Court Must Reach Independent Benefit Entitlement Decision, Without Deference To Plan Administrator, When Plan Does Not Confer Operational Discretion On Administrator
KROLNIK v. THE PRUDENTIAL INSURANCE COMPANY (June 29, 2009)
Although Paul Krolnik ceased working because of a hernia and back pain, he failed to return to work because, at least in part, of his depression. Prudential paid him long-term disability benefits for two years. It stopped the benefit stream after two years because the policy at issue caps the benefit at two years if the inability to work is caused, even in part, by a mental illness (including depression). Krolnik brought an ERISA suit against Prudential. The court below barred all discovery on medical issues, struck Krolnik's medical affidavits and granted summary judgment to Prudential.
In their opinion, Chief Judge Easterbrook and Judges Kanne and Williams affirmed in part and vacated and remanded in part. The parties agreed that the benefit plan at issue did not confirm operational discretion on its administrator. The Court stated that the court below therefore was required to make an independent decision on Krolnik’s benefit entitlement. Here, instead, the judge simply looked at the administrative record and disallowed any new evidence. The court erred in barring discovery, refusing to take new evidence, declining to resolve disputed facts and simply relying on the administrative record. As an aside, the Court criticized the use of the phrase "de novo review" in these circumstances since the court is not reviewing anything but reaching an independent decision. The Court affirmed the district court with respect to a subrogation issue and otherwise vacated and remanded.
Michael Rigney practices in the law offices of GVC Ltd. in Chicago. In this blog, he reports on select