The Eighth Circuit recently held that language in Prudential's disability policy requiring proof of disability that is "satisfactory to Prudential" was sufficient to grant the plan discretionary authority and entitled the plan to a deferential judicial review. Prezioso v. Prudential Ins. Co. of Am., No. 13-1641, 2014 WL 1356862 (8th Cir. April 4, 2014) (unpublished). The day after plaintiff Michael Prezioso injured his back he was fired for failing to meet target sales. Prezioso sued Prudential for denying his claim for short and long term disability benefits. Prezioso argued that the district court erred in applying the abuse of discretion standard of review because Prudential's plan document did not include language conferring such discretion. The Eighth Circuit held that the language in the plan providing that Prudential had the right to request "proof of continuing disability, satisfactory to Prudential" was sufficient to review the plan's decision under an abuse of discretion standard. In so holding, the Court recognized that the circuits were divided on the issue concerning the language required to defer to the plan administrator's decision. Prezioso urged the Court to follow contrary decisions of other circuits, which have held that "satisfactory to us" language is insufficient to confer discretion. Those courts reasoned that such language was ambiguous and that ambiguities in an ERISA plan should be construed against the plan. The Eighth Circuit found the other circuits' reasoning "unpersuasive" and also determined that an earlier case from Eighth Circuit, which concluded that a plan requiring an employee to submit "written proof of continued total disability... satisfactory to [the plan administrator]" was sufficient to trigger abuse of discretion review, was controlling.
Applying a deferential standard of review, the Court found that Prudential did not abuse its discretion in denying the Prezioso's claim. Prudential afforded Prezioso a "full and fair review": it considered "all comments, medical records, and other information submitted by Prezioso, did not afford deference to the initial claim denial, referred the appeal to a different decision-maker, consulted a neutral health care professional with appropriate training and experience in lower back disabilities, and obtained advice from a qualified vocational expert regarding the demands of Prezioso's 'regular occupation.'"
Proskauer's Perspective: While "satisfactory to us" remains sufficient in some circuits to entitle plan fiduciaries to a more deferential standard of review by courts reviewing benefit denials, plan sponsors should consider reviewing their plan documents to determine whether their plan language can be bolstered to support deferential review in all circuits. Given ERISA's broad venue and nationwide service of process rules, plan fiduciaries could find themselves sued in jurisdictions other than where the plan is administered.
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