Judicial Standard of Review in ERISA Benefit Claim Cases

Abstract

The federal law known as the Employee Retirement Income Security Act of 1974 (ERISA) provides protection for participants' employee benefits and prescribes a uniform set of requirements for employers in the voluntary delivery of such benefits. Unfortunately the statute is silent regarding the judicial standard of review in ERISA litigation cases. The Supreme Court in Firestone Tire & Rubber Co. v. Bruch rendered the de novo standard as the presumed standard of review in benefit denial cases. This allows the court to substitute its decision for that of the plan administrator. The ability to second-guess the findings of a plan administrator can cause unexpected administrative and substantives consequences for employers maintaining these plans. The federal courts have fashioned a common law alternative to the de novo standard permitting plan administrators, in certain circumstances, a more deferential review. However, the application of this more deferential standard, especially in conflict of interest cases (e.g., the employer as plan administrator of a self-funded plan), is anything but straightforward within the various federal circuits, either for the benefit of the participant or the plan administrator. This article examines the discrepancy in application of the more deferential standard by circuits and recommends a multi-step approach for courts to use which is consistent with ERISA's legislative intent, as well the goal of providing a uniform and cohesive rule for employee benefit plans.