This post will be updated to include commentary on the decision in Metlife v. Glenn.
First up, Paul Secunda updates us with a fine analysis in “Holding Pat and Satisfying No One: The Glenn ERISA Conflict of Interest Decision”.
In what I am sure will be an unsatisfactory opinion for many, the Supreme Court in Metlife v. Glenn, in a very fractured (5-1-1-2) decision has basically left the Firestone discretionary review standard alone in ERISA denial of benefit claims under Section 502(a)(1)(B).
You can read Paul’s analysis here.
Update – 6/20/08
Stephen Rosenberg, at the Boston ERISA and Insurance Litigation Blog, observes:
Personally, and as I have argued in posts in the past, my own experience in the courtroom makes me favor what turned out to be the Chief Justiceâ€™s take, not accepted by the majority, that the rule should simply be that the conflict can only be taken into account in reviewing the administratorâ€™s decision upon proof that the administratorâ€™s decision was animated or otherwise affected in some manner by the conflict.
As the case turned out, however, Stephen notes that the path chosen by the Court leaves the standard amorphous and unpredictable.
You will find a concise statement of the facts and the issues on Suzanne Wynn’s site, where she concludes that:
This decision may not look that significant, but I think this decision will be viewed in hindsight as cutting the gordian knot if it results in divorcing the act of administering plans and evaluating claims for benefits from the act of paying those benefits, not that such a change is needed except in Glenn-type situations.
And Brian King comments here, including the delightfully ironic comment by Justice Roberts:
But Chief Justice Roberts may summarize the decision best in his concurrence when he says, “[i]n a triumph of understatement, the Court acknowledges that its approach ‘does not consist of a detailed set of instructions.”
From a claimant’s perspective, however, Brian sees the decision as a complete rejection of the “just trust the insurer” approach favored by MetLife and its amici.
On the BNA Pension & Benefits Blog, Andrew Oringer explains the new regime as follows:
Under MetLife, the standard continues to be the abuse-of-discretion standard. However, the degree and nature of any conflict of interest is taken into account as a factor in determining whether there has a been an abuse of discretion. Thus, the governing rules are clear, but the application of those rules may vary with the facts and circumstances of each case.
The Court in MetLife recognizes the lack of certainty its decision brings, but asserts that the result is a workable one. As with the fallout from so many Supreme Court decisions, we’ll have to wait and see.
Andrew suggests that plan administrators may take the decision as signaling a need for procedural safeguards, such as taking steps “to reduce potential bias and promote accuracy, for example by walling off claims administrators from those interested in firm finances, or by imposing management checks that penalize inaccurate decisionmaking regardless of who benefits.”
While sharing the consensus view that the decision falls well short of a bright line standard, Troy Rosasco, at the New York Disability Law Blog, shares Brian King’s view that the decision is good for ERISA claimants, stating:
it seems clear that: 1) this is generally a good decision for ERISA long term disability claimants and 2) ERISA long term disability lawyers and courts will be struggling to apply the Supreme Court’s intentionally vague “factor test” for years to come.
Forbes comments on the case briefly noting that the decision could increase business costs. The New York Times, however, suggests that employers are not alarmed at the decision, quoting Lonie Hassel at the Groom Law Group:
â€œThis is going to put the thumb on the scale in the employeesâ€™ favor,â€ said Lonie A. Hassel, a partner at the Groom Law Group in Washington who represents companies in employee benefits litigation. â€œBut I think itâ€™s only going to make a difference in close cases.â€
And, in fact, the NYT notes disappointment among those supporting the claimant’s side of the issue, quoting Professor John Langbein:
â€œWe had hoped the court would give greater clarity and guidance in these cases,â€ said John H. Langbein, a Yale law professor who is an authority on employee benefits law. â€œBut they did not move the ball at all.â€
And, the quote of the day, will have to go to Justice Scalia, who found the opinion â€œpainfully opaque, despite its promise of elucidation.â€ In my view, that may, somewhat ironically, serve as one of the more concrete advantages in the case to ERISA claimants – by leaving the question of conflict and its effect to the resolution of a factor-based test, the Court has perhaps left sufficient doubt on the issue to motivate settlements in close cases.
Critics of the Courtâ€™s decision will likely object that this process for weighing an administratorâ€™s conflict of interest is amorphous and unpredictable. The Court, doubtless anticipating that charge, asserted that further clarity is neither possible nor desirable: â€œThere are no talismanic words that can avoid the process of judgment. . . . [T]he want of certainty in judicial standards partly reflects the intractability of any formula to furnish definiteness of content for all the impalpable factors involved in judicial review.â€
Opinion overview at SCOTUSBLOG
Plan fiduciaries may be protected by taking procedural actions, such as isolating claims administrators from management or employer influence, to prevent any possible conflict from tainting the claim review process, according to the Court. But the Court refused to create a bright-line test for reviewing claims decisions even when such protections are in place.
But thereâ€™s an area I havenâ€™t seen a lot of discussion about and that I and other ERISA lawyers will be dealing with regularly: what latitude will the federal courts give claimants to develop the information this decision identifies as being relevant to consideration of conflict in a benefit denial case? What will the federal judiciary require of claimants to be in a position to present information about conflict of interest? Does Glenn open the door to more discovery about conflict of interest? Or will claimants be required to more diligently uncover information about conflict of interest before litigation begins?
Brian King touches on an extremely important aspect of the MetLife case in this post. He observes:
My prediction is that Glenn will cause renewed effort by good claimants’ counsel to uncover facts relating to conflict of interest.
The majorityâ€™s decision could have wide-ranging, though apparently unforeseen, implications in thediscovery setting. Undoubtedly claimants will now seek to admit evidence of an alleged â€œhistory ofbiased claims administrationâ€ as part of the multi-factor analysis.