This new decision
out of the U.S. Court of Appeals for the Fourth Circuit today makes clear the answer to that question.
Evans v. Eaton Corp. Long Term Disability Plan, ___ F.3d ___ (4th Cir. 2008) involves Brenda Evans, a woman with severe rheumatoid arthritis. Her employer determined that she qualified for, and paid her, disability benefits for a number of years. But when she began to respond positively to new medications her physician administered, the plan cut off her benefits. It asserted that Brenda could no longer prove she was disabled from working in any occupation as the plan required in order for her to get benefits. She disagreed and submitted a number of opinions from her treating physicians supporting her inability to work. Eaton sent the claim file out for reviews by its own physicians on a number of occasions. Based on those reviewing physicians' opinions, Eaton denied benefits.
The crux of the issue in the case was what standard of review the trial court was obligated to use in reviewing Eaton's denial of Branda's claim. All parties agreed that the language in the ERISA plan gave Eaton discretion to interpret the terms of the plan and determine Brenda's eligibility for benefits. And it was undisputed that this language required that a judge defer to Eaton's actions and reverse the denial only if the court determined that Eaton had abused its discretion. After reviewing the evidence, the trial court ruled that Eaton had improperly denied benefits because it had ignored persuasive information from Brenda's treating physicians.
The Fourth Circuit reversed. The decision outlines in detail how courts must approach their job when faced with a deferential standard of review. The decision makes clear that if the standard of review were de novo
, that is, if the trial court was evaluating whether Brenda was entitled to benefits by reviewing all the evidence and examining her claim without giving any weight to Eaton's decision, the Fourth Circuit would affirm the trial court's decision to reverse Eaton's denial. But it is a different story when dealing with an "abuse of discretion" standard of review. If the arguments are relatively balanced and the facts closely contested, deference requires that a court uphold the actions of an ERISA plan administrator. As the Fourth Circuit phrases it, a court must not ". . . forget its duty of deference and its secondary rather than primary role in determining a claimant's right to benefits."
In short, this case is another reminder that if an ERISA plan administrator puts discretionary language into its plan documents, it will be very difficult for a claimant to reverse a denial that is based on a full and fair review of her claim.
What constitutes a "full and fair review" is what keeps my doors open.
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