), remained steadfast when the plaintiff urged in a Rule 60 motion the abrogation of that authority in the subsequent Ninth Circuit case, Abatie v. Alta Health & Life Insurance Co., 458 F.3d 955 (9th Cir. 2006) (en banc). Here, the district court erred.

The Ninth Circuit explained that Abatie requires more of the district court judge that he had supposed, and found endorsement of its view in Abatie in the recent Supreme Court opinion in Glenn:

a conflict of interest must be weighed as a factor in abuse of discretion review on a case-by-case basis, informed by the nature, extent, and effect of the conflict on the decision-making process. Id. at 967. We also concluded that a district court could, in its discretion, consider extrinsic evidence in evaluating the conflict’s effects. Id. at 970. Where, for example, there was evidence that a plan administrator “has repeatedly denied benefits to deserving participants by interpreting plan terms incorrectly or by making decisions against the weight of evidence in the record,” then the court could “weigh a conflict more heavily[.]” Id. at 968-69.

The Supreme Court endorsed this approach in Metropolitan Life Insurance Co. v. Glenn, 128 S. Ct. 2343 (2008), holding that a conflict of interest “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.” Id. at 2351.

The district court’s decision was thus vacated and the case remanded.

Note: For those who have been awaiting significant judicial interpretation of Glenn in the discovery context, the wait is over. While other circuits may not see the issue so clearly, in the Ninth Circuit says that Glenn constitutes a significant change in the scope of discovery:

As Abatie and Glenn materially altered the standard of review applicable to the review of a plan administrator’s denial of benefits under ERISA, permitting consideration of evidence outside of the administrative record to determine the appropriate weight to accord the conflict of interest factor, we vacate the judgment and remand to the district court for further proceedings, including reconsideration of Wilcox’s discovery requests.

(emphasis supplied)

The choice of wording may be faulted inasmuch as it describes a change in the standard of review. The majority opinion in Glenn was at pains to disclaim any change in the standard of review. From my list of 10 things the Court did not do, here’s #1:

We do not believe that Firestone’s statement implies a change in the standard of review, say, from deferential to de novo review.

Nonetheless, the take of the Ninth Circuit on the opinion as a whole can be justified in terms of the task it contemplates for the reviewing court.

. . . there “are no talismanic words that can avoid the process of judgment.”

Glenn, quoting Universal Camera Corp. v. NLRB, 340 U.S. 474