On July 10, the Fifth Circuit Court of Appeals announced that the full Court would re-hear a recent case concerning the applicable standard of review in an ERISA denial of benefits case – which is often outcome-determinative in favor of insurers and benefit plans.
As we previously reported, in Ariana M. v. Humana Health Plan of Tex., Inc., 2017 U.S. App. Lexis 7072 (April 21, 2017), a three-judge panel of the Fifth Circuit reviewed a summary judgment in favor of a Plan Administrator who denied benefits to a claimant with eating disorders. Even though the plan in question did not call for deference, the Court, bound by its prior decision in Pierre v. Conn. Gen. Life Ins. Co. of N. Am., 932 F.2d 1552 (5th Cir. 1991), applied an abuse of discretion standard. Not surprisingly, the panel affirmed the District Court’s grant of summary judgment. However, a separate concurring opinion (joined by all three judges), called Pierre into question and set the stage for a reversal.
The concurring opinion noted that the Fifth Circuit is the only circuit that applies a deferential standard to factual determinations made by an Administrator when the plan does not vest the Administrator with that discretion, and pointed to the growing number of state laws prohibiting discretionary clauses in insurance contracts. Based on these factors, the panel opined that Pierre has not withstood the test of time: “This question concerning the standard of review for ERISA cases is not headline-grabbing. But it is one that potentially affects the millions of Fifth Circuit residents who rely on ERISA plans for their medical care and retirement security.” The panel concluded that, given the “lopsided split” in the circuits and the potential for conflicting standards across different jurisdictions, further review of Pierre is warranted.
So, just as the outcome in Ariana M. v. Humana Health Plan was no surprise, it is not the least bit surprising that the Fifth Circuit has decided to re-examine the standard of review it applies in ERISA denial of benefits cases. And it is probably not too difficult to guess that the Court, en banc, will reverse Pierre, and align with other circuits holding that a de novo review is called for when reviewing decisions made by retirement and health plans during some of life’s most difficult times.