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Standard of review in ERISA benefits denial
February 07, 2006 by Ross Runkel at LawMemo

What is the standard of review for a court reviewing an ERISA-regulated benefit plan' denial of benefits?

• "abuse of discretion"?
• "de novo"?

The default rule is that review is "de novo."

The review is "abuse of discretion" if the plan gives the administrator discretionary authority to determine eligibility or benefits.

Even then, the review will be "de novo" if the plan is operating under a conflict of interest that reaches a level that the court thinks might have actually made a difference.

The 9th Circuit has ordered an en banc review of such a case and has withdrawn the earlier decision of a three-judge panel. The order: Abatie v. Alta Health & Life (9th Cir 02/06/2006).

Karla Abatie sued the administrator of an ERISA-regulated benefit plan for denying her claim for life insurance benefits. The trial court held that "abuse of discretion" was the standard of review, and denied Abatie's claim.

A 9th Circuit panel affirmed (2-1). Abatie v. Alta Health & Life (9th Cir 08/31/2005) (this opinion has been withdrawn, but you can still read it).

The DISSENT argued that "de novo" was the correct standard of review on the grounds that the administrator had a conflict of interests, and violated ERISA's procedural protections by ignoring a probative deposition and by adding an additional reason late in the internal appeals process.

For more, see my original source Workplace Prof Blog: Ninth Circuit Grants En Banc Review to Determine Proper Standard of Review in Denial of Benefits Case.

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