Third Circuit Expands Scope of ERISA Structural Conflict of Interest Analysis

The Third Circuit has weighed in again on the proper scope of review in a denial of benefits case under ERISA when there is a structural conflict of interest for the plan (we talked about these vexing types of ERISA cases previously here).

In Post v. Hartford Insurance Co., 05-4927 (3d Cir. Sept. 13, 2007), the Third Circuit considered whether an insurer's continued use of a video surveillance camera after it was clear that there was no evidence of fraud on the claimant's part amounted to a structural conflict of interest and required the lower court to apply a heightened form of arbitrary and capricious review of the administrator's decision as is appropriate in such cases.  Finding that it did and heightened review was appropriate, the Court reversed the district court.

Writing for the court, in the 2-1 decision, Judge Thomas Ambro wrote: ""The fact that [plaintiff] did not leave her home while she was under surveillance is perfectly consistent with, and corroborative of, her claim for disability. Yet Hartford was undeterred in continuing to pursue evidence that [she] was not disabled . . . . Indeed, the very fact that its employees characterized the results of the surveillance as 'unsuccessful' suggests that its motive was to find evidence to deny Post's claim."

Sounds like the insurance company was out to get an ERISA participant, so the results seems right to me.

PS