The Minnesota Federal District Court has recently confirmed the standard of review that will be applied to the decisions made by a plan administrator.  Anderson v. U.S. Bancorp (July 28, 2006).  In this case the employer had adopted a severance pay program which is a welfare benefit plan under ERISA.  The employee alleged that the committee administering the plan violated ERISA when it denied his claim for benefits finding that he had been terminated for cause.  Under the terms of the plan, severance benefits would be denied if the employee was terminated for cause.  After the initial denial, the employee used the appeal process provided for under the plan and the original denial was affirmed.  The employee then sued the Plan and the committee administering the plan under ERISA. 

The U.S. Supreme Court has held that when a plan gives an administrator discretionary authority to determine eligibility, the administrator´s decision will be reviewed by the courts based upon whether there has been an abuse of discretion.  Although there are several factors that the courts will review to see if there is an abuse of discretion, the primary underlying principal is that where the plan fiduciaries have offered a reasonable interpretation of disputed provisions, the courts may not replace it with an interpretation of their own.  If the plan administrator´s decision is supported by a reasonable explanation, it should not be disturbed even though a different reasonable interpretation could have been made.  Thus, the Minnesota District court again, affirmed the deference that it will give to a plan administrator´s discretionary decision under a plan, if it is supported by relevant evidence.

One other note, at the District Court level, the employee attempted to introduce other evidence into the record.  The Court ruled that it would only review the evidence available to the plan fiduciaries and the record they had available to them to determine if there was an abuse of discretion.   

Questions regarding employee benefits?  Contact Faye Witt for more information at 218.529.2428 or fmw@hanftlaw.com