Moreover, a claimant must have a colorable claim that (1) he will prevail in a suit for benefits, or that (2) eligibility requirements will be fulfilled in the future in order to establish that he "may be eligible." Please try again. Learn more about FindLaw’s newsletters, including our terms of use and privacy policy. The trust law de novo standard of review is consistent with the judicial interpretation of employee benefit plans prior to the enactment of ERISA. Firestone Tire & Rubber Co. v. Bruch, 489 U.S.110, 115, the Court reasoned that the employer and ERISA administrator could agree on a more deferential standard of review. First, we address the appropriate standard of judicial review of benefit determinations by fiduciaries or plan administrators under ERISA. Appeals reasoned that § 1132(a)(1) should be read to mean that "a civil action may be brought by someone who claims to be a participant or beneficiary.'" 1. It follows that the phrase "may become eligible" has nothing to do with the probabilities of winning a suit. An Insurance Company's Conflict of Interest. (1960). Id., 559, at 169-171. . 87-1054. In Firestone Tire, the Court reasoned that the default standard of review for ERISA benefits cases should be de novo; but, because plan administrators . ed. who fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant or beneficiary . Firestone concluded that respondents were not entitled to the information because they were no longer "participants" in the plans. at 138 (citing cases). V. BRUCH ET AL. 2d 866 (Del. § 1001 et seq. Supp., at 534.   Oral Argument - November 30, 1988; Opinion Announcement - February 21, 1989; Opinions. 93-533, p. 11 (1973). 460 And so a court must often “look outside the plan’s written language” to decide what an agreement means. Several respondents also sought information about their benefits under all three plans pursuant to § 1024(b)(4)'s disclosure requirements, but Firestone denied those requests on the ground that respondents were no longer plan "participants" entitled to information under ERISA. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 114 (1989). Though "instructive," failure to act on the proposed bill is not conclusive of Congress' views on the appropriate standard of review. Id., at 105; see also id., at 108. Without more, we cannot ascribe to Congress any acquiescence in the arbitrary and capricious standard. Rather, one is a fiduciary to the extent he exercises any discretionary authority or control. §§ 1002(7) ("participant"), 1002(8) ("beneficiary"), 1002(21)(A) ("fiduciary"), 1103(a) ("trustee"), 1104 ("fiduciary duties"). A comparison of the LMRA and ERISA, however, shows that the wholesale importation of the arbitrary and capricious standard into ERISA is unwarranted. And I find it contrary to normal usage to think that the characteristic of "being" eligible consists of "having prevailed in a suit for benefits." The Court of Appeals also held that the right to disclosure of plan information extends both to people who are entitled to plan benefits and to those who claim to be, but are not, so entitled. Respondents then filed a class action on behalf of "former, salaried, nonunion employees who worked in the five plants that comprised the Plastics Division of Firestone." 829, as amended, 29 U.S.C. ET AL. Thus, the raison d'etre for the LMRA arbitrary and capricious standard - the need for a jurisdictional basis in suits against trustees - is not present in ERISA. Nachman Corp. v. Pension Benefit Guaranty Corp. Audio Transcription for Opinion Announcement – February 21, 1989 in Firestone Tire & Rubber Company v. Bruch William H. Rehnquist: The opinions of the Court in three cases will be announced by Justice O’Connor. Cf. be subject to judicial review, the assumption seems to be that a de novo standard would encourage more litigation by employees, participants, and beneficiaries who wish to assert their right to benefits. Unlike the LMRA, ERISA explicitly authorizes suits against fiduciaries and plan administrators to remedy statutory violations, including breaches of fiduciary duty and lack of compliance with benefit plans. U.S. 101, 105] O'Connor, S. D. & Supreme Court Of The United States. . See also G. Bogert & G. Bogert, Law of Trusts and Trustees 560, pp. Adopting Firestone's Whether "the exercise of a power is permissive or mandatory depends upon the terms of the trust." Complaint §§ 87-94, App. And I find it contrary to normal usage to think that the characteristic of "being" eligible consists of "having prevailed in a suit for benefits." ", When Firestone did not comply with their request for information, respondents sought damages under 29 U.S.C. It reasoned that, in such situations, deference is unwarranted, given the lack of assurance of impartiality on, the part of the employer. 1002(7) ("participant"), 1002(8) ("beneficiary"), 1002(21)(A) ("fiduciary"), 1103(a) ("trustee"), 1104 ("fiduciary duties"). Massachusetts Mutual Life Ins. [489 Multi-national group of companies, active in tires, textiles, polymers, construction materials and industrial products. In relevant part, that plan provides as follows: Respondents then filed a class action on behalf of "former, salaried, non-union employees who worked in the five plants that comprised the Plastics Division of Firestone." See, e.g., 29 U.S.C. In relevant part, that plan provides as follows: "If your service is discontinued prior to the time you are eligible for pension benefits, you will be given termination pay if released because of a reduction in workforce, or if you become physically or mentally unable to perform your job. Co. v. Dedeaux, Footnote * ERISA defines a fiduciary as one who, "exercises any discretionary authority or discretionary control respecting management of [a] plan or exercises any authority or control respecting management or disposition of its assets.". 186(c), a provision of the Labor Management Relations Act, 1947 (LMRA). In addition, Firestone denied the requests for information concerning benefits under the three plans. Consistent with established principles of trust law, we hold that a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan. In light of Congress' general intent to incorporate much of LMRA fiduciary law into ERISA, see NLRB v. Amax Coal Co., 453 U. S. 322, 453 U. S. 32 (1981), and because ERISA, like the LMRA, imposes a duty of loyalty on fiduciaries and plan administrators, Firestone argues that the LMRA arbitrary and capricious standard should apply to ERISA actions. All rights reserved. This case presents two questions concerning the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 104-106. (1981), and because ERISA, like the LMRA, imposes a duty of loyalty on fiduciaries and plan administrators, Firestone argues that the LMRA arbitrary and capricious standard should apply to ERISA actions. 829, as amended, 29 U.S.C. costs of producing the information under § 1024(b)(4) and Department of Labor regulations. U.S. 391, 399 (1985). Firestone and its amici also assert that a de novo standard would contravene the spirit of ERISA because it would impose much higher administrative and litigation costs, and therefore discourage employers from creating benefit plans. Id., at 105; see also id., at 108. The trust law de novo standard of review is consistent with the judicial interpretation of employee benefit plans prior to the enactment of ERISA. In 1965 Firestone acquired the Seiberling Rubber Company . Briefs of amici curiae urging affirmance were filed for the Plaintiff Employment Lawyers Association by Paul H. Tobias; and for the Pension Rights Center by Karen W. Ferguson and Terisa E. Chaw. Instead, in a Supreme Court decision from 1989, Firestone Tire & Rubber Co. v. Bruch, 489 U.S.110, 115, the Court reasoned that the employer and ERISA administrator could agree on a more deferential standard of review. The LMRA does not provide for judicial review of the decisions of LMRA trustees. 87-1054. U.S. 359, 361 U.S. 101, 115] O'CONNOR, J., delivered the opinion for a unanimous Court with respect to Parts I and II, and the opinion of the Court with respect to Part III, in which REHNQUIST, C. J., and BRENNAN, WHITE, MARSHALL, BLACKMUN, STEVENS, and KENNEDY, JJ., joined. Petitioner Firestone Tire & Rubber Co. (Firestone) maintained, and was the plan administrator and fiduciary of, a termination pay plan and two other unfunded employee benefit plans governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. The fact that, after ERISA's passage, Congress failed to act upon a bill to amend § 1132 to provide de novo review of benefits denial decisions does not indicate congressional approval of the arbitrary and capricious standard that had by then been adopted by most courts, since the bill's demise may have resulted from events having nothing to do with Congress' views on the relative merits of the two. We now affirm in part, reverse in part, and remand the case for further proceedings. See also Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., supra, at 568 ("The trustees' determination that the trust documents authorize their access to records here in dispute has significant weight, for the trust agreement explicitly provides that `any construction [of the agreement's provisions] adopted by the Trustees in good faith shall be binding upon the Union, Employees, and Employers'"). Microsoft Edge. (b) Principles of the law of trusts -- which must guide the present determination under ERISA's language and legislative history and this Court's decisions interpreting the statute -- establish that a denial of benefits challenged under § 1132(a)(1)(B) must be reviewed under a de novo standard unless the benefit plan expressly gives the plan administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the plan's terms, in which cases a deferential standard of review is appropriate. § 1001 (setting forth congressional findings and declarations of policy regarding ERISA). 828 F.2d 134, affirmed in part, reversed in part, and remanded.   . Ante at 489 U. S. 117. . To say that a "participant" is any person who claims to be one begs the question of who is a "participant" and renders the definition set forth in 1002(7) superfluous. Respondents then brought suit for severance benefits under 1132(a)(1)(B) and for damages under 1132(a)(1)(A) and (c)(1)(B) based on Firestone's breach of its statutory disclosure obligation. In relevant part, 29 U.S.C. Pilot Life Ins. 473 Firestone was the sole source of funding for the plans and had not established separate trust funds out of which to pay the benefits from the plans. Internet Explorer 11 is no longer supported. benefits violated [ 186(c)])." § 186(c) authorizes unions and employers to set up pension plans jointly and provides that contributions to such plans be made "for the sole and exclusive benefit of the employees . 87-1054. The administrator may make a reasonable charge to cover the cost of furnishing such complete copies. of benefits violated [§ 186(c)])." See §§ 1024(b)(4), 1025(a). Pilot Life Ins. Firestone denied respondents severance benefits on the ground that the sale of the Plastics Division to Occidental did not constitute a "reduction in workforce" within the meaning of the termination pay plan. 157, 29 U.S.C. Given this language and history, we have held that courts are to develop a "federal common law of rights and obligations under ERISA-regulated plans." § 1024(b)(4) without paying the $100-a-day damages assessable for breach of that obligation, 29 U.S.C. ERISA abounds with the language and terminology of trust law. At a time when most federal courts had adopted the arbitrary and capricious standard of review, a bill was introduced in Congress to amend § 1132 by providing de novo review of decisions denying benefits. . We do not think Congress' purpose in enacting the ERISA disclosure provisions -- ensuring that "the individual participant knows exactly where he stands with respect to the plan," H.R.Rep. Bowsher v. Merck & Co., ERISA provides "a panoply of remedial devices" for participants and beneficiaries of benefit plans. A comparison of the LMRA and ERISA, however, shows that the wholesale importation of the arbitrary and capricious standard into ERISA is unwarranted. § 1024(b)(4), one of. 489 U. S. 108-115. I agree with its disposition, but not all of its reasoning, regarding Part III. National Retirement Fund, supra, at 476. 29942 (1974) (remarks of Sen. Javits)). We granted certiorari, 485 U.S. 986 (1988), to resolve the conflicts among the Courts of Appeals as to the appropriate standard of review in actions under § 1132(a)(1)(B) and the interpretation of the term "participant" in § 1002(7). [2] "The plan is subject to the procedural protections …   reading of ERISA would require us to impose a standard of review that would afford less protection to employees and their beneficiaries than they enjoyed before ERISA was enacted. . Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., The U.S. Supreme Court, in the landmark case of Firestone Tire Rubber v. Bruch held that in an ERISA benefit case, de novo review is to be presumed, stating clearly that a “denial of benefits... is to be reviewed under a de novo standard...” This is the so-called “Firestone default de novo” rule. See also Comment, The Arbitrary and Capricious Standard Under ERISA: Its Origins and Application, 23 Duquesne L.Rev. Most of the approximately 500 salaried employees at the five plants were rehired by Occidental and continued in their same positions without interruption and at the same rates of pay. who is or may become eligible to receive a benefit of any type from an employee benefit plan." Since the Supreme Court’s decision in Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989), federal courts have reviewed an ERISA health plan’s denial of benefits for arbitrariness and capriciousness, so long as the plan explicitly grants discretionary authority to an administrator or other fiduciary to render benefit decisions. [ 489 U.S. 101, 113 ( 1989 ) Firestone Tire and Rubber Co. v. Bruch Syllabus Firestone Tire Rubber! States, Southeast and Southwest Areas Pension Fund v. central Transport, Inc., 472 U.S. 559, 105... Of Life Insurance et al be thwarted by a participant or beneficiary [ of Labor regulations now affirm part..., concurring in the judgment is no longer supported upon so heavily by Firestone do think. Nachman Corp. v. Pension benefit Guaranty Corp. Internet Explorer 11 is no longer supported District Court Firestone! Plan may speak clearly, but they may also leave gaps, a provision of the also! Concerning benefits under all three of the Bridgestone Corp. Firestone Tire & Rubber Co. v. Decided. 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