Eighth Circuit: Ordinary Summary Judgment Procedures Apply to Review of ERISA Benefit Claims

Yesterday, in Avenoso v. Reliance Standard Life Ins. Co., No. 21-1772, __F.4th__, 2021 WL 5570816 (8th Cir. Nov. 30, 2021), the Eighth Circuit Court of Appeals weighed in on the procedural process governing ERISA benefit disputes. The district court in this matter reviewed Defendant-Appellant Reliance Standard Life Insurance Company’s (“RSL”) decision to terminate Plaintiff-Appellee Michael Avenoso’s claim for long-term disability benefits under the “any occupation” standard of disability under Federal Rules of Civil Procedure (“FRCP”) 56 but the district court resolved factual disputes in favor of Avenoso. The Eighth Circuit determined that this was an error, but the error was harmless. It held that ordinary summary-judgment procedures under FRCP 56 apply in ERISA benefit cases where the administrator lacked discretionary authority. Parties in an ERISA case that want the district court to exercise its factfinding function under FRCP 39(b) and 52(a)(1) to decide the case on the administrative record should request that the district court do that.

Under the “any occupation” standard of disability, Avenoso was entitled to long-term disability benefits if he showed that he was unable to perform the material duties of any occupation. RSL found that Avenoso retained sedentary work function, which involves “the ability to exert up to 10 pounds of force occasionally and/or a negligible amount of force frequently to lift, carry, push, pull, or otherwise move objects” during a work day that “involves sitting most of the time, but may involve walking or standing for brief periods of time.” See 20 C.F.R. § 404.1567(a). At the district court, the parties agreed that RSL did not have discretionary authority, so the district court reviewed the dispute under de novo review. The administrative record (the claim file up through RSL’s final decision) contained contradictory evidence as to Avenoso’s ability to perform sedentary work. In finding for Avenoso, the district court made credibility determinations about Avenoso’s accounts of his condition and made findings on disputed factual questions.

The Eighth Circuit explained that where the ERISA plan confers discretionary authority on the administrator, it has “likened bench trials on the administrative record to summary judgment.” The court of appeals treats a bench trial like summary judgment by reviewing the district court’s judgment de novo, but not because the district court treats summary judgment like a bench trial by resolving factual disputes. A court of appeals treats bench trials like summary judgment only where an administrator had discretionary authority because the district court must uphold its decision if it is one that “a reasonable person could have reached” on the administrative record. Therefore, it makes sense for a court of appeals to treat a bench-trial judgment where there is discretionary authority like a grant of summary judgment by reviewing it de novo. However, where there is no discretionary authority, the district court acts as a factfinder on the administrative record. The court of appeals reviews the district court’s findings of fact under the customary clearly erroneous standard. The district court erred by treating summary judgment where RSL lacked discretionary authority like a bench trial.

Though the district court erred by factfinding under Rule 56, the Eighth Circuit found that it was a harmless error. It explained that “if we were to remand, then the district court would do in a bench trial exactly what it did already: decide the case on the administrative record without giving either side the benefit of all reasonable inferences but instead weighing the evidence and finding the facts.” Though the district court could consider evidence outside the administrative record under Rule 52, including witness testimony, the parties had confirmed at oral argument that they had no additional evidence to submit if the court remanded for a bench trial. The court determined that under clear-error review of the district court’s factual findings, the district court did not clearly err in finding that Avenoso lacks sedentary-work capacity. The district court found Avenoso’s own accounts of his debilitating pain to be credible. A Functional Capacity Evaluation concluded that Avenoso could not tolerate an 8-hour work day, and the Social Security Administration found Avenoso to be disabled under its standard. Judgment affirmed.