Fleisher v. Standard Insurance
679 F.3d 116
| 3rd Cir. | 2012Background
- Fleisher, a dentist, holds a North American disability policy ($1,500/mo).
- He also holds a Standard ERISA LTD policy through his employer, Endodontics, Ltd., P.C. ($10,000/mo max pre-Deductible Income).
- Deductible Income includes benefits from other group coverage; North American policy may be such coverage.
- District Court applied abuse-of-discretion review and upheld Standard’s deduction of $1,500 from $10,000.
- Fleisher argued North American is an individual policy; court considered whether it is group (specifically franchise) insurance.
- Dissent argues equitable considerations and conflict-of-interest should influence review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether North American policy is group insurance coverage | Fleisher—policy is individual, not group. | Standard—policy is group (franchise) insurance. | Ambiguous term; administrator may interpret; Standard’s view sustained under abuse of discretion. |
| What standard of review applies to Standard’s deduction decision | De novo review should apply because North American is outside plan terms. | Abuse of discretion applies due to plan’s discretionary language. | Arbitrary and capricious (abuse of discretion) standard applies. |
| Whether the North American policy is reasonably characterized as franchise insurance | Policy lacks franchise features; argues against group/franchise labeling. | Policy exhibits several franchise-insurance features; supports group-insurance characterization. | Reasonable to characterize North American as franchise (group) insurance; deduction upheld. |
| Whether the North American policy’s own characterization affects review | North American treats policy as individual; should control. | Review focuses on policy language and substantial evidence; administrator’s interpretation controlled by deference. | Not controlling; relevant only as part of substantial-evidence review. |
| Whether conflict of interest should change the standard of review or outcome | Conflict warrants heightened scrutiny to protect Fleisher. | Conflict is a factor but does not alter the deferential standard. | Conflict acknowledged but not determinative under abuse-of-discretion review. |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (U.S. 1989) (establishes de novo vs. deferential review based on discretionary authority)
- Mitchell v. Eastman Kodak Co., 113 F.3d 433 (3d Cir. 1997) (broad discretionary authority includes factual determinations about eligibility)
- McElroy v. SmithKline Beecham Health & Welfare Benefits Trust Plan, 340 F.3d 139 (3d Cir. 2003) (ambiguity triggers deferential interpretation by administrator)
- Glenn v. Metropolitan Life Insurance Co., 554 U.S. 105 (U.S. 2008) (conflict of interest to be weighed under deferential review)
- Est. of Schwing v. Lilly Health Plan, 562 F.3d 522 (3d Cir. 2009) (conflict of interest considered as one factor in abuse-of-discretion review)
- Doroshow v. Hartford Life & Accident Insurance Co., 574 F.3d 230 (3d Cir. 2009) (conflict-of-interest considerations in ERISA review)