Supreme Court justices said Wednesday that they are not sure what to tell lower courts about how to review potential conflicts of interest that might affect disability benefits decisions.
The justices heard oral arguments in Metropolitan Life Insurance Company et al. vs. Wanda Glenn, a case involving questions about a benefits determination made by a company that served both as the insurer of an employer-sponsored group disability plan and as the administrator.
The plan was governed by the Employee Retirement Income Security Act.
Justices told the lawyers for the parties that they are uncertain about what the lawyers want them to write in their opinion.
Chief Justice John Roberts noted that the Supreme Court has repeatedly emphasized the importance of employer-sponsored benefit plans.
“We want to encourage people to set up ERISA plans,” Roberts said.
The Glenn case deals solely with how the courts should review a benefits determination and not with the merits of the underlying disability claim.
The insurer in the Glenn case, Metropolitan Life Insurance Company, a unit of MetLife Inc., New York, both administered and funded the benefits of an ERISA plan for Sears Roebuck and Company, Hoffman Estates, Ill.
Wanda Glenn, a Sears employee, suffered for years from heart disease. In 2000, she left her job and applied for disability benefits.
MetLife paid Glenn benefits for 2 years, and it also advised her to apply for Social Security disability benefits. She qualified for the Social Security disability benefits.
In 2002, MetLife reviewed Glenn’s files and decided she was no longer eligible for MetLife disability benefits, even though she had qualified for Social Security benefits.
Glenn sued in a U.S. District court in Columbus, Ohio.
The lower court held that MetLife had not been “arbitrary and capricious” and had not abused its discretion.
The 6th U.S. Circuit Court of Appeals reversed the district court decision. The appeals court judges said the court was entitled to consider MetLife’s dual role in evaluating claims and deciding whether to pay benefits.
The appeals court judges held that MetLife “acted under a conflict of interest” and made a decision that “was not the product of a principled and deliberative reasoning process.”
MetLife appealed to the Supreme Court. The company noted that questions about how to review decisions by insurers that act both as an ERISA plan’s administrator and as the plan’s insurance provider have divided the appellate courts.
The 4th, 5th, 6th, 8th, 9th and 11th circuits require consideration of the insurer’s dual roles when reviewing an ERISA award, while the 1st and 7th circuits do not require consideration of such “structural” conflicts, MetLife reported.
Solicitor General Paul Clement contends in a brief commenting on the case that MetLife “benefits financially if it denies an employee’s claim.”