The “standard of review” to be applied by a federal district court presiding over an ERISA “wrongful denial of benefits” case is a critical threshold consideration. Will the court review the determination anew without granting any leeway to the administrator (de novo review), or will it defer to the administrator by agreeing not to interfere absent proof that its claims handling was arbitrary or capricious (deferential review)? In most circuits, the issue (at least initially) boils down to one straight-forward consideration: does the plan contain language granting discretionary authority to the administrator. If it does, review deferentially. If it does not, review de novo.
Since 1991, however, the Fifth Circuit has approached things a bit differently. There, as result of Pierre v. Connecticut General Life Ins. Co./Life Ins. Co. of N. America, 932 F.2d 1552 (5th Cir. 1991), the rule is that factual determinations (as opposed to plan interpretations) are reviewed deferentially even when the plan in question does not grant discretionary authority.
The Fifth Circuit’s outlier status on this issue has put claimants in Louisiana, Mississippi and Texas at a severe disadvantage, and a recent decision from that court does little to downplay its frustration with that situation. Whether a remedy in the form of en banc reconsideration or Supreme Court review is in the offing is anyone’s guess, but we will be maintaining a watchful eye.
UPDATE: On July 10, 2017, the Fifth Circuit granted reconsideration en banc, meaning that the case will now go before all of the judges of the Fifth Circuit. Stay tuned for the outcome of that event.
Ariana M. v. Humana Health Plan of Texas, 854 F.3d 753 (5th Cir. Apr. 21, 2017)