District Court Denies Cross-Motions on Standard of Review in Favor of Eleventh Circuit’s Six-Step Framework for Evaluating ERISA Benefit Actions

In Davis v. United of Omaha Life Insurance Company, No. 6:23-CV-57-ACA, 2023 WL 6849438 (N.D. Ala. Oct. 17, 2023), Alabama Northern District Judge Annemarie Carney Axon denied both parties’ motions to establish the standard of review in this ERISA disability action, instead applying the Eleventh Circuit’s six-step framework outlined in Blankenship v. Metro. Life Ins. Co. 644 F.3d 1350, 1355 (11th Cir. 2011).

Under this framework, a district court evaluating a denial of benefits under ERISA should: (1) Apply the de novo standard to determine whether the claim administrator’s benefits-denial decision is “wrong” (i.e., the court disagrees with the administrator’s decision); if it is not, then end the inquiry and affirm the decision. (2) If the administrator’s decision in fact is “de novo wrong,” then determine whether it was vested with discretion in reviewing claims; if not, end judicial inquiry and reverse the decision. (3) If the administrator’s decision is “de novo wrong” and it was vested with discretion in reviewing claims, then determine whether “reasonable” grounds supported it (review the decision under the more deferential arbitrary and capricious standard). (4) If no reasonable grounds exist, then end the inquiry and reverse the administrator’s decision; if reasonable grounds do exist, then determine if the administrator operated under a conflict of interest. (5) If there is no conflict, then end the inquiry and affirm the decision. (6) If there is a conflict, the conflict should merely be a factor for the court to take into account when determining whether an administrator’s decision was arbitrary and capricious.

Plaintiff, a nurse for DCH Healthcare Authority, submitted a claim for LTD benefits under an employee sponsored plan and received benefits for two years when United of Omaha determined that she was no longer eligible for benefits. United of Omaha upheld that decision on appeal, prompting the instant action.

The Court permitted the parties to first resolve the question of the applicable standard of review, bringing cross-motions on the issue. Plaintiff argued that the matter should be considered de novo,  asserting that United of Omaha forfeited its entitlement to a deferential review standard because it did not afford Plaintiff the opportunity to respond to new grounds for its decision before issuing an appeal determination in violation of the requirement for strict adherence to claims procedures as outlined in 29 C.F.R. § 2560.503-1(l)(2)(i). Plaintiff contended that when United of Omaha amended the peer review report to correct a typographical error in the list of treating providers the peer reviewer attempted to contact, it violated ERISA procedures by not affording Plaintiff another opportunity to respond to the otherwise unchanged report. In denying Plaintiff’s motion, the Court reasoned that even if United of Omaha violated ERISA’s regulations, the violation was de minimus. Plaintiff had already responded to the virtually identical original report.

United of Omaha argued that the arbitrary and capricious standard of review applied strictly based on the plan’s grant of discretionary authority to determine benefits eligibility. The Court also denied this motion finding that United of Omaha had not established that the Court could or should depart from the six-step framework. In accordance with that framework, the Court also ordered limited discovery as to the first step, noting that if the case proceeded beyond the first step, then review would be limited to the administrative record.

If United of Omaha or your insurer has denied or terminated your disability insurance claim, contact us for assistance.