The Supreme Court heard MetLife v. Glenn this morning.  I'll try to characterize the impression of one observer whose judgment I trust.  Oral argument this morning demonstrated that the Court agrees that the common situation of an insurer acting both as payer of benefits with a financial interest in the decision and as ERISA fiduciary with a statutory obligation to solely in the interest of plan participants and beneficiaries and for the exclusive purpose of providing them benefits is an inherent conflict of interest.  But the Court did not seem persuaded that this inherent conflict of interest overrides discretionary language in an insurance policy to the point that a de novo standard of review should be required. 

The Court was looking for the same thing all Circuit and District courts have been looking for since Firestone Tire & Rubber v. Bruch was decided in 1989: a framework that effectively factors an insurer's conflict of interest into the federal judiciary's review of an ERISA benefit denial.  Insurers want to say either that the conflict is so slight it doesn't need to be factored into the judiciary review at all or that the claimant must show specific facts demonstrating a substantial conflict in the particular case before the court before anything other than an arbitrary and capricious standard of review should be used.  Claimants argue that the inherent conflict is so significant that every case should be reviewed de novo rather than with any degree of deference to the insurer's decision.  The Court is struggling to find out if there is something workable to put in place that is in between those two ends of the spectrum.  Whether the Court can find an analytical sword to cut this Gordian Knot is the challenge.  

I'll post a link to the transcript of the oral argument as soon as it becomes available. 


UPDATE: the hearing transcript is here.  Just click on MetLife v. Glenn for April 23, 2008.   

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Don Levit 11/17/2008 01:47 PM
Brian: I think you mentioned a while back that you have a study which details the percentage of cases on appeal which were overturned, depending on whether the level of review was de novo or arbitrary and capricious. The result was fairly startling in the number of appeals which were overturned with the de novo review. I wonder how the additional claims paid under de novo may translate into a higher premium estimate? Don Levit
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Brian S. King 11/17/2008 01:47 PM
Sorry for the delay in responding Don. You raise a good question. No doubt premiums will go up somewhat if you have a de novo rather than an abuse of discretion standard of review across the board. But how much is the question. I discussed that very thing in this blog entry:
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