Opinion ID: 164315
Heading Depth: 4
Heading Rank: 1

Heading: First tier

Text: 36 Under the first tier, if a benefit plan gives discretion to an administrator... who is operating under a conflict of interest, that conflict must be weighed as a factor in determining whether there is an abuse of discretion. Firestone, 489 U.S. at 115, 109 S.Ct. 948 (internal quotations omitted). When reviewing a plan administrator's decision made under any conflict of interest, therefore, the reviewing court must afford the administrator less deference, see id., without placing such an onerous burden on the administrator as to make voluntarily provided benefits cost prohibitive. See Kathryn J. Kennedy, Judicial Standard of Review in ERISA Benefit Claim Cases, 50 Am. U.L.Rev. 1083, 1087-88 (2001) (hereinafter, Kennedy, Judicial Standard ). 37 Professor Kennedy suggests a procedure for decreasing deference for first-tier cases that we find persuasive. 38 [T]o further protect participants and beneficiaries in such conflict of interest contexts, [courts should] shift[] the burden to the fiduciary to justify the reasonableness of its decision. This puts the plan administrator on notice that its decisions will be judged for their reasonableness and provides the courts with a record that must show that the conflict of interest did not taint such decision. Such a result is still consistent with the Firestone admonition to consider as a factor any conflict of interest, but provides more direction for the courts in the application of the reasonableness standard. 39 Id. at 1174. 40 This burden shifting approach for first-tier cases has numerous advantages. First, it comports with our post- Firestone holdings that, even in cases of conflict of interest, the arbitrary and capricious standard provides the appropriate level of review. See Chambers, 100 F.3d at 827. Second, it provides clear direction to district courts, lawyers, and potential litigants. Third, it provides the less deferential review that we must accord a conflicted plan administrator without unduly raising insurance costs. See Sandoval v. Aetna Life & Cas. Ins. Co., 967 F.2d 377, 380 (10th Cir.1992) (A primary goal of ERISA was to provide a method for workers and beneficiaries to resolve disputes over benefits inexpensively and expeditiously.). Thus, in all cases in which a plan administrator acted while subject to a conflict of interest, the plan administrator should bear the burden to prove the reasonableness of its actions, pursuant to our arbitrary and capricious standard of review. 41