:: Discretionary Authority: Limited To Claims Decisions Or Extended To All Plan Interpretations?

he Supreme Court granted cert. in Frommert v. Conkright, a Second Circuit opinion, on the following issues:

Question presented:

1. Whether the Second Circuit erred in holding, in conflict with decisions of this Court and other Circuits, that a district court has no obligation to defer to an ERISA plan administrator’s reasonable interpretation of the terms of the plan if the plan administrator arrived at its interpretation outside the context of an administrative claim for benefits.

2. Whether the Second Circuit erred in holding, in conflict with decisions of other Circuits, that a district court has “allowable discretion” to adopt any “reasonable” interpretation of the terms of an ERISA plan when the plan interpretation issue arises in the course of calculating additional benefits due under the plan as a result of an ERISA violation.

As I read the facts, once the offset method was deemed an impermissible cutback the problem arose as to fashioning a remedy that would take the place of the prohibited phantom account method. So I don’t see the petitioner changing its rationale so much as attempting to renew its interpretation of the plan provisions in a manner that implements the plan provisions forbidding duplication of benefits but in a way that does not constitute a cut back.

The petitioner lost a valuable opportunity by not asking the court to remand to the plan administrator for this purpose, thus waiving the issue. On the other hand, I read the Second Circuit opinion as rather flippant as to the plan administrator’s opinion in view of the usual deference given. In my opinion that tone does not bode well in view of the discretion lavished on plan administrators in Firestone and Glenn. I do not mean to say by this that Glenn was a discretion case like Firestone, but rather that the entire conflict issue was subsumed in a reaffirmation of the abuse of discretion/de novo dichotomy with an explicit aversion to special rules and distinctions.

For primary source references, see Prof. Runkel’s Law Memo here.

Cross posted to erisaboard.com.