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Thaddeus (Ted) J. Lewkowicz has broad experience in all aspects of Bond Schoeneck & King's employee benefits practice. He has counseled employers on a wide spectrum of employee benefits and tax issues, including the preparation of employment agreements, deferred compensation agreements, separation agreements, severance plans, other welfare benefit plans, qualified retirement plans, remitted tuition plans, the taxation of employer-provided housing and other fringe benefits, and cafeteria plans. Mr. Lewkowicz has been a frequent lecturer on employee benefits matters.The Supreme Court issued a ruling in late spring that may make it easier for some employees who have had benefit claims rejected to regain them in court. Ramifications of the ruling in Metropolitan Life Insurance v. Glenn are not entirely clear, and the courts ultimately will have to clarify different aspects of the case. But in the meantime, companies should be taking steps to ensure they don't get ensnared in a long benefits dispute.
Ted Lewkowicz, a labor law attorney with the law firm of Bond, Schoeneck & King, says the central part of the decision that companies should guard against is the possibility of a conflict of interest when those who adjudicate benefit claims are the same as those who benefit. A "conflict of interest could arise when an employer with a self-funded benefit plan (e.g., a self-insured health plan) also acts as the claims administrator for the plan," he writes. "The Supreme Court held that such potential conflicts of interest could, in certain circumstances, result in less judicial deference to a claims administrator's interpretation of a benefit claim if that claim is ever litigated."
The most obvious step is to ensure that those who decide claims are completely separate "from those who are responsible for the finances needed to pay for the claims," he says. But that is not always possible, so Lewkowicz outlines other ways companies can guard against conflicts of interest. One suggestion is to set up a committee that reviews benefit claims and includes employees who don't handle the firm's financial affairs. Minutes of meetings should be kept so it is clear no financial considerations were made in the decision whether to award a claim. Lewkowicz also advises that insurance companies that handle claims for a company be asked about the steps it is taking to address the potential conflict of interest and that agreements with insurance companies "make it clear that claims for benefits are to be decided solely based on the terms of the applicable plan, and that in no event should the costs of those benefits be considered" in making decisions about claims.
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