Standards of Review 101

The standard of review in a benefits case often drives the outcome. This was illustrated in a recent Middle District opinion: Dowling v. Metropolitan Life Insurance Co. Courts recognize three standards of review. The “pure arbitrary and capricious” standard of review is highly deferential to the Plan. The “heightened arbitrary and capricious” standard of review governs where the claims decision maker operated under a conflict of interest. Under Eleventh Circuit precedent, it is presumed that this conflict infected the decision unless the decision maker can show otherwise. Thus, less deference is given to the Plan under this standard. Finally, the “de novo” standard of review gives no deference to the Plan. Which standard governs depends on whether the Plan included adequate protective language in plan documents, as well as the afore-mentioned presence (or not) of a conflict of interest. More on this in a later post.

In Dowling, Judge Moody noted that the plaintiff’s own treating physicians were equivocal and that the defendant’s consultants found that he could perform sedentary work. The Court held that the pure arbitrary and capricious standard of review applied. Not surprisingly, the Court upheld the benefits denial.

Plaintiffs can win “pure arbitrary and capricious” cases but seldom if ever without the unequivocal help of the treating physicians.

The Unum Settlement

ERISA benefits litigators are well aware that Unum (and its various permutations, e.g., Unum Provident, First Unum, etc.) is the nation’s largest disability insurer. On November 18, 2004, New York State Attorney General Elliott Spitzer announced a landmark settlement with Unum resolving a multi-state investigation into alleged unfair claims-handling practices. The settlement requires Unum: (1) to reassess approximately 200,000 claims that previously had been denied; (2) to completely restructure its claims-handling procedures to ensure objectivity and fairness; and (3) to pay a 15-million-dollar fine.

The settlement will revive long denied claims including many that were clearly time barred. It will also give current litigants a shot at a remand to the plan. The ultimate outcome of all this “reassessment” is anyone’s guess.

The settlement agreements are worth a read. You can find them here.

Fees ... please

A recent decision out of the Southern District illustrates the attorneys’ fees analysis applicable to ERISA cases in Florida. Plaintiff’s counsel in Smith v. Reliance Standard Life Insurance Company, successfully prosecuted a claim for long-term disability benefits, recovering $319,200 in principal plus pre-judgment interest of $72,149.

In the Eleventh Circuit, five factors are considered in determining whether to award attorneys’ fees in an ERISA case:

1. The degree of the opposing party’s culpability or bad faith;

2. The ability of the opposing party to satisfy an attorneys’ fee award;

3. Whether an award of attorneys’ fees would deter similarly situated persons;

4. Whether the parties requesting fees sought to benefit all plan participants and beneficiaries or sought to resolve a significant legal question regarding ERISA; and

5. The relative merits of the parties’ positions.

The District Court found that two factors did not favor the award of fees: there was no evidence of bad faith, and Plaintiff’s claim did not resolve a significant legal question regarding ERISA. Nonetheless, the Court awarded fees.

This case reminds us that one need not have all five fee factors present to prevail on a fees’ claim. In fact, a prevailing plaintiff in a benefits action should typically be capable of showing the defendant’s ability to pay an award, the deterrence effect of the benefits award, and the obvious merit of the plaintiff’s position. It is worth additionally noting that the Court found $300 per hour reasonable.

Welcome to My Blog

Let me introduce myself. I'm Marcus Castillo, an ERISA attorney with Haas-Castillo, P.A. in Clearwater, Florida. ERISA, for those of you who may not know, is the federal law governing most group employee benefits. It's sort of a stealth law in the sense that most folks don't know much about it and won't unless they lose those benefits. Trust me - when those benefits are lost ERISA becomes very relevant to the unfortunate victim. My job is to help clients recover the benefits that were wrongfuly denied them. This may require the filing of an ERISA lawsuit in Federal Court.

The mission of this web log aka blog is to be a resource regarding recent happenings in ERISA law as handed down in Florida and the Courts that govern Florida (including the 11th Circuit Court of Appeals in Atlanta as well as the U.S. Supreme Court). Since my practice is largely devoted to disability insurance claims I intend to pay particular attention to decisions in those type of cases.

I welcome all comments and look forward to hearing from you.