The Federal Rules of Civil Procedure are intended to encompass the procedures for resolving all civil actions in the federal courts. However, a recent ruling from a federal district court in California suggested the use of a procedural mechanism that deviates from the rules. In Evans v. Bank of America Corp. Long Term Disability Plan, 2012 U.S.Dist.LEXIS 154296 (N.D.Cal. Oct. 25, 2012), the court denied cross-motions for summary judgment in a case involving a dispute over disability benefits. The court’s explanation of the procedure it applied rested on a premise set forth in a footnote at the outset of the opinion:

Although the defendant’s motion is titled as a Rule 52 judgment of partial findings, it is properly adjudicated as a motion for summary judgment on the administrative record. Zurndorfer v. Unum Life Ins. Co. of America; 543 F.Supp.2d 242, 255 (S.D.N.Y. 2008); see also Stephan v. Unum Life Ins. Co. of America, F.3d , 2012 WL 3983767, at *10 (9th Cir. Sept. 12, 2012).

Although the court cited authority for the procedural mechanism it applied, the court’s statement immediately raises two significant issues. First, a motion for summary judgment as defined in Rule 56(a) may be granted only if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” From the court’s recitation of the facts, though, the case was permeated with disputed facts since the plaintiff presented opinions from her doctors certifying disability while the defendant cited medical reports disputing whether the plaintiff was disabled. Second, the court referenced “an administrative record.” But nowhere in the Employee Retirement Income Security Act (ERISA) statute or in its legislative history is there any suggestion that ERISA civil actions authorized by 29 U.S.C. Section 1132 are subject to administrative procedures. I have written extensively on this point in a law review article entitled “The Paradox of the Misuse of Administrative Law in ERISA Benefit Claims,” 37 John Marshall Law Review727 (2004).

Judicial confusion about how to adjudicate ERISA cases, especially under a deferential standard of review, is apparent. For example, the Zurndorfer case cited by Judge William Alsup in the Evans ruling, expressed concern about “how to treat defendant’s motion for judgment on the administrative record.” 543 F.Supp.2d at 254. The court acknowledged that since “a motion for judgment on the administrative record is not contemplated by the Federal Rules of Civil Procedure, some courts treat such motions as motions for summary judgment under Rule 56, while others decide them under Rule 52(a) of the Federal Rules of Civil Procedure as bench trials ‘on the papers.'” 255. A 9th U.S. Circuit Court of Appeals ruling that formed the basis of the ruling cited in Evans, Nolan v. Heald College, 551 F.3d 1148, 1154 (9th Cir. 2009) also expressed perplexity on this issue, yet pronounced:

“We have previously held, however, that where the abuse of discretion standard applies in an ERISA benefits denial case, ‘a motion for summary judgment is merely the conduit to bring the legal question before the district court and the usual tests of summary judgment, such as whether a genuine dispute of material fact exists, do not apply.’ Bendixen v. Standard Ins. Co., 185 F.3d 939, 942 (9th Cir. 1999).”

Though the Bendixen court did not provide an explicit basis or citation for that conclusion, the conclusion followed in situations where the district court’s review was limited to the administrative record and the claimant was not entitled to a jury trial. See Orndorf v. Paul Revere Life Ins. Co., 404 F.3d 510, 517 (1st Cir. 2005). But see Patton v. MFS/Sun Life Fin. Distrib., Inc., 480 F.3d 478, 484 (7th Cir. 2007) (rejecting the 1st Circuit’s approach in Orndorf ).

Ultimately, if the premise is correct that administrative law principles should not apply to the adjudication of ERISA cases, this issue needs to be addressed either by Congress or the Supreme Court. Surely, prior to ERISA, cases such as Evans were decided just like any other insurance dispute. And the Supreme Court noted in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113-14 (1989) that claimants should not receive less protection under ERISA than they enjoyed prior to the passage of that law. The imposition of a deferential standard of review is what has led courts to apply an administrative law paradigm, but such a conclusion was never compelled.

In Perlman v. Swiss Bank Corp. Comprehensive Disability Protection Plan, 195 F.3d 975 (7th Cir. 1999), the court of appeals likened individual ERISA benefit cases to Social Security disability claims and held, “Deferential review of an administrative decision means review on the administrative record.” 195 F.3d at 981-2. However, as the dissent filed in that case pointed out, the analogy between Social Security Administration (SSA) and ERISA review is inappropriate since “the SSA is a public agency, whose decisions are subject to the strictures of the Administrative Procedure Act, while ERISA plan administrators are private sector actors subject to regulation under the ERISA statute.” 195 F.3d at 985.

The dissent added that “consideration of the process by which the administrator came to its conclusion … give[s] content to the rights conferred by Section 1132 [the authorization of a right to bring a civil action to challenge the denial of benefits].” 195 F.3d at 986. From the foregoing, in order to maintain the consistency required by the Federal Rules of Civil Procedure, the record review paradigm is only appropriate where the parties agree to hold a bench trial on a submitted record.

Otherwise, in the face of a conflict in the evidence, just as the normal means of resolving civil disputes is by holding a trial, even under a deferential standard of review, trials remain the most appropriate means of resolving ERISA claims, consistent with Supreme Court authority eschewing record review proceedings without explicit statutory direction.

I represented the plaintiff in the Stephan v. Unum case cited by the court in Evans.

This article was initially published in the Chicago Daily Law Bulletin. 

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