Don’t Lose Life Insurance Coverage When you Need it Most – When you are Gravely ill

ERISA Standard of Review

In Firestone Tire & Rubber Co. v. Bruch, the Supreme Court set forth a rubric controlling judicial review of ERISA benefit eligibility decisions.  Under Firestone, courts are to be guided by principles of trust law in evaluating the conclusions of plan administrators.  These principles of trust law require courts to review a denial of plan benefits under a “de novo” standard unless the plan provides to the contrary.  Plans provide to the contrary by granting the administrator or fiduciary discretionary authority to determine eligibility for benefits.  In such instances, a deferential standard of review is applied.

The question of whether a plan administrator’s exercise of power is mandatory or discretionary depends upon the terms of the plan.  To that end, there are no “magic words” determining the scope of judicial review of decisions to deny benefits, and discretionary powers may be granted expressly or implicitly.  However, to the extent a plan is ambiguous; it is construed in favor of the insured, and examined under a more favorable deferential standard.