Employment
ERISA; conflict of interest

A plan administrator's dual role of both evaluating and paying benefits claims creates a conflict of interest

That conclusion is clear where it is the employer itself that both funds the plan and evaluates the claim, but a conflict also exists where, as here, the plan administrator is an insurance company. For one thing, the employer's own conflict may extend to its selection of an insurance company to administer its plan. For another, ERISA imposes higher-than-marketplace quality standards on insurers, requiring a plan administrator to "discharge [its] duties" in respect to discretionary claims processing "solely in the interests of the [plan's] participants and beneficiaries," 29 U. S. C. §1104(a)(1); underscoring the particular importance of accurate claims processing by insisting that administrators "provide a 'full and fair review' of claim denials," Firestone, supra, at 113; and supplementing marketplace and regulatory controls with judicial review of individual claim denials, see §1132(a)(1)(B). Finally, a legal rule that treats insurers and employers alike in respect to the existence of a conflict can nonetheless take account of different circumstances by treating the circumstances as diminishing the conflict's significance or severity in individual cases.

461 F. 3d 660, affirmed.

Local effect: The decision overrules long-standing Seventh Circuit precedent, Chalmers v. Quaker Oats Co., 61 F.3d 1340, 1344 (7th Cir. 1995).

06-923 Metropolitan Life Ins. Co. v. Glenn

Breyer, J.; Roberts, C.J., concurring in part; Kennedy, J., concurring in part; Scalia, J., dissenting.

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