Supreme Court Denies LTD Administrator Review Obligation Case

June 24, 2003 ( - The United States Supreme Court has declined to hear a case involving the review obligations of a long-term disability (LTD) benefit plan administrator.

>By declining, the high court left standing a federal appellate court ruling in Wallace v. Reliance Standard Life Insurance Co that the plan administrator had no obligation to obtain additional documentation to support a plan participant’s disability claim.  The plaintiff had petitioned the Supreme Court for review asking the court to decide whether an insurer is acting as a fiduciary under ERISA when it is performing duties as a final reviewer of denied benefit claims, according to Washington-based legal publisher BNA.

Appeals Standing

>Bruce Wallace sued Reliance under ERISA after the administrator severed his LTD benefits. Applying a de novo standard of judicial review, a judge in the US District Court for the Western District of Wisconsin upheld Reliance’s decision, finding that the medical evidence supported the decision that Wallace was no longer disabled.

>Following the district court’s decision, Wallace appealed, arguing that, as plan administrator, Reliance was acting as an ERISA fiduciary and thus had a duty to seek out additional evidence supporting his claim for benefits.

>In February, the US 7th Circuit Court of Appeals agreed with the lower court, finding Reliance was not required as a fiduciary or in any other capacity to obtain additional medical evidence of a plan participant’s alleged disability.   “No case of which we are aware holds that, when a plan participant’s own doctors opine that he is again able to work, the insurer or plan administrator must refer the participant to additional physicians in quest of who will find a disabling condition,” the 7th Circuit ruled.

Reliance “has promised a particular set of benefits, to be sure, and must act with care in fulfilling its promises, but it did not undertake to evaluate all claims with a thumb on the scale in the participant’s favor. Indeed, a genuine fiduciary would go to bat for Wallace as an advocate; but this is not the role Reliance undertook to perform,” the appeals court said.

The case is Wallace v. Reliance Standard Life Insurance Co., U.S., No. 02-1630, cert. denied 6/23/03.