View From Sidley: State Law Bans on Discretionary Clauses in Insurance Contracts
Deferential review of an ERISA plan administrator’s decision on a claim for benefits is a hallmark of ERISA. Under Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 10 EBC 1873 (1989), if a plan grants the plan administrator discretion to interpret the plan, a court is required to uphold the administrator’s decision as long as it is reasonable, even if the court might otherwise have independently arrived at a different conclusion. This principle is rooted in trust law and promotes efficiency, predictability, and uniformity, all of which serve ERISA’s goal of encouraging employers to offer benefit plans.
Reproduced with permission from Pension & Benefits Daily, 85 PBD , 05/04/2015. Copyright 2015 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com