The U.S. Court of Appeals for the Fifth Circuit announced on July 10 that it would rehear en banc a recent case raising questions about the proper standard of judicial review in disputes over denied employee benefits that fall under the purview of the Employee Retirement Income Security Act (ERISA). In that earlier decision, three of the court’s judges, though they apparently disagreed with the binding caselaw forcing them to do so, affirmed Humana Health Plan of Texas Inc.’s refusal to cover a teenager’s eating disorder treatment. The judges’ decision was guided by the Fifth Circuit’s 1991 insurer-friendly ruling in Pierre v. Conn. Gen. Life Ins. Co. Notably, all three judges said Pierre should be re-examined or overturned.
Under the earlier Pierre decision, courts are forced to give deference to an ERISA plan administrator’s factual determinations, regardless of what a given plan document says. In calling for Pierre to be revisited, the judges emphasized that the standard of review in an ERISA case is often outcome-determinative in favor of insurers and benefit plans. The judges also criticized Pierre for frustrating the growing collection of state laws giving ERISA plan beneficiaries a better chance of prevailing in court. This deference is one factor among many that discourages litigation, ultimately preventing insureds from recovering when they are denied services.
Currently, ERISA cases are made or destroyed by the factual record as it is developed during the internal appeals process. The internal appeals process, which typically involves tight deadlines and requires specific language in requests, is not forgiving. Unfortunately, most participants attempt to complete this process without a lawyer, thinking they will receive a fair result and can handle these requests on their own. The result, usually, is an incomplete record that limits the possibility of success in litigation. Reversing Pierre could help change that. Perhaps more importantly, insurers will have to bear in mind the reduced deference when making all earlier decisions on ERISA cases, which could also benefit insureds. If you need more information on this case, contact Rebecca Gilliland at 800-898-2034 or by email at Rebecca.Gilliland@beasleyallen.com.