Post-Firestone Skirmishes: The Patient Protection and Affordable Care Act, Discretionary Clauses and Judicial Review of ERISA Plan Administrator Decisions
Maria O'Brien Hylton
Boston University School of Law
August 26, 2010
William & Mary Policy Review, Vol. 2, No. 1, pp. 1-52, 2010
Boston Univ. School of Law Working Paper No. 10-20
Since the Supreme Court's Firestone decision, ERISA plan administrators have enjoyed broad discretion and deferential review in benefits claims litigation. Language in Firestone that offered discretion and deference in exchange for a simple discretionary clause led, in time, to attempts by various state insurance commissioners to limit or ban the use of discretionary clauses on the ground that they often lead to unjust outcomes for plan participants. Various state efforts to inject a degree of fairness into the benefits denial review process have been met with preemption challenges, however. This article contrasts the Court‘s consistent support for discretionary clauses with the thus-far unanimous support of the federal courts of appeal for the position that states can ban or limit the use of such clauses without running afoul of ERISA's broad preemption language. This paper also evaluates the PPACA's requirement of universal and independent external review and suggests that, at least in the near term, the contested terrain of discretionary clauses will not change significantly.
Number of Pages in PDF File: 53
Keywords: The Patient Protection and Affordable Care Act, Discretionary clauses, ERISA, Firestone, De novo review, ERISA preemption, ERISA plan administrator, Conflicted plan administrator
JEL Classification: K12, K19, K23, K29, K39
Date posted: July 22, 2010 ; Last revised: February 17, 2011
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