The opinion of the court was delivered by: Leon Jordan United States District Judge
This civil action is brought pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., and is before the court for consideration of the motion for judgment on the record filed by defendant Hartford Life Group Insurance Company ("Hartford") [doc. 28] and the motion for judgment on the administrative record filed by plaintiff Carolyn Proffitt ("Proffitt") [doc. 31].*fn1
Hartford has asserted a counter-claim for the recoupment of the overpayment of benefits based on Proffitt's retroactive award of social security disability benefits [doc. 36]. Proffitt has filed an answer to the counter-claim [doc. 37].
Before addressing the standard of review in this case, the court needs to consider Proffitt's contention that Hartford may have relied on the wrong version of the Policy. Proffitt has filed as part of the record the 1997 version of the Policy, which she contends applies unless Hartford can show the terms of the Policy were changed, she was given notice of those changes, and she consented to those changes.
The 1997 Policy submitted by Proffitt and the group policy in the administrative record bear the No. SR 68081792. The following language appears on a "Group Long Term Disability Certificate" preceding the Policy booklet in effect at the time of Proffitt's loss:
Continental Casualty Company Having issued Policy No. SR-68081792 . . .
CERTIFIES that You are insured provided that You qualify under the ELIGIBILITY provision, become insured and remain insured in accordance with the terms of the policy. Your insurance is subject to all the definitions, limitations and conditions of the policy. It takes effect on the effective date stated in the EFFECTIVE DATE provision.
This certificate describes Your eligibility for benefits and the terms and provisions of the policy. It replaces and cancels any other certificate previously issued to You under the policy.
A.R. 0037*fn2 (emphasis added). The administrative record reflects that the 1997 Policy booklet had been superseded by the booklet Hartford relied on to evaluate Proffitt's loss. The record also indicates that identity of the correct Policy was confirmed by Hartford. In a letter to plaintiff's counsel from Cheryl Sauerhoff with Hartford, the following was stated:
We have verified and obtained another copy of the policy, which is also contained in Ms. Proffitt's claim file. Enclosed is another copy of the policy that was in effect at the date of Ms. Proffitt's disability. This policy has been confirmed by The MGIS Companies (Medical Group Insurance Services, Inc.), who is the plan administrator for the Stedman policies. Further identification of this group is provided on the fax coversheet from Michelle Friedman, Product Manager/Stedman for MGIS. CNA Group Benefits was acquired by The Hartford effective January 1, 2004.
As a member of the group Policy, Proffitt was subject to the revisions and changes made to the Policy. The language on the Policy certificate gave notice of the changes in the attached booklet and also that the booklet replaced and cancelled any previous certificate under the Policy.
In addition, Proffitt has not directed the court to any documentation in the record that gave her as an individual authority to approve changes to the group Policy. The Policy in effect at the date of Proffitt's loss states:
Coverage under the policy can be amended by mutual consent between the Participating Employer and Us. No change in the policy is valid unless approved in writing by one of Our officers.
No agent has the right to change the policy or to waive any of its provisions.
A.R. 0047. Thus, the changes made to the Policy from the 1997 booklet could be and were made without the approval of Proffitt. Proffitt's unsubstantiated arguments to the contrary do not invalidate the Policy in the administrative record. Therefore, the court will look to the Policy in the record and determine what standard of review applies to Hartford's decision.
In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), the United States Supreme Court held that "a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Id. at 115. If the plan herein grants the administrator or fiduciary the appropriate discretionary authority, this court must review the decision at issue under the "highly deferential arbitrary and capricious standard of review." Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376, 380 (6th Cir. 1996). This standard is the "least demanding form of judicial review of administrative action." Williams v. Int'l Paper Co., 227 F.3d 706, 712 (6th Cir. 2000). The Sixth Circuit requires that a plan's grant of discretionary authority to the administrator must be "express." Perry v. Simplicity Eng'g, 900 F.2d 963, 965 (6th Cir. 1990); see also Wulf v. Quantum Chem. Corp., 26 F.3d 1368, 1373 (6th Cir. 1994) (requiring "a clear grant of discretion").
Decisions concerning eligibility for ERISA benefits are not arbitrary and capricious if they are "rational in light of the plan's provisions." Daniel v. Eaton Corp., 839 F.2d 263, 267 (6th Cir.1988). "Before concluding that a decision was arbitrary and capricious, a court must be confident that the decisionmaker overlooked something important or seriously erred in appreciating the significance of evidence." Marchetti v. Sun Life Assurance Co. of Can., 30 F.Supp.2d 1001, 1008 (M.D. Tenn. 1998) (citing Wahlin v. Sears, Roebuck & Co., 78 F.3d 1232, 1235 (7th Cir. 1996)). "[W]hen it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary and capricious." Williams, 227 F.3d at 712.
Nevertheless, merely because our review must be deferential does not mean our review must also be inconsequential. While a benefits plan may vest discretion in the plan administrator, the federal courts do not sit in review of the administrator's decisions only for the purpose of rubber stamping those decisions.
Moon v. Unum Provident Corp., 405 F.3d 373, 379 (6th Cir. 2005).
The subject plan contains an express grant of discretionary authority to the plan administrator. The Policy states, "When making a benefit determination under the Policy, We [CNA, now Hartford] have discretionary authority to determine Your eligibility for benefits and to interpret the terms and provisions of the Policy." A.R. 0037. This statement is a sufficient grant of discretionary authority. Therefore, the court will apply the arbitrary and capricious standard to Hartford's decision in this case.
Plaintiff also contends that Hartford is operating under a conflict of interest because it operates as the plan administrator and funds the plan as well. Thus, Hartford both decides whether an employee is eligible to receive benefits and pays those benefits. "This dual function creates an apparent conflict of interest." Glenn v. Metro. Life Ins. Co., 461 F.3d 660, 666 (6th Cir. 2006). The court agrees that Hartford is performing a dual function in this case and that there is a resulting inherent conflict of interest. However, the presence of a conflict of interest does not alter the standard of review. Marchetti, 30 F.Supp.2d at 1007. Rather, the administrator's conflict of interest is a factor considered by the court in its review of the administrative decision. See id.; Miller v. Metro. Life Ins. Co., 925 F.2d 979, 984 (6th Cir. 1991); Best v. Nissan Motor Corp., 973 F.Supp. 770, 776 (M.D. Tenn. 1997). "In considering such a conflict, there must be significant evidence in the record that the insurer was motivated by self-interest, and the plaintiff bears the burden to show that a significant conflict was present." Smith v. Cont'l Cas. Co., 450 F.3d 253, 260 (6th Cir. 2006). The court will consider the inherent conflict of interest as a factor in determining whether Hartford's decision was arbitrary and capricious.
II. Administrative Record
The Policy defines "Disability" as follows:
Disability or Disabled means that You satisfy the Occupation Qualifier or the Earnings Qualifier as defined below. Occupation Qualifier "Disability" means that during the Elimination Period and the following 24 months, Injury or Sickness causes physical or mental impairment to such a degree of severity that You are:
1. continuously unable to perform the Material and Substantial Duties of Your Regular Occupation; and
2. not Gainfully Employed.
After the LTD Monthly Benefit has been payable for 24 months, "Disability"means that, Injury or Sickness causes physical or mental impairment to such a degree of severity that You are:
1. continuously unable to perform the Material and Substantial Duties of any occupation for which You are or become qualified by education, training or experience; and