Over time, the court system has fine tuned the disability evaluation process. I’ll outline the process below.
The “Standard of Review” in ERISA Claims
One of the first things to determine is what “standard of review” applies. Most ERISA claims proceed under 29 U.S.C. § 1132(a)(1)(B), which gives a participant the right to bring a civil action to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.
It is well settled that a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.
If the plan provides the administrator with discretion, however, then the highly deferential arbitrary and capricious standard of review is applicable.
Many Federal Courts recognize that a plan is not required to use certain magic words to create discretionary authority for a plan administrator in administering the plan. What is required is a clear grant of discretion to the administrator. Where the plan provides that the employer or insurance company has full discretion and authority to determine eligibility for benefits and to construe and interpret all terms and provisions of the Policy, the arbitrary and capricious standard applies. This standard “does not require the Court merely to rubber stamp the administrator’s decision. Rather, under the arbitrary and capricious standard, a plan administrator’s decision will not be deemed arbitrary and capricious so long as it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome. It is worth noting that the “arbitrary and capricious” standard is the least demanding form of judicial review”. A court must therefore review the quantity and quality of the medical evidence and the opinions on both sides of the issues. The Court will uphold a benefit determination if it is rational in light of the plan’s provisions.
In evaluating the record, then, the Court is required to consider only the facts known to the plan administrator at the time the final decision was made to deny disability benefits.