Standard of Review of Plan Administrator's Decision on a Benefits Request - Generally

If a benefit plan gives discretion to the plan administrator regarding benefit determinations, a court typically will review that decision applying the stringent arbitrary and capricious standard.  Under this standard, the court reviews the plan administrator's decision and analyzes whether the plan administrator's interpretation of the plan was "reasonable" and made in "good faith."

In cases where the plan administrator operates under an inherent or proven conflict of interest or there is a serious procedural irregularity in the administrative process, a court will adjust the standard of review applying a sliding scale approach.  Under this approach, the court continues to apply the arbitrary and capricious standard but decreases the level of deference given in proportion to the seriousness of the plan administrator's conflict.

If the individual seeking benefits can establish a serious conflict of interest or the existence of a serious procedural irregularity, then the burden shifts to the plan administrator to prove the reasonableness of its decision under the arbitrary and capricious standard.  The plan administrator must show that that its interpretation of the terms of the plan is reasonable and that its application of those terms to the individual seeking benefits is supported by substantial evidence.