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Not all ERISA Plan Administrator’s Determinations are Equal

The recent decision of the Fifth Circuit in Porter v. Lowe’s Co., decided September 24, 2013, once again demonstrates that benefit determinations can be difficult to overturn under the ERISA regime because of built-in deference to those determinations.  In this case, the District Court reversed the Plan Administrator’s denial of benefits concluding that the administrator had abused his discretion.  On appeal, the Fifth Circuit reversed finding that the decision was due deference because the ERISA Plan Document gave the administrator discretion;   Specifically, the ERISA Plan gave the Administrator the power “to interpret the terms of the Plan and to determine the eligibility for Plan benefits.”    The Fifth Circuit explained:

When, as here, the ERISA plan grants the administrator the discretion to interpret the meaning of the plan, this court will reverse an administrator’s decision only for an abuse of discretion.5 The fact that the evidence is disputable will not invalidate the decision; the evidence “need only assure that the administrator’s decision fall somewhere on the continuum of reasonableness—even if on the low end.” Stated differently, “If the plan fiduciary’s decision is supported by substantial evidence and is not arbitrary and capricious, it must prevail.”

Porter also argued that to the extent there was an ambiguity relating to the terms of the ERISA Plan, such ambiguity should be construed against the Administrator who drafted the document.  Rejecting this argument the Fifth Circuit cited to Winters v. Costco Wholesale Corp., 49

F.3d 550, 554 (9th Cir. 1995) (“We hold that the rule of contra proferentem is not applicable to self-funded ERISA plans that bestow explicit discretionary authority upon an administrator to determine eligibility for benefits or to construe the terms of the plan.”).  Finally, because the Plan Administrator did not operate under a conflict of interest that was not an issue.