The United States Fifth Circuit And ERISA

The United States 5th Circuit Court of Appeals has never found sufficient claims procedure abuse to warrant a change in the standard of review from abuse of discretion to a preponderance of the evidence in an Employee Retirement Income Security Act (ERISA) case.  In that regard, the court has noted that “this circuit has rejected arguments to alter the standard of review based upon procedural irregularities in ERISA benefit determinations, such as delays in making the determination ….  Absent potential wholesale or fragrant violations that evidence an utter disregard of the underlying purpose of the plan, this court does not heighten the standard of review from abuse of discretion to de novo.

Oddly, the 5th Circuit has protected deference to the factual determinations of the claims fiduciary even when the claims fiduciary did not make any factual determinations.  This resulted from the 5th Circuit’s overriding concern that allowing de novo review of ERISA benefit claims will clot the veins of the federal court system.  Regarding this, this court has held as follows:

The courts simply cannot supplant plan administrators, through de novo review, as resolvers of mundane and routine fact disputes.  Considerations of expediency therefore support reference to factual determinations made in the administration of the plan.  Otherwise, federal trials are encouraged in the vast number of claims that are filed in the thousands of ERISA plans throughout this county. . .  We therefore conclude that a deferential standard of review for factual determinations is buttressed, if not compelled, by practical considerations.
Although the 5th Circuit has bristled at the idea that claimants should receive a level playing if claims procedures are violated, the tribunal has found an instance which substantial abuse of the claims procedures can merit a remand to the claims administrator for further review.  Although this may lead to an award of benefits, it may also lead to an extended claims process that results in another denial that must be challenged again at the courthouse under an abuse of discretion standard.
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