People make mistakes. Even administrators of ERISA plans
Conkright v. Frommert, 130 S. Ct. 1640 (U.S. 2010)
The pithy statement quoted above, coupled with the comment that a “single honest mistake” does not alter the standard of review, seems destined to become the talismanic essence of what Conkright means to ERISA law. Starting from the boggy, loamy soil Metropolitan Life v. Glenn left behind, the Court sought traction by reaching for something fixed and weighty — like Firestone v. Bruch, for example.
The trilogy now seems to be in place – Firestone, providing generous deferential review; Glenn, providing a multi-factor analysis for cases in which the fiduciary is deemed unworthy of such deference; and Conkright, to remind us that Firestone remains the bedrock on which all else rests.
A review of post-Conkright cases corroborates this interpretative template.
For example, the following excerpt provides a good summary of Conkright’s policy argument:
These principles were discussed further in Conkright, in which the Supreme Court declared that a single mistake by a plan administrator cannot serve as a basis for depriving that administrator of deference that would otherwise be warranted under Firestone Tire. Conkright, 130 S.Ct. at 1644-47. It was noted that deference to the findings of a plan administrator, where warranted under the terms of the plan in question, promoted the goals of “efficiency,” “predictability” and “uniformity.” Id. at 1649.
Deference promotes efficiency by encouraging the resolution of benefits disputes by means of “internal grievance procedures,” rather than by means of “costly litigation.” Id.
Predictability is ensured by standards allowing an employer to “rely on the expertise of the plan administrator rather than worry about unexpected and inaccurate plan interpretations that might result from de novo judicial review.” Id.
Uniformity is secured when an employer is able to “avoid a patchwork of different interpretations of a plan” that covers multiple employees in several different jurisdictions. Id. ERISA does not affirmatively require employers to establish employee benefit plans, nor does it mandate what types of benefits must be provided by employers who choose to create such plans. Lockheed Corp. v. Spink, 517 U.S. 882, 887, 116 S. Ct. 1783, 135 L. Ed. 2d 153 (1996). It should not be construed in such a way as to “lead those employers with existing plans to reduce benefits,” or to discourage employers without such plans from adopting them in the first place. Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11, 107 S. Ct. 2211, 96 L. Ed. 2d 1 (1987). Instead, it should be interpreted in light of its objectives of ensuring the enforcement of employees’ rights under existing employee benefit plans and encouraging employers to create additional employee benefit plans. Aetna Health, Inc. v. Davila, 542 U.S. 200, 215, 124 S. Ct. 2488, 159 L. Ed. 2d 312 (2004).
Haisley v. Sedgwick Claims Mgmt. Servs., 2011 U.S. Dist. LEXIS 20751 (W.D. Pa. Mar. 2, 201
The district court’s perspective shows its perfect appreciation for the general rule enunciated in Conkright.
The notion of a single honest mistake “rule” is captured in another excerpt from a recent district court opinion:
Where, as here, an employer both administers the Plan and pays benefits, this dual role creates a conflict of interest, and “‘that conflict must be weighed as a factor in determining whether there was an abuse of discretion.’” Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 128 S.Ct. 2343, 2348, 171 L. Ed. 2d 299 (2008)(quoting, Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 957, 103 L. Ed. 2d 80 (1989)). Nevertheless, the administrator’s decision is still entitled to deference and that deference remains, even where the administrator makes a mistake, because a “single honest mistake in plan interpretation” does not justify “stripping the administrator of . . . deference for subsequent related interpretations of the plan.” Conkright v. Frommert, 130 S.Ct. 1640, 1645, 176 L. Ed. 2d 469 (2010).
Canada v. Am. Airlines, Inc. Pilot Ret. Ben. Program, 50 Employee Benefits Cas. (BNA) 1272 (M.D. Tenn. Aug. 10, 2010)
On the other hand, a magistrate judge swims upstream in an opinion in which he defends the Ninth Circuit Abatie opinion, post-Conkright, and simultaneously overcomes the “single” mistake hurdle:
In Conkright, the court held that a Plan Administrator’s single, honest mistake does not strip a Plan Administrator of deference. 130 S. Ct. 1640, 176 L. Ed. 2d 469, Id. 2010 WL 1558979 at *9-10. Abatie similarly requires that a court “should give the administrator’s decision broad deference notwithstanding a minor irregularity.” Id., 458 F.3d at 972. If anything, Conkright reinforces the basic themes of the main cases over the years related to whether a Plan Administrator is entitled to deference: that deferential review is to be applied; that lower courts are not to deviate from it on ad hoc rationales; and that deferential review is a necessary element of the balancing act between employee rights and the need to encourage employers to provide benefits plans. Conkright, 130 S. Ct. 1640, 176 L. Ed. 2d 469, 2010 WL 1558979 at *7. Instead of changing the controlling law, Conkright reaffirmed it. See e.g., Conkright, 130 S. Ct. 1640, 176 L. Ed. 2d 469, 2010 WL 1558979 at *9 (noting that it would be inappropriate to defer to a Plan Administrator’s interpretation when he does not exercise his discretion fairly or honestly or is too incompetent to exercise his discretion fairly). Accordingly, there are no grounds for reconsideration of my April 12, 2010 Opinion and Order.
Even assuming arguendo that Conkright had changed existing law, application of Conkright’s holding would not change the result here. In Conkright, the Supreme Court rejected the notion that a single honest mistake had infected the ERISA review process. Conkright. 130 S. Ct. 1640, 176 L. Ed. 2d 469, 2010 WL 1558979 at *7. The instant case is not a case about a single mistake. Instead, significant procedural irregularities throughout Providence’s internal review proces
Lafferty v. Providence Health Plans, 720 F. Supp. 2d 1239 (D. Or. 2010)
The Ninth Circuit remains somewhat mired in the bog. In a recent opinion (over a vehement dissent), the Court trotted out a number of axiomatic propositions from the Firestone trilogy (ultimately holding against the plan):
The Supreme Court further refined the standard of review in its decision this year in Conkright v. Frommert, holding that a single honest mistake in plan interpretation” administration does not deprive the plan of the abuse of discretion standard or justify de novo review for subsequent related interpretations. The Court emphasized that under Glenn, “a deferential standard of review remains appropriate even in the face of a conflict.” Conkright noted, though, that “[a]pplying a deferential standard of review does not mean that the plan administrator will prevail on the merits.” n24 What deference means is that the plan administrator’s interpretation of the plan ” ‘will not be disturbed if reasonable.’ ”
Salomaa v. Honda Long Term Disability Plan, 2011 U.S. App. LEXIS 4386 (9th Cir. Cal. Mar. 7, 2011)
But most courts appear to be on board and repeat the now familiar refrain, as in this Seventh Circuit opinion:
“People make mistakes. Even administrators of ERISA plans.” Conkright v. Frommert, 130 S. Ct. 1640, 1644, 176 L. Ed. 2d 469 (2010). This introduction was fitting in Conkright, which dealt with a single honest mistake in the interpretation of an ERISA plan. It is perhaps an understatement in this case, which involves a devastating drafting error in the multi-billion-dollar plan administered by Verizon Communications, Inc. (”Verizon”).
Verizon’s pension plan contains erroneous language that, if enforced literally, would give Verizon pensioners like plaintiff Cynthia Young greater benefits than they expected. Young nonetheless seeks these additional benefits based on ERISA’s strict rules for enforcing plan terms as written. Although Young raises some forceful arguments, we conclude that ERISA’s rules are not so strict as to deny an employer equitable relief from the type of “scrivener’s error” that occurred here. We will accordingly affirm the district court’s judgment granting Verizon equitable reformation of its plan to correct the scrivener’s error.
Young v. Verizon’s Bell Atl. Cash Balance Plan, 615 F.3d 808 (7th Cir. Ill. 2010)
Likewise, from the Third Circuit:
Also waived is Goletz’s argument that, because Prudential’s handling of this case has already been faulted once by the District Court, we should now forego extending any deference to Prudential’s decision and subject it to de novo review. This position was all but rejected by the Supreme Court in Conkright, in which the Court explained that ERISA plan administrators “make mistakes” and that a “single honest mistake in plan interpretation” does not justify “stripping the administrator of . . . deference for subsequent related interpretations of the plan.” ___ U.S. ___, 130 S. Ct. 1640, 176 L. Ed. 2d 469, 2010 WL 1558979, at *3.
Goletz v. Prudential Ins. Co. of Am., 383 Fed. Appx. 193 (3d Cir. Del. 2010)
And the now-chastened Second Circuit (from whence Conkright emerged):
More recently, in Conkright v. Frommert, 130 S. Ct. 1640, 176 L. Ed. 2d 469 (2010), the Supreme Court reiterated its longstanding concern with ERISA litigation expenses. In Frommert, the Court addressed the deference that courts should accord to a plan administrator’s interpretation of an ERISA plan. Central to the Court’s holding was the increased litigation costs associated with de novo review of a plan administrator’s decisions as to plan benefits. As the Court explained:HN19Congress enacted ERISA to ensure that employees would receive the benefits they had earned, but Congress did not require employers to establish benefit plans in the first place. We have therefore recognized that ERISA represents a careful balancing between ensuring fair and prompt enforcement of rights under a plan and the encouragement of the creation of such plans. Congress sought to create a system that is not so complex that administrative costs, or litigation expenses, truly discourage employers from offering [ERISA] plans in the first place. ERISA induc[es] employers to offer benefits by assuring a predictable set of liabilities, under uniform standards of primary conduct and a uniform regime of ultimate remedial orders and awards when a violation has occurred.Id. at 1648-49 (internal quotation marks and citations omitted). Extending ERISA liability to unintentional misstatements regarding non-plan consequences of retirement decisions would run counter to these goals.
Bell v. Pfizer, Inc., 626 F.3d 66 (2d Cir. 2010)
All of which leaves us to ask, what are we to make of Metropolitan Life v. Glenn, if Conkright is the other bookend to Firestone? I think that would be a great theme for an article about Conkright and one that I hope to finish in the next few weeks.