McCauley v. First Unum Life Ins. Co., 2008 U.S. App. LEXIS 26094 (2nd Cir.) (December 24, 2008) is an important post MetLife v. Glenn decision in the Second Circuit. The Court found First Unum’s past history as being a factor in evaluating a conflict of interest.

The Court mentioned the fact that First Unum had a history of biased claims administration and how First Unum has a disturbing pattern of erroneous and arbitrary benefits denials, bad faith contract misinterpretations, and other unscrupulous tactics.  The court listed more than thirty cases in which First Unum’s denials were found to be unlawful, including one decision in which First Unum’s behavior was “culpably abusive.

The Court found that First Unum’s history of deception and abusive tactics to be additional evidence that it was influenced by its conflict of interest as both plan administrator and payor in denying McCauley’s claim for benefits.

The Court added that post MetLife v. Glenn, a plan under which an administrator both evaluates and pays benefits claims creates the kind of conflict of interest that courts must take into account and weigh as a factor in determining whether there was an abuse of discretion, but does not make de novo review appropriate.  This is true even where the plaintiff shows that the conflict of interest affected the choice of a reasonable interpretation.

The reason First Unum gave to McCauley for rejecting the information provided in McCauley’s memorandum was unreasonable and deceptive.  The selective choice of evidence supporting the plan administrator’s decision also played a role in the court’s decision.

The Court concluded that First Unum’s reliance on one medical report in support of its denial to the detriment of a more detailed contrary report without further investigation was unreasonable.  The Court added that First Unum deceptively indicated to McCauley that the medical professional assigned to review his records was a medical doctor when the individual was in fact a nurse.  First Unum failed to obtain a physician’s recommendation, and mischaracterized its rationale for continuing to deny benefits.  Lastly, First Unum has a well-documented history of abusive claims processing.  Based on all of the above, the Court concluded that First Unum’s denial was arbitrary and capricious.

This is a great example of a court exercising the discretion afforded by MetLife v. Glenn to the benefit of the claimant where the fiduciary is conflicted.

Tags:

This entry was posted by Adam V. Russo on Monday, January 5th, 2009 at 10:14 am and is filed under 2nd. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.