United States District Court, N.D. Illinois
November 19, 2004.
PRUDENTIAL INS. CO.
The opinion of the court was delivered by: JAMES ZAGEL, District Judge
On September 7, 2004, I granted Defendant Prudential Insurance
Co.'s ("Prudential") motion in limine to apply an arbitrary and
capricious standard of review and to limited discovery
accordingly. Plaintiff has asked me to reconsider my ruling,
arguing that this case should be reviewed under a de novo
standard, which would entitle Plaintiff to a broader range of
The proper standard of review for a denial of benefits
challenged under the Employee Retirement Income Security Act
("ERISA") is de novo "unless the benefit plan gives the
administrator or fiduciary discretionary authority to determine
eligibility for benefits or to construe the terms of the plan."
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989).
When the plan gives an administrator, such as Prudential, the
authority to interpret or apply the plan, the arbitrary and
capricious standard of review applies. Wilczynski v. Kemper
Nat'l Ins. Cos., 178 F.3d 933, 934 (7th Cir. 1999). To
determine whether the administrator has discretionary authority,
courts look to the language of the plan itself. Postma v. Paul
Revere Life Ins. Co., 223 F.3d 533, 538 (7th Cir. 2000);
O'Reilly v. Hartford Life & Accident Ins. Co., 272 F.3d 955,
959 (7th Cir. 2001). In Hertzberger v. Standard Ins. Co.,
205 F.3d 327, 331 (7th Cir. 2000), the Seventh Circuit found
that to properly delegate discretionary authority to the
administrator, the plan must make that delegation sufficiently
clear to the holder of the plan. The Court stated: "the mere fact
that a plan requires a determination of eligibility . . . or
requires proof or satisfactory proof of the applicants claim . . .
does not give the employee adequate notice that the plan
administrator is to make a judgment largely insulated from
judicial review by reason of being discretionary." Id. at 332.
As an example of an adequate provision, the Court provided the
following "safe harbor" language: "Benefits under this plan will
be paid only if the plan administrator decides in his discretion
that the applicant is entitled to them." Id. at 331. The Court
noted, however, that this specific clause was not required to
reserve discretionary authority, recognizing that less explicit
language may still provide the "requisite if minimum clarity" to
confer discretionary authority on the plan administrator. Id.
As an example of a less explicit but still satisfactory
provision, the Court highlighted the language of the benefits
plan in Donato v. Metropolitan Life Ins. Co., 19 F.3d 375
(7th Cir. 1994), which required a submission of proof
"satisfactory to us" (the plan administrator). The Court
explained that "the `to us' signaled the subjective,
discretionary character of the judgement that was to be made."
Id. (citing Donato, 19 F.3d at 379).
Plaintiff's plan contains language similar to that found in
Donato. In the section on Long Term Disability Benefits, under
the heading "What Information Is Needed as Proof of Your Claim?",
Plaintiff's plan states: "We may request that you send proof of
continuing disability, satisfactory to Prudential, indicating
that you are under the regular care of a doctor." This, Plaintiff
argues, is not clear enough to confer discretionary authority.
After reading the plan provisions, I must disagree. The phrase
"satisfactory to Prudential" modifies the phrase "proof of
continuing disability", clearly demonstrating that any proof
submitted upon a claim for benefits must meet Prudential's
subjectively determined criteria. Diaz v. Prudential Ins. Co.,
No. 03 C 2702, 2004 U.S. Dist. LEXIS 8640 at *21-22 (N.D. Ill.
May 12, 2004); DiPietro v. Prudential Ins. Co., No. 03 C 1018,
2003 U.S. Dist. LEXIS 16400 at *4 (N.D. Ill. Sept. 16, 2003).
This language was sufficient to put Plaintiff on notice of the
Administrator's discretionary authority and to trigger an
arbitrary and capricious standard of review. Domato at 380;
See Also Diaz at *4, DiPietro at *22. Since the arbitrary and
capricious standard of review is appropriate, I find that
discovery should be limited to the administrative record.
For the reasons given above, Plaintiff's Motion for
Reconsideration is GRANTED. However, I stand by my prior ruling.
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