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 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.