Benefits Ruling Shows Need For Revised ERISA Procedure

• Jurisdiction: United States,Federal
• Law Firm: DeBofsky Law
• Subject Matter: Employment and HR, Retirement, Superannuation & Pensions, Employee Benefits & Compensation, Employment Litigation/ Tribunals
• Author: Mr Mark Debofsky
• Published date: 11 January 2023

Although the Employee Retirement Income Security Act grants benefit claimants the right to bring a civil action to challenge benefit denials,¹ ordinary civil procedure prescribed by the Federal Rules of Civil Procedure² is not always followed in ERISA litigation, nor are court procedures uniform between the federal circuits.

The U.S. Court of Appeals for the Ninth Circuit's recent ruling in Vicki Collier v. Lincoln Life Assurance Co. of Boston illustrated this point.³

The Ninth Circuit reversed a district court ruling upholding Lincoln Life's decision to deny Vicki Collier's claim for long-term disability benefits. Both the U.S. District Court for the Central District of California and the court of appeals applied the de novo standard of ERISA review. However, the appellate court found the district court erred in the manner in which it applied that standard, holding:

The district court's task is to determine whether the plan administrator's decision is supported by the record, not to engage in a new determination of whether the claimant is disabled. Accordingly, the district court must examine only the rationales the plan administrator relied on in denying benefits and cannot adopt new rationales that the claimant had no opportunity to respond to during the administrative process.

The Ninth Circuit ruled the district court improperly permitted the insurer to raise new grounds during the litigation as the basis for the benefit denial, which ran afoul of precedent precluding plan administrators from asserting post hoc rationales that had not previously been raised during the claim process.⁴

Specifically, the plaintiff's credibility and an assertion that the claim was unsupported by adequate objective evidence was first raised during the litigation. And because Collier had not had the opportunity to address that issue before her lawsuit was filed, the court ruled the plaintiff was denied the statutorily mandated full and fair review of her claim.⁵

Collier's claim was based on a variety of musculoskeletal conditions that she alleged precluded her from working as an insurance sales agent. Despite an extensive course of treatment that included surgery, Lincoln denied Collier's claim and maintained the denial following the plaintiff's submission of a prelitigation appeal. The plaintiff then filed suit.

Although the court ordered that a bench trial take place instead of a plenary hearing, the matter was adjudicated based on the briefs submitted by the parties without any witness testimony. The court ruled for Lincoln and issued findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a)(1).

The court specifically found Collier's pain...