Court Applies De Novo Standard of Review to ERISA Benefit Dispute
Litigants in ERISA cases often dispute the standard of review that the court should apply in evaluating a plan’s denial of benefits. Under the seminal case of Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989), the U.S. Supreme Court held that the de novo standard applies “unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” In Ushakova v. AIG Life Ins. Co., 2006 WL 2473473 (W.D. Wash. Aug. 28, 2006), an ERISA case decided this week by a federal court in Washington State, the defendant argued that plan language requiring "due written proof of the loss" was sufficient to trigger the arbitrary and capricious standard of review. The federal court disagreed, holding as follows:
The administrator has to show that the plan unambiguously gives it discretionary authority in order to get judicial deference to its decision. Kearney v. Standard Insurance Co., 175 F.3d 1084, 1089 (9th Cir.1999) (en banc).
Although Defendant does not clearly identify itself as the as the plan's administrator, the letters denying Plaintiff initial claim and appeal make comments from which this is reasonably implied. For example, Defendant's letter denying Plaintiff's appeal states that the “denial of this appeal is a final plan administration decision.” The first step in resolving these motions, then, is to determine whether the plan confers discretion on Defendant, and thus what standard of review is appropriate.
Defendant does not point out, nor is the Court aware, of a provision in the plan conferring discretion on defendant to “determine eligibility for benefits or to construe the terms of the plan.” Firestone at 115. The plan's “Claims Provisions” section provides that “[b]enefits payable under this Policy for loss other than loss for which this policy provides any periodic payment will be paid immediately upon the Company's receipt of due written proof of the loss.” The phrase “due written proof of the loss” is subject to various interpretations, and the plan does not indicate who judges whether the proof of loss is adequate. The phrase is therefore ambiguous, and does not grant the Defendant discretion either to “determine eligibility for benefits or to construe the terms of the plan.” See Kearney v. Standard Insurance Company, 175 F.3d 1084, 1089 (9th Cir.1999) (finding the phrase “satisfactory written proof” in ERISA plan ambiguous and therefore did not grant administrator discretion). Accordingly, review of Defendant's decision to deny Plaintiff's claim will be reviewed de novo.
(Docket citations omitted.) The court went on to deny the defendant’s motion for summary judgment as to whether benefits were payable under the accidental death and dismemberment plan. The court found that there were disputed questions of material fact as to the cause of the decedent’s death.