In Prichard v. Metropolitan Life Insurance Company, No. 12-17355 (9th Cir. 2015), Matthew Prichard appeals from the district court’s judgment affirming Metropolitan Life Insurance Company’s (“MetLife”) decision, as plan administrator, to deny him long-term disability benefits under the long- term disability plan of his employer, IBM (the “Plan”). The district court had reviewed MetLife’s decision to deny the benefits for abuse of discretion. The Ninth Circuit Court of Appeals (the “Court”) ruled that the district court should have reviewed MetLife’s decision de novo, and not for an abuse of discretion. Therefore, the Court vacated the district court’s judgment, and remanded the case back to the district court to review MetLife’s denial of benefits de novo.
In analyzing the case, the Court said that the district court must review a plan administrator’s denial of benefits de novo, unless the benefit plan gives the administrator fiduciary discretionary authority to determine eligibility for benefits. Here, it is undisputed that the only document in the record that confers discretionary authority upon MetLife is the Plan’s summary plan description (the “SPD”). Prichard argues that after the Supreme Court’s decision in Amara, a grant of discretion located only within an SPD (as opposed to a formal plan document) is insufficient to warrant discretionary review. However, MetLife argues that Prichard misapprehends the scope of the Plan. According to MetLife, the SPD is the Plan (i.e., it is the only formal Plan document), and therefore the SPD’s terms warrant discretionary review.
In this case, noted the Court, the Plan has a separate document, in the form of an insurance certificate which contains the terms of the Plan, so the Plan and the SPD are not one and the same. The Plan document does not grant discretion to the plan administrator. The Court said that, although the SPD in this case does indicate that MetLife has discretionary authority, the Supreme Court has made clear in Amara that statements made in SPDs do not themselves constitute the terms of the plan. Because the official insurance certificate contains no discretion-granting terms, the Court held, consistent with Amara, that the SPD’s grant of discretion constitutes an additional term of the Plan and therefore cannot be applied. Consequently, the Court concluded that the district court erred in applying the abuse of discretion standard of review.