/>iIn Avenoso v. Reliance Standard Life Insurance Company, No. 21-1772, 2021 U.S. App. LEXIS 35264 (8th Cir. Nov. 30, 2021), the Eighth Circuit clarified its position in a circuit split over the proper judicial procedure for deciding ERISA benefits cases.
The underlying case concerned the defendant’s denial of long-term disability benefits under an ERISA plan after the defendant disability insurer found the plaintiff retained sedentary work capacity. After exhausting his administrative appeals, the plaintiff filed a lawsuit in the United States District Court of Minnesota alleging the benefits denial violated ERISA. Both parties moved for summary judgment, with the district court finding for plaintiff.
On appeal, the Eighth Circuit ruled that the district court’s decision on summary judgment was improper because it weighed evidence, made credibility determinations, and made findings on disputed factual questions in the administrative record. The Eighth Circuit confirmed that it stands with the Second, Seventh, Eleventh, Ninth, and Sixth Circuits in refusing to recognize the First Circuit’s exception, which permits district courts to weigh facts and resolve conflicts in evidence when deciding summary judgment in cases resolving ERISA claims for benefits under 29 U.S.C. § 1132(a)(1)(B).
The Eighth Circuit acknowledged that, under its precedent, when a plan administrator is granted discretionary authority under an ERISA plan to determine benefits claims, the district court typically only makes legal conclusions at a subsequent bench trial – i.e., whether under the applicable record a reasonable factfinder could reach a certain outcome. However, when the plan administrator is not granted discretionary authority under the plan, the district court must review the administrative record de novo and act as a factfinder at a subsequent bench trial. Here, the plan administrator was not granted this discretionary authority. Accordingly, at a bench trial, the district court would have weighed evidence and acted as a factfinder in its de novo review to determine whether benefits were due. As a result, the Eighth Circuit held the district court was not justified in resolving factual issues at summary judgment.
The Eighth Circuit concluded, however, that the district court’s error was harmless under FRCP 61, and it affirmed the district court’s decision granting plaintiff summary judgment. Of controlling import, the parties confirmed that neither had new evidence to submit should the court remand the case for a bench trial. Thus, the same district judge would be deciding the same issue on the same record during a bench trial, and the district court’s factfinding would be reviewed for clear error on appeal. Accordingly, the Eighth Circuit applied the clear error standard here, concluding the district court’s finding that the plaintiff lacked sedentary work capacity was not clearly erroneous.
Avenoso serves as an important reminder to the parties in ERISA benefit claim cases to evaluate the most efficient way to resolve these cases. They are often decided on the administrative record with the judge as the factfinder. In these circumstances, using FRCP 52 to conduct a bench trial “on the paper” (instead of summary judgment) can avoid the issues (including the potential costs of further remand and litigation) raised in the Avenoso appeal.
