The time frame for submission of the briefs in MetLife v. Glenn has now passed. Having taken a look at several of them filed by the parties and amici in the case, I’m more convinced that with this case the Supreme Court has an excellent opportunity to revisit and correct some of the fundamental problems with ERISA. The flip side of the coin is that the case also presents the risk that some of the worst things federal Circuit and District courts have come up with in analyzing the intersection of ERISA’s fiduciary duty and conflict of interest requirements will be enshrined until Congress overhauls the statute.
How courts should review a denial of ERISA benefits made by a self-interested insurance company has been addressed by hundreds of courts and commentators. Glenn presents this fundamental issue squarely to the Supreme Court. I’ve blogged about Glenn before here. The case is scheduled for hearing on April 23rd. You can view the briefs submitted by the parties and various other interested parties at the American Bar Association website here. Just scroll down to the April 23rd oral argument date and click away to access various PDF documents.
Of particular interest is the brief submitted on behalf of the New York City Chapter of the National Multiple Sclerosis Society ("MS brief"). This amicus curiae brief was written by two excellent ERISA claimants’ lawyers, Jonathan Feigenbaum and Scott Riemer. It provides an intriguing perspective of ERISA. Here’s the analysis in a nutshell.
Article III of the Constitution, the section of that document that establishes the federal judiciary, provides individuals with a fundamental right to have disputes about private contract questions resolved by federal courts rather than in some other manner. It "preserves to litigants their interest in an impartial and independent federal adjudication of claims within the judicial power of the United States." MS brief, p. 6. The Supreme Court has allowed these judicial functions to be delegated in very limited circumstances not applicable to ERISA. Allowing insurers to make decisions about benefit denials to which the federal judiciary later defers is an impermissible usurpation of Constitutional Article III authority.
Requiring federal courts to defer to an insurer’s denial of benefits based on the insurer’s self-granted discretionary authority has never been authorized by the Supreme Court in dealing with ERISA. When discretionary language exists in an ERISA plan document, the Supreme Court requires courts to defer to the decision-making process of ERISA trustees who are free of bias and conflict and who discharge their responsibilities in conformity with ERISA’s rigorous fiduciary duty standards. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). But Bruch involved a self-funded pension plan, not an ERISA plan funded through purchase of a run-of-the-mill group insurance policy.
The Court in Bruch specifically noted that to the extent an ERISA pension fiduciary had a conflict of interest, a court must take that conflict into account in evaluating the trustee’s denial of benefits. In addition, Justice O’Connor, the author of Bruch, wrote that the Court could not permit an ERISA participant or beneficiary to be provided less protection than they had before ERISA was passed. There is no authority for the idea that individuals denied insurance benefits before ERISA passed should be entitled to anything less than a de novo standard of review in a state or federal court when asking a court to review a denial of insurance benefits.
Jonathan indicated to me that he and Scott owe a debt to the efforts of Don Bogan, law professor at the University of Oklahoma College of Law, for his work in developing this argument as it relates to ERISA’s standard of review analysis.