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FOURTH CIRCUIT
Standard of Review; Conflict of Interest
Johnson v. Metropolitan Life Insurance Company, 2009 WL 2973045
(W.D. N.C.): In this case, the Court considered cross motions for
summary judgment on Johnson’s claim for LTD benefits. The Magistrate
Judge made certain findings of fact, and recommended summary judgment
in favor of MetLife. In objecting to the Magistrate’s recommendations,
Johnson argued that (1) the abuse of discretion standard of review did
not apply; (2) Glenn did not prevent the Court from lessening the
deference given to the administrator; and (3) the decision was
inherently unreasonable. The District Court rejected each argument and
adopted the recommendation of the Magistrate.
With respect to the first argument, Johnson argued that the Magistrate
Judge relied solely on the SPD, rather than on the Plan, to determine
the applicable standard. The Court rejected this argument finding that
the Plan and SPD were not in conflict: the Plan gave the plan
administrator discretionary authority, and the SPD specifically
delegated that discretionary authority to a benefits committee.
Johnson next argued that the Magistrate Judge misstated the abuse
of discretion standard when he noted the Court would apply the standard
“in determining whether MetLife’s factual conclusions find support in
the administrative record.” Johnson asserted this sentence meant the
Magistrate Judge “aimed to search the record for facts to find support
for MetLife’s decision… rather than properly determining if MetLife
made a reasoned, principled decision….” The Court again disagreed,
noting the Magistrate Judge’s recommendation was forty pages long and
carefully addressed each of the eight factors called for in Booth v.
Wal-Mart Stores, Inc., 201 F.3d 335, 342-43 (4th Cir. 2000).
Johnson next argued that Metropolitan Life Ins. Co. v. Glenn, 128
S.Ct. 2343, 2349 (2008) did not prevent the Court from lessening
deference to an administrator’s decision in a conflicts situation. The
Court disagreed, noting that Glenn altered the Fourth Circuit’s
framework for reviewing discretionary decisions by ERISA
administrators. The Court further affirmed the Magistrate Judge’s
refusal to find the conflict colored MetLife’s decision to deny
benefits. Johnson argued three factors showed MetLife’s decision was
impacted by the conflict: its decision to grant short term disability
but deny long term disability (where LTD was paid by MetLife, and STD
was paid by Bank of America); its decision to allow Johnson unpaid
medical leave but deny LTD; and that Johnson was ultimately approved
for social security benefits.
As to the first factor, the Court noted MetLife’s decision to grant
STD benefits occurred when Johnson was being “monitored closely” by a
physician. It denied LTD benefits because evidence from a medical
consultant showed no link between Johnson’s disabling symptoms and any
medical condition. Accordingly the Court found MetLife’s decision was
based on new evidence in the medical record, not improper financial
considerations.
As to the second factor, Johnson noted the SPD provided an employee
unpaid medical leave for “up to 24 months from the initial date of
disability, provided you remain medically unable to work.” Based on
this language, Johnson argued he must have been disabled when he first
received medical leave, because his medical leave had been extended
beyond 24 months. Accordingly, he argued he should have received LTD
benefits. The Court found Johnson had selectively read the SPD which
actually provided extended medical leave to an individual who did not
qualify for LTD. The Court, therefore, disregarded this argument.
As to the third factor, the Court disagreed that the fact that
Johnson was granted SSDI benefits was probative of the conflict
controlling MetLife’s decision making. It noted MetLife was not aware
Johnson was applying for SSDI when it made its decisions regarding LTD
benefits and, notably, the decision regarding LTD was made three years
before Johnson was granted SSD benefits.
Finally, Johnson argued MetLife’s decision to deny LTD benefits was
inherently unreasonable for two reasons: first, MetLife cited the wrong
definition of “disability” in its denial letter; and second, its
decision was not based on a principled, reasoned process. On both
counts, the Court disagreed.
The Court found MetLife’s citation to the wrong definition of
“disability” was not per se unreasonable. In the denial letter,
MetLife defined “disability” as “you are unable to perform each of the
material duties of your own occupation.” In the SPD, however,
“disability” is defined as “you are unable to earn more than 80% of
your predisability earnings or indexed predisability earnings at your
own occupation for any employer in your local economy.” MetLife argued
that, even though it cited the wrong definition, it applied the proper
standard. In support of this argument, it cited to the conclusion in
the denial letter, which stated “the documentation submitted for review
has failed to provide medical evidence of a severity of impairment that
would preclude you from gainful employment on a full-time basis
performing within your own occupation.” The Court found that Johnson
had not shown he was prejudiced by the differing definitions, or that
they resulted in the denial of his claims.
The Court likewise found MetLife’s decision-making was reasonable
and principled. It found there was no evidence MetLife ignored
Johnson’s disability or statements of symptoms, distorted his
physician’s statements, or performed an unreasonable interpretation of
the medical evidence. Instead, the evidence showed MetLife based its
decisions on a reasoned interpretation of the medical evidence.
* This is a well-reasoned and thorough decision. Although the
case was appealed in October 2009, the appeal was dismissed in late
January, 2010 as a result of a joint agreement to dismiss filed by the
parties. |
