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The Fifth Circuit Calls Into Question Its Standard Of Review In ERISA Denial Of Benefits Cases

Explaining that “[a]s any sports fan dismayed that instant replay did not overturn a blown call learns, it is difficult to overcome a deferential standard of review,” a panel of the Fifth Circuit Court of Appeals has called for a re-examination of the Court’s standard of review in ERISA denial of benefits cases where the plan does not provide deference to the plan administrator.

Since its 1991 decision in Pierre v. Conn. Gen. Life Ins. Co. of N. Am., 932 F.2d 1552 (5th Cir. 1991), the Fifth Circuit has held that an ERISA plan administrator’s factual conclusions are reviewed for an abuse of discretion even if the plan does not provide deference to the plan administrator. See also, Green v. Life Ins. Co. of N. Am., 754 F.3d 324, 329 (5th Cir. 2014) (noting that the standard of review for factual determinations is abuse of discretion regardless of the presence of a discretionary clause).

Pierre was one of the first cases to address the standard of review for a plan administrator’s factual determinations. Pierre was based on the Fifth Circuit’s interpretation of the Supreme Court’s then relatively new ruling in Firestone v. Bruch, in which the high court drew from the law of trusts, analogized deference to administrative agency decisions, and pointed to concerns about courts’ ability to conduct de novo reviews of factual determinations.

Last month, in Ariana M. v. Humana Health Plan of Tex., Inc., 2017 U.S. App. Lexis 7072 (April 21, 2017), the Fifth Circuit was tasked with reviewing Humana’s decision to deny benefits to a plaintiff diagnosed with eating disorders. The Plan in Ariana did not provide deference to the decisions of Plan Administrator. However, adhering to Pierre and its progeny, the Court applied the abuse of discretion standard to examine the plan administrator’s factual determinations.

The result, not surprisingly, was a decision to affirm the District Court’s grant of summary judgment in favor of Humana. Significantly, however, in a separate concurring opinion (joined by all three judges), the panel called into question the precedent upon which its decision was based.

Taking down the “pillars supporting Pierre” one by one, the Court noted that it is the only circuit that would apply deference to factual determinations made by a plan administrator when the plan does not vest them with that discretion, and also pointed to the growing number of state laws prohibiting discretionary clauses in insurance contracts.

Based on these factors, the concurring opinion concluded that Pierre has not withstood the test of time: “This question concerning the standard of review for ERISA cases is not headline-grabbing. But it is one that potentially affects the millions of Fifth Circuit residents who rely on ERISA plans for their medical care and retirement security.” They concluded that, given the “lopsided split” in the circuits and the potential for conflicting standards across different jurisdictions, further review of Pierre is warranted.

Jackson Lewis P.C. © 2017


About this Author

René E. Thorne, Jackson Lewis, Employment Litigation, ERISA Attorney"
Office Managing Principal and Office Litigation Manager

René E. Thorne is Office Managing Principal of the New Orleans, Louisiana, office of Jackson Lewis P.C. Her practice covers the full range of employee benefit litigation matters, including representation of employers, plans, plan fiduciaries, and trustees.

In that regard, she has handled numerous ERISA class actions for clients such as Nortel Networks, Target, Krispy Kreme Doughnuts, Owens Healthcare, United Airlines ESOP Committee, Dunbar Armored, United Companies, Benefits Administration Corporation, and Beverly Enterprises. Ms. Thorne also has handled...

Patrick Richter, Jackson Lewis Law Firm, Labor and Employment Litigation Attorney
Of Counsel

Patrick S. Richter is Of Counsel in the Austin, Texas, office of Jackson Lewis P.C. His practice consists of representing employers in all aspects of the employment relationship, from preventive counseling and advice, to drafting and negotiating contracts, to litigation.

Mr. Richter has significant litigation experience involving federal and state employment and labor statutes, intellectual property and trade secrets, covenants not to compete, stock option agreements, employment contracts, and wrongful discharge claims.