Leeson v. Transamerica Disability Income Plan et al

Filing 86

ORDER denying dfts' 79 Motion to Remand ; Discovery completed by 3/1/2009, Dispositive motions due by 3/1/2009, by Judge Ricardo S Martinez.(RS)

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 ORDER ON MOTION FOR REMAND - 1 Plaintiff filed this action pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"), alleging that his long-term disability benefits were wrongfully terminated. The case was dismissed by this Court on a motion for summary judgment. That ruling was vacated by the Ninth Circuit Court of Appeals, and the matter is now before the Court for consideration of defendants' motion for remand to the claims administrator. Dkt. # 79. Defendants assert that the appellate court's direction for this Court to conduct de novo review conflicts with the Supreme Court's later ruling in Metropolitan Life Insurance Co. v. Glenn, 128 S. Ct. 2343 (2008) ("Glenn"), and that pursuant to Ninth Circuit precedent, remand to the claims administrator is appropriate. See, Saffle v. Sierra Pacific Power Company Long Term Disability Income Plan, 85 F. 3d 455 (9th Cir. 1996) ("Saffle"). Plaintiff has opposed the motion for remand. For the reasons set forth, the Court shall deny the motion. v. TRANSAMERICA DISABILITY INCOME PLAN, AEGON USA LONG TERM DISABILITY PLAN, and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendants. JACK C. LEESON, Plaintiff, CASE NO. C04-471RSM ORDER ON MOTION FOR REMAND TO CLAIMS ADMINISTRATOR UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

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The Ninth Circuit Court of Appeals determined that de novo review is required in this case because "the procedural violations in the Plan's letters terminating Leeson's benefits were `so flagrant as to alter the substantive relationship between the employer and employee.'" Dkt. # 79-2, p. 3; quoting Abatie v. Alta Health & life Insurance Co., 458 F. 3d 955, 971 (9th Cir. 2006) (en banc). Defendants

argue that this ruling, issued May 23, 2008, is at odds with the Supreme Court's June 19, 2008 decision in Glenn, and that instead of applying de novo review as ordered, this Court should remand to the claims administrator as directed in Saffle. In so arguing, defendants have placed undue emphasis on the Supreme Court's statement in Glenn that "[w]e do not believe that Firestone's statement implies a change in the standard of review, say, from deferential to de novo review." Glenn, 128 S. Ct. at 2350 (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989) (emphasis in original). In Firestone, the Supreme Court set forth the rule that in ERISA cases, a conflict of interest should "be weighed as a `factor in determining whether there is an abuse of discretion.' " Firestone, 489 U.S. at 115, quoting Restatement (Second) of Trusts § 187. In Glenn, the Supreme Court declined to overturn Firestone "by adopting a rule that in practice could bring about near universal review by judges de novo--i.e., without deference--of the lion's share of ERISA plan claims denials." Glenn, 128 S. Ct. 2350. However, the Court did not state that de novo review is never appropriate. Instead, the Court reiterated and explained the Firestone rule that a conflict of interest is but one factor of many which a reviewing court must take into account when determining whether there has been an abuse of discretion. Id. at 2350-51. Defendants contend that Glenn overcomes the Ninth Circuit determination that this Court should conduct de novo review. Defendants assert that "[o]n May 23, 2008, the court of appeals was not--and could not have been--aware of the Supreme Court's subsequent June 18, 2008 ruling in Glenn that deferential review is not replaced with de novo review where there is a conflict of interest." Defendants' Motion to Remand, Dkt. # 79, p. 5. However, the Ninth Circuit's determination that de novo review is appropriate in this case was not based on finding a conflict of interest; instead it was, as set forth above, triggered by "flagrant" procedural violations in the Plan's handling of plaintiff's claim. Further, subsequent post-Glenn decisions by the Ninth Circuit Court of Appeals have confirmed the continued

ORDER ON MOTION FOR REMAND - 2

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viability of de novo review in appropriate circumstances. See, e.g., Vaught v. Scottsdale Healthcare Corporation Health Plan, 546 F. 3d 620, 633 (9th Cir. 2008) ("Accordingly, we remand to the district court to review the plan administrator's decision to deny Vaught's claim for benefits. The district court should decide in the first instance whether allowing additional evidence outside the administrative record is appropriate in this case, and whether de novo or deferential review applies to the Plan's decision."(citing Glenn) (emphasis added)). Here, it has not been left to this Court to decide the appropriate standard of review; only the possibility of discovery to obtain additional evidence remains open to determination. See, Memorandum Opinion, Dkt. # 79-2, p. 8. Defendants also cite the Ninth Circuit's opinion in Saffle for its procedural ruling on remand to the claims administration. In Saffle, the appellate court ruled that where a plan administrator has misconstrued the plan and applied the wrong standards, remand to the plan for a new determination is appropriate. Saffle, 85 F. 3d at 461. However, where the administrator abused discretion by rendering a decision without explanation, or by relying on erroneous factual findings, such remand is not appropriate. Id. at 460. Further, the Ninth Circuit later limited Saffle as standing "for the proposition that `remand for reevaluation of the merits of a claim is the correct course to follow when an ERISA plan administrator, with discretion to apply a plan, has misconstrued the Plan and applied a wrong standard to a benefits determination.'" Grosz-Salomon v. Paul Revere Life Insurance Co, 237 F. 3d 1154, 1163 (9th Cir. 2001). That is not the situation here, and Saffle is inapplicable. Defendants' motion for remand to the administrator is accordingly DENIED. The parties shall confer and submit a joint status report, with their respective proposals for discovery and dispositive motions dates, by March 1, 2009.1 DATED this 6 Day of January 2009.

A

RICARDO S. MARTINEZ UNITED STATES DISTRICT JUDGE

1

This date was chosen in recognition of counsel's Notice of Unavailability, Dkt # 85.

ORDER ON MOTION FOR REMAND - 3