Friday, January 18, 2008
An ERISA case added to the docket tests whether the manager of an employee benefit plan has an illegal conflict of interest if the plan gives that individual the authority both to pay benefits and to rule on eligibility for benefits (MetLife v. Glenn, 06-923). In addition to that question, the Court added a second issue to be addressed: if that is a conflict of interest, how should that be taken into account by a court reviewing a specific benefit decision. The Sixth Circuit Court, in conflict with some federal appeals courts but in agreement with others, ruled that the dual role of funding and decider for plan administrators is a potential conflict of interest that must be weighed in judging a plan manager’s benefit eligibility ruling.
The Supreme Court had asked the SG for its input on this case and the SG recommended granting cert.
I know my good friend Stephen Rosenberg is apt to disagree with me on this, but I am all for giving de novo review in these type of conflict of interest situations in denial of benefit cases.
Put differently, plans should not be able to take advantage of Firestone discretionary language for plan appeals if the plan administrator is operating under a conflict of interest. I don't even think the 3rd Circuit's heightened arbitrary and capricious standard quite does it. Any advantage a plan has in this context should disappear and the standard should revert back to de novo where the decisionmaker is in the dual role of funding and deciding benefit appeals.
Including the two employment discrimination cases discussed in the previous post, this meaning (even taking into account that Huber ADA will no longer be heard), that there are eleven pending labor and employment cases in front of the Supreme Court! Perhaps, we are not the Rodney Dangerfields of the legal academy any longer.