As noted in yesterday’s post, the lack of the plan administrator’s involvement in the benefits denial decision was cited as the reason for applying a de novo, as opposed to an abuse of discretion, standard of review. In the case discussed there, Shelby County Healthcare Corp. v. Majestic Star Casino, LLC, Slip Copy, 2008 WL 782642 (W.D.Tenn.) (March 20, 2008), the district court concluded that this lack of involvement distinguished this case from those in which deference must be accorded to the plan administrator.

Applicable Authorities

In reaching its conclusion, the court cited the following authorities:

A denial of health benefits is to be reviewed by federal courts under a de novo standard, unless the benefit plan gives the administrator discretionary authority to determine eligibility for benefits or to construe the terms of the plan. Anderson v. Great West Life Assurance Co., 942 F.2d 392, 395 (6th Cir.1991) (citations omitted).

Where an ERISA plan expressly affords discretion to a plan trustee to make benefits determinations, a court reviewing the plan administrator’s actions applies an arbitrary and capricious standard of review. Id. “When an unauthorized body that does not have fiduciary discretion to determine benefits eligibility renders such a decision, however, this deferential review is not warranted” and de novo review is applied. Sanford v. Harvard Indus., Inc., 262 F.3d 590, 597 (6th Cir.2001) (citations omitted) (upholding the district court’s finding that the de novo standard was applicable when the defendant violated plan procedures by allowing an unauthorized body, a union grievance committee, to make a benefits decision). The plan administrator bears the burden of proving that the arbitrary and capricious standard applies. See Fay v. Oxford Health Plan, 287 F.3d 96, 104 (2d Cir.2002); Sharkey v. Ultramar Energy Ltd., 70 F.3d 226, 229-30 (2d Cir.1995).

Factual Findings

Here are the critical facts noted by the court in support of its holding:

The record reveals that Majestic was almost totally uninvolved in the decision to deny benefits to Weatherspoon.

  1. First, it appears that BAS initially denied the request for benefits without any input from Majestic. (Doc. No. 16, Def.’s Resp. to Pl.’s Statement of Facts ¶ 15.)
  2. Only after the Med requested an appeal of BAS’s decision, was Sally Ramirez, the Corporate Director of Compensation & Benefits for Majestic, informed of the claim and the basis for its denial. ( Id.¶ 19.)
  3. A BAS representative eventually emailed Ramirez its draft of a letter rejecting the Med’s appeal and requested that she “review and approve” it before it was sent out. ( Id.¶ 26.)
  4. Although the Defendant alleges that Ramirez had several phone conversations with BAS employee Dawn Evanchik during which the merits of the claim were discussed, it is unclear whether anyone from Majestic ever examined Weatherspoon’s medical records, the crash report, or any other documents pertaining to this case, other than the correspondence drafted by BAS. ( See Doc. No. 15, Aff. of Sally Ramirez ¶¶ 4-5.)