Opinion ID: 215106
Heading Depth: 2
Heading Rank: 2

Heading: Law Beyond This Circuit

Text: In the absence of clear guidance from either this court or the Supreme Court, we look to the law of other circuits. The circuit courts have articulated the abuse of discretion standard afforded to ERISA plan administrators under Bruch in various ways. Jayne E. Zanglein & Susan J. Stabile, ERISA Litigation 550 (3d ed.2008). We do not delve into how the circuits have formulated this standard for all cases in which an ERISA plan administrator has power to make benefit determinations. Rather, we limit our attention to the question of when an ERISA plan administrator, acting pursuant to a grant of power to construe the plan's terms, construes the plan in a manner that is unreasonable and thus abuses its discretion. At the outset, we note that [i]t is notoriously difficult to venture a general definition of the term `abuse of discretion,' and none is canonical; indeed, the term has different meanings in different legal contexts. Evans v. Eaton Corp. Long Term Disability Plan, 514 F.3d 315, 321-22 (4th Cir.2008). As Judge Wilkinson wrote in Evans, the standard draws a lineor rather demarcates a regionbetween the unsupportable and the merely mistaken, between the legal error, disorder of reason, severe lapse of judgment, and procedural failure that a reviewing court may always correct, and the simple disagreement that, on this standard, it may not. Id. at 322 (citing Harry T. Edwards & Linda Elliott, Federal Standards of Review 68 (2007)). It goes without saying that terms like reasonable, which underlie the standard here, are similarly difficult to define precisely. It also bears emphasis that this standard of review, which concerns a fiduciary element of the role of an ERISA plan administrator, must reflect the relevant principles of trust law, rather than the law of contracts. Mathews v. Sears Pension Plan, 144 F.3d 461, 465 (7th Cir.1998); see also Bruch, 489 U.S. at 111, 109 S.Ct. 948. As the Supreme Court has held, trust law can ask judges to determine lawfulness by taking account of several different, often case-specific, factors, reaching a result by weighing all together. Glenn, 554 U.S. at 117, 128 S.Ct. 2343. In this context, our analysis must weigh the values advanced by ERISA in empowering plan administrators as fiduciaries, cf. Evans, 514 F.3d at 323, with the dangers policed by the statute arising from breach of fiduciary duty, cf. Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 141 n. 8, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985). In their review of ERISA plan constructions like the one presented in this case, courts beyond this circuit have looked to the language and purpose of the plan. In some circuits, the analysis has been conducted with reference to the consistency of an administrator's construction with the plain meaning of the plan. See Boyd v. Bert Bell/Pete Rozelle NFL Players Ret. Plan, 410 F.3d 1173, 1178 (9th Cir.2005); Wagener v. SBC Pension Benefit Plan Non Bargained Program, 407 F.3d 395, 404 (D.C.Cir.2005); Pagan v. NYNEX Pension Plan, 52 F.3d 438, 443 (2d Cir. 1995); Fuller v. CBT Corp., 905 F.2d 1055, 1060 (7th Cir.1990). These circuits have not defined how courts should determine whether an interpretation does not accord with an ERISA plan's plain meaning. At least four circuits have advanced more specific standards. The Fifth Circuit has split the inquiry into two steps, each of which contains three guiding factors, while the Third, Fourth, and Eighth circuits have listed a general set of guidelines. The Fifth Circuit first asks whether an administrator's interpretation is legally correct. Chacko v. Sabre, Inc., 473 F.3d 604, 611 (5th Cir.2006). In so doing, it considers (1) whether the administrator has given the plan a uniform construction; (2) whether the interpretation is consistent with a fair reading of the plan; and (3) any unanticipated costs resulting from different interpretations of the plan. Id. If the interpretation is legally correct, it must stand; if it is not, the court considers three factors to determine if it is an abuse of discretion: (1) the internal consistency of the plan under the administrator's interpretation, (2) any relevant regulations formulated by the appropriate administrative agencies, and (3) the factual background of the determination and any inferences of lack of good faith. Gosselink v. Am. Tel. & Tel., Inc., 272 F.3d 722 (5th Cir.2001). The Third, Fourth, and Eighth circuits each employs a multi-factor test to determine whether a plan construction constitutes an abuse of discretion. The Third and Eighth circuits each considers the following five factors: (1) whether the administrator's language is contrary to the clear language of the plan; (2) whether the interpretation conflicts with the substantive or procedural requirements of ERISA; (3) whether the interpretation renders any language of the plan meaningless or internally inconsistent; (4) whether the interpretation is consistent with the goals of the plan; and (5) whether the administrator has consistently followed the interpretation. Manning v. Am. Republic Ins. Co., 604 F.3d 1030, 1041-42 (8th Cir.2010); see also Howley v. Mellon Fin. Corp., 625 F.3d 788, 795 (3d Cir.2010). The Fourth Circuit's non-exhaustive list of factors includes these five factors as well as whether the decisionmaking process was reasoned and principled, any external standard relevant to the exercise of discretion, and the fiduciary's motives and any conflict of interest it may have. Carden v. Aetna Life Ins. Co., 559 F.3d 256, 261 (4th Cir.2009).