Opinion ID: 2543
Heading Depth: 3
Heading Rank: 3

Heading: The New Standard

Text: According to principles of trust law, a benefit determination is a fiduciary act, and courts must review de novo a denial of plan benefits unless the plan provides to the contrary. See Glenn, 128 S.Ct. at 2347-48. However, where the plan grants the administrator discretionary authority to determine eligibility benefits, a deferential standard of review is appropriate. See id. at 2348. Under the deferential standard, a court may not overturn the administrator's denial of benefits unless its actions are found to be arbitrary and capricious, meaning without reason, unsupported by substantial evidence or erroneous as a matter of law. Pagan, 52 F.3d at 442. Where both the plan administrator and a spurned claimant offer rational, though conflicting, interpretations of plan provisions, the administrator's interpretation must be allowed to control. Pulvers, 210 F.3d at 92-93 (internal quotation marks and alteration omitted). Nevertheless, where the administrator imposes a standard not required by the plan's provisions, or interprets the plan in a manner inconsistent with its plain words, its actions may well be found to be arbitrary and capricious. Id. at 93 (internal quotation marks and alteration omitted). Following Glenn, a plan under which an administrator both evaluates and pays benefits claims creates the kind of conflict of interest that courts must take into account and weigh as a factor in determining whether there was an abuse of discretion, but does not make de novo review appropriate. See Glenn, 128 S.Ct. at 2348. This is true even where the plaintiff shows that the conflict of interest affected the choice of a reasonable interpretation. See id. [W]hen judges review the lawfulness of benefit denials, they [should] take account of several different considerations of which a conflict of interest is one. Id. at 2351. The weight given to the existence of the conflict of interest will change according to the evidence presented. [W]here circumstances suggest a higher likelihood that [the conflict] affected the benefits decision, including, but not limited to, cases where an insurance company administrator has a history of biased claims administration, the conflict of interest should prove more important (perhaps of great importance). .... It should prove less important (perhaps to the vanishing point) where the administrator has taken active steps to reduce potential bias and to promote accuracy, for example, by walling off claims administrators from those interested in firm finances, or by imposing management checks that penalize inaccurate decisionmaking irrespective of whom the inaccuracy benefits. Id. (citation omitted). As the Supreme Court has said, this kind of review is no stranger to the judicial system, and judges will be able to determine lawfulness by taking account of several different, often case specific, factors, reaching a result by weighing all together. Id. In light of these changes, the question McCauley raised of whether the district court erred in refusing to review the benefit denial de novo is no longer pertinent. The question remains, however, whether the district court erred in finding that, as a matter of law, First Unum's denial was not arbitrary or capricious. We now turn to that question.