Wednesday, April 21, 2010

Supreme Court: ERISA administrators get one free so-called “honest” mistake before losing phony-baloney discretion

The Supreme Court today issued its opinion in Conkwright v. Frommert. It’s a complicated pension case under ERISA, and the good guys lost. Not that that’s any news.

The impact of this decision, of course, remains to be seen, but summing up the good guys argued that once an ERISA plan administrator screws up a decision, no further phony-baloney “deference” should be given its subsequent decisions on the same subject. The Court, however, said essentially that “one honest mistake” should not be enough to foreclose deferential analysis after the administrator gets its second bite at the apple (you read that right; often an ERISA administrator who screws up a decision doesn't lose the case but gets another chance to deny the claim all over again. More on that in a future post).

This doesn’t worry me all that much because I have seen precious few “honest mistakes” out of ERISA insurers and plenty of fraudulent self-serving lying cheating stealing outrages.

We’ll probably spend a lot of time going forward litigating how “honest” a “mistake” was.

Bring it on.

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