Opinion ID: 3038689
Heading Depth: 2
Heading Rank: 1

Heading: The Proper Standard of Review of Feibusch’s

Text: Benefits Denial [1] Following Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), we held that district courts must review ERISA benefit denial claims de novo unless the discretion to grant or deny claims is unambiguously retained by a plan administrator or fiduciary. Kearney v. Standard Ins. Co., 175 F.3d 1084, 1090 (9th Cir. 1999) (en banc). Recently, in Abatie v. Alta Health & Life Ins. Co., No. 03-55601, slip op. 9625, 9636-37 (9th Cir. Aug. 15, 2006) (en banc), we explained: When a plan does not confer discretion on the administrator to determine eligibility for benefits or to construe the terms of the plan, a court must review the denial of benefits de novo regardless of whether the plan at issue is funded or unfunded and regard- 10902 FEIBUSCH v. SUN LIFE ASSURANCE less of whether the administrator or fiduciary is operating under a possible or actual conflict of interest. De novo is the default standard of review. If de novo review applies, no further preliminary analytical steps are required. The court simply proceeds to evaluate whether the plan administrator correctly or incorrectly denied benefits, without reference to whether the administrator operated under a conflict of interest. But if the plan does confer discretionary authority as a matter of contractual agreement, then the standard of review shifts to abuse of discretion. We have held that, for a plan to alter the standard of review from the default of de novo to the more lenient abuse of discretion, the plan must unambiguously provide discretion to the administrator. The essential first step of the analysis, then, is to examine whether the terms of the ERISA plan unambiguously grant dis- cretion to the administrator. (internal quotations and citations omitted, emphasis in original). [2] The dispositive policy language in Feibusch’s case is that proof of a disability claim “must be satisfactory to Sun Life.” This language does not unambiguously provide discretion to the plan administrator. This conclusion clearly follows from our case law. In Sandy v. Reliance Standard Life Ins. Co. we stated, “Neither the parties nor the courts should have to divine whether discretion is conferred. It either is, in so many words, or it isn’t.” 222 F.3d 1202, 1207 (9th Cir. 2000). We subsequently emphasized: If an insurance company seeking to sell and administer an ERISA plan wants to have discretion in mak- ing claims decisions, it should say so. It is not difficult to write, “The plan administrator has discreFEIBUSCH v. SUN LIFE ASSURANCE 10903 tionary authority to grant or deny benefits under this plan.” . . . [I]t is easy enough to confer discretion unambiguously if plan sponsors, administrators, or fiduciaries want benefits decisions to be reviewed for abuse of discretion. Ingram v. Martin Marietta Long Term Disability Income Plan, 244 F.3d 1109, 1113-14 (9th Cir. 2001) (internal quotation omitted). [3] In light of these guiding statements, the Sun Life policy language does not merit deferential judicial review. Because the Sun Life policy does not unambiguously indicate that the plan administrator “has authority, power, or discretion to determine eligibility or to construe the terms of the Plan, the standard of review will be de novo.” Sandy, 222 F.3d at 1207. This is not to say that “magic words” are required for a plan to reserve discretion. See Abatie, slip op. at 9637. Instead, the Sun Life policy language simply does not clearly indicate that Sun Life has discretion to grant or deny benefits. Indeed, the language makes no reference whatsoever to granting or denying benefits, and is included under the policy heading “What is considered proof of claim?” We construe ERISA policy ambiguities in favor of the insured. See Thomas v. Oregon Fruit Products Co., 228 F.3d 991, 994 (9th Cir. 2000). [4] In Thomas, we held that the ERISA policy term “[beneficiary must provide] satisfactory proof of Total Disability to us” was insufficient to merit deferential judicial review. Id. We explained that one possible interpretation of the term was that proof must be “satisfactory to us,” which would “arguably confer[ ]” discretion on the plan administrator. Id. (emphasis in original). Under this reasoning, if language only arguably confers discretion, it does not unambiguously confer discretion and cannot escape the default of de novo review. We also note with approval the Second Circuit’s persuasive analysis of similar policy language: 10904 FEIBUSCH v. SUN LIFE ASSURANCE [T]he phrase “proof satisfactory to [the decisionmaker]” is an inadequate way to convey the idea that a plan administrator has discretion. Every plan that is administered requires submission of proof that will “satisfy” the administrator . . . . [T]he administrator’s burden to demonstrate insulation from de novo review requires either language stating that the award of benefits is within the discretion of the plan administrator or language that is plainly the functional equivalent of such wording . . . . [C]ourts should require clear language and decline to search in semantic swamps for arguable grants of discre- tion. Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 252 (2d Cir. 1999). [5] Finally, we examine our ERISA cases that have held abuse of discretion review to be appropriate. We conclude that these cases involve policy provisions that are far clearer in conferring discretion in plan administrators than the provision at issue in Sun Life’s policy. See Abatie, slip op. at 9637 (“The responsibility for full and final determinations of eligibility for benefits; interpretation of terms; determinations of claims; and appeals of claims denied in whole or in part . . . rests exclusively with [insurer].”); Jordan v. Northrop Grumman Corp. Welfare Benefit Plan, 370 F.3d 869, 875 (9th Cir. 2004) (“[Insurer] has the discretion to construe and interpret the terms of the Plan and the authority and responsibility to make factual determinations.”); Bergt v. Ret. Plan for Pilots Employed by MarkAir, Inc., 293 F.3d 1139, 1142 (9th Cir. 2002) (Administrator has “power” and “duty” to “interpret the plan and to resolve ambiguities, inconsistencies and omissions” and to “decide on questions concerning the plan and the eligibility of any Employee . . .” ); McDaniel v. Chevron Corp., 203 F.3d 1099, 1107 (9th Cir. 2000) (“[Plan Administrator has] sole discretion to interpret the terms of the Plan”); Friedrich v. Intel Corp., 181 F.3d 1105, 1110 n.5 (9th Cir. FEIBUSCH v. SUN LIFE ASSURANCE 10905 1999) (“[Insurer] shall have the sole discretion to interpret the terms of the Plan and to determine eligibility for benefits.”). Because we have concluded that a de novo standard of review applies, we need not reach Feibusch’s arguments that abuse of discretion review is improper because of 1) an improper delegation of discretion from IDT to Sun Life, or 2) Sun Life’s conflict of interest in being both the payor and administrator of benefits. These issues are only pertinent to an abuse of discretion standard of review.