ERISA-Fourth Circuit Upholds Insurer’s Termination of Disability Benefits Despite Its Conflict Of Interest

In Frankton v. Metropolitan Life Insurance Company, No. 09-2184 (4th Cir. 2011) (Unpublished Opinion), the plaintiff, Georgia Frankton (“Frankton”), had been covered by a long -term disability plan maintained by her employer (the “Plan”). She brought suit against Metropolitan Life Insurance Company (“MetLife”), the insurer and administrator of the Plan, for terminating her benefits under the Plan in violation of ERISA. MetLife had discretion and authority to make determinations of benefit entitlement under the Plan. The district court awarded summary judgment in favor of Metropolitan, and Frankton appealed. The Fourth Circuit Court of Appeals (the “Court”) affirmed the district court’s judgment.

In analyzing the case, the Fourth Circuit Court noted that, since MetLife had discretion and authority to determine benefit entitlement under the Plan, its decision to terminate the long-term disability benefits is subject to a deferential review. As such, the Court will not disturb its decision, so long as the decision is reasonable. To be reasonable, MetLife’s decision must result from a deliberate, principled reasoning process and be supported by substantial evidence. The Court listed 8 factors to be used to test MetLife’s reasonableness.

In this case, the Court found that MetLife was reasonable in deciding to terminate the long-term disability benefits. In particular, it found that:

–MetLife did not act unreasonably in failing to send certain updated medical records of Frankton’s own physician to an independent physician consultant hired by MetLife to review the case. Those records were basically duplicative of other documents in Frankton’s claim file. Therefore, the failure to send them resulted in only a minor procedural violation.

–MetLife did not consider an award of disability benefits to Frankton by Social Security. However, Frankton never gave MetLife the award letter from Social Security, and Social Security’s definition of “disability” differs from the Plan’s definition. Therefore, it was not unreasonable for MetLife to fail to consider this award.

–Frankton argued that MetLife failed to accord sufficient weight to the medical reports of Frankton’s own examining physician. However, while MetLife may not arbitrarily ignore reliable evidence, ERISA does not require that administrators accord special deference to the opinions of a claimant’s own treating physicians. Here, the reports of an independent medical examiner and an independent physician consultant hired by MetLife to review the case included substantial criticism of the reports of Frankton’s own treating physician. Thus, MetLife acted reasonably in relying on the reports of the independent medical examiner and independent physician consultant, and in rejecting the opinion of Frankton’s own treating physician.

What about MetLife’s conflict of interest, since it was both the insurer and administrator of the Plan? Here is what the Court said about this conflict. The presence of a conflict of interest is one fact, among many, that a reviewing court may consider in evaluating the reasonableness of an administrator’s decision. The record shows that MetLife attempted to make an accurate claim assessment by hiring an independent medical examiner and an independent physician consultant to review Frankton’s entire claim file. Those physicians reached reasoned and principled conclusions. Both physicians prepared detailed reports and justified their conclusions in light of contrary reports from Frankton’s own examining physician. Thus, the Court concluded that Frankton failed to show that MetLife’s conflict of interest was sufficient to outweigh the evidence of MetLife’s effort in assuring an accurate claim assessment.

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