Conflict of Interest Insufficient to Warrant De Novo Review, Denial of Benefits Upheld

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Hobson v. Metropolitan Life Ins. Co.

(2nd Cir., July 29, 2009)


The Second Circuit rejected plaintiff’s argument that a de novo review was warranted given the administrator’s structural conflict of interest.  In the wake of MetLife v. Glenn, the court acknowledge that a conflict is created by an administrator’s ability to both determine eligibility and pay benefits, but found there was no evidence suggesting the administrator’s decision was influenced by the conflict and, therefore, afforded it no weight. 


Under an arbitrary and capacious standard of review, the court upheld the administrator’s decision to deny benefits.  The court held the decision was based on substantial evidence and was reasonable.  In addition, the court found that the participant was given a full and fair review and the insurer “substantially complied” with ERISA’s notice regulations.


The court further found the insurer’s requirement that the participant provide “objective support” for her disability was not unreasonable.  In addition, specifically following the Seventh Circuit, the court said an administrator need not order an IME, even without objective evidence, reducing the “financial burden of conducting repetitive tests and examination.”


Finally, addressing the fact the participant received SSDI benefits, the court “encourage[d]” administrators to explain why they reached a contrary conclusion to the SSA.  The administrator’s failure to do so, however, did not render its denial arbitrary and capricious.


For a copy of the decision click here


By Kimberly E. Whistler and Daniel W. Gerber