Given the U.S. Supreme Court’s decision earlier this summer in the case of MetLife v. Glenn, it is imperative that all plan sponsors review their claims decision and appeals processes.

The Court felt that having MetLife make both the claims determination and have a financial stake in the outcome of its own decision created an inherent conflict of interest, leading to the courts no longer giving deference to the claims determination.

Previously, where a plan document granted discretionary decision-making authority, and the determination was made in a reasoned manner (not an “arbitrary and capricious” determination), the courts historically have been reluctant to overturn such a claims determination.  However, after Glenn, we now expect the courts to begin applying a “de novo” (“from new”) review, serving in essence as a claims determiner when there is a financial conflict of interest.

As a result, employers may wish to have an independent third party–one without any financial interest in the outcome–make the final claims determination.

The Supreme Court case and decision can be read at:

http://www.supremecourtus.gov/opinions/07pdf/06-923.pdf