This is interesting. I have written before on this blog, on numerous occasions, about courts sometimes engaging in a more searching level of discretionary review that, in essence, is not discretionary review at all, at least in the manner it has long been traditionally understood. The common belief, and applied in that way by many and probably most courts over the years, is that discretionary – sometimes called arbitrary and capricious – review means that an administrator’s decision in a long term disability case must be upheld if there is significant medical evidence in the administrative record to support the administrator’s determination, and that the process of weighing the different pieces of evidence in the medical record – much of which may be conflicting – belongs to the administrator; the court, applying this type of review, is normally understood to not engage in its own independent weighing of that evidence. Actually looking into and weighing that conflicting evidence to decide whether the administrator was correct was traditionally understood to be part of de novo review, not discretionary review.
However, as I have commented in the past, court decisions in this area reflect a subtle shift away from granting that much discretion to the administrator and towards analyzing the credibility and weight of the evidence supporting the administrator’s decision, even as part of discretionary review. Essentially, while applying discretionary review, some courts have begun to look more closely at the evidence to decide whether to uphold the administrator’s decision, finding that the decision is arbitrary if the court disagrees with the administrator over the value of or weight to be given to certain aspects of the administrative record. It’s a gradual and subtle shift in jurisprudence, but one that exists and that can change the outcome of a long term disability case, by affecting exactly how the court reviews the record and the administrator’s decision. The developing jurisprudence over structural conflicts of interest has provided still greater impetus to, and opportunities for, this shift.
Roy Harmon at his always excellent Health Plan Law blog had a perfect example of this in a post yesterday, concerning a Ninth Circuit ruling in which the appeals court looked behind the medical evidence to weigh it in deciding a long term disability case, finding that the evidence, looked at closely, did not support the administrator’s determination. In contrast, though, you can see in that same case how the district court applied a more traditional understanding of discretionary review, which does not involve independently analyzing the evidence in that manner, to find that the administrator’s decision was not arbitrary and capricious since it was supported by substantial evidence in the administrative record. The end result is that you can compare in this case the effect on the same facts of these two different approaches to applying discretionary review, with the more traditional view of it – applied by the district court – resulting in a win for the administrator – and the more searching and activist approach – applied by the Ninth Circuit – resulting in a win by the participant.