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Willeford & Toledano - ERISA

Call an experienced disability benefits lawyer at 504-322-1488 to schedule your consultation.

ERISA lawsuits: The standards of review explained

On Behalf of | Jun 16, 2022 | Firm News

When your ERISA claim is denied, and you have exhausted the internal administrative processes under your plan, you can turn to the court for relief.

Usually, before a court can review the decision you seek to reverse, it must first establish the standard of review that will apply to your case. Two standards of review could apply:

  • De novo standard
  • Abuse of discretion standard

Either standard may apply but that will likely impact the outcome of your appeal.

What are the differences?

De novo is the default standard of review in ERISA lawsuits. Under this system of review, the court will listen to your case anew, without considering your insurer’s prior decision. Since the court will conduct an impartial and fresh evaluation of your claim, you stand a better chance of success.

On the other hand, an abuse of discretion review is more stringent. Here, a court will review the plan administrator’s decision and only reverse it if it is deemed unreasonable under the terms of the plan and evidence availed. 

In most cases, an abuse of discretion review leans towards the insurer rather than the appellant.

Which standard of review will the court apply?

When determining the applicable standard of review, the terms of the plan will usually guide the court. If the language in your ERISA plan does not grant discretionary authority to the plan administrator, then a de novo standard is likely to apply.

The court could also consider whether the entity that issued the final decision has discretionary authority to make the decision. In some cases, the plan administrator is different from the final decision-maker. 

Usually, the applicable standard of review depends on the unique facts of every appeal – whether it is an issue of law, facts or both.

Be prepared for either type of review

The legal intricacies involved mean that things can go either way. Therefore, the best approach is to prepare for whichever review comes your way. Learning more about the law and what to expect during the appeal process will help your ERISA claim avoid problems.