Friday, June 13, 2008

ERISA and Cartman and Respecting Authoritay

Cartman Our good friend Ross Runkel provides the goods on a new ERISA case from the 4th Circuit, Woods v. Prudential (4th Cir 06/11/2008), which finds that conferral of "authority" to a plan administrator (as opposed to the conferral of "discretionary authority") is insufficient to merit application of an "abuse of discretion" standard of review under ERISA:

Woods sued the administrator of her employer's long-term disability plan under the Employee Retirement Income Security Act (ERISA), challenging the plan's denial of benefits.  The trial court granted summary judgment in favor of the plan, based on its application of an "abuse of discretion" standard of review.  The 4th Circuit reversed.

Benefits decisions are reviewed "de novo" unless a plan confers discretionary authority on its plan administrator.  If discretionary authority is conferred, the administrator's decision is reviewed for an "abuse of discretion."  Such discretionary authority may be conferred expressly or impliedly.  However, regardless of whether the authority is express or implied, the 4th Circuit has "consistently required that the plan manifest a clear intent to confer such discretion." 

The court held that the mere conferral of authority to a plan administrator (as opposed to the conferral of discretionary authority) is insufficient to merit application of an "abuse of discretion" standard of review.  The court stated, "[a] plan which simply conveys authority to an administrator creates the expectation only that such authority will be exercised, not that the administrator will enjoy wide discretion in wielding its authority...."  The court noted that the 7th Circuit has arrived at the same conclusion.

Call this the Cartman of ERISA decisions. I can just hear the plan administrator screaming: "Respect My Authoritay!"

It's Friday.

PS

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