In Davis v. Hartford Life and Accident Insurance Company
, 980 F.3d 541 (6th Cir. 2020), a denial-of-benefits suit under ERISA, the Sixth Circuit recently addressed whether a defendant can argue that it retained the discretionary authority required for a more deferential standard of review when it did not employ the decisionmakers on the claim. Id.
When a Sixth Circuit court reviews a claim for benefits under ERISA, the applicable standard of review turns on whether the plan at issue grants the administrator “discretionary authority” to determine a claimant’s eligibility for benefits or to interpret the terms of the plan. Id.
If the plan grants that authority, the deferential arbitrary-and-capricious standard of review applies; if not, the court will review the claim de novo. Id.
Plaintiff Richard Davis conceded that the policy at issue conferred discretionary authority on defendant Hartford Life and Accident Insurance Company (“Hartford Life”). Davis argued, however, that Hartford Life never exercised that authority and, as such, de novo review should have applied. Specifically, Davis contended that employees of Hartford Fire Insurance Company (“Hartford Fire”)—a separate but related subsidiary of Hartford Life—decided to terminate his disability benefits, and not employees of Hartford Life. Id.
at 545–46. In fact, through discovery, Davis learned that Hartford Life does not itself have employees. Id.
at 546. As such, Davis claimed that because the policy vested discretionary authority in Hartford Life, and not Hartford Fire, the district court should have reviewed the decision to terminate his benefits de novo. Id.
The Sixth Circuit disagreed. Although the Court acknowledged—as did Hartford Life—that Hartford Fire paid the decisionmakers here, Hartford Fire had no other relationship to the case. Id.
Hartford Life issued the group insurance policy at issue; the decisionmakers adjudicated claims under Hartford Life policies only, and had no responsibilities with respect to Hartford Fire policies; and correspondence to Davis and his counsel made no reference to Hartford Fire, but identified Hartford Life in the signature blocks. Id.
The Sixth Circuit concluded that “these signs point[ed] to Hartford Life, rather than Hartford Fire, exercising discretion in terminating Davis’s benefits.” Id.
Noting that other courts had already rejected similar arguments where separate entities related to an ERISA plan administrator employed or paid the decisionmakers, id.
at 546, the Sixth Circuit held that “where decisionmakers who act on behalf of an authorized plan administrator are employed by another entity within the corporate family, the plan administrator is still exercising (and has not delegated) its discretionary authority.” Id.
; see Fenwick v. Hartford Life & Acc. Ins. Co.
, No. 20-5595, 2021 U.S. App. LEXIS 734, at *7–8 (6th Cir. Jan. 12, 2021).
Given that holding, the Davis
Court applied arbitrary and capricious standard of review, and ultimately affirmed the district court, concluding that Hartford Life acted reasonably in denying Davis’s benefits.