Saying “we must now take a new approach,” the 4th U.S. Circuit Court of Appeals applied the high court’s decision in Metropolitan Life Insurance Co. v. Glenn (See Supreme Court Considers Conflict for Plan Administrators That are Also Payers ) and concluded that a conflict of interest did exist in Champion v. Black & Decker . The 4th Circuit reviewed the plan’s determination in Champion under the familiar abuse-of-discretion standard, and considered the conflict only as a factor.
The court pointed out that prior to the Glenn decision, it would have first determined if a conflict of interest existed and if so, adjust its review standard giving less deference to the benefit plan’s argument.
Under this new approach, the appellate court found that Black & Decker did not abuse its discretion in cutting off disability benefits for former employee Lisa Champion.
The court found that Black & Decker’s determination that Champion fell under a provision in its disability plan under which benefits would be terminated after 30 months if the disability was caused by a mental illness was not unreasonable based on the medical record presented to Black & Decker.
Considering the conflict of interest factor, the court said it found it significant that Champion’s initial claim was denied by a third-party administration and that denial was reversed by Black & Decker.
“[W]hen the Plan overruled the initial denial of short-term disability benefits by CIGNA, the third-party administrator, it manifested an approach demonstrating an unbiased interest that favored Champion, making the conflict factor “less important (perhaps to the vanishing point),” the 4th Circuit’s opinion said.
In addition, the plan voluntarily granted Champion a second appeal after she hired a lawyer, which was not required by the plan language, increasing the likelihood of an accurate final decision, which also reduced the conflict factor “to the vanishing point,” according to the court.
Champion had epileptic seizures which were mostly of the petite mal or “absence” variety and were controlled with medication. However, treating physicians noticed that Champion also reported seizure-like events that were not epileptic seizures, but brought on by panic attacks, called “pseudoseizures.” She was also diagnosed with various emotional and psychiatric conditions including anxiety, depression, panic attacks, and post-traumatic stress disorder.
In January 2002, Champion had a seizure at work that required emergency room care, and she never returned to work. She applied for short-term disability benefits under the Black & Decker’s plan, which CIGNA Integrated Care denied. Champion appealed to the plan’s Appeals Committee, which reversed CIGNA’s denial and awarded benefits. After 30 months, CIGNA terminated benefits, concluding that Champion’s disability resulted from mental illness. The plan’s appeal committee affirmed CIGNA’s decision.
The opinion in Champion v. Black & Decker is here .