Federal Courts Struggle with Supreme Court Refusal to Promulgate a Bright-Line Rule for Evaluating ERISA Plan Administrators' Conflicts of Interest

Article excerpt

Federal Courts Struggle with Supreme Court Refusal to Promulgate a Bright-Line Rule for Evaluating ERISA Plan Administrators' Conflicts of Interest- Metropolitan Life Insurance Company v. Glenn.1 - The Employee Retirement Income Security Act of 1974 ("ERISA") regulates employer-provided pension and welfare benefit plans to ensure that participants receive their promised benefits.2 Under an ERISA-governed employee benefit plan, a single entity may act in a "dual role" as both an insurer and the payer of benefit claims.3 ERISA requires administrators to "provide a full and fair review of claim denials."4 In the event of a benefit denial, beneficiaries may seek judicial review after exhausting their administrative remedies.5 Where ERISA "grant[s] the administrator or fiduciary discretionary authority to determine eligibility for benefits," courts must review denials deferentially.6

In Metropolitan Life Insurance Company v. Glenn, after being diagnosed with a heart condition, Respondent Wanda Glenn ("Glenn") applied for disability benefits from Metropolitan Life Insurance Company ("MetLife").7 MetLife served as both the administrator and insurer of Glenn's insurance plan under ERISA.8 In 2000, MetLife determined that Glenn qualified for 24 months of disability and in 2002 an Administrative Law Judge determined that she could not "perform[] any job[] for which she could qualify existing in significant numbers in the national economy."9 Accordingly, the Social Security Administration ("SSA") awarded Glenn permanent disability payments.10 MetLife, however, denied Glenn's claim for continued benefits under a similar standard requiring Glenn's condition prevent her from both performing her own job and "the material duties of any gainful occupation for which she was reasonably qualified [,]" finding her "capable of performing full time sedentary work."11

Following the exhaustion of her administrative remedies, Glenn filed suit in the Southern District of Ohio, as permitted under ERISA.12 The federal district court denied Glenn relief.13 However, on appeal the Sixth Circuit, under a deferential standard of review as prescribed by ERISA, 14 reversed the lower court's holding.15 In finding an abuse of discretion, the Sixth Circuit specifically determined that MetLife 's position as both determining eligibility for and providing benefits presented a conflict of interest, but treated it only as a "relevant factor."16 The Sixth Circuit also considered the following factors: (l) the SSA's contradictory conclusion that Glenn could not work; (2) MetLife's focus upon a single physician report which favored their position while ignoring other, more detailed reports; (3) MetLife neglecting to provide their experts with all relevant physician reports; and (4) MetLife's disregard of evidence demonstrating the aggravation of Glenn's condition by stress.17

MetLife sought and obtained certiorari regarding the existence of conflict of interest for dual-role plan administrators. 18 The United States Supreme Court also considered the Solicitor General's request to consider "how any such a conflict should be taken into account" and affirmed.19 In its holding, the Court applied the principles from Firestone Tire Ö Rubber Co. v. Bruch which similarly entailed an entity that both evaluated claim validity and paid the benefits.20 Specifically, benefit denials in this context demand a deferential standard of review21 and "if a benefit plan gives discretion to an administrator... who is operating under a conflict of interest, that conflict must be weighed as a factor in determining whether there is an abuse of discretion."22

The United States Supreme Court held that a conflict of interest exists when the same entity serves as an ERISA plan administrator and payer of benefits.23 However, this conflict of interest serves as only one factor in the deferential review of whether the denial of the claim constituted an abuse of discretion. …


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