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U.S. Supreme Court to Hear ERISA Case Brought by MetLife(BestWire Services Via Thomson Dialog NewsEdge) The U.S. Supreme Court will hear arguments later this term related to the process for considering conflicts of interest under the federal Employee Retirement Income Security Act in cases where the administrator of an ERISA plan also funds that plan's benefits. In a case that could have significant implications for the life and health insurance industries, the high court granted certiorari to MetLife vs. Glenn, looking to clarify the thorny question of whether such conflicts must be taken into account in judicial reviews of plan fiduciaries' benefit decisions. The case will likely would be heard in April, the court's final sitting of this term. The issue was last addressed by 1989's Firestone Tire & Rubber Co. vs. Bruch decision, when the court ruled that "if a benefit plan gives discretion to an administrator or fiduciary 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." Despite that precedent, the First and Seventh circuits have rendered decisions holding that the mere fact that a plan administrator also pays benefits is not a conflict that courts necessarily have to take into consideration, while the Second and Eighth circuits have required that some evidence be presented that an administrator was influenced by the conflict before a more stringent review would be triggered. In the MetLife case, which the company appealed from the Sixth U.S. Circuit Court of Appeals, the appellate court found an apparent conflict in MetLife's denial of a plan participant's disability claim when it was "authorized both to decide whether an employee is eligible for benefits and to pay those benefits." Similar rulings likewise have been handed down by the Third, Fourth, Fifth, Ninth, Tenth and Eleventh circuits. The case stems from a June 2000 disability claim filed by Sears Roebuck & Co. employee Wanda Glenn. Acting as administrator of Sears' benefit plan, MetLife approved the claim for an initial 24 months of short-term disability. But in July 2002, despite a determination by a Social Security administrative judge that Glenn was totally disabled, the company terminated Glenn's benefits after informing her that she did not meet the plan's definition for long-term disability, which required she be "completely and continuously unable to perform the duties of any gainful work." In its opinion, delivered by Circuit Court Judge Martha Craig Daughtrey, the appellate court noted that an assessment of Glenn's claim by a MetLife-hired physician "was in direct conflict both with his earlier assessments and with every detailed written explanation that he gave concerning Glenn?s disability." Daughtrey also chided the company in one of the opinion's footnotes, claiming the Glenn case was "not the first in which we have been called upon to review MetLife's over-reliance on an aberrational report from a physician." But in its petition to the Supreme Court, MetLife cited a First Circuit decision finding that potential conflicts involving ERISA administrators who also finance a plan's benefits "is countered by other market forces (employers' desires to please their employees), which offset the risk that the insurer will be 'overly tight-fisted.' "Even though Congress specifically permitted employers to appoint ERISA claim administrators who are also funders of the benefit plan, some courts are using treating that practice as a 'conflict of interest' in an effort to discourage employers from making those appointments," MetLife wrote. (By R.J. Lehmann, Washington bureau manager: [email protected]) Copyright ? 2008 A.M. Best Company, Inc. |