United States District Court, N.D. Illinois
[Copyrighted Material Omitted]
For Carol Novak, Plaintiff: Michael Bartolic, LEAD ATTORNEY, The Law Offices of Michael Bartolic, LLC, Chicago, IL.
For Life Insurance Company Of North America, Defendant: Daniel Keenan Ryan, LEAD ATTORNEY, Peter E. Pederson, Jr., Hinshaw & Culbertson, Chicago, IL.
For Discover Financial Services Welfare Benefits Plan, Defendant: Peter E. Pederson, Jr., Hinshaw & Culbertson, Chicago, IL.
Virginia M. Kendall, United States District Court Judge.
MEMORANDUM OPINION AND ORDER
On November 27, 2012, Plaintiff Carol Novak filed this suit under the Employee Retirement Income Security Act (" ERISA" ), 29 U.S.C. § 1132(a)(1)(B), alleging that Defendant Life Insurance Company of North America (" LINA" ) incorrectly denied her claim for long-term disability benefits under a benefit plan (the " Plan" ) offered by her former employer, Discover Financial Services. Because the standard of review governing Novak's claims will determine the course of these proceedings, including discovery, the Court ordered that the issue be briefed and resolved at the threshold. With the benefit of the parties' briefs, the court concludes that the de novo standard of review governs Novak's long-term disability claim and that additional discovery beyond the administrative record is not appropriate at this time.
I. Standard of Review
ERISA does not set out the appropriate standard of review for actions under § 1132(a)(1)(B) challenging benefit eligibility determinations. To fill this gap, courts have held that a denial of insurance benefits is reviewed de novo under ERISA " 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, 114-15, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); see also Conkright v. Frommert, 559 U.S. 506, 130 S.Ct. 1640, 176 L.Ed.2d 469 (2010); Black v. Long Term Disability Ins. , 582 F.3d 738, 743 (7th Cir. 2009); Perlman v. Swiss Bank Corp. Comprehensive Disability Protection Plan , 195 F.3d 975, 980 (7th Cir. 1999). When the plan gives the administrator discretionary authority, the standard of review is deferential and court " will set aside an administrator's
decision only if it is arbitrary and capricious." Black , 582 F.3d at 743-44 (citing Herzberger v. Standard Ins. Co. , 205 F.3d 327, 332 (7th Cir. 2000); Aschermann v. Aetna Life Ins. Co. , 689 F.3d 726, 728 (7th Cir. 2012); Hess v. Reg-Ellen Mach. Tool Corp. Employee Stock Ownership Plan , 502 F.3d 725, 727 (7th Cir. 2007). In order for a plan to be grant discretionary authority to the fiduciary, " [t]he reservation of discretion must be communicated clearly in the language of the plan, but the plan need not use any particular magic words." Gutta v. Standard Select Trust Ins. Plans , 530 F.3d 614, 619 (7th Cir. 2008); Semien v. Life Ins. Co. of N. Am. , 436 F.3d 805, 810 (7th Cir. 2006) (plan should " clearly and unequivocally state that it grants discretionary authority" ).
A. The Plan Terms
The Plan designates LINA as the " Claims Administrator" and fiduciary of the LTD program and delegates to LINA " full discretionary authority to determine claims and appeals under such Participating Program." Specifically, § 2.9(a) of the Plan document, entitled " Claims Administrator," provides:
" Claims Administrator" means, with respect to any Participating Program, the person(s) or entity(ies) appointed by the Plan Administrator to decide, in its sole discretion, claims for benefits, or the person(s) or entity(ies) appointed by the Plan Administrator to decide, in its sole discretion, appeals of denied claims for benefits .... The Claims Administrator will be a fiduciary (with respect to the authority delegated to the Claims Administrator) of the Plan.
(a) Fully Insured Participating Programs. The Claims Administrator for the insured Participating Programs will be the insurance company issuing the insurance policy or contract. Each Claims Administrator under an insured Participating Program will have full discretionary authority to determine claims and appeals under such Participating Program, subject to the terms of the insurance policy contract under which benefits are provided.
(Dkt. 23-1, p. 12.) In this case, LINA is the " Claims Administrator" and fiduciary for the LTD program under § 2.9(a) because it issued the insurance policy that provides the LTD benefits. Additionally, in a section entitled " Claims and Appeals Process Under the Discover Benefits Plan," the Summary Plan Description states:
What else should I know about how the reviewers make decisions?
The administrators and fiduciaries of Discover's benefits plans, including the Reviewers, have discretionary authority to interpret the plans and make determinations under the plans. Any decision made pursuant to this authority is given full force and effect unless arbitrary and capricious.
(Dkt. 23, Ex. C, p. 140.) In a section entitled " Other Important Information," the Summary Plan Document provides:
Discretionary Authority of Plan Administrator and Other Plan Fiduciaries
In carrying out their respective responsibilities under the Plan, the Plan Administrator and other Plan fiduciaries shall have the exclusive right and discretionary authority to make any findings necessary or appropriate for any purpose under the plan, including to interpret the terms of the Plan and to determine eligibility for and entitlement to Plan benefits. Any ...