There are always plaintiffs’ attorneys who live to push the envelope in ERISA benefit litigation. You know who they are. When opposing one of these attorneys, you may feel that he or she is more concerned with chipping away at ERISA procedures than in achieving a quick, favorable result for the client. Such attorneys will fight for as much discovery as possible (even if it has no value in a particular case); they may routinely argue for a de novo review (even where a deferential standard clearly applies). They may argue, repeatedly, that courts should routinely conduct trials in ERISA matters when any fact is in dispute. They may even argue that jury trials are permissible in ERISA claims. If such lawyers can get one judge to agree, even a little, with one of their positions, they will take that decision to the next judge, and argue for another little push to the envelope.
There is no question that arguments like these have to be met head on, and on the merits. But the opposition can be made more powerful by framing it in the context of congressional policy.
As an example, the Second Circuit permits district courts to expand the administrative record on de novo review when it finds “good cause” to do so. However, there arose a conflict among district courts as to when the requisite “good cause” existed. Some courts held that the presence of a “structural conflict” – i.e., a single entity determining claims and paying benefits – was per se good cause to expand the record. Others held that more was needed to establish good cause.
The issue came to the Second Circuit in Locher v. First Unum Life Ins. Co., 389 F.3d 288 (2d Cir. 2004). In presenting the issue to the Circuit, defense counsel took care to explain that routinely expanding the administrative record in de novo cases would harm multiple congressional policies. It would penalize plans where the employer affirmatively chose, for reasons sufficient to it, to designate a single entity to decide claims and pay benefits. It would increase the cost of claim litigation and therefore the cost of the benefit plan. It would place the Second Circuit at odds with other Circuits, harming the interest of national uniformity. The Second Circuit accepted and endorsed the policy argument, holding that a structural conflict did not provide per se good cause to expand the record:
[A] per se rule is inconsistent with the congressional purposes and goals of ERISA. … [B]ecause claims reviewers and payors are often interconnected, a per se rule would allow additional evidence to be presented at the district court level in almost every circumstance on the basis of a presumed conflict of interest. A per se rule would also eliminate the appropriate incentive for a claimant to submit all available evidence regarding the claimant’s condition to the insurance company upon first submitting a claim. Cf. Masella, 936 F.2d at 105 (noting claimant’s obligation at the administrative level to “provide particulars regarding the claimant’s condition”). Accordingly, a per se rule would undermine the significant ERISA policy interests of minimizing costs of claim disputes and ensuring prompt claims-resolution procedures. See Pilot Life, 481 U.S. at 54; Varity Corp. v. Howe, 516 U.S. 489, 497, 134 L. Ed. 2d 130, 116 S. Ct. 1065 (1996) (indicating that courts should take into account Congress’s “desire not to create a system that is so complex that administrative costs, or litigation expenses, unduly discourage employers from offering welfare benefit plans”)[.]
Might the Second Circuit have issued the same decision even if defense counsel had not made the policy arguments? Perhaps. But submitting policy arguments to a court makes it more likely that the court will adopt and address those policy arguments (if it agrees with your position, of course!). And decisions explaining why certain procedural rules are essential to advancing ERISA policies will certainly be helpful to defense counsel in future cases. So making policy arguments now will likely make your job easier in the future. Not to mention making it more difficult for aggressive plaintiffs’ lawyers to push the envelope in the other direction.