Feb 17, 2019
ERISA plans and their fiduciaries have almost invariably asserted that, for ERISA benefit recovery cases, district courts are limited to the pre-litigation appeal record, sometimes referred to by the misnomer of "administrative" record. Insurers and plan administrators want to limit claimants to the information they present before litigation begins for a number of reasons. But one big factor in their thinking is that insurers recognize the claimants usually do a relatively haphazard job of appealing the denials before litigation.
However, hard and fast application in litigation of the "no facts beyond the record" rule took a big hit MetLife v. Glenn, 128 S.Ct. 2343 (2008). That case quite clearly allows for discovery and production of facts outside the pre-litigation appeal record relating to conflict of interest. Yesterday the U.S. Court of Appeals for the Ninth Circuit issued a decision, Nolan v. Heald College, the builds on Ninth Circuit precedent and Glenn to more definitively establish that, at least as to conflict of interest, future ERISA benefit recovery cases will not be limited to a pre-litigation appeal record.
Jeanne Nolan had a disability claim against her employer’s disability insurance carrier, Metropolitan Life. MetLife paid her claim for the first two years but when the policy’s definition of disability switched from "own occupation" to "any occupation," MetLife asserted Nolan could work in a sedentary occupation and terminated her benefits. MetLife relied on the opinions of two file reviewer physicians who worked with an outside consulting company, Network Medical Review, in denying Nolan’s claim. In litigation, Nolan presented for the first time information to the trial court showing that the two reviewing physicians and NMR received a substantial portion of their income doing file reviews for MetLife. She argued that under Ninth Circuit precedent and Glenn, the trial court needed to take this information into account as a reason to substantially reduce the deference a court would otherwise accord MetLife’s denial.
The trial court ruled that an abuse of discretion standard of review, untempered by skepticism based on the information of bias that Nolan presented, applied and that MetLife was entitled to summary judgment in its favor. Nolan appealed and the Ninth Circuit reversed and remanded the case to the trial court for full consideration of the facts relating to conflict of interest and bias in an evidentiary context to determine the appropriate degree to which deference to the insurer’s decision needed to be reduced.
The Ninth Circuit stated, ". . . the precise . . . [standard of review in abuse of discretion] cases where the plan administrator is also burdened by a conflict of interest is only discernable by carefully considering the conflict of interest, including evidence outside of the administrative record that bears upon it." Slip op., p. 487. The trial court erred by evaluating the evidence relating to bias of NMR and its reviewers without the benefit of an evidentiary hearing or bench trial. As the decision puts it, "[t]here is no such thing as . . . findings of fact, on a summary judgment motion." To determine whether MetLife was entitled to summary judgment, the trial court had to initially consider the information about conflict of interest and bias introduced for the first time in litigation and evaluate how, if at all, that information changed the standard of review from undiluted abuse of discretion to something closer to de novo. Making this inquiry without an evidentiary hearing was improper.
While the Ninth Circuit relied primarily on circuit precedent for its decision, it made clear that Glenn was consistent with its ruling. There is little question that Nolan is correct on this point. The case will likely serve as a guidepost for other circuit and district courts as they wrestle with how to properly apply the language of Glenn.
Post a Comment to "Evidentiary Hearings For ERISA Benefit Claims"To reply to this message, enter your reply in the box labeled "Message", hit "Post Message."