Archive for the ‘Conflict of Interest’ Category

January 22, 2010 (PLANSPONSOR.com) – A federal court has refused to dismiss a claim by a Jersey Construction employee that he was fired for pursuing health benefits for his wife’s chemotherapy.

The U.S. District Court for the District of New Jersey said it found that Christian Pailleret stated sufficient facts to support a prima facie case under § 510 of the Employee Retirement Income Security Act (ERISA). The court said Pailleret had no “smoking gun” evidence of intent, but the fact that almost immediately after he submitted medical claims of tens of thousands of dollars, he was assigned low-level and “degrading” tasks and shortly after that was terminated without notice or explanation was sufficient to show a plausible claim and “to thus unlock the doors of discovery.” Read more

From the August 20, 2009 EBIA Weekly[Fischer v. Liberty Life Assurance Co. of Boston, 2009 WL 2366115 (7th Cir. 2009); Raybourne v. Cigna Life Ins. Co. of N.Y., 2009 WL 2392788 (7th Cir. 2009)]

The Seventh Circuit has decided a pair of LTD benefit cases that consider the impact of the U.S. Supreme Court’s Glenn decision. That case held that if an ERISA plan document gives a plan decisionmaker “discretionary” authority to make benefit decisions, those decisions are entitled to deferential review (i.e., they may be overturned by the courts only if they are arbitrary and capricious) even if the decisionmaker has a conflict of interest. The conflict is just one of the factors that must be considered when implementing deferential review. (See our article on Glenn at http://www.ebia.com/WeeklyArchives/ERISA/CourtCases/19423, and articles on other post-Glenn decisions at http://www.ebia.com/WeeklyArchives/ERISA/CourtCases/19769 and http://www.ebia.com/WeeklyArchives/ERISA/CourtCases/19756 (subscription required).) The Seventh Circuit cases summarized below illustrate how different underlying facts affect the Glenn analysis. Read more

The number of cases that apply the Supreme Court’s opinion in Metropolitan Life Insurance Company v. Glenn, 128 S. Ct. 2343 (2008) , when reviewing a decision to deny employee benefits by an administrator with a conflict of interest, continue to grow. The most recent example is Raybourne v. Cigna Life Insurance Company of New York, No. 08-2754 (7th Cir. 2009), where the plaintiff was a participant in his employer’s long-term disability benefits plan. Read more

The Ninth Circuit provided significant guidance for the district court to consider regarding a conflict of interest involving self-funded plans in Burke w. Pitney Bowes Inc. Long-Term Disability Plan 544 F.3d 1016 (9th Cir. 2008). While the district court ruled in favor of the plan, it reached its decision prior to the Supreme Court’s decision in Glenn. The Ninth Circuit therefore remanded the matter for the district court to consider the potential conflict of interest in light of Glenn. In doing so, the court rejected the proposition that a structural conflict of interest cannot exist where a plan is self-funded, with benefits paid out of trust. The court held that even when benefits are paid out of a trust, instead of directly by an employer, the employer has a financial incentive to deny claims because every dollar not paid in benefits is a dollar that will not need to be contributed to fund the Trust. The court explained: “although there is no dollar-for-dollar correlation, it still remains true that the more that the Trust pays out in benefits, the more the plan must contribute to maintain the Trust’s solvency.”