Contact Us for a Free Consultation Today

Is Heightened Scrutiny of the Benefits Decision Required?

In the recent decision of Day v. AT&T. ___F. 3d ___ , 2012 WL 5359628 (9th Cir. November 1, 2012), the Court determined that a plan administrator’s consultation with the plan’s funding source does not create a structural conflict of interest.  In this case, the plaintiff disputed how Sedgwick calculated his benefit payments under the AT&T ERISA plan and filed suit. AT&T funded the plan but conferred full discretion to Sedgwick as plan administrator.  Under ERISA, plan administrators both administering and funding the plan operate under a “structural conflict of interest” which requires heightened scrutiny of the benefits decision.  Although the Plan in this case delegated a plan administrator separate from the funding source, the Court had to determine whether a structural conflict of interest could be found when Sedgwick, the plan administrator, consulted with AT&T, the funding source, on benefits issues.  The court found that it did not; stating, “Just because Sedgwick consulted with AT&T in responding to Day’s concerns…does not show that AT&T had any influence over Sedgwick’s decision making process in that regard.”