10 Key ERISA Cases: Metropolitan Life Ins. Co. v. Glenn and Weighing Conflicts of Interest
Every ERISA claim for benefits requires a decision by a benefits plan. Who makes that decision and whether they have a “conflict of interest” is an important question in determining how much deference to give a Plan decision in an “abuse of discretion” case.
While the abuse of discretion standard is highly deferential, in the Ninth Circuit that deference is tempered with “skepticism” if the claim decider has a conflict of interest.
MetLife v. Glenn is second in our “10 Key ERISA Cases” series examining key Supreme Court and Ninth Circuit decisions governing ERISA benefits disputes.
The facts: Wanda Glenn was working for Sears when a severe heart condition left her unable to continue.
MetLife approved Glenn’s first 24 months of long-term disability benefits under a “own occupation” standard.
After an ALJ hearing, the Social Security Administration approved SSDI benefits on a finding that Glenn could not perform any job for which she was qualified.
But when Glenn sought “any occupation” long-term disability benefits from MetLife after 24 months, she was denied.
MetLife had been appointed by Sears to decide benefits claims and was underwriting the Plan and so would pay any benefits owed. Glenn argued this created a conflict of interest at MetLife that compelled de novo review.
Holding: “[T]he fact that a plan administrator both evaluates claims for benefits and pays benefits claims creates the kind of ‘conflict of interest’” that required being taken into account by a reviewing court. Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 112 (2008). That “conflict should be weighed as a factor in determining whether there is an abuse of discretion.” Id. at 115.
The presence of a structural conflict does not require de novo review, but instead more scrutiny on the conflict and its potential or actual impact on the benefits decision.
A reviewing court can then assess whether, in light of the conflict, the Plan abused its discretion.
Aftermath: Glenn led to cases trying to operationalize these principles.
Montour v. Hartford Life & Accident Ins. Co. (9th Cir. 2009) harmonized Ninth Circuit law with Glenn. It established that the “skepticism” applicable to conflicts of interest set out in Abatie v. Alta Health & Life Ins. Co. (9th Cir. 2006) applied to these “structural conflicts of interest.”
Salomaa v. Honda LTD Plan (9th Circ. 2011) underlined that abuse of discretion review asks courts to determine if a decision to deny benefits is “reasonable. Reasonableness does not mean that we would make the same decision. We must judge the reasonableness of the plan administrator skeptically where, as here, the administrator has a conflict of interests… because the plan acts as judge of its own cause.”
Demer v. IBM Corp. LTD Plan (9th Cir. 2016) built on structural conflict-of-interest logic to assessing whether outside “independent reviewers” had conflicts of interest attributable to the insurers authorized to decide claims.
Conflicts of Interest Discovery: Because not just the existence but the extent and impact of conflicts of interest are a factor the court must consider, they offer the rare opportunity for ERISA discovery (and often, in practice, motivate settlement of abuse-of-discretion claims).
Takeaway: In an abuse of discretion case, investigating potential conflicts of interest is a key strategy to undermine the deference accorded to judge-and-jury benefits plans.
10 Key ERISA Cases