ERISA provides federal courts with jurisdiction to review benefits determinations made by fiduciaries or plan administrators. 29 U.S.C. § 1132(a)(1)(B); see also Lopez ex rel. Gutierrez v. Premium Auto Acceptance Corp., 389 F.3d 504, 509 (5th Cir. 2004). A district court’s function when reviewing ERISA claims is like an appellate court’s.
“[The court] does not take evidence, but, rather, evaluates the reasonableness of an administrative determination in light of the record compiled before the plan fiduciary.” Leahy v. Raytheon Co., 315 F.3d 11, 18 (1st Cir.2002). Courts cannot consider additional evidence “resolve the merits of the coverage determination—i.e. whether coverage should have been afforded under the plan-unless the evidence is in the administrative record, relates to how the administrator has interpreted the plan in the past, or would assist the court in understanding medical terms and procedures.” Crosby v. La. Health Serv. & Indem. Co., — F.3d —, No. 10-30043, 2010 U.S. App. LEXIS 26323, *8, 2010 WL 5356498 (5th Cir. Dec. 29, 2010). A claimant is not permitted to explore, through discovery in an ERISA lawsuit, what information a plan administrator “should have considered” in making its benefits determination, as opposed to analyzing the information that the plan administrator “did consider” in making its decision. Griffin, 2005 U.S. Dist. LEXIS 18720, 2005 WL 4891214, at *2.
Bullard v. Life Ins. Co. of N. Am., 2011 U.S. Dist. LEXIS 47 (S.D. Tex. Jan. 3, 2011)
In this claim for accidental death benefits, a factual dispute arose over policy exclusions given the circumstances of death. The deceased, Darnell Berryman, died six days after receiving 17 stitches for a knife wound to his face. He was on prescribed medication after the stitches but h also had a history of sleep anea. The death certificate and autopsy report listed the cause of death as “Acute Toxicity due to the Combined Effects of Hydrocodone, Alprazom, Carisprodol, and Promethazine.”
As explained in more detail below, the carrier denied the parents’ claim for death benefits. The issue before the court, however, was not simply whether that denial should be overturned.
In fact, the insurer and the claimants agreed that further proceedings were appropriate before judicial review — they just couldn’t agree on the extent of those proceedings.
To wit:
The issue is the scope of the claim administrator’s work on remand when the parties have agreed to the remand. The plaintiff claimants ask this court to limit the remand to the existing administrative record, with an instruction on the relevant law. The defendant insurer/claims administrator asks this court to allow it to reopen the investigation to obtain additional factual information and medical records.
The court ultimately concluded that the additional investigation would be permitted but provided the requested instruction that the summary plan description standard of causality applied rather than policy language.
On remand, the parties may conduct additional medical investigation and add to the administrative record relevant to LINA’s determination of benefit eligibility, specifically, whether Darnell Berryman’s death was a loss “caused by or resulting from” sleep apnea. The benefit determination must be made under the binding Fifth Circuit law that when the terms of the policy and SPD conflict, the SPD controls and any ambiguity must be resolved in favor of coverage.
Reliance on SPD Not Required
The factual dispute over cause of death involved two possible policy exclusions. The first involved different language in the policy versus the summary plan description. The carrier did not consider the SPD language which the court ruled was error.
This record in this case shows that LINA’s original determination was based on two policy exclusions. One of those exclusions was different from a similar provision in the SPD. The policy allowed the plan administrator to exclude benefits on a slight showing of a causal link between the insured’s preexisting sleep apnea and his death. The SPD required a more stringent showing that the preexisting sleep apnea caused the death.
LINA did not consider the SPD exclusion. This was error. See Washington v. Murphy Oil USA, Inc., 497 F.3d 453, 457 (5th Cir. 2007); see also Hansen v. Continental Ins. Co., 940 F.2d 971, 982 (5th Cir. 1991) (”[T]he summary plan description is binding, and [ ] if there is a conflict between the summary plan description and the terms of the policy, the summary plan description shall govern.”).
An insured need not have relied on the SPD for the terms in that document to control over inconsistent policy terms. Rhorer v. Raytheon Eng’rs & Constructors, Inc., 181 F.3d 634, 644 n.12 (5th Cir. 1999) (”This Court has never held that an ERISA claimant must prove reliance on a summary plan description in order to prevail on a claim to recover benefits.”). “[A]mbiguity in the summary plan description must be resolved in favor of the employee and made binding against the drafter.” Hansen, 940 F.2d at 982. LINA also applied the exclusion for voluntary drug use, which is not in the SPD. “When, as here, the administrator construes a plan provision erroneously, the court should not decide itself whether benefits should be awarded but rather should remand to the administrator for it to make that decision under the plan, properly construed.” Collinsworth, 404 F. Supp. 2d at 923 (quoting Saffle v. Sierra Pac. Power Co. Bargaining Unit Long Term Disability Income Plan, 85 F.3d 455, 456 (9th Cir. 1996)) (alterations omitted)
Addition To Record On Remand
The court noted that the Fifth Circuit permitted mutual agreement to remand a case to the plan administrator. The scope of that review, however, presented a significant issue.
The Fifth Circuit has also recognized that voluntary remand to the plan administrator may be appropriate. See Barhan v. Ry-Ron, Inc., 121 F.3d 198, 202 n. 5 (5th Cir. 1997) (”[I]f either party concludes that additional factual development is necessary, it may move to remand to the plan administrator for further factual development.”). . . .
The issue in the present case is whether the claim administrator may add to the record when the parties have agreed to remand because the claim administrator arguably applied an incorrect standard in making the factual determination on benefit eligibility. The parties assert that they have found no cases identifying limits on the scope of remand when the remand is voluntary. But even if the parties had not agreed to the remand, this court would order it because the standards for remand are met. The cases discussing the scope of remand apply even if they do not involve voluntary remands.
The Court accepted the carrier’s argument that the record should be supplemented by additional investigation:
LINA argues that given the more stringent causal relationship required to exclude coverage for the death under the SPD and other differences between the policy and SPD exclusions and definitions, it needs to obtain additional medical information to enable it to determine whether the death was covered. . . . [B]ecause the standard for excluding coverage is more stringent under the SPD than under the policy provisions that LINA applied, LINA needs to conduct a more searching inquiry that will likely require investigation to obtain additional medical information.
Not only must LINA apply a more stringent standard, the plaintiffs have also alleged that LINA obtained incomplete records on the deceased’s prescription drugs and non-prescription but medically supervised or appropriate drug usage. These allegations are an additional reason the inquiry requires additional investigation into relevant medical information.
Remand Rather Than Award Appropriate
The case presented the familiar issue of the proper course of action when a plan administrator errs. Should the court determine the issue or remand for further proceedings? The court chose the latter course:
LINA also applied the exclusion for voluntary drug use, which is not in the SPD. “When, as here, the administrator construes a plan provision erroneously, the court should not decide itself whether benefits should be awarded but rather should remand to the administrator for it to make that decision under the plan, properly construed.” Collinsworth, 404 F. Supp. 2d at 923 (quoting Saffle v. Sierra Pac. Power Co. Bargaining Unit Long Term Disability Income Plan, 85 F.3d 455, 456 (9th Cir. 1996)) (alterations omitted)
Note: The question of remand and the administrative law analogy can be frustrating for claimants. Nonetheless, the federal courts have almost uniformly adopted the administrative agency metaphor for review of benefit denials notwithstanding the fact that the APA does not apply to such proceedings and ERISA itself makes no reference to this approach.
The district court observed that:
A district court’s function when reviewing ERISA claims is like an appellate court’s. “[The court] does not take evidence, but, rather, evaluates the reasonableness of an administrative determination in light of the record compiled before the plan fiduciary.” Leahy v. Raytheon Co., 315 F.3d 11, 18 (1st Cir.2002).
Furthermore, the determination, in the court’s view, must typically be offered back to the plan administrator except where the errors are patent. On this point, the court states:
When a court determines that a plan administrator’s decision is arbitrary and capricious, a court may determine that it can award benefits or it may remand the case for further evaluation. Flinders v. Workforce Stabilization Plan of Phillips Petroleum Co., 491 F.3d 1180, 1194 (10th Cir. 2007), abrogation on other grounds recognized by Holcomb v. Unum Life Ins. Co. of Am., 578 F.3d 1187 (10th Cir. 2009). Awarding benefits without remand is appropriate “only if the evidence clearly shows that the administrator’s actions were arbitrary and capricious, or the case is so clear cut that it would be unreasonable for the plan administrator to deny the application for benefits on any ground.” Lafleur v. La. Health Sevrv. & Indem. Co., 563 F.3d 148, 158 (5th Cir. 2009) (quoting Caldwell v. Life Ins. Co. of N. Am., 287 F.3d 1276, 1288-89 (10th Cir. 2002)). “If the administrative [*11] record reflects, at minimum, a colorable claim for upholding the denial of benefits, remand is usually the appropriate remedy.” Id. (citing Gagliano v. Reliance Standard Life Ins. Co., 547 F.3d 230, 240 (5th Cir. 2008)); Duhon v. Texaco, Inc., 15 F.3d 1302, 1309 (5th Cir. 1994) (if a district court finds that the plan administrator had insufficient evidence before it to determine whether the insured met the plan definition of disability, the appropriate relief is remand of the case to the plan administrator with instructions to take additional evidence); DeGrado v. Jefferson Pilot Fin. Ins. Co., 451 F.3d 1161, 1175 (10th Cir. 2006) (if the plan administrator “fail[s] to make adequate findings or to explain adequately the grounds of [its] decision, the proper remedy is to remand the case to the administrator for further findings or explanation.”); Gallo v. Amoco Corp., 102 F.3d 918, 923 (7th Cir. 1996) (”The remedy when a court or agency fails to make adequate findings or to explain its grounds adequately is to send the case back to the tribunal for further findings or explanation. . . . This is the appropriate remedy in an ERISA case just as in a conventional appeal.”) (internal citations [*12] omitted); Blum v. Spectrum Restaurant Grp., Inc., 261 F. Supp. 2d 697, 710-11 (E.D. Tex. 2003) (the proper remedy for an incomplete administrative record is to remand to the plan administrator, not consideration of evidence outside the administrative record by a district court; if there is no request for remand to the plan administrator and the plaintiff asserts that pursuing further administrative remedies would be futile, the court must limit its review to the administrative record in considering the plaintiff’s ERISA claim); Collinsworth v. AIG Life Ins. Co., 404 F. Supp. 2d. 911, 923 (N.D. Tex. 2005) (remand is appropriate because the defendant’s factual analysis was based on an erroneous interpretation of the benefit plan, requiring additional factual determinations to be made to determine if the plaintiff was eligible for benefits, the defendant had provided some evidence to support its decision, and there was no evidence of excessive delay on the defendant’s part.)
Discovery – While the plan administrator may get another bite at the apple, there may be some sense of asymmetry when the claims seeks investigative alternatives. For example:
Courts cannot consider additional evidence “resolve the merits of the coverage determination—i.e. whether coverage should have been afforded under the plan-unless the evidence is in the administrative record, relates to how the administrator has interpreted the plan in the past, or would assist the court in understanding medical terms and procedures.” Crosby v. La. Health Serv. & Indem. Co., — F.3d —, No. 10-30043, 2010 U.S. App. LEXIS 26323, *8, 2010 WL 5356498 (5th Cir. Dec. 29, 2010). A claimant is not permitted to explore, through discovery in an ERISA lawsuit, what information a plan administrator “should have considered” in making its benefits determination, as opposed to analyzing the information that the plan administrator “did consider” in making its decision. Griffin, 2005 U.S. Dist. LEXIS 18720, 2005 WL 4891214, at *2.