Do federal courts have the authority to remand Employee Retirement Income Security Act benefit claim cases to insurance companies or claim administrators that denied benefits?

While some courts have said no, the U.S. Court of Appeals for the Tenth Circuit, in P. v. United Healthcare Insurance Co.,[1] recently answered that question in the affirmative. However, the court never explained the source of its remand authority, which renders the ruling problematic.

The matter involved a denial of health care claim for residential behavioral health treatment. The district court ruled in the plaintiffs’ favor after finding procedural irregularities in the manner in which the claims were processed.

As a result, the district court found that United Behavioral Health failed to engage in a meaningful dialogue with the plaintiffs as to several issues that included whether a substance use disorder diagnosis would have provided an independent basis for coverage in addition to other psychiatric diagnoses that had been rendered.

Nor did UBH address the opinions of the patient’s treatment providers and the rationale they offered for recommending residential treatment, which is a requirement according to in D.K. v. United Behavioral Health,[2] a decision handed down by the same court earlier this year.

Consequently, the Tenth Circuit affirmed the district court’s finding that the defendant abused its discretion in denying benefits by “fail[ing] to comply with either the letter or the spirit of ERISA’s claims-processing requirements” and by “depriv[ing] Plaintiffs of the meaningful dialogue ERISA requires between claimants and the plan administrator deciding their benefits claims.”

The court further determined that UBH could not cure a defective denial by pointing to notations in internal claim notes that were not communicated to the patient. In short, the court ruled that if United Behavioral health “disagreed with the treatment recommendations made by [the plaintiff’s] treating health care providers, it could have said so and explained why.”

Although the district court determined the proper remedy for the defendant’s abuse of discretion was an award of benefits, the court of appeals disagreed, explaining the choice between a remand or an award of benefits “depends on the specific flaws in the plan administrator’s decision.” Unless the evidence in the record “clearly shows” an entitlement to benefits, the Tenth Circuit maintained that a remand was more appropriate, finding the defendant’s “fail[ure] to consider all of the evidence before it, fail[ure] to explain adequately why it denied Plaintiffs’ claims, and fail[ure] to engage adequately with Plaintiffs” was not enough to justify an outright award of benefits.

What is missing from the Tenth Circuit’s opinion is any citation supporting the court’s authority to remand the matter.

In 2021, a concurring opinion issued in the U.S. Court of Appeals for the Sixth Circuit case of Card v. Principal Life Insurance Co,[3] asked, “Why do courts have any power to ‘remand’ a pending federal lawsuit to one of the private litigants?” Judge Eric Murphy acknowledged that circuit courts adjudicating ERISA benefit cases “seem to agree” that a “‘remand’ power exists.”[4] However, he pointed out the Supreme Court has never ruled on the propriety of ERISA remands, nor does the ERISA statute authorize remands.

By contrast, other laws such as the Social Security Act permits federal courts to remand cases seeking judicial review of Social Security claim denials to administrative law judges.[5] However, Judge Murphy observed that he was unable to identify any areas of federal civil practice not involving administrative law other than ERISA which permit remands to private litigants.[6]

Other courts have also questioned the practice of remanding ERISA cases. The U.S. Court of Appeals for the Second Circuit, in Mead v. Reliastar Life Insurance Co.,[7] noted in 2014 that while ERISA authorizes aggrieved claimants to bring a “civil action,” the statute “does not contain any provisions governing remands to plan administrators once those actions have been initiated, nor does it explain how judicial review of determinations made on remand is to occur.”[8]

Thus, since the ERISA statute lacks any provision authorizing remands of ERISA cases, the right of federal courts to do so cannot be assumed. While federal judges may be uncomfortable issuing decisive rulings in ERISA benefit cases involving complex medical or disability issues, that is what courts do every day in medical malpractice and personal injury cases.

Further, unlike administrative agencies that possess specialized expertise, as the U.S. Court of Appeals for the Third Circuit’s 1991 decision in Luby v. Teamsters Health, Welfare and Pension Trust Funds[9] teaches, ERISA plan administrators are typically laypeople who possess no more expertise than judges.

Given the conduct by UBH violative of ERISA that was described in this ruling, why should the defendant have been given another bite at the apple?

As the U.S. Court of Appeals for the Seventh Circuit observed in 2004 in Dabertin v. HCR Manor Care Inc.[10] when it rejected a defendant’s remand request: “It would be a terribly unfair and inefficient use of judicial resources to continue remanding a case to the Committee to dig up new evidence until it found just the right support for its decision to deny an employee her benefits.”

Thus, in the absence of any authority supporting a court’s power to remand ERISA benefit cases, an award of benefits was fully justified in the UBH matter.

Mark DeBofsky is a shareholder at DeBofsky Law Ltd.

This article was first published by Law 360 on August 25, 2023.

[1] David P. v. United Healthcare Ins. Co., 2023 U.S.App. LEXIS 21196, 2023 WL 5209748 (10th Cir. August 15, 2023).

[2] D.K. v. United Behavioral Health, 67 F.4th 1224, 1236 (10th Cir. 2023); DeBofsky, “ERISA Ruling Shows Why Insurers Must Justify Claim Denials,” Law360 (May 31, 2023).

[3] Card v. Principal Life Ins. Co., 17 F.4th 620, 626 (6th Cir. 2021) (Murphy, J., concurring); also see, DeBofsky, “6th Circ. ERISA ruling Highlights Dubious Court Practice,” Law360 (November 16, 2021)

[4] Id. at 627.

[5] 42 U.S.C. § 405(g).

[6] Citing Perlman v. Swiss Bank Corp. Comp. Disability Prot. Plan, 195 F.3d 975, 978 (7th Cir. 1999) (“it is doubtful as an original matter that a district court may ‘remand’ ERISA claims as if to administrative agencies”).

[7] Mead v. Reliastar Life Ins. Co., 768 F.3d 102 (2d Cir. 2014).

[8] 768 F.3d at 112.

[9] Luby v. Teamsters Health, Welfare and Pension Trust Funds, 944 F.2d 1176, 1183 (3d Cir. 1991).

[10] Dabertin v. HCR Manor Care Inc., 373 F.3d 822, 832 (7th Cir. 2004).

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