ERISA standard of review
In every case, the Court applies a certain standard of review, or the legal standards that will govern the claim. Many people are familiar with the 2 most common; the “reasonable doubt” standard that applies in criminal cases, and the “preponderance of the evidence” standard that applies to most civil claims. ERISA — of course– has its own very unique standard of review. As a general rule, the Court reviews an administrator’s decision de novo (meaning the Court applies the more usual standard, and reviews all of the evidence on its own) unless the plan provides otherwise. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). Where the plan grants “the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan,” the Court determines if the denial of benefits was arbitrary and capricious. Murphy v. Deloitte & Touche Group Ins., 619 F.3d 1151 (10th Cir. 2010).
Most modern plans include this type of “magic phrase”.
However, and even under this far more difficult standard of review, there is hope. “ERISA imposes a higher-than marketplace quality standards on insurers…” who must discharge their duties “solely in the interests of the participants…of the plan.” Glenn, supra. Thus, “deferential review is not no review.” Hess v. Hartford Life Ins. Co., 174 F.3d 456, 461 (7th Cir. 2001). Rather, the decision must be the result of a deliberate and principled reasoning process. Glenn, supra; Adamson, supra; Glenn v. Metro. Life Ins. Co., 401F.3d 660 (6th Cir.2006). Pertinent are both the conclusions drawn from the evidence and how the insurer arrived at those conclusions, both of which must be supported by substantial evidence. Adamson, supra. Substantial evidence is “more than a scintilla but less than preponderance.” Rekstad v. U.S. Bancorp, 451 F.3d 1114, 1119-20 (10th Cir. 2006).
The evidence to be considered generally comes from the Administrative Record, and is limited to the information available to Defendant when its decision was made. Adamson, supra. As a corollary to that, the Court should only consider the specific grounds upon which the Defendant relied in conducting its analysis. Spradley v. Owens-Ill. Hourly Empl. Welfare Benefit Plan, 686 F.3d 1135 (10th Cir. 2012). New arguments by counsel, raised for the first time during litigation, are not a substitute for the decision-making process ERISA requires.
Finally, and because ERISA relies on trust law principles, several other factors must be considered. While no one is dispositive, “any one factor will act as ‘tiebreaker’ when the other factors are closely balanced…” Glenn, 128 S.Ct. 2351-2. These include any serious procedural irregularities, or whether, as Judge Figa observed in Smith, supra, the insurer “cherry picked” its file for evidence to support a denial. See also, Glenn, 128 S.Ct. at 2355 (Roberts, J., concurring). As to the latter, “cherry picking” the Administrative Record raises a clear question about whether the Defendant did an objective review or was simply trying “to substantiate the desired decision to limit benefits.” Smith, 322 F.Supp. at 1178 citing Lemaire v. Hartford, 69 Fed.Appx. 88 (3d Cir. 2003).