I posted a couple of days ago
about Elliott v. Met. Life Ins. Co.
The analysis in that case relating to Met Life’s failure to provide a reasonable process in evaluating Patricia Elliott’s claim is spot on. However, the decision goes awry in the last section when the court determines what remedy will be provided for Met Life’s failure to provide Elliott a full and fair review of her denied claim.
The court acknowledges that it has the power to evaluate Elliott’s disability claim on its merits and award her insurance benefits and/or to provide her benefits as a sanction for Met Life’s failure to comply with ERISA’s claims procedure requirements. But after reviewing a number of other cases from its own and other Circuits, the court states that the appropriate remedy is to remand the claim, send it back to Met Life, for the insurer to consider anew whether Elliott is entitled to benefits. The court’s rationale is that there are unanswered questions associated with Elliott’s claim and that Met Life is in a better position to gather that information and make a determination on the merits of the claim than is the federal judiciary. This rationale dovetails into restrictions courts have placed on the ability of the parties to supplement the prelitigation appeal record through discovery. The result is that courts commonly latch on to remand as a remedy rather than simply ordering the insurer to pay the benefits the claimant seeks.
Remand has been criticized, rightly, as creating a “heads we win; tails let’s play again” mentality on the part of insurers. Benecke v. Barnhart
, 379 F.3d 587, 595 (9th Cir. 2004). Remanding claims to the insurer after the court has found significant errors that require reversal of a denial of benefits is generally an insult to concepts of due process. What evidence exists to suggest that the particular insurer involved in the claim, or insurers as a whole in the context of ERISA, are making good faith efforts to do a better job of complying with ERISA’s fiduciary duty and claims procedure requirements? Nevertheless, in many, perhaps most, jurisdictions across the country, remand is the rule rather than the exception when it comes to the remedy courts order for ERISA claims that have been wrongly denied.
From a more global perspective, whether or not remand is a good thing depends on whether you believe insurers in the ERISA context are committed solely to the interests of their insureds and for the exclusive purpose of providing them benefits. I do not believe this difficult standard of behavior, ERISA’s fiduciary standard, is something that insurers live up to. The primary reason insurers cannot live up to a fiduciary standard of conduct is that they are profit making entities or, at least, have to compete with profit making entities in a very challenging business climate.
ERISA’s fiduciary standards are conceptually and structurally inconsistent with the bottom line oriented climate in which insurers live and breathe. Nevertheless, Congress has spoken in how it set up the dynamics of the statute. It is critical for courts to diligently police insurers' attempts to cut corners on complying with ERISA’s fiduciary and claims procedure requirements. Unfortunately, they frequently fail. More often than not, remand is an excellent example of those failures.
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