Monday, May 18, 2015

FedEx LTD Denial Subject to De Novo Review

On May 5, 2015 the United States Court of Appeals for the Fourth Circuit ruled against the Federal Express Long Term Disability Plan in its denial of LTD benefits to one of its former employees. This decision is great news for  disabled FedEx employees.  FedEx was unsuccessful in convincing the Circuit Court to apply an abuse of discretion standard to review the denial of benefits. Instead, the court determined unanimously that the denial was subject to a de novo review.  See Bilheimer v. Federal Express Corporation Long Term Disability Plan, No. 13-1859.  

Long term disability attorneys must deal, on a regular basis, with the issue of what standard of review a court must apply when reviewing a denial of benefits.  Under ERISA case law, a court may review a denial of benefits using one of two standards: 1. an abuse of discretion standard or, 2. a De Novo review.  Under an abuse of discretion standard a court will not reverse a denial of LTD benefits if the denial "was reasonable" even when the court "would have reached a different decision". Therefore, as long as the denial is grounded in some "principled reasoning process" it will not be reversed.  However, under a "de novo" standard a judge can review the record and make a decision without any deference to the denial by the insurance company or plan administrator. Obviously, the de novo standard is much more beneficial for disabled individuals and is the standard that plaintiffs' lawyers always want.

In the case of Bilheimer, which was decided just a few weeks ago, the Fourth Circuit Court of Appeals had the opportunity to decide whether FedEx had discretion in denying LTD benefits to one of its employees.  The Circuit Court ruled that the denial was subject to a de novo review because the FedEx LTD Plan did not properly delegate its final decision making authority to Aetna.  The court found that FedEx could not outsource its discretionary duties to Aetna without first amending its long term disability plan documents.  RamosLaw is currently representing another  disabled FedEx employee whose LTD benefits were also denied.  The case involves the same standard of review issue as Bilheimer and is pending before the Connecticut District Court.  Although the Fourth Circuit decision is not binding in our case, (Connecticut is on the Second Circuit) we are confident that the Court will reject the abuse of discretion standard also, and review the case de novo.