How the Burden of Proof may Shift from Claimants to ERISA Plans
By David Pixley
Under Firestone, a U.S. Supreme Court Case decided in 1989, plan administrators are entitled to a deferential standard of review, but only if such authority is expressly reserved in the plan documents. Absent sufficient language in the plan documents, the trial court will conduct a de novo review (no deference given to the plan administrator), which really puts the trial court in the driver’s seat in benefit claims litigation involving ERISA plans.
Generally, the participant has the burden of proving he is entitled to benefits from an ERISA plan. If the plan documents properly provide the plan administrator with discretionary authority, the plan administrator’s decision to deny benefits will normally be reviewed under the very high, abuse of discretion standard. In other words, the plan administrator’s decision will be upheld by the court, unless it was arbitrary and capricious. There are some important exceptions. An ERISA plan, not the claimant, bears the burden of proving that an exclusion operates to deny benefits that would otherwise be payable.
Recently, the 9th Circuit Court of Appeals decided that there are additional circumstances where the burden of proof will shift from the claimant to the plan. The Circuit Court reasoned that the plan, not the claimant, was better positioned to determine if the plaintiff had earned enough hours of covered service in a sufficient number of years to qualify for a benefit. Therefore, in the 9th Circuit, a claimant without the same access to the evidence as the plan need only establish a claim that is valid on its face to shift the burden of proof to the plan. The plan then must disprove the claimant’s entitlement to benefits.
This has a major impact on the deference that was afforded to plan administrators by the Supreme Court in Firestone, especially for union multi-employer plans where the plan is often in a far better position to track contribution history for a participant that may work for numerous contributing employers.
There was a strong dissent in the 9th Circuit case. The dissenting judge opined that shifting the burden of proof to the plan was in direct conflict with the deferential standard of review normally applied to evaluate the plan administrators’ determinations.
We will continue to monitor the evolution of this burden shifting strategy, which claimants are sure to try to employ outside of the 9th Circuit.