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On November 3, 2008, Riemer Hess appeared as Panelists at the NY, NJ and CT Regional Conference of the College of Labor & Employment Lawyers. The College is a non-profit professional association honoring the leading lawyers nationwide in the practice of labor and employment law. The team highlighted four paradigm shifts in ERISA law as a result of the Supreme Court's recent case MetLife v. Glenn:
1. Glenn describes a "combination-of-factors method of review" in order to determine whether a defendant has "abused its discretion." It does not describe the standard as the "arbitrary and capricious" standard of review. This represents a shift from the arbitrary and capricious standard of review, which has its basis in administrative law, to the abuse of discretion standard, which has its basis in trust law. This shift is important to claimants because trust law calls for much more scrutiny of a defendant's determination than administrative law.
2. Glenn establishes for the first time a priority of the competing goals and purposes of ERISA. Prior to Glenn, Courts have restricted discovery and judicial review on the grounds that extensive proceedings were inconsistent with ERISA's goals to: (a) avoid complex review proceedings; (b) avoid deterring employers from setting up benefit plans; and (c) allowing employers to administer their own plans. The Glenn Court held, "As to all three [of those goals] taken together, we believe them outweighed by Congress' desire to offer employees enhanced protection for their benefits." Courts will now focus more on protecting the rights of employees.
3. Glenn shifts the presumption that a tie goes to the defendant. Glenn holds that a defendant's conflict of interest could "act as a tiebreaker when the other factors are closely balanced." This is hugely important to claimants because in many of the cases that make it to litigation the other factors are closely balanced. Thus, instead of a victory in favor of defendant, Glenn supports a victory in favor of the claimant.
4. Glenn specified that there should be no "special burden-of-proof rules, or other special procedural or evidentiary rules, focused narrowly upon the evaluator/payor conflict." Prior to Glenn, the Courts established elaborate procedures for dealing with a defendant's conflict of interest. These rules often made it difficult for a claimant to present the insurer's conflict of interest as an issue in the case.
As a result of these paradigm shifts, the law will enter a period of uncertainty as the lower courts parse through what is still good law. Overall, however, Glenn appears to be very good news for claimants. Claimants will be provided with increased discovery and Courts will provide much closer scrutiny of insurance company determinations.
