Despite the admonition in the Federal Rules of Civil Procedure that there is only one form of civil action and that the rules apply to all civil actions,[1] Employee Retirement Income Security Act litigation is mostly conducted in a unique manner that dramatically departs from ordinary federal civil procedure.
Although ERISA claims are not administrative proceedings, the courts analogize ERISA cases to Social Security disability benefit administrative review proceedings brought pursuant to Title 42 of the U.S. Code, Section 405(g), and decide cases based on a review of a so-called administrative record.[2]
Thus, instead of plenary hearings, ERISA claims are mostly conducted as record review proceedings. That means courts generally disallow the introduction of any evidence not previously introduced during the claim process.
On July 29, a federal appellate court ruled that a district court’s preclusion of additional evidence proffered by the plaintiff in an ERISA benefits case was erroneous.
In Harris v. Lincoln National Life Insurance Co.,[3] the U.S. Court of Appeals for the Eleventh Circuit overturned a ruling from the U.S. District Court for the Northern District of Georgia that barred the plaintiff in an ERISA case from submitting an affidavit and updated medical records. The court held that such evidence was properly admissible.
The Harris ruling is yet another in a string of recent decisions that have addressed civil procedure anomalies in ERISA litigation. By addressing the admissibility of evidence in a case involving ERISA-governed benefits, the court has moved the ball more in the direction of harmonizing ERISA civil procedure with ordinary federal civil procedure.
At the same time, the Eleventh Circuit recognized that ERISA was enacted to protect employee benefits and removed a hurdle from the ability of employees to have their claims addressed fully and fairly.
The court in Harris framed the issue before it as follows: “Relevant to our analysis is whether the de novo standard — which applies here — forbids, requires, or simply allows a district court to consider evidence outside the administrative record.”
The court acknowledged a divergence of opinion on that issue by the various circuit courts of appeal. Surveying the positions taken by different courts, the Eleventh Circuit observed that some circuits refuse to consider any evidence outside the administrative record, some permit additional evidence under certain circumstances, while others allow consideration of all relevant evidence.[4]
Quoting its 2004 opinion in Jones v. American General Life and Accident Insurance Co., the Eleventh Circuit took the view that ERISA claims are “akin to common law breach of contract causes of action” and thus permitted the introduction of new evidence if review is plenary, or de novo. The court relied on two older precedents it issued in ERISA cases that had not been disturbed for decades — 1989’s Moon v. American Home Assurance Co.[5] and 1994’s Kirwan v. Marriott Corp.[6]
The court distinguished ERISA cases decided under the arbitrary and capricious standard, though. Quoting its 1989 opinion in Jett v. Blue Cross and Blue Shield of Alabama Inc., the court ruled that in such cases court review is limited to the claim record
because “the function of the court [in such a case] is to determine whether there was a reasonable basis for the decision, based upon the facts as known to the administrator at the time the decision was made.”[7]
However, the Eleventh Circuit found its earlier rulings remained binding precedent as to cases heard under the de novo standard of review.
The Eleventh Circuit’s ruling in this case is consistent with the Federal Rules of Civil Procedure and the concept of de novo review. As the U.S. Court of Appeals for the Seventh Circuit remarked in Krolnik v. Prudential Insurance Co. of America in 2009:
A judge would not dream of forbidding the parties to take discovery, let alone of rejecting affidavits that did not depend on discovery. Evidence is essential if the court is to fulfill its fact-finding function. Just so in ERISA litigation.[8]
Most ERISA benefit cases involve complex medical issues and medical conditions that change over time. Precluding plaintiffs from introducing evidence that may assist a court in understanding the issues presented is unfair and could easily lead to an unjust result, which is contrary to ERISA’s intent.
In 2008, the U.S. Supreme Court emphasized the importance of the need for plan administrators to reach accurate claim determinations in Metropolitan Life Insurance Co. v. Glenn when it observed:
ERISA imposes higher-than-marketplace quality standards on insurers. It sets forth a special standard of care upon a plan administrator, namely, that the administrator “discharge [its] duties” in respect to discretionary claims processing “solely in the interests of the participants and beneficiaries” of the plan, … it simultaneously underscores the particular importance of accurate claims processing by insisting that administrators “provide a ‘full and fair review’ of claim denials.”[9]
Thus, admission of all relevant evidence furthers that goal.
That is not to say there are no valid counterarguments to the ruling in Harris.
For one thing, so long as courts mandate that claimants pursue prelitigation appeals as a condition precedent to filing suit, allowing the introduction of new evidence in court proceedings undermines the value and purpose of a prelitigation appeal. The ruling could also potentially open the floodgates to the introduction of new evidence in every case.
Neither concern is particularly warranted, though. For those claimants who are represented by counsel, there is often no need to supplement the record. However, many, if not most, claimants are not represented by counsel when they try to appeal adverse claim determinations on their own.
Permitting the introduction of new evidence permits those claimants who have meritorious claims to fully present their case to a neutral fact-finder and offers further protection to their right to receive benefits that are due.
Finally, the holding in Harris is not one-sided. It could also benefit plan administrators who wish to introduce additional evidence supporting the appropriateness of a denial.
The overriding issue, though, is one of civil procedure.
Courts need to stop treating ERISA cases differently than other civil actions since the statute explicitly permits claimants to bring a civil action to redress benefit denials.[10] Consistent with that right, courts must adjudicate ERISA benefit cases the same way they would handle breach of contract suits and permit the parties to utilize the full panoply of rights and procedures afforded by the Federal Rules of Civil Procedure.
Mark D. DeBofsky is a shareholder at DeBofsky Law.
This article was first published by Law 360 on August 10, 2022.
[1] Federal Rules of Civil Procedure 1 and 2.
[2] The sole outlying federal judicial circuit is the Seventh Circuit, which, in Krolnik v. Prudential Ins. Co., 570 F.3d 841 (7th Cir. 2009), held that ERISA benefit cases adjudicated under the de novo standard of review are subject to trials.
[3] Harris v. Lincoln National Life Insurance Co., 2022 U.S. App. LEXIS 21049, 2022 WL 3009199 (11th Cir. July 29, 2022).
[4] The court cited Perry v. Simplicity Eng’g, 900 F.2d 963, 966 (6th Cir. 1990) and Ariana M. v. Humana Health Plan of Tex., Inc., 884 F.3d 246, 256 (5th Cir. 2018) as examples of cases disallowing additional evidence, while Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1026-27 (4th Cir. 1993) and Dorris v. Unum Life Ins. Co. of Am., 949 F.3d 297, 304 (7th Cir. 2020) were cited as cases that permit the introduction of additional evidence at the court’s discretion. The court noted the Eighth Circuit, in Donatelli v. Home Ins. Co., 992 F.2d 763, 765 (8th Cir. 1993) permits additional evidence to be introduced, but only if the court finds good cause to do so. In j the Ninth and Tenth Circuits allow for the introduction of new evidence in limited circumstances if needed for the court to conduct an adequate review — Mongeluzo v. Baxter Travenol Long Term Disability Ben. Plan, 46 F.3d 938, 944 (9th Cir. 1995); Jewell v. Life Ins. Co. of N. Am., 508 F.3d 1303, 1308-09 (10th Cir. 2007). However, the Third Circuit and D.C. Circuits would permit the introduction of new evidence according to Luby v. Teamsters Health, Welfare, & Pension Tr. Funds, 944 F.2d 1176, 1184 (3d Cir. 1991) (“Limiting the review of an ERISA benefit decision to evidence before the administrator … makes little sense … when a plan administrator’s decision is reviewed de novo.”) and Doe v. United States, 821 F.2d 694, 697-98, 261 U.S. App. D.C. 206 (D.C. Cir. 1987) (“De novo means … a fresh, independent determination of ‘the matter’ at stake; the court’s inquiry is not limited to or constricted by the administrative record, nor is any deference due the agency’s conclusion.”).
[5] Moon v. Am. Home Assurance Co., 888 F.2d 86, 89 (11th Cir. 1989).
[6] Kirwan v. Marriott Corp., 10 F.3d 784, 789 (11th Cir. 1994).
[7] Jett v. Blue Cross & Blue Shield of Ala., Inc., 890 F.2d 1137, 1139 (11th Cir. 1989); also see Perlman v. Swiss Bank Corp., 195 F.3d 975 (7th Cir. 1999) (same).
[8] Krolnik v. Prudential Ins. Co. of Am., 570 F.3d 841, 843 (7th Cir. 2009).
[9] Metro. Life Insur. Co. v. Glenn, 554 U.S. 105, 115 (2008) (citations omitted), quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S., at 113, 109 S. Ct. 948, 103 L. Ed. 2d 80 (1989).
[10] 29 U.S.C. § 1132(a).
