In a case last week, the court found that a necessary factor in the abuse of discretion analysis for MetLife’s denying a claim for long-term disability benefits is MetLife’s undisputed structural conflict of interest as both claim administrator and payor. “MetLife’s conflict is compounded by its reliance on allegedly biased physician reviewers. Critical gaps in the administrative record render it insufficient to properly vet the influence of MetLife’s conflict, as compounded by its reliance on the physician reviewers, on its exercise of discretion”, the court reasoned.
In this case Mr. Walker’s job required him to provide technical support and training and involved sitting, walking, bending, and occasional lifting of up to fifty pounds. In January 2006, Mr. Walker filed a claim for long-term disability benefits with MetLife on the ground that he was totally disabled from working in his occupation due to cardiac and blood pressure problems which left him with shortness of breath, chest pain, and insufficient stamina.
After MetLife denied his claim for LTD benefits, Mr. Walker sued MetLife under the Employee Retirement Income Security Act of 1974 (“ERISA”), claiming MetLife abused its discretion in denying his claim.
ERISA imposes higher-than-marketplace quality standards on insurers. It sets forth a special standard of care upon a plan administrator, namely, that the administrator “discharge [its] duties” in respect to discretionary claims processing “solely in the interests of the participants and beneficiaries” of the plan; it simultaneously underscores the particular importance of accurate claims processing by insisting that administrators “provide a ‘full and fair review’ of claim denials”; and it supplements marketplace and regulatory controls with judicial review of individual claim denials.
A court may weigh a conflict heavily if, for example, the administrator provides inconsistent reasons for denial; fails adequately to investigate a claim or ask the plaintiff for necessary evidence; fails to credit a claimant’s reliable evidence; or has repeatedly denied benefits to deserving participants by interpreting plan terms incorrectly or by making decisions against the weight of evidence in the record. The conflict of interest should prove more important where circumstances suggest a higher likelihood that it affected the benefits decision, including, but not limited to, cases where an insurance company administrator has a history of biased claims administration; it should prove less important where the administrator has taken active steps to reduce potential bias and to promote accuracy.
Here, the employee welfare-benefit plan gave MetLife, the plan administrator, the discretion to make claim determinations. In addition to conferring discretion on MetLife, the plan named MetLife as claim administrator and payor, thereby creating a structural conflict of interest. MetLife does not dispute this. Critical gaps in the record render it insufficient to properly vet the effect of MetLife’s conflict. Most importantly, the record was developed and the decision was made largely in reliance upon NMR, a company MetLife knows benefits financially from doing repeat business with it. NMR received more than $11 million from MetLife between 2002 and 2007. It follows that MetLife knows NMR has an incentive to provide it with reports upon which MetLife may rely in justifying its decision to deny benefits in order to increase the chances that MetLife will return to NMR in the future.The court found key to determining whether MetLife’s conflict of interest, compounded by its reliance on a company with an incentive to provide it biased reports, led to a “parsimonious claims granting history” or a “history of biased claims administration”, is statistical information regarding NMR physician reviews relied upon by MetLife in making its disability claim determinations.
Alan Olson writes this web-log to provide helpful information regarding long-term disability cases. He practices long-term disability law throughout the United States from his offices in New Berlin, Wisconsin. Attorney Olson may be contacted at [email protected] with questions about the information posted here or for advice on specific disability benefit claims.