Long Term Disability Law Blog

On November 3, 2008, Scott M. Riemer appeared as a Panelist at the NY, NJ and CT Regional Conference of the College of Labor & Employment Lawyers. The College is a non-profit professional association honoring the leading lawyers nationwide in the practice of labor and employment law. Mr. Riemer highlighted four paradigm shifts in ERISA law as a result of the Supreme Court's recent case MetLife v. Glenn:

1. Glenn describes a "combination-of-factors method of review" in order to determine whether a defendant has "abused its discretion." It does not describe the standard as the "arbitrary and capricious" standard of review. This represents a shift from the arbitrary and capricious standard of review, which has its basis in administrative law, to the abuse of discretion standard, which has its basis in trust law. This shift is important to claimants because trust law calls for much more scrutiny of a defendant's determination than administrative law.

2. Glenn establishes for the first time a priority of the competing goals and purposes of ERISA. Prior to Glenn, Courts have restricted discovery and judicial review on the grounds that extensive proceedings were inconsistent with ERISA's goals to: (a) avoid complex review proceedings; (b) avoid deterring employers from setting up benefit plans; and (c) allowing employers to administer their own plans. The Glenn Court held, "As to all three [of those goals] taken together, we believe them outweighed by Congress' desire to offer employees enhanced protection for their benefits." Courts will now focus more on protecting the rights of employees.

3. Glenn shifts the presumption that a tie goes to the defendant. Glenn holds that a defendant's conflict of interest could "act as a tiebreaker when the other factors are closely balanced." This is hugely important to claimants because in many of the cases that make it to litigation the other factors are closely balanced. Thus, instead of a victory in favor of defendant, Glenn supports a victory in favor of the claimant.

4. Glenn specified that there should be no "special burden-of-proof rules, or other special procedural or evidentiary rules, focused narrowly upon the evaluator/payor conflict." Prior to Glenn, the Courts established elaborate procedures for dealing with a defendant's conflict of interest. These rules often made it difficult for a claimant to present the insurer's conflict of interest as an issue in the case.

As a result of these paradigm shifts, the law will enter a period of uncertainty as the lower courts parse through what is still good law. Overall, however, Glenn appears to be very good news for claimants. Claimants will be provided with increased discovery and Courts will provide much closer scrutiny of insurance company determinations.

The Supreme Court agreed to hear MetLife's appeal in MetLife v. Glenn. This will perhaps be the most important Supreme Court decision in the area of long term disability claims in decades.

On January 18, 2008, the Supreme Court agreed to decide whether the arbitrary and capricious standard of review should be tempered or abandoned if the insurance company both decides the claim and pays the benefits. Right now, the Circuit Courts of Appeal have widely different standards. In the Second Circuit, where we practice, such a conflict has no impact on the standard of review. The standard of review is only switched if a plaintiff can demonstrate that the insurance company's conflict of interest in fact influenced the claim determination. Because that is extremely difficult to establish, no plaintiff has ever been able to switch the standard of review based on a conflict of interest. In other Circuits, such as the Third Circuit, the Court will apply a heightened standard of review in the event of an inherent conflict. In Glenn v. MetLife, the Sixth Circuit held that the District Court committed reversible error because it failed to take into account that MetLife was both decider and payor of the claim.

Given the existing standard in the Second Circuit, we are cautiously optimistic that no matter how the Supreme Court decides MetLife v. Glenn, plaintiffs within the Second Circuit will benefit.

If CIGNA, or one of its subsidiaries, denies your long term disability claim, you should send a request to CIGNA demanding a copy of its claims manual. You should ask for it by name; CIGNA calls its claims manual "The Book of Operating Knowledge."

On November 14, 2006, we successfully defeated CIGNA's attempt to prevent disclosure of its Book of Operating Knowledge. In the case of Levy v. INA Life Ins. Co. of New York, 2006 U.S. Dist. LEXIS 83060 (S.D.N.Y. Nov. 14, 2006), Judge Gerard E. Lynch denied CIGNA's motion. Judge Lynch explains:

The case for non-disclosure is further undermined by Department of Labor regulations requiring disclosure of procedures employed during claims processing as mandated under section 503 of ERISA. See 29 C.F.R. § § 2560.503-1(g)(1), (h)(2), (i)(5), (j)(5), and (m)(8). Indeed, the Department of Labor "has taken the position that internal rules, guidelines, protocols, or similar criteria would constitute instruments under which a plan is established or operated within the meaning of section 104(b)(4) of ERISA and, as such, must be disclosed to participants and beneficiaries." U.S. Department of Labor, "Frequently Asked Questions about the Benefit Claims Procedure Regulation," C-17, www.dol.gov/ebsa/FAQs/faq_claims_proc_reg.html. These requirements make plain that such claims-handling manuals, whether in whole or piecemeal, are likely to be disseminated widely to plan participants and to litigants challenging benefits denials. Under these circumstances, the effort to protect such materials as confidential is quixotic.

Obtaining CIGNA's Book of Operating Knowledge is often helpful because if CIGNA did not follow its own internal procedures a strong argument could be made that it failed to provide you with a full and fair review.