So what can a court consider, in determining whether a conflict of interest affected the benefit denial?
Can a court consider evidence outside of the administrative record to assess the potential bias of the decision-maker in a case involving conflict of interest? YES
Here is Howley v. Mellon Financial Plan et al, __ F. 3d __ (3rd Cir. August 31, 2010)(pdf).
FACTS: Howley wanted ERISA plan benefits–which included severance benefits. When they were denied, he appealed and the program administrator affirmed the denial. So, he sued, alleging wrongful denial of benefits, and some wrongful discharge claims.
The plan had discretionary language, and there was a structural conflict of interest.
TRIAL COURT: Considered evidence outside the administrative record and found an abuse of discretion.
THIRD CIRCUIT COURT OF APPEALS: Affirmed abuse of discretion, but on other grounds, and remanded for further proceedings.
- Conflict of interest does not alter the standard of review. Conflict is merely one factor to be considered in evaluating whether the plan decision actually constituted an abuse of discretion. Op. at 16.
- Considering evidence outside the record:
- Courts generally must base review on the materials that were before the administrator when the decision was made. Op. at 16-17
- A court may consider evidence of potential bias that is not found in the administrative record. Op. at 17 (Adopting 9th Circuit case.)
- The district court gave too much weight to extra-record evidence, and erred in resolving the disputed facts in favor of the claimant. Op. at 21.