An end to lenient regime of claim reviews

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An end to lenient regime of claim reviews

Chicago Daily Law Bulletin
November 24, 2008

by MARK D. DEBOFSKY

The 4th U.S. Circuit Court of Appeals recently issued an instructive, albeit unpublished ruling, in Gorski v. ITT Long Term Disability Plan, 2008 U.S.App.LEXIS 22904 (4th Cir. Nov. 3, 2008) (unpublished), which points to a new way of evaluating disability benefit denials under the abuse of discretion standard. The plaintiff, who had undergone back surgery and received disability benefits commencing in 1999, continued to experience excruciating pain due to dislodged hardware from her surgery that was causing nerve root compression.

Notwithstanding the treating doctors' unequivocal support for Gorski's ongoing disability, MetLife nonetheless terminated benefits after receiving a surveillance report asserting Gorski was moving about normally, and based on a Network Medical Review report completed by Dr. Marc Soriano, who found no objective support for Gorski's pain complaints.

The key portion of the opinion rejected MetLife's reliance on Soriano's opinion, explaining: ''The problem with Dr. Soriano's opinion is that Dr. Soriano never explained on what basis he doubted the veracity of Gorski, whom he had never examined. To the extent that he did not believe that Gorski's physical problems would cause the intense pain of which she complained, he never revealed why he rejected the view of the other doctors that dislodged surgical hardware was irritating surrounding nerve tissue, resulting in debilitating pain for Gorski.''

The court thus concluded that MetLife's decision was not supported by substantial evidence. In reaching that conclusion, the court made a crucial observation that globally impacts ERISA litigation.

''Importantly,'' the court wrote, ''the defect in MetLife's final decision was not that the evidence before it was insufficient to support a hypothetical decision to deny benefits, but rather, that the actual decision that MetLife issued was not reasoned and principled.''

Because the record showed conclusively that Gorski was unable to work, and since the surveillance failed to show Gorski could sustain physical activities over a sufficient period of time, the court reinstated benefits. A dissenting opinion would have remanded the matter to the insurer, though.

It is disappointing that this ruling is unpublished because Gorski makes a key point. The recent ruling in Metro.Life Ins. Co. v. Glenn, 128 S.Ct. 2343 (2008), is somewhat Delphic given the Supreme Court's refusal to prescribe specific rules or guidelines; however, this decision appears to capture the Supreme Court's meaning. While the Supreme Court adhered to the abuse of discretion standard in ERISA cases, the impact of Glenn is in its discussion as to how that standard is to be applied. Glenn, and now Gorski, indicate that a reviewing court must do more than simply look to see whether any evidence in the record supports the ''reasonableness'' of the conclusion reached, as has heretofore been the rule. Instead, the reviewing court is required to assess the entire record and consider a ''combination of factors,'' which includes, among a host of other elements, consideration of the plan administrator's inherent conflict of interest. Glenn, 128 S. Ct. at 2351-52.

The Glenn opinion's citation to two seminal cases instructing lower courts to evaluate the entire record assembled in support of administrative decisions, rather than looking to see if there is any evidence in the record supporting the decision ( Citizens to Preserve Overton Park Inc. v. Volpe, 401 U.S. 402, 415-417 (1971), and Universal Camera Corp. v. NLRB, 340 U.S. 474 (1951)), points to the correctness of the evaluative framework applied in Gorski.

Although Chief Justice John G. Roberts Jr. remarked in a concurring opinion that administrative standards do not govern ERISA, his ensuing comments about the citation to Universal Camera suggest the instructive value of that ruling. In essence, Glenn and this ruling illustrate that the appropriate paradigm for evaluating ERISA cases is not a micro but a macro perspective taking into consideration the entire record in order to assure the accuracy of the benefit plan's claim determination.

This more all-encompassing scope of judicial review is perhaps what triggered criticism from Roberts and Justice Antonin Scalia, and further prompted Scalia to refer to the new regime in his dissent as ''nothing but de novo review in sheep's clothing.'' Although not to the extent suggested by Scalia, the dissent illuminates the paradigm shift created by Glenn. The 4th Circuit's ruling in Gorski reinforces that change has come, and that the lenient regime of claim reviews is over.