Wednesday, August 14, 2013
Jonathan Feigenbaum and Scott Riemer have published in the ABA TIPS Health and Disability & Life Insurance Law Committee Newsletter (Summer 2013): Did the Supreme Court Flunk Constitutional Law When It Permitted Discretionary Review of Insured ERISA Benefits Cases?
From the Introduction:
Beginning with Firestone Tire & Rubber Co. v. Bruch, and its affirmance in Metropolitan Life Ins. Co. v. Glenn, and most recently in Conkright v. Frommert, the Supreme Court permitted District Courts to treat insured ERISA welfare benefits cases as summary review proceedings. In each case, the court focused on trust law, but never addressed whether the regulatory scheme it set up by these cases satisfies the requirements of Article III of the Constitution. The authors argue that discretionary review, without a full trial on the merits, violates Article III.
In the 1983 comedy Trading Places the amoral Duke brothers conduct an experiment in social Darwinism debating whether genetics or nurturing is the source of success. They make a wager, and then put their theories to the test. They manipulate the life of Louis Winthorp III (Dan Akroyd), a successful commodities trader, by “trading places” with Billy Ray Valentine (Eddie Murphy), a street con artist.
We’ll bet the same amount wagered by the Duke brothers with our readers – identify any litigation in the federal courts between private litigants, other than discussed in this paper, where the Article III Judge must defer to the decision of the defendant without conducting a full trial on the merits. We bet you can’t.
This is an interesting topic that has been explored by Don Bogan (Oklahoma), among others, in the past. The article makes an interesting and provocative point concerning the unique features of ERISA Section 502(a)(1)(B) litigation and the lack of a normal Article III federal court procedure.
Can anyone win the Duke brothers' wager that Feigenbaum and Riemer have put forward? I guess one of the questions is whether there is another area of law that has a statutorily required internal review process (like under ERISA Section 503) which requires exhaustion of internal appeals before a claim can be brought in court (not the same thing as what exists in Title VII scenarios where you can exhaust external administrative procedures by merely waiting out the EEOC)?
Another wrinkle is that ACA provides for the possibility of an alternative mechanism through an independent external medical review by a physician, which is de novo review of the plan administrator's claim denial and which is final and not appealable to court. How does that further complicate the Article III issue?