For more than twenty-five years, the law of the Fifth Circuit has been that health and disability benefit denials based on factual determinations (e.g., whether a beneficiary is disabled or whether a treatment is medically necessary within the meaning of a plan) are reviewed by courts under an abuse of discretion standard, regardless of whether a subject plan includes discretionary “Firestone” language. Pierre v. Connecticut General Life Ins. Co., 932 F.2d 1552, 1553 (5th Cir.) cert. denied, 112 S. Ct. 453 (1991).
The Fifth Circuit’s so-called “Pierre deference” was recently challenged in the case of Ariana M. v. Humana Health Plan of Texas Inc., No. 16-20174 (5th Cir. Apr. 21, 2017). In Ariana M., the plaintiff argued that a Texas statute prohibiting the use of discretionary clauses in insurance policies overrode the Fifth Circuit’s default Pierre deference, under which district courts are directed to “reject[ ] an administrator’s factual determinations in the course of a benefits review only upon the showing of an abuse of discretion.” Dutka ex rel. Estate of T.M. v. AIG Life Ins. Co., 573 F.3d 210, 212 (5th Cir. 2009). The plaintiff argued that Texas’s specific ban on the use of discretionary language in insurance policies precluded the district court from conducting a deferential review of Humana’s factual findings, and thus compelled application of the more favorable de novo standard.
The Fifth Circuit rejected the plaintiff’s argument, unanimously finding that “Texas’s anti-discretionary clause law concerns what language can and cannot be put into an insurance contract in Texas. It does not mandate a specific standard of review for insurance claims.B” Consequently, “Texas’s anti-discretionary clause law does not change [the Fifth Circuit’s] normal Pierre deference”, and courts in the Circuit will continue to apply Pierre deference to all factual determinations even in cases arising out of insurance policies issued in Texas. In this regard, Ariana M. preserves the status quo.
Continue Reading Fifth Circuit Maintains Default Deferential Standard Of Review In Denial Of Benefit Claims, But Suggests It May Soon Be Overruled