In Dine v. Metropolitan Life Insurance Company, No. 09-56761 (9th Cir. 2011) (Unpublished Memorandum), the plaintiff, Kathy Dine (“Dine”), had brought an action under ERISA against the administrator and insurer of her employer’s long-term disability (“LTD”) plan, Metropolitan Life Insurance Company (“MetLife”). She alleged that MetLife had abused its discretion by terminating her LTD benefits under the plan. The question for the Ninth Circuit Court of Appeals (the “Court”): was Dine correct?
In analyzing the case, the Court said that, while MetLife’s decision to terminate the benefits is reviewed for abuse of discretion ( a deferential review), MetLife has a structural conflict of interest because it both evaluates claims for benefits and pays benefit claims. When this structural conflict exists a court must consider numerous case-specific factors, including the administrator’s conflict of interest, and reach a decision as to whether discretion has been abused by weighing and balancing those factors together. A higher degree of skepticism is appropriate where the administrator has a conflict of interest.
The Court found that, in this case, three factors lead to the conclusion that MetLife had abused its discretion. First, the record indicates MetLife notified Dine by letter that it was presently reviewing her claim to have the LTD benefits continue, and stated that if additional information is needed to complete the review, MetLife will notify her accordingly. Notwithstanding those statements, MetLife shortly thereafter denied Dine’s claim, stating that she had submitted insufficient evidence. Second, MetLife’s determination that Dine was not disabled contradicted the opinion of her treating physician. Third, MetLife ignored its own reviewing physician’s advice to order an independent medical examination.
The Court decided to reverse the district court’s decision against Dine. It remanded the case back to the district court, to enter judgment in favor of Dine and to order reinstatement of her LTD benefits until (if ever) MetLife properly applies the plan’s provisions to reach a different result.