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Another Bad Erisa Case, Deferential Standard for Sedgwick and Sun Trust

In the recent decision of Foster v. Sedgwick Claims Management Services, the Circuit Court of the District of Columbia recently affirmed a finding that Sedgwick, the plan administrator for a Sun Trust plan, had complete and sole discretion in determining whether or not an employee’s medical evidence qualifies as disabling as defined by the plan. A Sun Trust employee, Kelly Foster, elected a long-term disability plan, upon hire. The long-term disability plan was self-funded by Sun Trust and administered by Sedgwick. Foster was denied benefits and brought suit after exhausting her administrative remedies.

The Court applied a deferential standard of review in examining Sedgwick’s claim denials. Sun Trust’s plan explicitly granted broad discretion to Sedgwick to interpret the terms of Foster’s LTD plan. Under a deferential standard of review, claims administrators like Sedgwick are not constrained to the limitations of a well-reasoned decision for termination of benefits. Rather, as long as the plan was interpreted in a reasonable manner the Court will give great deference to a plan administrator’s decision and will decline to find a wrongful denial. Unfortunately, the ERISA statute provides insurance companies and their paid administrators this type of discretion making it more difficult for claimants to receive their long term disability benefits.