Dallas Fort Worth Insurance Lawyer Blog
Lawyers who handle Employee Retirement Income Security Act cases will want to know about this June 2022, opinion from the Northern District of Texas, Dallas Division. The opinion is a win for ERISA cases. It is styled, Michael Cloud v. The Bert Bell/Pete Rozelle NFL Player Retirement Plan.
This case represents the first time in many years where a court has ruled in favor of a claimant. For reference, there are many good cases that resolved/settled prior to a court rendering an opinion. But, for those cases that do not get resolved it is rare for the person making the claim to prevail.
The opinion in this case is 84 pages long. Very little of the opinion will be cited here but for attorneys handling ERISA cases, it is a must read.
The facts of the case are lengthy.
In discussing the law, the court stated that pursuant to 29 U.S.C., Section 1132(a)(1)(B), a plan participant may sue under ERISA “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” When the plan vests the fiduciary with discretionary authority to determine eligibility for benefits under the plan or to interpret the plan’s provisions, an abuse of discretion standard of review applies. Here, the Plan gives the Board, as the “named fiduciary,” “full and absolute discretion, authority and power to interpret, control, implement, and manage the Plan,” including to “define the terms of the Plan,” “construe the Plan,” and “decide claims for benefits.” Accordingly, the Court reviews the Board’s decision for abuse of discretion.
Whether the administrator gave the plan a fair reading is the most important
factor. Whether the administrator gave the plan a fair reading is the most important factor. Eligibility for benefits under any ERISA plan is governed in the
first instance by the plain meaning of the plan language. Plan terms are interpreted in accordance with their ordinary and popular sense as would a person of average intelligence and experience. Therefore, ERISA provisions must be interpreted as they are likely to be understood by the average plan participant, consistent with the statutory language.
If the plan administrator’s interpretation of the plan is legally incorrect, the court next considers whether the administrator abused its discretion. A plan
administrator abuses its discretion without some concrete evidence in the administrative record that supports the denial of the claim. Determining whether a plan administrator abused its discretion requires a combination-of-factors method of review, in which the court takes into account several different, often case-specific, factors, reaching a result by weighing all together. Factors considered by the Fifth Circuit include (l) the internal consistency of the plan under the administrator’s interpretation, (2) any relevant regulations formulated by the appropriate administrative agencies, (3) the factual background of the determination,” and (4) “any inferences of lack of good faith. However, the Fifth Circuit has made clear that “if an administrator interprets an ERISA plan in a
manner that directly contradicts the plain meaning of the plan language, the administrator has abused his discretion even if there is neither evidence of bad faith nor of a violation of any relevant administrative regulations.” Ultimately, a court’s ‘review of the Plan administrator’s decision need not be particularly complex or technical; it need only assure that the administrator’s decision falls somewhere on a continuum of reasonableness-even if on the low end.
This Court then analyzed the facts of the case and ruled against the plan administrator.