Fifth Circuit Defers to Plan Administrator’s Claim Appeal Decision Involving Competing Medical Opinions
In Rittinger v. Health Alliance Life Insurance Company, the U.S. Court of Appeals for the Fifth Circuit, whose jurisdiction includes Texas, analyzed the claims decision-making process of a group health plan administrator that had been granted discretion under the terms of the employer’s group health plan. The court determined that, based on such grant of discretion, the plan administrator’s decision regarding a participant’s benefits claim appeal was entitled to judicial deference, even with respect to the plan administrator’s selection of competing medical providers’ opinions.
Background regarding Grant of Discretion under ERISA
Under general standards, a court will consider denials of appealed benefits claims under an employer-sponsored employee benefit plan (including a group health plan) that is subject to ERISA on a “de novo” basis, which means that the court will not give any deference to the plan administrator’s prior decision on a benefit claim appeal, but instead can substitute its judgment for that of the plan administrator. However, when the terms of the plan include language which properly grants discretion to the plan administrator (or another designated claims fiduciary), the court will use a highly deferential standard of review, under which the plan administrator’s prior decision will be overturned only if the court finds that the plan administrator “abused its discretion” in making that decision.
In Rittinger, the employer’s group health plan (“Plan”) had properly delegated discretion to the Plan administrator to administer the Plan, thus the court reviewed the Plan administrator’s denial of the participant’s benefit claim appeal using the abuse of discretion standard. The court ruled that if the Plan administrator’s decision was supported by substantial evidence and was not arbitrary or capricious, it must prevail. Notably, the documents and other information which the participant had submitted to the Plan’s administrator in support of her appeal contained competing opinions regarding her medical condition by various medical providers, some of which favored the participant’s position on appeal and some of which did not. In addressing such information, the court determined that, when faced with two competing medical opinions, a plan administrator to whom discretion has been granted may exercise that discretion and choose one medical opinion over another.
Take-Aways for Employers
A court’s application of the deferential “abuse of discretion” standard of review to a plan administrator’s decision regarding a benefits claim appeal can often determine whether the decision to deny benefits will be upheld or overturned. Consequently, employers that sponsor ERISA plans should ensure that their plan documents, including summary plan descriptions, contain a valid grant of discretion to the plan administrator (and any other designated claims fiduciaries) regarding the interpretation and application of plan provisions to benefit claim determinations and other fiduciary actions. By incorporating such language into their plan documents, employers will position their plan administrators to retain the desirable “abuse of discretion” review standard in the event that a benefit claim decision must be defended in court.
View the Fifth Circuit’s opinion in Rittinger here.