MetLife v. Glenn

This final case of the Court's 2007-08 term deals with a conflict of interest in the administration and benefit-paying roles of Metropolitan Life Insurance Company under a company disability plan governed by ERISA, that complex 1974 federal law dealing with retirement and disability plans. The Supreme Court granted cert. on the following two questions:

"Whether the Sixth Circuit erred in holding, in conflict with two other Circuits, that the fact that a claim administrator of an ERISA plan also funds the plan benefits, without more, constitutes a “conflict of interest” which must be weighed in a judicial review of the administrator's benefit determination under Firestone Tire & Rubber v. Bruch, 489 U.S. 101 (1989)?"

and...

"If an administrator that both determines and pays claims under an ERISA plan is deemed to be operating under a conflict of interest, how should that conflict be taken into account on judicial review of a discretionary benefit determination?”

Well, as usual, the questions get to the heart of the issue, but unless you know some of the bones and sinews, you really can't appreciate the questions. Let me give you some of those...

Relevant Facts

If you understand the facts of this case, the issue is squarely presented. Here they are, taken from the Second Circuit's 2006 decision (461 F3d 660).

"The plaintiff, Wanda Glenn, worked for Sears, Roebuck from 1986 until April 29, 2000, at which point she took a medical leave of absence and has not since returned to work. Glenn's final position with Sears was as sales manager in the women's department, which entailed a workweek of 40-50 hours per week and the training and direct supervision of 20-30 sales associates. The description of her job, prepared by Sears, indicated that the job required sitting up to 20 percent of the workday, standing for 20-60 percent of the workday, and some climbing, reaching, stooping, and lifting. Glenn was responsible for supervising other employees, ensuring that her department was properly stocked with merchandise, satisfying the needs and demands of customers, and identifying and solving various problems as they arose. She reported to the store's general manager."

So, Ms. Glenn submitted a disability claim.

"Glenn submitted a disability claim under Sears's long-term disability plan on June 20, 2000, attaching a letter from her treating physician, Dr. Rajendera C. Patel, dated April 30, 2000, indicating that Glenn had been diagnosed with “severe dilated cardiomyopathy,” a disease of the heart muscle that causes the heart to become enlarged and, for that reason, to pump inadequately. Her symptoms included general fatigue and shortness of breath on exertion. Dr. Patel further stated, “From my standpoint, this patient cannot return to any kind of job that would require any significant physical or psychological stress.”

Now we need to know a little about the disability plans that she was able to apply for:

"The Sears disability plan for which Glenn applied covered two distinct stages of “total disability.” The first provided that a participant was totally disabled when she was “completely and continuously unable to perform each of the material duties of [her] regular job.” The second category became relevant after the first 24 months of benefits and required that the participant be “completely and continuously unable to perform the duties of any gainful work or service for which [she is] reasonably qualified taking into consideration [her] training, education, experience, and past earning.” (Emphasis added.) Glenn's claim was approved, and she began receiving long-term disability benefits..."

Sounds like everything is hunky-dory, doesn't it? Not on your life. A few months later, at the urging of MetLife, the administrator of the Sears disability plan, she applied for and eventually received Social Security benefits. But then MetLife, sneaky as they are, decided that they had to be reimbursed by Glenn for more than $13,000--the amount that Social Security picked up that MetLife at first had paid. Glenn paid up. Then, in May 2003, a few years after Glenn received disability benefits, MetLife sent Glenn a letter advising her that if she wanted to continue to receive long-term disability benefits she had to meet the second definition for total disability bolded above, i.e., that she was "incapable of performing the material duties of any gainful occupation as defined by the plan..."

Then the fun began. She got the proper documentation in place, but MetLife looked at all the records and decided that Glenn, in fact, had "improved" in her medical condition and that therefore she shouldn't receive any more benefits from MetLife (now you are beginning to see the conflict of interest issue, I hope. MetLife administers and funds the plan...). Glenn took the issue to court, and the district court agreed with MetLife. Then, on appeal, 461 F3d 660, a panel of the Sixth Circuit held that the administrator's decision to deny long-term disability benefits for Glenn's condition was not a product of a principled and deliberative reasoning process. Hence, the Sixth Circuit reversed the district court's determination. One of the factors that led the Second Circuit to reverse was the seemingly perverse conflict that MetLife had both to protect and to deny benefits to disabled workers.

Conclusion

It was not the existence of a conflict per se that caused the Sixth Circuit to reverse the lower court but the fact that the lower court didn't seem to have taken into account the way that this conflict could have shaped MetLife's second decision on Glenn's disability. Thus, the Court is poised to deal with the issue of conflict of interest in the administration of ERISA plans. I think we are in for a wild and woolly ride..

3381