Section Review

The cooperative approach: An emerging view of ERISA law

Robert S. Mantell practices with Rodgers, Powers & Schwartz LLP in Boston, concentrating in plaintiff-side employment law. He has served on a number of MBA committees assisting the Massachusetts Commission Against Discrimination with drafting regulations and guidelines on subjects including procedure, handicap discrimination and sexual harassment.
Imagine that while you are in the throes of some serious illness, a good-hearted soul establishes a medical trust for you. The trust is carefully drawn up, with directions to the trustee to act solely in your benefit and in compliance with the usual requirements of trust law. Later, you learn that every time the trustee denies you treatment, she gets richer, and every time she allows treatment, she gets poorer. Moreover, the trustee will not be held liable if her failure to provide treatment results in injury or death. “This is my trustee!?” Close your gaping mouth; you are in the land of ERISA.

The Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq., was enacted to ensure that employees receive their employment benefits. ERISA applies to a wide range of benefits such as pensions, medical insurance and disability insurance — benefits crucial to the health and support of employees and their families. When a plan administrator, often an insurer, denies a claim, ERISA permits the claimant to seek review in federal court.

In the past, ERISA claims have fared poorly. Denials of benefits are generally reversed only upon the showing of an abuse of discretion. Even when an administrator is an insurer, and directly benefits financially from a claim denial, the administrator is accorded deference. Courts have also interpreted ERISA as providing limited remedies, and where the statute accords judges discretion to award remedies, judges have been miserly. Defense attorneys have been able to point to “a virtually unbroken string of First Circuit decisions upholding the denials of claims.”1

According to a survey of ERISA cases, courts have recently become more receptive to claims to recover benefits. This article will show that the trend is the result of the courts’ increased awareness that (1) trust principles have been incorporated into ERISA; (2) plan administrators dispensing benefits perform a public function and (3) the process of determining plan eligibility must be informed by a cooperative effort between the administrator and the claimant.

This article will describe the impact this new mindset has made on the legal landscape, and then propose ways in which ERISA protections should be expanded, consistent with the new approach. For example, this article will argue, based on the recent case of Aetna Health, Inc. v. Davila, 124 S. Ct. 2488 (2004), that insurers with a financial stake in eligibility determinations should be barred from making those determinations. In addition, where an administrator makes a decision based on an ambiguous or incomplete record, and the administrator could have corrected that deficiency, the record should be viewed in the manner most favorable to the claimant. Attorneys’ fees should be presumptively awarded to the claimant if the claim is remanded back to the administrator. Finally, in addition to various other suggestions, I will argue that an administrator should not be permitted to explain a denial of benefits to a court, except via quotations from the original denial notices that were sent to the claimant.

ERISA claims are faring better

Two decades of overwhelmingly strict, pro-insurer interpretations of ERISA have resulted in a backlash. States have enacted laws to ameliorate the harsh effects of ERISA, with mixed results.2
ERISA regulations have been revised to provide employees new protections.3 Finally, there is a “rising judicial chorus urging that Congress . . . revisit what is an unjust and increasingly tangled ERISA regime.”4
A survey of cases shows that there has been a rise in the likelihood that a court will find in the claimant’s favor.5 Decisions issued by the Supreme Court, First Circuit and District of Massachusetts in 2004 favored the claimant 50 percent of the time. (See Table 1.)

In contrast, only 17 percent of the decisions issued in 1997 through 2003 favored the claimant. Three of those “successful” cases simply remanded the claims back to the plan administrator and it is uncertain whether those claimants recovered any benefits. In 2004, the claimant was three times more likely to prevail than during the prior seven years.

This trend represents more than improved statistics in the win/loss column. As will be shown below, the trend reflects a change in the way some judges review claim denials. The raw data from this survey is included as Addendum A.

The reduction of ERISA protections

To understand the recent trend, it is necessary to review what came before. In the 15 years prior to 2004, court decisions overwhelmingly limited ERISA protections and remedies. The erosion of ERISA rights commenced when courts began according plan administrators with an enormous degree of deference to deny claims.

When a court considers a benefit denial for a non-ERISA plan, the plan will be interpreted liberally in favor of the claimant. To the extent that two plan provisions conflict, they must be construed most favorably to the claimant to maximize coverage.6 Likewise, where a court reviews a denial of an ERISA benefit under a de novo standard, ambiguous terms of an ERISA plan will be strictly construed against the insurer.7

In 1986, the Supreme Court held that under ERISA, a court must review the decision of a plan administrator using a de novo standard.8 However, the Court further held that where the plan gives the administrator discretionary authority to determine eligibility for benefits or to construe the terms of the plan, the court will review a decision using the arbitrary and capricious standard.9 After Firestone, the overwhelming majority of plans amended their language to confer discretionary authority on administrators and fiduciaries. Arbitrary and capricious review became the rule, and the de novo standard was rendered almost inapplicable. Since 1986, courts have continued to expand the deference accorded to administrators, and limit ERISA protections.

* Deference to a plan administrator is at its height when the plan language is ambiguous. This principle led to the decision that a paraplegic, suffering serious muscle strain and pain, is not disabled.10 Under this rubric, “[d]isability, like beauty, is sometimes in the eye of the beholder.”11
* Conflicting medical evidence results in greater deference to the plan administrator.12

* The plan administrator may hire, and then rely on, the opinions of non-treating, and/or unqualified physicians.13
* Deference is accorded even when it is in the plan administrator’s direct financial interest to deny claims.14
* Where an administrator gives two reasons for a denial, and the first reason is found to be arbitrary, the administrator will still be accorded deference with regard to the second reason.15
* The administrator’s notice of denial of benefits may be general and “sparse,” and there need not be any further explanation of why the denial is correct.16 Where, for example, an administrator denied payment for medical services because they were “unnecessary,” there need not be any explanation as to why these services were unnecessary.17
* Where a plan administrator has been found to have acted arbitrarily, the presumptive remedy is to remand the case back to that administrator.18 Making remand a presumptive remedy is a curious solution, where the administrator has been found to have acted unfairly.

* There are no consequential damages awarded when the refusal to approve treatment leads to the death or injury of the claimant.19
* Attorneys fees are not awarded to a successful claimant as a matter of course.20
* There are no presumptive penalties when a plan withholds information that it is required to disclose.21

While not all past decisions have been negative, they have been disproportionately so. Given the restrictive approach that courts have taken, it is no wonder that during 1997 though 2003, 83 percent of the ERISA claims failed.

Expansion of ERISA protections in 2004

In contrast to the array of restrictive decisions of the past, in 2004, the First Circuit and District of Massachusetts have found ways to expand ERISA protections. Thus, the unusual rate of successful ERISA cases in 2004 is based not on precedent, but on the liberalization of ERISA standards. A review of some holdings will reflect this new regime.

* For some issues, the de novo standard always applies. Even if an arbitrary and capricious standard applies when reviewing the merits of an administrator’s decision, the court nevertheless applies a de novo review to determine whether the administrator has investigated the case in a sufficient manner (the depth of the inquiry), and whether the administrator has acted within the standards of conduct analogous to those applied to trustees under common law.22
* The administrator must perform an adequate investigation, such as scheduling an examination or obtaining the claimant’s complete medical file, prior to making a determination.23

* The administrator must not rely on statements taken out of context from the claimant’s medical file. In Ruggerio v. FedEx,24 an employee diagnosed with chronic fatigue syndrome sought long-term disability benefits. She was examined by a number of physicians, who found the presence of disability. The administrator’s denial letter “cherry-picked” only the medically positive and optimistic comments of the physicians, while failing to recognize (or to distinguish) the physicians’ findings of medical impairment.

* The administrator may not arbitrarily refuse to credit the opinions of treating physicians.25 Similarly, the administrator must accept and rely on a treating doctor’s letter of clarification in the absence of reasons to reject that clarification.26
* A functional capacity test is not required. In Ruggerio,27 a disability was found on the basis of a description of the claimant’s disabilities despite the absence of a functional capacity test or evaluation.

* The administrator may not require submission of objective medical evidence to establish the existence of some types of disability, such as fatigue, where such a disability cannot be objectively verified. In Colby,28 Colby suffered a stroke and, thereafter, experienced fatigue. Colby’s claim for disability benefits was denied based on the lack of objective medical evidence supporting his inability to work. While the stroke could be substantiated by objective medial evidence, Colby’s disability — fatigue — could not. The court found that the denial was arbitrary, as it was based on the failure to provide objective medical evidence of a disability that could not be objectively verified.29

* Where the claimant’s physicians find that the claimant’s condition is improving, this is insufficient information to support an administrator’s finding of ability to work.30
* An administrator may not justify a denial of benefits in court for a reason not articulated to the claimant at the time of the original denial, even if the plan administrator’s internal documents show that the reason was a factor in its initial denial.31
* An insurer’s internal policies and guidelines are relevant to the question of whether the plan acted arbitrarily and are discoverable, even when such documents were not reviewed by the administrator considering the decision at issue.32
* The internal review of the denial should not be deferential to the initial denial, should include a consultation with a qualified health care professional and should consider all relevant documents.33
* Remand may not be an appropriate remedy, especially where the administrator has been found to have acted in an arbitrary or capricious manner.34
Claimants’ recent successes cannot be explained merely by application of pre-existing precedent; ERISA law is being liberalized. An examination of the new philosophy that drives the recent cases follows.

An administrator is not just a gatekeeper: ERISA requires a non-adversarial and collaborative benefit process

There has been an evolution in the philosophical approach taken by courts to ERISA cases. In the past, courts were content to permit plan administrators to adopt an adversarial approach to benefit decisions. Administrators were permitted to issue vague, obtuse denials and withhold documents without penalty. Now, there is a growing recognition that plan administrators perform an important public function in distributing crucial benefits, and that the process for making a benefit determination should be collaborative and claimant-friendly.

Of course, this new mindset is firmly rooted in the provisions of ERISA, which states that Congress enacted ERISA to “protect . . . the interests of participants in employee benefit plans and their beneficiaries.”35 Plan administrators who decide whether to grant or deny ERISA benefits act in a fiduciary capacity.36 ERISA fiduciaries are required to discharge their duties “solely in the interests of the participants and beneficiaries” (i.e. employees and their families).37 Administrators must act “for the exclusive purpose of providing benefits to participants and their beneficiaries; and defraying reasonable expenses of administering the plan.”38
ERISA fiduciaries are expected to exercise proper management, maintain proper records, disclose appropriate information and avoid conflicts of interest.39 Fiduciaries are held to standards of conduct analogous to those applied to trustees under judicially developed law.40 Importantly, ERISA imposes on plan administrators and fiduciaries a “duty of loyalty” to employees.41
ERISA requires that procedures be in place to insure that a claimant seeking benefits has a full and fair chance to challenge a claim denial.42 For example, when a plan administrator issues a denial of benefits, the notice should include specific reasons for the denial, specific references to plan provisions, a description of any additional material necessary to perfect the claim and an explanation of why such material is necessary.43
Administrators must freely provide claimants with access to plan documents, and other relevant documents, including internal guidelines and training materials.44 Claimants also are to be provided the opportunity to appeal a benefit decision internally, to test the administrator’s decision and provide further information.45
In light of the statutory and regulatory scheme, it is clear that ERISA administrators are not meant to act as neutral arbitrators, but must act to serve the interests of claimants. The claims process “is not an adversarial one, but a collaborative effort on the part of the claimant and the plan administrator.”46
Moreover, the administrator is not to act as a mere gatekeeper, simply waiting for the claimant to submit the right combination of documents. There are times when the administrator must make an affirmative investigation, prior to denying claims.47 The workings of the plan administrator should be transparent and open; documents should be revealed; and specific reasons should be given for decisions. In other words, the claimant should not have to guess where her claim fails, but should be escorted through the process by the administrator and be informed in an understandable fashion how she can fill any gaps in the record.

The purpose of these requirements is to preserve “a non-adversarial dispute resolution process,” whereby the plan and beneficiaries can have a full and meaningful dialogue regarding benefits.48
Part of the goal of ERISA is to encourage employers, through tax incentives, to provide employees with benefits.49 Given the importance of the benefits at issue, to sustain claimants through periods of sickness, disability and retirement, there is a growing recognition that plan administrators are performing an essential public function.50 Administrators and courts must make determinations in these cases “with an awareness of the social policies at stake.”51
Thus, the courts have shown a new willingness to hear the pleas of desperate claimants, seeking the medical and disability benefits that they worked for and earned. The courts are now aware of the wider context against which a plan administrator’s actions should be judged and plaintiffs’ attorneys have a new arsenal of arguments with which to win fair treatment for their clients.

How ERISA should work

For many years, courts have ignored the fact that ERISA is a trust law. Courts have deferred to insurers as if they were fiduciaries, but the courts have not held insurers to the standards of conduct applicable to fiduciaries. However, a plain reading of the statute requires that administrators act as fiduciaries, for the benefit of employees and their families. Given a proper understanding of ERISA, its pro-claimant language and the goals behind its promulgation, there are numerous areas in which ERISA’s protections should be broadened.

* Certain deficiencies in the record should be held against the administrator. The following is the way in which an ERISA claim is often handled. The claimant submits a number of doctors’ notes confirming, for example, a disability or need for medical treatment. When denying a claim, the administrator will often write: “I have reviewed the following documents . . .” and append a list of the doctors’ notes submitted by the claimant. Then the administrator will conclude that based on a review of the listed documents, “there is insufficient objective evidence to substantiate a disabling condition.”52 There is no specific recitation of what the deficiency in the record is. There is usually no suggestion of what tests should be run to provide the “objective evidence” needed. There is no specific explanation of the reasoning behind the decision.53 The claimant is left to wonder what she can or should provide.

This type of cursory denial reflects a flawed understanding of the role of the administrator. The administrator is not a gatekeeper who simply receives documents and then gives an impassive thumbs up or thumbs down. Unless the record affirmatively, and without ambiguity, disproves medical need or disability, administrators should be required to recommend specific tests or examinations that will result in an appropriate determination. Thus, while an administrator may be given deference, deficiencies or ambiguity in the records is the fault of the administrator, and should be held against the administrator. That is the inevitable result of the holding that plan eligibility determinations must be a collaborative, non-adversarial endeavor.54 It should be up to the administrator to either procure, or advise the claimant to procure, a specifically identified type of examination, using the correct standard.

Therefore, unless the record affirmatively shows a lack of disability or medical need, the administrator should not be permitted to deny benefits based on an insufficiency of the evidence, unless it has made a further investigation worthy of a fiduciary dedicated to providing benefits to deserving claimants. An administrator’s suggestions that the claimant obtain “more evidence” or “objective evidence” is simply insufficient to satisfy the administrator’s duty to clarify the record.

To the extent that a doctor’s evaluation in the record does not turn on the specific standard set forth in the plan policy, an ambiguity is therefore created that should be held against the administrator. In such a case, the administrator should be required to inform the claimant that the ambiguity exists, and inform the claimant of the appropriate standard, so that she may be re-evaluated. The administrator must not be permitted to issue a denial when the record is ambiguous as to whether the claimant meets the standard for benefits, if that ambiguity can be corrected. The court uses a de novo standard when considering the depth of the administrator’s inquiry.55 Under that standard, any ambiguity in the record should be reviewed in a manner favoring the claimant, unless the claimant refuses to participate in the administrator’s efforts to clarify the record.

* Denials must be more specific and worded in a way that a claimant can understand. To highlight this requirement, I make the following proposal. For the next five years, to the extent that a claim denial is challenged in court, a plan administrator’s pleadings must be absolutely and strictly limited to the denial notices. There may be no further explanation or justification provided to the court. There is no reason why the court should get a clearer explanation than a pro se claimant. Perhaps, if this proposal is adopted, administrators will take seriously their obligation to explain the reasons for denials.

* Administrators should be required to explain fully when they disregard doctors’ evaluations finding a disability or medical need.56
* There is a growing abundance of case law in the handicap discrimination area that for many jobs, regular attendance and reliability are essential functions of the job. Where medical impairments result in intermittent incapacity, before denying disability benefits, the administrator must be required to demonstrate that the claimant can reliably be called upon to work (and not just on good days).57

* ERISA provisions prohibit administrators from engaging in conflicts of interest. “A fiduciary shall not . . . act in any transaction involving the plan on behalf of a party . . . whose interests are adverse to . . . the interests of its participants or beneficiaries.”58 However, it is often the case that insurers act as plan administrators, even though benefits are paid directly out of the insurers’ own assets. The insurer has a direct financial incentive to deny benefits, and this constitutes an inherent conflict of interest.59
The Supreme Court has recently confirmed that when an insurer acts as a plan administrator, the insurer is acting solely in the capacity of a fiduciary to the claimant.60 In such a situation, the administrator stands in a role analogous to that of a trustee for a traditional medical trust. Despite the fact that insurers must necessarily exercise some type of “medical judgment,” when determining eligibility, their role is to make “pure eligibility decisions.”61 As such, insurers acting in the role of plan administrators are fully subject to the ERISA fiduciary provisions.62
Under the fiduciary provisions, it is prohibited by law that a plan administrator be in a position to make more money to the extent it denies more claims.63 That such a role is common, and is permitted to continue, is an absolute scandal and is an affront to ERISA trust principles.

It seems strange to characterize an ERISA plan administrator as a fiduciary, and to apply an abuse of discretion or an arbitrary and capricious standard in reviewing that administrator’s conduct, when the fiduciary is the insurer whose own funds would be used to satisfy a claim. That conflict of interest suggests to this common law court that such a fiduciary’s decision making should not be isolated from the thorough scrutiny that an evidentiary trial de novo would provide . . . We think that it is strange that a law designed to protect employees should be construed to provide them with less complete judicial review than was available before ERISA was adopted.64
Given the clear guidance of the Aetna decision, courts should preclude administrators with this type of conflict from determining benefits, pursuant to 29 U.S.C. § 1132(a)(3).65
* Even if insurers were permitted to serve as administrators, it is an absolute affront to ordinary trust principles to accord conflicted administrators with deference.66 To the extent an administrator is conflicted in this way, the court should apply a “presumptively void” standard, or at least engage in a searching de novo review of plan denials.67
* Ordinarily, when a case is remanded, it is sent back to the entity that mishandled the claim in the first place. The court should avoid remands, or in the alternative, ensure that the remand be determined, or overseen, by a neutral third party. In the further alternative, any benefit denial occurring after remand should be subject to de novo review or the “presumptively void” standard.

* Failure of the administrator to provide plan documents, or plan-related documents, in a timely fashion should result, presumptively, in daily penalties. ERISA requires the provision of such information and makes no exception where the plaintiff is unable to prove some type of prejudice. Moreover, a failure to disclose information should evaporate any deference that should be accorded to the administrator. Even in the absence of a showing of prejudice based on late disclosure, one cannot assume an administrator, who withholds information from the claimant, takes seriously her duty to act in the claimant’s interests.

* To the extent that a plan administrator sends the claimant to an independent medical examination (IME), the administrator should provide the claimant (1) information on the examiner’s qualifications; (2) the amount of money paid to the examiner for the exam; (3) the amount of money paid to the examiner by the plan over the last five years; (4) the number of times that an examiner has been utilized by the plan in the last five years; and (5) the number of times that the examiner has found in favor of the provision of benefits in the last five years. As a fiduciary, the administrator should be required to ascertain whether the examiner selected is qualified and fair. The administrator should be required to maintain the above information, and provide it to the claimant.

* When a plan administrator breaches the duty of loyalty, acts under a conflict of interest, fails to disclose information, fails to eliminate ambiguity in the record or otherwise fails in the requirements of a fiduciary, courts should remove that administrator, and/or refuse to accord the administrator deference.68
* Courts should be permitted to award consequential damages based on harm flowing from the administrator’s wrongful conduct.69
* The First Circuit has yet to hold that prevailing claimants should presumptively be awarded attorneys fees, and has, in fact indicated a contrary view.70 However, the courts should recognize that attorneys’ fees must be presumptively awarded. ERISA states, “the court in its discretion may allow a reasonable attorney’s fee and costs [to the prevailing party].”71 Courts have interpreted identically worded fee-shifting provisions in other statutes to require the award of attorneys’ fees to prevailing plaintiffs, save for rare special circumstances.72 There is no justifiable reason to interpret ERISA more stringently than other similarly worded statutes that also establish rights for employees.

Under the rigid standards imposed by the First Circuit, a successful claimant may well have to pay more in attorneys’ fees than she recovers in benefits. This hardly seems consistent with the remedial intent of ERISA, which is meant to insure that people, in the throes of physical, mental and financial distress, get the benefits that they had bargained for. Reluctance to award fees prevents claimants from obtaining competent legal counsel.

Moreover, in the event that a claim is remanded back to a plan administrator for further review, based on a faulty initial review, the claimant should be awarded attorneys fees. The remand itself should be considered “prevailing” under statute, and fees should be awarded, even if the claimant ultimately loses on the merits of the claim after remand. A remand is generally ordered only after it has been established that the claim has been handled inappropriately. By remanding the case, the court is ordering the administrator to perform an appropriate benefit review, something that the claimant was entitled to in the first place and should not have to pay for. To increase the likelihood of the award of attorneys’ fees on remand, plaintiffs’ lawyers should include a claim in their complaints, pursuant to 29 U.S.C. § 1132(a)(3), seeking, in the alternative, a remand.

Conclusion

The First Circuit and the District of Massachusetts remain very hostile forums for ERISA cases. This is not a good place to be if you are the beneficiary of an ERISA plan. Given the restrictive decisions that have emerged, it is surprising to review the language of ERISA and recognize how pro-claimant it actually is. Hopefully, courts have begun the process of returning to the original purposes of the statute, and applying the law as it was intended.

End notes 1. Martin v. Polaroid Corp., Long Term Disability Plan, 2004 U.S. Dist. Lexis 9510, 6 (D. Mass. 2004).[back] 2. Aetna Health, Inc. v. Davila, 124 S. Ct. 2488 (2004) (ERISA preempts a Texas law requiring HMOs to exercise ordinary care); UNUM Life Ins. Co. of America v. Ward, 119 S. Ct. 1380 (1999) (ERISA does not preempt a California law permitting some late-filed insurance claims). [back] 3. 65 Fed. Reg. 70,246 (Nov. 21, 2000) (applicable to claims filed after Jan. 1, 2002). [back] 4. Aetna Health, Inc., 124 S. Ct. at 2503 (Ginsburg, J., concurring). [back] 5. ERISA cases that do not turn on benefit determinations of a plan administrator, such as misrepresentation or interference with rights claims, are not included in the survey. See Varity Corp. v. Howe, 116 S. Ct. 1063 (1996). [back] 6. Giampa v. Trustmark, Ins. Co., 73 F. Supp. 2d 22, 28-29 (D. Mass. 1999). [back] 7. Hughes v. Boston Mutual Life Ins. Co., 26 F.3d 264, 268 (1st Cir. 1994).[back] 8. Firestone Tire & Rubber Co. v. Bruch, 109 S. Ct. 948, 956-57 (1989).[back] 9. Id. at 956-57. [back] 10. Brigham v. Sun Life of Canada, 317 F.3d 72, 86 (1st Cir. 2003).[back] 11. Leahy v. Raytheon Co., 315 F.3d 11, 18 (1st Cir. 2002). [back] 12. Id. at 19. (“Indeed, when the medical evidence is sharply conflicted, the deference due to the plan administrator may be especially great”). [back] 13. Lopez v. Metro. Life Ins. Co., 332 F.3d 1, 5 n.8 (1st Cir. 2003) (insurer may rely on opinion of physician who is not qualified to treat the plaintiff’s maladies); Gannon v. Metro. Life Ins. Co., 360 F.3d 211, 215-16 (1st Cir. 2004) (insurer may rely on opinion of physician who has not examined claimant, even where that physician disagrees with two treating physicians). [back] 14. Conrad v. Reliance Standard Life Ins. Co., 282 F. Supp. 2d 233, 237 (D. Mass. 2003).[back] 15. See, e.g., McLaughlin v. Prudential Life Ins. Co. of Am., 319 F. Supp. 2d 115, 127 (D. Mass. 2004).[back] 16. Cole, 101 Fed. Appx., at 840. [back] 17. Id.[back] 18. Recupero v. New England Tel. & Tel. Co., 118 F.3d 820, 822 (1st Cir. 1997).[back] 19. Turner v. Fallon Cmty. Health Plan, Inc., 127 F.3d 196 (1997) (no damages for wrongful withholding of healthcare benefits which results in the death of the beneficiary); Andrews-Clarke v. Travelers Ins. Co., 984 F. Supp. 49, 55 & n.26, 65 (D. Mass. 1997) (no damages where administrator withheld treatment, leading to the death of the claimant, causing Judge Young to ask, “Does anyone care? Do you?”).[back] 20. Cottrill v. Sparrow, Johnson & Ursillo, Inc., 100 F.3d 220, 226 (1st Cir. 1996) (refusing to award fees to beneficiary who fought a long litigation battle); Cook v. Liberty Life Assurance Co. of Boston, 334 F.3d 122 (1st Cir. 2003) (refusing to award a successful claimant appellate fees, even where the district court found she deserved fees). [back] 21. Rodriguez-Abreau v. Chase Manhattan Bank, N.A., 986 F.3d 580, 588-89 (1st Cir. 1993).[back] 22. Radford Trust v. First UNUM Life Ins. Co. of Am., 321 F. Supp. 2d 226, 238 (D. Mass. 2004).[back] 23. Martin v. Polaroid Corp., Long Term Disability Plan, 2004 U.S. Dist. Lexis 9510 (D. Mass. 2004) (remand ordered where plan administrator denied a claim based on lack of record support for the finding of disability; however, the administrator had failed to request and review the entire medical file); see also Cook v. Liberty Life Assurance Co. of Boston, 320 F.3d 11, 23 (1st Cir. 2003) (administrator acted arbitrarily where, upon harboring suspicions about the claimant’s evidence, it failed to investigate by scheduling an independent medical examination, or seeking further review by another physician).[back] 24. 2003 U.S. Dist Lexis 14048 (D. Mass. 2003).[back] 25. Colby v. UNUM Provident, 328 F. Supp. 2d 186, 191 (D. Mass. 2004).[back] 26. Glista v. UNUM Life Ins. Co. of Am., 378 F.3d 113, 127 n.9 (1st Cir. 2004).[back] 27. Ruggerio, 2003 U.S. Dist. Lexis 14048, at 7-8.[back] 28. Colby, 328 F. Supp. 2d at 191.[back] 29. See Cook, 320 F.3d at 21 (administrator may not require clinical objective findings where the claimant suffered from fibromyalgia or chronic fatigue syndrome). But see Ivy v. Raytheon Employees Disability Trust, 307 F. Supp. 2d 301, 307-08 (D. Mass. 2004) (insurer may reject the existence of a mental disability for want of “objective evidence,” without informing the claimant what sort of objective evidence is required to establish that type of disability).[back] 30. Colby, 328 F. Supp. 2d at 192. But see McLaughlin, 319 F. Supp. 2d at 127 (indications of medical progress justifies the denial of disability benefits).[back] 31. Glista, 378 F.3d at 128, 130-31.[back] 32. Id. at 123-24 & n.3 (consistency is a factor in determining whether plan has acted arbitrarily; therefore, internal plan documents are relevant and discoverable).[back] 33. Krodel v. Bayer Corp., Memorandum and Order, C.A. No. 03-11109 at 7-9 (Gorton, J.) (D. Mass. Nov. 19, 2004).[back] 34. Radford Trust, 321 F. Supp. 2d at 249-51; see also Cook, 320 F.3d at 24 (refusing to remand case after finding that the administrator acted arbitrarily).[back] 35. 29 U.S.C. § 1001(b); see Firestone Tire & Rubber Co., 109 S. Ct. at 956. [back] 36. Aetna Health, Inc., 124 S. Ct. at 2501-02; 29 U.S.C. § 1002(21)(A)(iii). [back] 37. 29 U.S.C. § 1104(a)(1); see Restatement (Second) of Trusts § 170(1) (1959) (similar standard binds trustees).[back] 38. 29 U.S.C. § 1104(a)(1)(A)(i) & (A)(ii). [back] 39. Mertens v. Hewitt Assocs., 113 S. Ct. 2063, 2066 (1993); NLRB v. Amax Coal Co., 101 S. Ct. 2789, 2795 (1981) (ERISA “codified strict fiduciary standards”); 29 U.S.C. § 1106. [back] 40. Firestone Tire & Rubber Co., 109 S. Ct. at 954; Recupero, 118 F.3d at 827. [back] 41. Firestone Tire & Rubber Co., 109 S. Ct. at 953; Varity Corp., 116 S. Ct. at 1074-75.[back] 42. 29 U.S.C. § 1133(2); 29 C.F.R. § 2560.503-1. [back] 43. Glista, 378 F.3d at 129; 29 U.S.C. § 1133; 29 C.F.R. § 2560.503-1. [back] 44. Glista, 378 F.3d at 123; 29 U.S.C. § 1024(b)(4). [back] 45. 29 C.F.R. 2560.503-1(h).[back] 46. Martin, 2004 U.S. Dist. Lexis 9510 at 5. [back] 47. See Martin, 2004 U.S. Dist. Lexis 9510 at 6; Houle v. Raytheon Co., Report and Recommendation on Cross-Motions for Summary Judgment, C.A. 00-12071, Dein, U.S.M.J. (D. Mass. 2003), at 39. [back] 48. Glista, 378 F.3d at 129. [back] 49. Cent. Laborers’ Pension Fund v. Heinz, 124 S. Ct. 2230, 2236-37 (2004). [back] 50. Radford Trust, 321 F. Supp. 2d at 241, 248. [back] 51. Id. at 242. [back] 52. See Milad v. Raytheon Employees Disability Trust, Opinion, C.A. No. 95-10629 (Keeton, J.) (D. Mass. Sept. 20, 1996). [back] 53. Cole, 101 Fed. Appx. at 840. [back] 54. Glista, 378 F.3d at 129; Martin, 2004 U.S. Dist. Lexis 9510 at 5. [back] 55. Radford Trust, 321 F. Supp. 2d at 238. [back] 56. See Houle v. Raytheon Co., Report and Recommendation on Cross-Motions for Summary Judgment, C.A. 00-12071, Dein, U.S.M.J. (D. Mass. 2003) at 42.[back] 57. Ruggerio, 2003 U.S. Dist Lexis 14048.[back] 58. 29 U.S.C. 1106(b)(2).[back] 59. Lang v. Long-Term Disability Plan, 125 F.3d 794, 797 (9th Cir. 1997); see Radford Trust, 321 F. Supp. 2d at 242 (insurers have a duty to their shareholders to maximize profits). [back] 60. Aetna Health, Inc., 124 S. Ct. at 2501-02 & n. 6 (contrasting the situation where a physician stands in the role of both treating the claimant and making eligibility determinations). [back] 61. Id. at 2501-02. [back] 62. Id. at 2501-02. [back] 63. 29 U.S.C. § 1106(b)(2). [back] 64. Gurnack v. John Hancock Mutual Life Ins. Co., 406 Mass. 748, 754-55 & n.6 (1990). [back] 65. The insurers’ argument is that there is no conflict of interest because if the insurer abuses its position, employers will no longer contract with them. Therefore, the argument goes, it is in the insurer’s long-term financial interest to administer claims fairly. However, such a “long view” approach is foreign to traditional trust principles. Fiduciaries must not be conflicted, either in the long-term or in the short-term. Moreover, the realities belie the insurers’ “long-view” argument. The people hurt by claim denials, employees, do not contract directly with insurers. Even if it can be said that employers will eventually leave abusive insurers, that only makes the insurer’s conflict slightly more subtle: An insurer has incentive to deny as many claims as possible, but not so many as will jeopardize client relations. Thus, an inappropriate conflict remains. Employees can not force a change of plan administrator, even if a large number of employees have poor experiences with the insurer. Moreover, improper claim denials do not directly affect employers in an adverse manner, and so, improper claims administration may not motivate an employer to switch insurers, even if the employer is acting in good faith. Employers obtain their tax advantages, whether or not the ERISA plan is administered in a robust fashion. While insurers may argue that conflicted administrators keep costs down for employers, and allow employers to provide for benefits to employees into the future, that argument is inapposite. Administrators must devote themselves to present claimants, and owe absolutely no duties to a stranger that might be hired in the indefinite future, and may fall under some future version of the plan.[back] 66. See, e.g., Recupero, 118 F.3d at 827; Conrad, 282 F. Supp. 2d at 237. [back] 67. See Buttram v. Ford Motor Co., 76 F.3d 896, 900 n.6 (8th Cir. 1996); Cleary v. Cleary, 427 Mass. 286, 290-91, 295 (1998) (where a fiduciary benefits from a transaction, the burden of proof shifts to the fiduciary to demonstrate that she has affirmatively and diligently discharged her fiduciary duties, and indicating that “when a fiduciary benefits by a transaction with his client, the transaction presumptively is void and improper”).[back] 68. See 29 U.S.C. § 1132(a)(3).[back] 69. See Aetna, 124 S. Ct. at 2503 (Ginsburg, J., concurring) (suggesting that consequential damages might be awarded as an equitable remedy under 29 U.S.C. § 1132(a)(3)). [back] 70. See Cottrill, 100 F.3d at 225 (“ERISA does not provide for a virtually automatic award of attorneys fees to prevailing plaintiffs”). [back] 71. 29 U.S.C. § 1132(g)(1).[back] 72. Stanton v. S. Berkshire Reg. Sch. Dist., 197 F.3d 574 (1st Cir. 1999) (same language in 42 U.S.C. § 1988(b) requires presumptive award of attorneys fees); Bandera v. Quincy, 220 F. Supp. 2d 26 (D. Mass. 2002) (same language in Title VII requires presumptive award of fees).[back]

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