This being – roughly – the start of a new month, I engaged in my usual habit of reviewing any ERISA decisions issued in the past month by the courts in the First Circuit, just to make sure I didn’t miss anything while busy with the usual run of business. As it turns out, on July 20th, the United States District Court for the District of Rhode Island issued its opinion in Holm v. Liberty Mutual Life Assurance Co. and Bank of America , a case in which an employee who had resigned from a company without first seeking disability benefits thereafter sought them later. In many ways, this is a traditional denial of benefits decision in this circuit, with the court finding that the plan granted the administrator sufficient discretion to invoke the arbitrary and capricious standard of review and then finding that under that standard the administrator’s denial of benefits must be upheld since there was sufficient evidence in the record to support the decision. The court does offer some good language, and a good synopsis of the circuit’s most popular decisions, on these points, and, frankly, you can tell on one read of the opinion that the outcome should have been the same regardless of the level of review applied by the court.
What makes the decision more interesting than most, however, is that the case presented the somewhat unique situation of the defendants raising the question of whether the benefit was even provided under an ERISA governed plan, and the court provides a nice summary of the law in this circuit for making that determination. As per the court (I have left out the cites):
ERISA provides a broad definition for employee benefit plans, and this definition has been divided by the First Circuit into “five essential constituents:”
(1) a plan, fund or program (2) established or maintained (3) by an employer or by an employee organization, or by both (4) for the purpose of providing medical, surgical, hospital care, sickness, accident, disability, death, unemployment or vacation benefits … (5) to participants or their beneficiaries. . . . In determining whether a specific plan is an ERISA plan, the First Circuit reviews the extent of the employer’s role in administering the benefits. Those obligations are the touchstone of the determination: if they require an ongoing administrative scheme that is subject to mismanagement, then they will more likely constitute an ERISA plan; but if the benefit obligations are merely a one-shot, take-it-or-leave-it incentive, they are less likely to be covered. Particularly germane to assessing an employer’s obligations is the amount of discretion wielded in implementing them.
The court had little trouble concluding that the benefit plan in question was “clearly an employee benefit plan as defined by the ERISA statute” in light of the actual facts of the matter.