On July 10, 2017, the U.S. Fifth Circuit granted a Petition for Rehearing, En Banc, to consider the panel’s decision in Ariana M. v. Humana, 854 F.3d 753 (5th Cir. 2017), affirming the denial of medical benefits to a plan beneficiary who had been hospitalized due to serious mental health conditions. Applying an abuse of discretion standard of review under the Circuit’s 1991 decision in Pierre v. Connecticut General Life Ins. Co., the panel found no genuine issue of fact for summary judgment purposes, despite the conflicting opinions of plaintiffs’ own treating physicians, as the plan administrator was entitled to rely upon the Mihalik Criteria and the opinions of the medical experts hired by the insurance company to review the claim. However, all three judges on the panel joined in a special concurrence calling into question the Circuit’s continuing reliance on Pierre:
“As any sports fan dismayed that instant replay did not overturn a blown call learns, it is difficult to overcome a deferential standard of review. The deferential standard of review our court applies to ERISA decisions often determines the outcome of disputes that are far more important than a sporting event: decisions made by retirement and health plans during some of life’s most difficult times, as this case involving a teenager with a serious eating disorder demonstrates. So it is striking that we are the only circuit that would apply that deference to factual determinations made by an ERISA administrator when the plan does not vest them with that discretion….
“Apart from Glenn’s implication that Pierre’s deference is not warranted, one of the primary reasons we cited for that deference — that trust law draws a distinction between judicial review of a trustee’s legal and factual decisions — has not withstood scrutiny. Trust law traditionally provided different standards of review based on whether a decision was mandatory or discretionary according to the trust document, not whether that decision was factual or legal. In a thorough discussion citing treatises on trust law as well as nineteenth century British and American cases, the Seventh Circuit found no basis for distinguishing legal questions from factual ones because ‘ever since the English courts of equity developed the trust instrument, trustees have been answerable to the beneficiaries for a host of factually specific decisions, including reviews of accounts and investment decisions.’ Another reason Pierre gave for finding a fact/law distinction in trust law—that factual decisions are ‘necessary or appropriate’ for plan administration and thus are granted deference under the Restatement (Second) of Trusts — applies with equal force to plan interpretations…. One prominent scholar argues that Firestone got trust law wrong: ‘classic trust law assumed that the trustee had discretion unless the trust instrument or some particular doctrine of trust law provided otherwise,’ whereas Firestone says that the default standard is de novo and the plan has to grant discretion. So Pierre may well be correct in reading trust law as providing deferential review for fact-based decisions when the plan was silent. It failed to recognize, however, that Firestone ‘reversed the presumption’….
“Pierre’s analogy to the limited factual review appellate courts give trial courts and administrative agencies has also been questioned. That deference is to a neutral factfinder, whereas ERISA plan administrators often have conflicts of interest as many both decide and pay claims. As the Seventh Circuit has explained, district courts and administrative agencies ‘enjoy a well established set of procedural protections that stem from the Constitution and individual statutes. Plan administrators, in contrast, neither enjoy the acknowledged expertise that justifies deferential review for agency cases, nor are they unbiased fact finders like the courts.’ Glenn reinforced this distinction, holding that judicial review should take account of a plan administrator’s conflict even under the abuse of discretion review that governs when a plan grants discretion. Granting those conflicted decisionmakers deference even when the plan does not call for it would ‘afford less protection to employees and their beneficiaries than they enjoyed before ERISA was enacted.’”
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