LawyersUSA

WASHINGTON – Oral arguments over how courts review conflict of interest claims under ERISA seemed to leave the justices of the Supreme Court with more questions than answers in a case that could have broad implications for employers, employees and insurers.

On the last day of oral arguments this term, the Court and the attorneys arguing in Metropolitan Life Insurance Co. v. Glenn, No. 06-923, struggled to find the parameters of a rule of law that would determine:

• When a conflict of interest arises in a situation where a plan administrator serves as both the evaluator of benefits claims and the payer of such claims, and

• How the courts should take such a conflict into account in ERISA cases.

"I don't know what you are telling the courts to do," Justice Antonin Scalia said at one point in yesterday's arguments – a sentiment echoed by several other justices as the attorneys struggled to provide a framework for judging such cases.

The complex issue arises from the denial of a claim for continuing disability benefits paid to a MetLife employee, Wanda Glenn, who suffered from a heart condition.

Glenn sued MetLife, claiming that it improperly disregarded doctors' reports stating that she could not work, and relied instead on an outside expert who had never examined her.

A U.S. District Court upheld the claim denial, but the 6th Circuit reversed, saying the lower court should have considered MetLife's conflict of interest as both the evaluator and payer of benefits claims. MetLife sought and was granted review by the Supreme Court.

The Court's decision could resolve the split among the circuits as to whether courts must consider the fact that a plan administrator serves as both the evaluator and payer of claims when reviewing them – as well as how much weight such a conflict should be afforded.

Some circuits use a sliding-scale approach based on the seriousness of the conflict, while other courts review the claim under a de novo standard. Others have created a burden-shifting scheme between the plan administrator and the claimant.

Yesterday, Amy Posner, associate general counsel for MetLife, reminded the justices that ERISA expressly allows a plan administrator to serve as both the decision maker on claims and the person who authorizes benefit payments. A holding that such a setup creates an automatic presumption of conflict, she argued, would run counter to the intent of the law.

"The mere fact that the potentiality of a conflict is inherent [in such situations] is not alone enough to show the existence" of an actual conflict, she said.

Scalia wasn't sure that the setup should be left out of the equation.

"It seems to me that it should be looked at with suspicion," he said.

But Scalia and the other justices spent most of the one-hour argument wrangling with how to write a decision that would instruct courts how to treat such cases.

"How does this work?" asked Chief Justice John G. Roberts., Jr.

E. Joshua Rosenkranz, shareholder at the New York office of Heller Ehrman, who represented the employee, argued that the potential for conflict of interest must always be weighed by the trial court in cases involving "dual-authority" plan administrators.

"What do you mean by 'giving it weight?'" asked Scalia. "How close is close?"

Nicole Saharsky, assistant to the Solicitor General who argued on the employee's behalf as amicus curiae, said she could not come up with a specific formula.

She stressed that courts often have a set of standards to balance when considering claims, citing cases involving trusts.

"I can't say that it counts for 10 percent or 20 percent" of the determination, she said.

A decision from the Court is expected later this term.

Questions or comments can be directed to the writer at: kimberly.atkins@lawyersusaonline.com