The U.S. Supreme Court has agreed to take up a case involving questions about whether a company that both insures and administers an employee benefit plan has an inherent conflict of interest.
MetLife Inc., New York, asked the court to review the case to resolve differences in the rules federal courts in different regions of the country apply to plan benefit determination appeals.
The administrators usually operate under the Employee Retirement Income Security Act of 1974.
“Depending upon the circuit in which the benefit decision is reviewed, the dual status of an ERISA administrator may have no effect, may be considered as evidence of a conflict of interest, may change the standard of review, may change the burden of proof, or may make the administrator’s decision presumptively void,” MetLife says.
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MetLife alone processes more than 290,000 disability claims a year, and it “desperately needs a resolution of this issue so that it knows how properly to manage its massive benefits business,” MetLife says.
Wanda Glenn, the insured in the case, MetLife vs. Wanda Glenn, 06-923, worked at a retail store in Ohio for 14 years. In 2000, she filed a claim for group disability benefits with a plan insured and administered by a unit of MetLife Inc., New York. Glenn told the plan she had developed a heart condition.
The plan paid short-term disability benefits, but MetLife later rejected Glenn’s request for long-term disability benefits.
The Social Security Administration awarded Glenn Social Security Disability Insurance benefits.
Glenn sued MetLife in federal court.
The U.S. District Court in Cincinnati declined to overturn MetLife’s decision, but a panel of the 6th U.S. Circuit Court of Appeals reversed the lower-court ruling.
MetLife’s decision “was not the product of a principled and deliberative reasoning process,” and the company “acted under a conflict of interest,” according to the 6th Circuit.