Free Order on Motion to Expedite - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Before the court is a Joint Motion for an Expedited Decision on the Standard of Review (doc. 35). Plaintiff and Defendants have each filed Motions for Judgment on the Administrative Record in a dispute over benefits under a long-term disability insurance policy. ) ) ) Plaintiff, ) ) vs. ) ) Halliburton Company Long-) Term Disability Plan;) Hartford Life & Accident) ) Insurance Company, ) ) Defendants. ) David L. Mazet, No. 04-CV-0493-PHX-FJM ORDER IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

Defendants determined that Plaintiff is not totally disabled, and thus discontinued long-term disability benefits under the Halliburton Company Long-Term Disability Plan (HCLTD Plan). Plaintiff seeks a de novo standard of review and Defendants seek an abuse of discretion standard of review. A decision by a fiduciary to deny or terminate benefits under an ERISA plan is to be reviewed "under a de novo standard unless the benefit plan gives the administrator or
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fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Brunch, 489 U.S. 101, 115 (1989). When a plan gives the administrator or fiduciary

discretionary authority, their determinations are reviewed for abuse of discretion. Taft v. Equitable Life Assurance The HCLTD Plan's

Soc'y, 9 F.3d 1469, 1471 (9th cir. 1993).

language states: "The Hartford reserves the right to determine if your proof of loss is satisfactory." 29. Ex. 1 p.

In order to grant plan administrators discretion, the

policy language must unambiguously retain discretion in the plan to grant or deny claims. Kearney v. Standard Insurance However, a plan

Co., 175 F.3d 1084, 1090 (9th Cir. 1999).

need not use the word "discretion" in order for the administrator to retain discretion, but the plan documents must "unambiguously say in sum or substance that the Plan Administrator or fiduciary has authority, power, or discretion to construe the terms of the plan" in order to confer discretion. Sandy v. Reliance Standard Life Ins. Here, the HCLTD

Co., 222 F.3d 1202, 1207 (9th Cir. 2000).

Plan language states that the plan administrator "reserves the right" to "determine" if the proof provided is "satisfactory." We find this to be an unambiguous grant of

discretion to the plan administrators, not subject to any alternative interpretation. See Kearney, 175 F.3d at 1090

(holding a policy that conditioned payment of benefits on the "receipt of satisfactory written proof" of disability was subject to at least three interpretations). -2Case 2:04-cv-00493-FJM Document 38 Filed 07/15/2005 Page 2 of 4

Because we

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find that this language does grant unambiguous discretion to the plan administrators, we review their determination under the abuse of discretion standard. Plaintiff also argues that because Defendants failed to respond to his written appeal of the termination of benefits, Defendants did not exercise any discretion to which the Court may defer, and thus de novo review is required. Defendants failed to comply with the time

limitations for appeals outlined in 29 C.F.R. § 2560.5031(h), and thus the claim was "deemed denied on review." Plaintiff cites Jebian v. Hewlett-Packard Co., 349 F.3d 1098, 1103 (9th Cir. 2003), for the proposition that "where...a claim is 'deemed...denied' on review after the expiration of a given time period, there is no opportunity for the exercise of discretion and the denial is usually to be reviewed de novo." However, this argument was rejected

in Gatti v. Reliance Standard Life Ins. Co., 409 F.3d 1061 (9th Cir. 2005), which holds that "the procedural violations of ERISA do not alter the standard of review unless those violations are so flagrant as to alter the substantive relationship between the employer and employee." 1068. Id. at

Because there is no evidence of flagrancy, the abuse

of discretion standard of review applies. Although de novo review is appropriate where the plan administrator has a serious conflict of interest shown by "material, probative evidence, beyond the mere fact of an apparent conflict, tending to show that the fiduciary's self-interest caused a breach of the administrator's -3Case 2:04-cv-00493-FJM Document 38 Filed 07/15/2005 Page 3 of 4

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fiduciary obligations to the beneficiary,"

Atwood v.

Newmont Gold Co., 45 F.3d 1317, 1323 (9th Cir. 1995), Plaintiff makes no such contention here.

IT IS THEREFORE ORDERED, GRANTING the Joint Motion for An Expedited Decision on the Standard of Review (doc. 35). We shall review Defendants' denial of Plaintiff's benefits under an abuse of discretion standard. DATED this 15th day of July, 2005.

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