You already know that plans that contain “discretionary language” should enjoy a more deferential review by the trial court.

But when the plan administrator decides and funds the benefit decision, courts view this as a “structural conflict” and impose additional expectations on the claims process.

Sometimes de novo review isn’t all bad.

Here’s the recent case Inciong v. Fort Dearborn Life Insurance Company, __ Fed. Appx. __, 2014 WL 1599513 (9th Cir. April 22, 2014)(Court affirms benefit denial, under de novo standard of review, even though there was no Independent Medical Exam).

This opinion also has some other “pearls” regarding vocational assessments and consideration of Social Security Administration decisions.

FACTS: Inciong received disability benefits under an ERISA-governed plan for fifteen (15) years. Then, Fort Dearborn obtained evidence that Inciong’s condition had improved, and terminated benefits. The trial court reviewed the termination of benefits under de novo review, and affirmed the termination because Inciong failed to “provide sufficient objective and quantifiable evidence to support his claim of total disability.” The policy did not specifically mention a requirement of “objective, quantifiable evidence of disability.”  Inciong appealed.

NINTH CIRCUIT HELD:

  1. Fort Dearborn presented evidence that Inciong’s “level of activity ha[d] actually improved over time.” Op. at 3.
  2. Inciong claimed he was disabled because no one would hire him after being out of the workforce for 15 years.  But the policy’s definition of disability “does not require a showing that Inciong would in fact be hired for a specific job; it only requires a showing that jobs exist that Inciong was qualified for and capable of doing.” Op. at 4.
  3. IME Required? When a court performs de novo review, an Independent Medical Exam is not required.  (When a court reviews a decision under the arbitrary and capricious standard, and the plan has a structural conflict, then a court may question the “thoroughness and accuracy of a benefit decision” if the plan relied only on a “pure paper review.”) Op. at 5.
  4. Failing to explain away the Social Security decision not a problem. “Fort Dearborn terminated benefits fifteen years after initially granting them, based on evidence that Inciong’s condition had improved. There is no evidence that the Social Security Administration has conducted a recent review of its determination. Op. at 5.