On June 19, the Supreme Court decided MetLife v. Glenn, ruling that a company that both administers and funds a benefits plan operates under a conflict of interest that must be considered as a factor in a court’s review of claim denials.

From the analysis on SCOTUSBLOG:

In its decision below, the Sixth Circuit explicitly considered that conflict of interest when reviewing MetLife’s denial of benefits to respondent Glenn, a Sears employee who filed for disability benefits after a heart condition impaired her ability to work. After MetLife rejected Glenn’s claim, asserting that she was still physically capable of performing full-time sedentary work, Glenn brought suit against the insurance company under ERISA, which authorizes federal courts to review the decisions of benefit plan administrators. Glenn lost her case in district court but prevailed before the Sixth Circuit... The Sixth Circuit [ruled] that the claim denial was unreasonable and should be reversed.

As always, plan sponsors should carefully evaluate how their claims are decided and paid. Any employer who both administers and pays benefits should take the ruling into account and put safeguards into place to separate benefit decisions from financial concerns.

A thorough discussion of MetLife v. Glenn can be found on SCOTUSWIKI.