A New Firestone Drill: MetLife v. Glenn

 Hopefully, the Supreme Court's MetLife decision will turn out to be a welcome clarification of the Firestone case, even if it generates some new uncertainty. Firestone left open the question of how much a conflict of interest in the administrator should affect the level of a court's deference to the administrator's decision. After Firestone, the lower courts went in all different directions on this question, ranging from engaging in a slippery-slope analysis, where there would be less deference, to a de novo approach, where the court would essentially ignore the administrator's decision altogether. MetLife now provides the answer, but in a way that does not provide certainty. Under MetLife, the standard continues to be the abuse-of-discretion standard. However, the degree and nature of any conflict of interest is taken into account as a factor in determining whether there has a been an abuse of discretion. Thus, the governing rules are clear, but the application of those rules may vary with the facts and circumstances of each case. The Court in MetLife recognizes the lack of certainty its decision brings, but asserts that the result is a workable one. As with the fallout from so many Supreme Court decisions, we'll have to wait and see. One interesting passage from the case may give a hint as to how lower courts will proceed. MetLife notes that a conflict may become less important to the analysis as active steps are taken to reduce potential bias and promote accuracy, for example by walling off claims administrators from those interested in firm finances, or by imposing management checks that penalize inaccurate decisionmaking regardless of who benefits. It will be interesting to see if players in the market seize upon steps like this to try to increase the extent to which internal decisionmaking will be entitled to deference in the post-MetLife world The fun never stops . . .

Andrew L. Oringer
White & Case LLP