Although the Federal Rules of Civil Procedure are to be applied uniformly in all civil actions,[1] which would encompass Employee Retirement Income Security Act benefit claims,[2] civil procedure in ERISA litigation often deviates from the norm.
One issue in particular that has taken on a different spin in ERISA litigation is the nature of summary judgment. Under Rule 56,[3] summary judgment is permitted only “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Several courts have modified that rule in ERISA litigation; however, in Anita Tekmen v. Reliance Standard Life Insurance Co.,[4] the U.S. Court of Appeals for the Fourth Circuit pointed out last month how summary judgment has been misused in ERISA litigation and rejected the approach taken by other circuit courts of appeal.
The Tekmen case involved a claim for long-term disability insurance benefits. After Reliance Standard denied Tekmen’s claim for benefits relating to a concussion she suffered in a car accident, she filed suit against the insurer. After conducting a bench trial under Federal Rule of Civil Procedure 52 based on the claim record, the court ruled for Tekmen. Reliance Standard then appealed.
Reliance Standard argued that the U.S. District Court for the Eastern District of Virginia was required to resolve the case on summary judgment and should not have held a bench trial. The defendant also maintained the appellate court should have reviewed the lower court’s decision de novo. The Fourth Circuit ruled against Reliance Standard on both issues.
The appeals court acknowledged that its sister circuits have held divergent views on how ERISA denial of benefits cases should be adjudicated.
Some courts have utilized summary judgment in some fashion;[5] others have conducted bench trials;[6] and the U.S. Court of Appeals for the Sixth Circuit asserts that neither summary judgment nor a bench trial should be used; and that an alternative form of review unique to ERISA cases should be utilized.[7]
The Fourth Circuit concluded that traditional summary judgment would not be applicable since it requires the court to find the absence of any material issues of fact and to construe inferences in favor of the nonmoving party.[8] Moreover, summary judgment is inapt because it precludes a court from weighing evidence or making credibility determinations.
Courts — such as the U.S. Court of Appeals for the First Circuit with its 2010 ruling in Gent v. CUNA Mutual Insurance Society — that have applied summary judgment to ERISA cases have explained that in such cases, “summary judgment is simply a vehicle for deciding the [benefits] issue” and “the non-moving party is not entitled to the usual inferences in its favor.”[9]
The Fourth Circuit disagreed, and pronounced that it has never endorsed such a procedure and would not do so, explaining that given the parties’ dispute over key facts, summary judgment is improper.
Although the First Circuit’s 2005 ruling in Orndorf v. Paul Revere Life Insurance Co. pronounced that there are “no disputed issues of fact for the court to resolve” when an ERISA case is decided on a claim record,[10] the Fourth Circuit challenged that rationale,
explaining:
Where, as here, the district court is faced with directly at-odds contentions regarding whether the individual’s claimed impairment is genuine, we see no alternative to the district court making findings of fact. And where such findings implicate material
issues, summary judgment simply is not appropriate.
The court was also troubled by the use of the summary judgment paradigm vis-a-vis its role as a reviewing court.
Typically, when a district court renders findings of fact, the appellate court reviews those findings for clear error.[11] However, summary judgment is reviewed de novo, which means a second round of fact-finding.
The court deemed that it would be wasteful for the appellate court to essentially conduct a do-over after the district court has already reviewed a voluminous record and evaluated the evidence since “district courts are institutionally assigned the role of finder of fact.”
Thus, if Reliance Standard’s position were to prevail, it “would convert the district court’s resolution of the facts from the ‘main event’ to a mere ‘tryout on the road.'”
The court thus characterized the quasi-summary judgment approach taken by other circuits as “a solution in search of a problem,” pointing out that Rule 52 already provides a mechanism for district courts to resolve disputed facts and render a judgment. Hence, the court held that:
In the context of de novo review of ERISA denial-of-benefits cases as in any other context, district courts should employ the appropriate procedural mechanism for resolving the case before them as defined by the Federal Rules of Civil Procedure.
Thus, summary judgment would only be appropriate where there are no genuine issues of material fact. Correspondingly, the court held that the clear error standard of appellate review applies to the reviewing court’s appellate adjudication, not the de novo standard
urged by Reliance Standard. Only issues of law are reviewed de novo; factual findings are not.
The court also rejected Reliance Standard’s argument that the district court’s use of Rule 52 violated a principle of civil procedure known as the party presentation principle.
Since both parties had filed cross-motions for summary judgment, Reliance Standard argued that it was improper for the court to reframe the case in order to conduct an adjudication under Rule 52.
The Fourth Circuit disagreed, explaining, “The district court here did not reshape the legal question presented by the parties; it simply adjusted the procedural mechanism it would use to address the correctness of Reliance’s decision.” Hence, the court’s use of Rule 52 to render fact-finding following the denial of the parties’ crossmotions for summary judgment was upheld.
After resolving the procedural issues, the court ruled the district court’s finding in favor of Tekmen was not clearly erroneous.
The Tekmen ruling joins a rising chorus of appellate rulings that have begun to question the quasi-administrative law procedures that courts have applied to adjudicating ERISA claims.
The use in ERISA litigation of terms such as “administrator” or “administrative record” is confusing since most ERISA benefit cases involve insurance and the so-called administrator is simply a claim adjuster, as the U.S. Court of Appeals for the Third Circuit recognized in Luby v. Teamsters Health, Welfare & Pension Trust Funds in 1991:
Plan administrators are not governmental agencies who are frequently granted deferential review because of their acknowledged expertise. Administrators may be laypersons appointed under the plan, sometimes without any legal, accounting, or other training preparing them for their responsible position, often without any experience in or understanding of the complex problems arising under ERISA, and, as this case demonstrates, little knowledge of the rules of evidence or legal procedures to assist them in factfinding.[12]
As the courts continue to question ERISA dogma, even the prohibition against jury trials in ERISA cases may fall by the wayside as the Sixth Circuit has already begun to examine in In re: Caudill.[13]
Jury trials are barred in ERISA cases based of the rationale that ERISA claims are equitable in nature; however, ERISA claims have also been described as contractual,[14] and the U.S. Supreme Court, in Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry in 1990, found a Seventh Amendment right to jury trials in breach of contract cases.[15]
Coaches in sports emphasize the need for players to learn and apply the fundamentals of their sport; and the application of civil procedure fundamentals in litigation is equally important.
The Federal Rules of Civil Procedure have a purpose; and Rule 1 states the rules “should be construed, administered and employed by the court and the parties to secure the just, speedy and inexpensive determination of every action and proceeding.”
The Tekmen case points out how the meaning of summary judgment has been distorted in ERISA litigation; and its decisive and definitive ruling is a critical step on the way toward restoring ERISA litigation to civil procedure norms.
This article was first published in Law360 on January 3, 2023.
Mark DeBofsky is a shareholder at DeBofsky Law, Ltd.
[1] Fed. R. Civ. P. 1 and 2.
[2] 29 U.S.C. § 1132(a)(1)(B) empowers claimants to bring a “civil action” to recover benefits.
[3] Fed. R. Civ. P. 56.
[4] Tekmen v. Reliance Standard Life Ins. Co., 2022 U.S. App. LEXIS xx, 2022 WL 17725720 (4th Cir. December 16, 2022).
[5] Both Orndorf v. Paul Revere Life Ins. Co., 404 F.3d 510, 517 (1st Cir. 2005) and LaAsmar v. Phelps Dodge Corp. Life, Accidental Death & Dismemberment & Dependent Life Ins. Plan, 605 F.3d 789, 795–96 (10th Cir. 2010) have used the term “summary judgment” but explained that the summary judgment procedure in ERISA cases differs from ordinary summary judgment.
[6] Kearney v. Standard Ins. Co., 175 F.3d 1084 (9th Cir. 1998).
[7] Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 618–19 (6th Cir. 1998).
[8] See, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
[9] Gent v. CUNA Mut. Ins. Soc’y, 611 F.3d 79, 82–83 (1st Cir. 2010) (citations omitted); see also LaAsmar, 605 F.3d at 796.
[10] Orndorf, 404 F.3d at 518.
[11] Fed. R. Civ. P. 52(a)(6).
[12] Luby v. Teamsters Health, Welfare & Pension Trust Funds, 944 F.2d 1176, 1183 (3d Cir. 1991).
[13] See, In re Caudill, No. 20-3834, 2020 U.S. App. LEXIS 34464, 2020 WL 6748203 (6th Cir. Oct. 30, 2020) (unnsigned order).
[14] See, e.g., Larson v. United Healthcare Ins. Co., 723 F.3d 905, 911 (7th Cir. 2013).
[15] Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, 494 U.S. 558, 564-65 (1990).