345 ALI-ABA Course of Study Insurance Industry and Financial Services Litigation May 10-11, 2007 Chicago, Illinois Update on ERISA Litigation By Elizabeth J. Bondurant, Esquire Andrea K. Cataland, Esquire Carter & Ansley LLP Atlanta, Georgia And Ronald Dean, Esquire Law Office of Ronald Dean, L.C. Pacific Palisades, California
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347 UPDATE ON ERISA LITIGATION Elizabeth J. Bondurant Andrea K. Cataland CARTER & ANSLEY LLP Atlantic Center Plaza, Suite 2300 1180 West Peachtree Street Atlanta, Georgia 30309 lbondurant@carteransley.com acataland@carteransley.com Ron Dean Ron Dean, ALC 15135 W. Sunset Blvd, Suite 280 Pacific Palisades, California 90272 rdean@74erisa.com ALI-ABA Conference Life and Health Insurance Litigation May 10-11, 2007 In light of the explosion of litigation under the Employee Retirement Income Security Act of 1974 ( ERISA ), 29 U.S.C. 1001, et seq., the core issues faced by counsel involved in such litigation are changing rapidly. The circuit courts are developing conflicting analyses for many ERISA principles, and the Supreme Court occasionally weighs in on those matters. This paper will address some of the more hotly disputed issues of the past year, including:! What is the appropriate standard and scope of judicial review?! What language is sufficient to grant discretionary authority?! In which plan documents must the grant of authority appear?! In what manner may authority be delegated to others?! What standard of review applies when the fiduciary has been granted discretionary authority but operates under a conflict of interest?
348! What standard of review applies when the administrator fails to follow ERISA s procedural requirements?! How do these issues affect the scope of a court s review and the extent of discovery that is permitted?! What constitutes full and fair review within the meaning of 29 U.S.C. 1133?! What remedies are available under ERISA? For example,! Can plan participants or beneficiaries simultaneously pursue claims under 29 U.S.C. 1132(a)(1)(B) and (a)(3)?! What constitutes equitable relief under 29 U.S.C. 1132(a)(3)? This paper also discusses other ERISA topics, such as cash balance plans, stock drop cases, and excessive plan fee cases. I. THE STANDARD AND SCOPE OF JUDICIAL REVIEW A denial of benefits challenged under ERISA is reviewed under a de novo standard unless the benefit plan gives the administrator... discretionary authority to determine eligibility for benefits or to construe the terms of the plan. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). With this statement, the Supreme Court spawned years of litigation during which the lower courts have attempted to resolve the question of exactly what constitutes a grant of discretionary authority. The results have not been uniform, and numerous related issues have been raised and continue to be litigated. Below are circuit court and district court cases decided in the past year that have addressed these still evolving issues. A. Is there discretionary authority to determine benefits eligibility? 1. What language is sufficient to grant discretionary authority? When reviewing an administrative decision to deny benefits, a court must determine whether the plan s language confers discretionary authority upon the administrator. Where a plan specifically uses the term discretion in connection with the power to interpret or to construe plan terms, courts uniformly find the requisite grant of discretionary authority. In the following cases, the courts addressed whether less 2
349 obvious language in the ERISA plan was sufficient to confer discretionary authority upon the plan administrator. Noland v. Prudential Ins. Co. of Am., 187 Fed. Appx. 447 (6th Cir. 2006) The policy defined Total Disability as follows: Total Disability exists when Prudential determines that all of these conditions are met: (1) Due to Sickness or accidental injury, both of these are true; (a) You are not able to perform, for wage or profit, the material and substantial duties of your occupation. (b) After the Initial Duration of a period of Total Disability, you are not able to perform for wage or profit the material and substantial duties of any job for which you are reasonably fitted by your education, training or experience.... (2) You are not working at any job for wage or profit. (3) You are under the regular care of a Doctor. (Emphasis added.) In this unpublished opinion, the Sixth Circuit held that the italicized language when Prudential determines that all of these conditions are met..., conferred on Prudential discretionary authority to make factual determinations. The court cited as supporting authority Perez v. Aetna Life Insurance Company, 150 F.3d 550, 556 (6th Cir. 1998) (en banc), in which the court held that language stating that the insurer shall have the right to require as part of the proof of claim satisfactory evidence conferred discretion, as well as Yeager v. Reliance Standard Life Insurance Company, 88 F.3d 376, 381 (6th Cir. 1996), in which the court held that language stating that the claimant must submit satisfactory proof of Total Disability to us conferred discretion. Metropolitan Life Ins. Co. v. Conger, 474 F.3d 258 (6th Cir. 2007) The policy provided that MetLife had discretion with regard to the terms, conditions and provisions of the policy. MetLife argued that such language vested it with discretion to make determinations as to whether [the plaintiff s] application [for group long-term care insurance] was inconsistent with his medical records and whether 3