Labor & Employment Law

ERISA case cert pending: Standard Insurance Co v Lindeen

Standard Insurance Co. v. Lindeen is a hot ERISA case which is pending certiorari at the US Supreme Court. The Court is expected to decide on Thursday whether or not to grant certiorari.

Case below: Standard Insurance Co. v. Morrison (9th Cir 10/27/2009)

Question Presented by Petitioner Standard Insurance Co:
[Petition for Certiorari full text]

In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), this Court held that the standard under which a federal court will review an ERISA plan benefits determination is determined by whether the plan grants its administrator discretion in making such determinations. When the plan includes a so-called ?discretionary clause,? the federal courts review the administrator?s determinations deferentially; when the plan does not grant such discretion, the federal court standard of review is de novo.

Two Terms ago, in Metro. Life Ins. Co. v. Glenn, the Court, applying Firestone, cautioned that ?a rule that in practice could bring about near universal review by judges de novo? of ERISA benefits decisions would be contrary to congressional intent. 128 S. Ct. 2343, 2350-51 (2008).

The questions presented in this case are:

1. Whether a state rule banning discretionary clauses, with the sole purpose and sole effect of dictating universal de novo review by the federal courts of ERISA benefits decisions, is preempted by ERISA.

2. Whether this Court?s opinion in Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355 (2002), authorizes the states to eliminate the option of a deferential federal court standard of review that Congress made available to the creators of ERISA plans.

Question Presented by Respondent Lindeen:

Whether a state insurance commissioner?s disapproval of insurance policies containing clauses that purport to grant discretion to insurers is saved from preemption by 29 U.S.C. § l144(b)(2)(A) of the Employee Retirement Income Security Act of 1974 (ERISA).

Petitioner Standard Insurance Co's arguments:

I. THE DECISION BELOW REVOLUTIONIZES ERISA?S REMEDIAL SCHEME BY PERMITTING STATE REGULATORS TO DICTATE, CONTRARY TO CONGRESSIONAL INTENT, UNIFORM DE NOVO FEDERAL COURT REVIEW

A. The Extraordinary Preemptive Force Of ERISA?s Civil Enforcement Scheme Invalidates Any State Law That Purports To Affect Or Enhance ERISA Remedies

B. Montana?s Attempt To Dictate De Novo Federal Court Review Of ERISA Benefits Denials Conflicts With ERISA?s Carefully Calibrated And Exclusively Federal Remedial Scheme.

II. THE DECISION BELOW HIGHLIGHTS A TENSION BETWEEN THIS COURT?S DECISIONS IN GLENN AND RUSH PRUDENTIAL THAT REQUIRES THIS COURT?S RESOLUTION.

III. THE ISSUE PRESENTED REQUIRES PROMPT RESOLUTION BY THIS COURT.

Respondent Lindeen's arguments:
[Brief in Opposition full text]

I. Because the two courts of appeals that have decided this issue both concluded that ERISA does not preempt a state prohibition of discretionary clauses in insurance policies, there is no conflict in the courts of appeals and this court?s review is not warranted

II. State Disapproval of insurance policies containing Discretionary Clauses Is The Regulation of Insurance And Therefore Consistent With Congressional Intent As Explained By This Court in Kentucky Ass?n and Rush Prudential

III. State Disapproval of insurance policies containing Discretionary Clauses Does Not Change ERISA Remedies Nor Does It Dictate A Standard of Review To Federal courts

A. State Disapproval of insurance policies containing Discretionary Clauses Does Not Affect ERISA Remedies

B. Montana?s Ban on insurance policies containing Discretion- Granting Language Does Not Dictate A Standard of Review to Federal Courts

Full post as published by Ross' Employment Law Blog on May 13, 2010 (boomark / email).