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Supreme Court remands ERISA case
November 27, 2006 by Ross Runkel at LawMemo
Metropolitan Life Ins Co v. Hawkins-Dean (US Supreme Court 11/27/2006) | Order
Case below: Hawkins-Dean v. Metropolitan Life Ins Co (9th Cir 01/06/2006)
Hawkins-Dean sued an ERISA plan administrator seeking long-term disability payments under her employer's group insurance policy. The administrator first denied eligibility and then admitted eligibility for benefits, and calculated that at 60 percent of Hawkins-Dean's earnings - excluding stock options. The trial court held that the administrator had discretion under the plan and did not abuse its discretion in calculating benefits.
The 9th Circuit reversed. First, the 9th Circuit said that the administrator had discretion under the plan. Then the 9th Circuit said that the district court should have reviewed the benefits amount using a de novo standard. The court said, "MetLife's denial and subsequent concession of eligibility for disability benefits was material, probative evidence tending to show that MetLife's decision regarding the amount of benefits due to Hawkins-Dean was affected by self-interest."
The administrator petitioned the US Supreme Court for certiorari in May 2006. Later, the 9th Circuit decided Abatie v. Alta Health and Life Insurance, 458 F.3d 955 (9th Cir en banc 08/15/2006). Abatie signaled a totally different approach to ERISA cases in which a plan administrator denies benefits and (1) the wording of the plan confers discretion on the plan administrator; and (2) the plan administrator has a conflict of interest.
The US Supreme Court vacated the 9th Circuit's judgment in Metropolitan Life Ins Co v. Hawkins-Dean and remanded for further consideration in light of Abatie.
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