ERISA Standard of Review After Glenn

Abuse-of-Discretion Review After Metropolitan Life v. Glenn Where the Administrator Both Decides and Pays Claims

The standard of review in an action under section 502(a)(1)(B) of ERISA, which permits a participant or beneficiary to sue "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan," 29 U.S.C. § 1132, begins with Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). Firestone held that "a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Where the plan grants that discretionary authority, review is deferential, and Firestone added that "if a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest, that conflict must be weighed as a ‘facto[r] in determining whether there is an abuse of discretion.’"

The Supreme Court resolved in Metropolitan Life Insurance v. Glenn, 554 U.S. 105 (2008) that an insurer that both rules on claims and pays them from its own funds is such a conflicted fiduciary, and it "decide[d] that this dual role creates a conflict of interest; that a reviewing court should consider that conflict as a factor in determining whether the plan administrator has abused its discretion in denying benefits; and that the significance of the factor will depend upon the circumstances of the particular case." The conflict does not change the standard itself: "Trust law continues to apply a deferential standard of review to the discretionary decisionmaking of a conflicted trustee, while at the same time requiring the reviewing judge to take account of the conflict when determining whether the trustee, substantively or procedurally, has abused his discretion." The factor "should prove more important (perhaps of great importance) where circumstances suggest a higher likelihood that it affected the benefits decision," including a history of biased claims administration, and "should prove less important (perhaps to the vanishing point) where the administrator has taken active steps to reduce potential bias and to promote accuracy, for example, by walling off claims administrators from those interested in firm finances, or by imposing management checks that penalize inaccurate decisionmaking irrespective of whom the inaccuracy benefits." Two terms later, Conkright v. Frommert, 559 U.S. 506 (2010) confirmed the durability of the deferential standard, holding that "a single honest mistake in plan interpretation" does not justify "stripping the administrator of that deference for subsequent related interpretations of the plan" and reasoning that "[i]f, as we held in Glenn, a systemic conflict of interest does not strip a plan administrator of deference ... it is difficult to see why a single honest mistake would require a different result."

The courts of appeals have converted Glenn’s guidance into a proportionality inquiry that turns on record evidence. Durakovic v. Building Service 32 BJ Pension Fund, 609 F.3d 133 (2d Cir. 2010) explained that "[t]he weight properly accorded a Glenn conflict varies in direct proportion to the ‘likelihood that [the conflict] affected the benefits decision,’" that evidence of such an effect "may be categorical (such as ‘a history of biased claims administration’) or case specific (such as an administrator’s deceptive or unreasonable conduct)," and that "[n]o weight is given to a conflict in the absence of any evidence that the conflict actually affected the administrator’s decision." Applying those principles, the Second Circuit observed that the plan had "summarily dismissed the report by Durakovic’s vocational expert, which was vastly more detailed and particularized than the report on which the Funds relied," concluded that "[t]hese facts bespeak the influence of a conflict of interest" and that "the district court should have accorded the conflict more weight," and reversed with instructions to enter judgment for the claimant. The conflict thus supplies the margin of decision where the administrator’s handling of the evidence is one-sided and the merits are otherwise close.

Where the insurer insulates its claims process, the same inquiry runs in its favor. In Bernitz v. USAble Life, 149 F.4th 113 (1st Cir. 2025), the First Circuit reaffirmed that "[c]ourts are duty-bound to inquire into what steps a plan administrator has taken to insulate the decisionmaking process against the potentially pernicious effects of structural conflicts," and it affirmed summary judgment sustaining a termination of long-term disability benefits where the insurer "employed third-party vendors to select independent physicians," "used a separate appeals unit to review the initial denial," and "made good-faith benefit payments under reservation of rights" during the appeal, because "[e]ach of these facts diminishes the weight that we place on the structural conflict here." Procedural irregularities receive parallel treatment: McIntyre v. Reliance Standard Life, 73 F.4th 993 (8th Cir. 2023) held that "[d]ecisional delays and conflicts of interest do not change the standard of review, but we consider them when determining whether the plan administrator abused its discretion," that "procedural irregularities are given significant weight in the abuse-of-discretion analysis when they indicate that ‘the result reached was the product of an arbitrary decision,’" and that the insurer’s "failure timely to determine McIntyre’s appeal carries little weight" where the delay did not suggest an arbitrary process. The claims-procedure regulation imposes the same structural discipline directly: under 29 C.F.R. § 2560.503-1, a plan providing disability benefits "must ensure that all claims and appeals for disability benefits are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision," and "decisions regarding hiring, compensation, termination, promotion, or other similar matters with respect to any individual (such as a claims adjudicator or medical or vocational expert) must not be made based upon the likelihood that the individual will support the denial of benefits."

Under these decisions, the dual role of deciding and paying claims never displaces the deferential standard that follows a plan’s grant of discretion; it supplies one factor whose weight the reviewing court calibrates to the record. A denial supported by substantial evidence and produced by an insulated process — independent medical reviewers, a separate appeals unit, compensation practices untethered from claim outcomes — will ordinarily be sustained, with the structural conflict reduced toward the vanishing point. A denial accompanied by evidence that the conflict operated — a history of biased claims administration, one-sided treatment of the medical or vocational evidence, or procedural irregularities suggesting an arbitrary process — gives the conflict enough weight to tip a close case toward reversal. Litigation over the standard of review accordingly concentrates on the likelihood that the conflict affected the particular decision: the claimant develops categorical and case-specific evidence of bias, and the insurer documents the steps it took to wall off claims personnel from its finances, to keep decisionmakers independent and impartial as the claims-procedure regulation requires, and to penalize inaccuracy irrespective of whom it benefits.