In Aschermann v. Aetna Life Ins. Co., — F.3d. –, 2012 WL 3090291 (7th Cir. Jul. 31, 2012), the Seventh Circuit gave a clear ruling that an ERISA claim administrator can delegate its discretionary authority to a substitute, as long as the plan does not expressly prohibit delegation.
The plan at issue was funded by a disability policy issued by Lumbermens Mutual Casualty Company. Lumbermens was withdrawing from the insurance business, and signed an Administrative Services Agreement under which Aetna undertook “all of Lumbermen’s day-to-day duties and discretion.”
The Court held that the question whether Lumbermens effectively delegated discretion to Aetna “can be decomposed into two questions: first, is a written delegation essential; second, is this particular delegation authorized?”Continue Reading Seventh Circuit Holds that Claim Administrator Has Inherent Power to Delegate Discretionary Authority, Unless Plan Prohibits It