In an ERISA action for denial of disability benefits, the plaintiff moved for summary judgment seeking a determination the appropriate standard of judicial review of her claim for long term disability benefits is de novo. Plaintiff argued the insurance policy is not the operative plan document, and there was no plan in the administrative record to confer discretion on the administrator or fiduciary to trigger the abuse of discretion standard of review.
A denial of ERISA benefits is reviewed by the court de novo, unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits under the plan. Firestone Tire & Rubber Co. v. Burch, 489 U.S. 101, 115 (1989). However, "the plan must unambiguously" confer discretion on the administrator or fiduciary to invoke the abuse of discretion standard of review. Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir. 2006) (en banc) (citing Kearney v. Standard Ins. Co., 175 F.3d 1084, 1090 (9th Cir.) (en banc)).
Here, the Eastern District Court of California rejected plaintiff's argument the insurance policy was not the operative plan document, citing Sterio v. HM Life No. 08-17426, 2010 WL 750032, at *1 (9th Cir. Mar. 4, 2010) (rejecting plaintiff's argument "there is no plan document, only an insurance policy," citing Cinelli v. Security Pacific Corp., 61 F.3d 1437, 1441 (9th Cir. 1995) (stating "it is clear that an insurance policy may constitute the 'written instrument' of an ERISA plan")).
The district court held the language in the policy unambiguously conferred discretion on the fiduciary, Standard Insurance Company ("Standard"). Plaintiff argued an insurance company cannot bestow discretion on itself through the policy. The district court rejected this argument, finding no authority to support it. Plaintiff relied on Madden v. ITT Long Term Disability Plan for Salaried Employees, 914 F.2d 1279 (9th Cir. 1994) for the proposition the University of the Pacific, as the plan administrator, was required to confer discretion on Standard. The district court was unpersuaded. In Madden, the issue was whether the deferential standard of review applied where the plan's named fiduciary with discretionary authority designates another fiduciary and delegates to that fiduciary its discretionary authority. Madden held the deferential standard of review applied to both the named fiduciary and the delegated fiduciary. It did not hold that only the plan's administrator can confer discretion, and was therefore inapplicable.
The district court denied Plaintiff's motion for summary judgment regarding the applicable standard of review holding, "since the plan at issue in this case unambiguously confers discretionary authority upon Standard to determine benefit eligibility and interpret the plan, the abuse of discretion standard of review applies to Plaintiff's claim."
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