Legal Document

128 S. Ct. 2343 (2008) METROPOLITAN LIFE INSURANCE COMPANY, et al., Petitioners, v. Wanda GLENN. No. 06-923. Supreme Court of United States. Argued April 23, 2008. Decided June 19, *2346 Amy K. Posner, Michelle M. Constandse, Long Island City, NY, Lee T. Paterson, Winston & Strawn LLP, Los Angeles, CA, Miguel A. Estrada, Counsel Record, Amir C. Tayrani, Minodora D. Vancea, Gibson, Dunn Crutcher Washington, D.C., Gene Schaerr, for Petitioners. Stanley L. Myers, Law Offices Columbus, Ohio, Ted Sichelman, University California School Law, Berkeley, California, E. Joshua Rosenkranz, Jeremy N. Kudon, Malaika Eaton, Sara Pildis, Heeler Ehrman New York, Respondent. Justice BREYER delivered the opinion Court. The Employee Retirement Income Security Act 1974 (ERISA) permits a person denied benefits under an employee benefit plan to challenge that denial in federal court. 88 Stat. 829, as amended, 29 U.S.C. § 1001 seq.; see 1132(a)(1)(B). Often entity administers plan, such employer or insurance company, both determines whether is eligible and pays out its own pocket. We here decide this dual role creates conflict interest; reviewing court should consider factor determining administrator has abused discretion denying benefits; significance will depend upon circumstances particular case. See Firestone Tire Rubber Co. Bruch, 489 U.S. 101, 115, 109 948, 103 Ed. 2d 80 (1989). I Petitioner Metropolitan Life Insurance Company (MetLife) serves insurer Sears, Roebuck Company's long-term disability ERISA-governed plan. App. 182a-183a; 1003. grants MetLife (as administrator) discretionary authority determine employee's claim valid; it simultaneously provides insurer) itself pay valid claims. 181a-182a. Respondent Glenn, Sears employee, was diagnosed with severe dilated cardiomyopathy, heart condition whose symptoms include fatigue shortness breath. She applied 2000, concluded she met plan's standard initial 24 months benefits, namely, could not "perform material duties [her] job." Id., at 159a-160a. also directed Glenn law firm would assist her applying Social (some which be entitled receive offset more generous benefits). In 2002, Administrative Judge found Glenn's illness prevented only from performing job but "from any jobs [for qualify] existing significant numbers national economy." Pet. Cert. 49a; 20 CFR 404.1520(g) (2007). Administration *2347 consequently granted permanent payments retroactive 2000. herself kept none backdated benefits: three-quarters went MetLife, rest (plus some additional money) lawyers. To continue receiving after months, had meet stricter, Social-Security-type standard, medical rendered incapable "the gainful occupation which" "reasonably qualified." 160a. extended because "capable full time sedentary work." 31a. After exhausting administrative remedies, brought lawsuit, seeking judicial review MetLife's benefits. 1132(a)(1)(B); 461 F.3d 660, 665 (C.A.6 2006). District relief. appealed Appeals Sixth Circuit. Because "discretionary ... benefits," reviewed record deferential standard. 666. doing so, treated "as relevant factor" "conflict interest" arising fact "authorized those benefits." Ibid. ultimately set aside light combination several circumstances: (1) (2) failure reconcile conclusion work other Administration's not; (3) focus one treating physician report suggesting expense other, detailed reports indicating (4) provide all hired experts; (5) take account evidence stress aggravated condition. id., 674. sought certiorari, asking us evaluates claims operates interest making determinations. Solicitor General suggested we "`how'" "`be taken into on determination.'" Brief States Amicus Curiae 22. agreed questions. 552 ___, 1117, 169 845 (2008). II 80, addressed appropriate determinations by fiduciaries administrators under" 1132(a)(1)(B), ERISA provision issue here. 105, 948; 108, 948. forth four principles "determining review," "guided trust law"; analogize trustee common-law trust; determination fiduciary act (i.e., owes special duty loyalty beneficiaries). 111-113, Aetna Health Inc. Davila, 542 200, 218, 124 2488, 159 312 (2004); Central States, Southeast Southwest *2348 Areas Pension Fund Transport, Inc., 472 559, 570, 105 2833, 86 447 (1985). Principles require courts "under de novo standard" unless contrary. Firestone, U.S., 112, 948 (citing, inter alia, 3 Scott W. Fratcher, Trusts 201, p. 221 (4th ed.1988); G. Bogert Bogert, Trustees pp. 162-168 (2d rev. ed.1980) (hereinafter Bogert); 1 Restatement (Second) Comment b (1957) Restatement)). Where contrary granting eligibility (emphasis added), "[t]rust make appropriate," 111, (citing 187 (abuse-of-discretion standard); 560, 193-208; emphasis added). If "a gives who operating interest, must weighed `factor there abuse discretion.'" supra, (quoting 187, d; added; alteration omitted). questions before us, while implicating first three principles, directly application meaning fourth. III question asks kind Firestone's fourth principle refers. our view, does. That answer clear where funds circumstance, "every dollar provided spent employer; every saved [the employer's] pocket." Bruch Co., 828 F.2d 134, 144 (C.A.3 1987). employer's may counsel favor borderline immediate financial counsels Thus, "interest conflicting beneficiaries," type judges when they acts trust. comment); cf. Black's Dictionary 319 (8th ed.2004) ("conflict "real seeming incompatibility between one's private interests public duties"). Indeed, involved administered evaluated paid And thus circumstance quite possibly what mind mentioned conflicted administrators. parties, disagreeing about matters, created employer. Petitioners 6-7, 27-29, Respondents 9, 26, 22, O.T.1988, 87-1054. points fund administer foresees, implicitly approves, *2349 resulting conflict. But cannot change conclusion. At law, settlor (the establishing trust) approves trustee's does legal need judge later decisionmaking. 107, f (discretionary settlor-approved subject "careful scrutiny"); f, Illustration (conflict considered whether" been "abuse discretion"); d (same); Scott, Ascher, Ascher 18.2, 1342-1343 (5th ed.2007) Scott) (same). also, e.g., 543, 264 (rev.2d ed.1993) (settlor approval simply individual trustee); 543(U), 422-431 17.2.11, 1136-1139 follow "inconsistent language statute, structure, purposes." Hughes Aircraft Jacobson, 525 432, 447, 119 755, 142 881 (1999) (internal quotation marks adds find inconsistent ERISA's efforts avoid complex proceedings, Varity Corp. Howe, 516 489, 497, 116 1065, 134 130 (1996); Congress' deter employers setting up plans, ibid., specifically allowing their 1108(c)(3). these considerations inconsistency. As first, note functions well similar second, have no reason, empirical otherwise, believe decision seriously discourage creation plans. third, just explained why differs together, them outweighed "Congress' desire offer employees enhanced protection Varity, 1065 (discussing "competing congressional purposes" enacting ERISA). less here) rather professional company. Such argue, likely much greater incentive than self-insuring accurate processing. company typically charges fee attempts cost payouts, result paying come same extent company's It marketplace (and regulators) punish products, ingredients fall below par. processing, ingredient product, falls par seeks biased result, one. Why, might ask, inherently market participant, say, manufacturer earn money short run producing product poor quality steel lawyer slowly necessary, thereby accumulating billable hours? Conceding differences, nonetheless purposes exists. For thing, extend selection *2350 An choosing effect buys others (when compared customer himself) interested low rates Cf. Langbein, Trust Regulatory 101 Nw. U.L.Rev. 1315, 1323-1324 (2007) (observing are rarely negotiations). another, imposes higher-than-marketplace standards insurers. sets care administrator, "discharge [its] duties" respect processing "solely participants beneficiaries" 1104(a)(1); underscores importance insisting "provide `full fair review' denials," 113, 1133(2)); supplements regulatory controls denials, Finally, rule treats alike existence can so far those, similar, diminishing severity cases. Part IV, infra. IV turn "how" identified "be determination." 1117 elucidate do statement implies review, review. continues apply decisionmaking trustee, requiring substantively procedurally, his discretion. Comments d-j; f; 1342-1344. reason forsake reliance respect. 111-115, Nor overturn adopting practice bring near universal novoi.e., without deferenceof lion's share denials. America's Plans al. Amici 3-4 (many plans grant combine evaluation payment functions). Had Congress intended system left development said subject. 109, ("ERISA actions 1132(a)(1)(B)"); compare, Gresenz A Flood Litigation? 8 (1999), http://www.rand.org/pubs/issue_papers/2006/IP184.pdf (all Internet materials visited 2008, available Clerk Court's case file) (estimating 1.9 million beneficiaries health each year), *2351 Caseload Federal Courts Remains Steady Overall (Mar. 11, 2008), http://www. uscourts.gov/Press_Releases/2008/ caseload.cfm (257,507 total civil filings 2007); Whitman American Trucking Assns., 531 457, 468, 121 903, 149 (2001) (Congress "hide elephants mouseholes"). Neither necessary desirable create burden-of-proof rules, procedural evidentiary focused narrowly evaluator/payor principle, said, conflicts among many account. Benefits decisions arise too contexts, concern circumstances, relate different ways conflictswhich themselves vary degree seriousnessfor one-size-fits-all promote rules further complexity, adding process already costly seek redress. means word "factor" implies, lawfulness often This stranger system. Not ask taking different, case-specific, factors, reaching weighing together. cf., Citizens Preserve Overton Park, Volpe, 401 402, 415-417, 91 814, 28 136 (1971) (review governmental discretion); Universal Camera NLRB, 340 474, 71 456, 95 456 (1951) agency factfinding). instances, tiebreaker factors closely balanced, closeness depending tiebreaking factor's inherent case-specific importance. here, example, prove important (perhaps great importance) suggest higher likelihood affected decision, including, limited to, cases history administration. 1317-1321 (detailing large insurer). vanishing point) active steps reduce potential bias accuracy, walling off finances, imposing management checks penalize inaccurate irrespective whom inaccuracy Herzel Colling, Chinese Wall Conflict Interest Banks, 34 Bus. 73, 114 (1978) (recommending interdepartmental information walls bank conflicts); Blue Cross Shield Association 15 (suggesting insurers incentives reward processors accuracy); generally J. Mashaw, Bureaucratic (1983) internal sound method accuracy). Appeals' present illustrates combination-of-factors says little assure assessment. gave weight degree; suggests that, context, *2352 alone determinative. F.3d, 666, instead heavily factors. particular, questionable encouraged argue work, received bulk success remainder going lawyers recommended), then ignored agency's finding concluding work. 666-669. course events right (because unreasonableness), justified giving seemingly positions were financially advantageous). furthermore observed emphasized certain favored deemphasized conclusion, failed independent vocational experts evidence. 669-674. All serious concerns, together part, led decision. 674-675. nothing improper way conducted elucidation consist instructions. respect, pertinent comments made somewhat context factfinding. Corp., supra. explaining how reversal examiner's factual findings, did lay down held ultimate adequacy record's support 492-497, 456. holding, noted enunciated precise See, 493, warned against creating formulas "falsif[y] actual judging" serve "instrument[s] futile casuistry." added "are talismanic words judgment." then, now, "[w]ant certainty" "partly reflects intractability formula furnish definiteness content impalpable review." 477, affirm Appeals. ordered. CHIEF JUSTICE ROBERTS, concurring part judgment. join opinion. agree third-party insurer's funder rise decisions. majority, however, comes matter. ante, 2349-2352. majority accord weight, varying indeterminate amount, present. 2351-2352. majority's approach allow bare enhance courts, *2353 even if shown played end increase level scrutiny conflictthat is, most casesthereby undermining deference owed vests them. motivated administrator's No presented judgment Circuit, facts case not. (1989), recognized sponsors could, terms reserve long encouraging formation plans." Pilot Ins. Dedeaux, 481 41, 54, 107 1549, 39 (1987). Ensuring conferred encourages retirement through planssomething required do. 215, (2004). common feature acknowledges "lion's denials" evaluate 2350; Guthrie National Rural Elec. Coop. Assn. Long-Term Disability Plan, 509 644, 650 (C.A.4 2007) (describing use dual-role "`simple commonplace'" Colucci Agfa Severance Pay 431 170, 179 2005)); Hall UNUM 300 1197, 1205 (C.A.10 2002) (declining permit "whenever party payor" arrangement "commonplace"). surely correct retain administrators, order "near novo." Ante, 2350. so. Saying mere case, focusing consideration way, invites substitution administrator. Judicial constrained, look presence authorizing exacting scrutiny. problem exacerbated imprecise court's analysis. forthright failing. triumph understatement, "does instructions." 2352. tries transform vice virtue, pointing 2351, test identifying influenced interest. fact, rejected analogy before, *2354 109-110, (rejecting arbitrary capricious Labor Management Relations 1132(a)(1)(B)), General, position accepts, endorses it, 29-30, n. (noting "key differences context"). Pursuant strained analogy, (1951), makes unexpected appearance stage. cited proposition lack certainty "`partly review.'" 2352 Camera, 456). Maybe. predictability criteria ERISA, considering establish notion say "impalpable review" Rush Prudential HMO, Moran, 536 355, 379, 122 2151, 153 375 (2002) "ERISA's policy inducing assuring predictable liabilities, uniform primary conduct"). leaves uncertain, unpredictable it. O. Holmes, Common (M. Howe ed.1963) ("[T]he tendency always narrow field uncertainty"). Nothing compels kitchen-sink approach. stated "must `facto[r] discretion.' " (1959) (alteration original)). confirms "is acting motive" "further beneficiary." g post, 2358-2360 (SCALIA, J., dissenting). specify thrown mix along apparently actually motivation matters discretion, itself. Consonant understanding, demonstrates forms. may, appear face Pegram Herdrich, 530 211, 227, 7, 120 2143, 147 164 (2000) (offering hypothetical example bonus 10th beneficiary"); incentives, Armstrong 1263, 1265 (C.A.8 1997) (insurer bonuses reviewers "claims savings"); pattern unreasonably meritorious claims, Radford First Unum 321 *2355 F.Supp.2d 226, 247 (D.Mass.2004) (finding "pattern erroneous bad faith contract misinterpretations, unscrupulous tactics"). conflict, justification heightening scrutiny, either enhancing overbroad reach nature. Three finds, warrant deny favorable deemphasis unfavorable ones; These failing relevant, expert status. There basis supposing lent logical give extra dollop structural Even took "seemingly positions" regarding short. stood gain ignoring show motivation. did, automatically qualify advocates per se rule. referral agency, deduct estimated amount "whether [Glenn] appl[ied] receive[d] amounts," 167a, like 168a. Hence, prompted refer itself, requirement not, obligated enforce. indication Circuit viewed deficiencies Apart remarking outset opinion, 674 (2006), never again obligations reversing explained, "was principled deliberative reasoning process." acknowledge reached Administration, scant supplied Dr. Patel, neglected Patel's reports. Ibid.; wholly apart therefore below. KENNEDY, dissenting part. framework cases, consistent holding my view *2356 correct, concur parts discuss framework. submission, remanded now explains facts. two read devotes discussion given conclude considerable relevance wrongfully terminated respondent's payments. interpretation address us. second reading concludes conduct egregious all; 11 pages unnecessary disposition. workable disputes protects ability companies funders. linchpin recognition "should 2351. point tell, effort assess employed safeguards cause vanish. affirms judgment, chance defend articulates today. notes "[t]he assessment," implying blame introduce earlier proceedings. Until today's notice considerations. By merits remanding, disadvantages solely anticipate instructions deviation practice, unfair. Given pertaining safeguards, matter ruling. reasons, dissent affirming SCALIA, THOMAS joins, dissenting. petitioner petitioner) *2357 coffers profits rejects. volunteer, "clear[ly]" 2348. least thought insurance-company employer-administrator 2005). resolve until argued, uninvited resolution regarded dictum. bear score am fundamental disagreement choice mine matter, adopt totality-of-the-circumstances (so-called) "test," put (unspecified) "weight." unique, hence outcome not reasonable place explicitly creator despite 2353-2354 (ROBERTS, C.J., judgment). More importantly, solved views; governed trusts. Under improperly motivates Our all-important direct answer. hearing 1132(a)(1)(B) ERISA-plan traditionally trustees. vested novo. 112-113, Citing current enactment, acknowledged defer trustees hand because, vest (1959)). Accordingly, occasion scope of, limitations on, accorded sheer dictum quoting portion comment Restatement, "[o]f course, d). takes throwaway literally builds castle 2350-2352. "elucidation" sentence reveal trust-law reveals Justices' fondness judge-liberating "test." indeed list (including *2358 interest) "may relevant" deciding discretion.[1] chucked brown paper bag shaken Nowhere mention modus operandi "weighing" contrary, immediately following (e-l) precisely elaborate (factor (1), j; (4), external judging reasonableness, i; (6), motives g) relevantmaking very determinative, necessity included listing, h, Trustee's judgment; k, Limits power confer Instead pain entirety section dictum, statutory command, (if call that) sense painfully opaque, promise elucidation. variously describes object discretion" (ante, 2350), 2351), tantamount "review factfinding" 2352). How go conducting unclear. rife instruction 2350-2351. final analysis, seems advance gestalt reasonableness (a "combination-of-factors calls court, mindful being deferential, weigh thinks best, divine fiduciary's overturned.[2] Notwithstanding assurances 2350, sheep's clothing.[3] *2359 Looking trusts (which all, binds do), Restatement's guidelines substitute 111-112, 187. Otherwise, trustee. Shelton King, 229 90, 94-95, 33 686, 57 1086 (1913). "Abuse discretion," uses term, refers distinct failures: acted dishonestly; he motive; beyond bounds e. discusses manners abusing successively, g, i, describing aim inquiry each. abuses dishonestly when, accepts bribes. f. "without knowledge merely whim." h. unreasonable regard exercise assessment preconditions met.[4] i. Andmost casea motive trust." g. Improper "spite prejudice clearly separate distinct. identifies instance, non-existence, indefiniteness, judged," d, alluded dealing particularly nonexistence motive, hint types *2360 irrelevant substantive consequences perverse: courses action, facing choices, compelled avoids self-dealing. He better beneficiary's lest unreasonable. lurking identity unreasonable, well-thought-out, informed uninformed arbitrary. echoes commonsensical view: pretermit evaluating "[i]n . interpose act[ed] dishonestly, motive." explanation plainly excludes relevant) motive. predicate circumstantial wrongful theoretically unreasonableness decisionbut using purpose entirely redundant, since suffices gradations infer chose "less reasonable," yet self-serving, "more course. Reasonable reasonable. over minds "best" "right" disagree. best beneficiary chosen. Gradating improper-motive determination, eliminating intentionally foreclosed otherwise 2348-2349. essentially presume selfish (how unspecified). draw inference informed, reasonable, though self-serving suppressed anticipated) compliance good loyalty. Gregory Moose, 266 Ark. 926, 933-934, 590 S.W.2d 665, 670-671 (1979) Jarvis Boatmen's Nat. Bank St. Louis, 478 266, 273 (Mo.1972)). Only presumption vindicate provisions settlors appoint place. 225, (2000). Applying possible *2361 petitioner's disability. principal (SSA). SSA's, nor SSA's weight. Black Decker Plan Nord, 538 822, 834, 123 1965, 155 1034 (2003). wrong, contradicted clarify exists, remand denial, NOTES [1] full: "Factors guilty exercising power, relevant: nature power; judged; refraining (6) beneficiaries." (1959). [2] deserves. 46-50. disavows reading. 2350 ("We review"). Of speaking deferring another decisionmaker, degrees absurd. perhapsbut defers, "Some deference," all. [3] proposes equally gobbledygook standard: "Reasonableness Totality Circumstances," a.k.a. "[r]eview searching warrant," "extra care" ensure 25. [4] latter sort challenged Petitioner, precondition disabled. 9 (dealing competence manage property, obligation beneficiary).

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