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Order Remanding ERISA Claim to Administrator Was Not Appealable, Because It Did Not Satisfy Collateral Order Test

Order Remanding ERISA Claim to Administrator Was Not Appealable, Because It Did Not Satisfy Collateral Order Test

ERISA and Life Insurance News
(May 11, 2012)

As an employee of Bristol-Meyers Squibb, Dickens participated in the company’s long-term disability plan, under which benefits were funded by a group insurance policy issued by Aetna.

Based on diagnoses of depression and anxiety, Dickens applied for LTD benefits under his employer’s plan, and he also applied for Social Security disability benefits, both of which were granted.

Four years later, Aetna terminated the payment of benefits under the ERISA plan, based on its conclusion that the medical evidence no longer showed that Dickens suffered from a debilitating illness. The Social Security Administration continued to pay benefits.

Dickens sued, and the federal district court concluded that Aetna had abused its discretion by neglecting to address relevant evidence relating to the award of SSDI benefits and by failing to address the Social Security award in "any meaningful fashion."

The court remanded the claim to Aetna for further consideration, stating that because the plan’s definition of disability was similar to that of the Social Security Administration, Aetna was obliged to accord substantial weight to the Social Security disability determination.

Because the court found that Aetna had accorded no weight to the SSDI decision, it deemed the decision to be "arbitrary and unreasonable." The district court did not enter a final judgment, however, and it "express[ed] no opinion as to whether [Dickens] is disabled under the LTD Plan’s definition."

Despite the absence of a final judgment, Aetna filed a notice of appeal. Dickens did not challenge the appellate court’s jurisdiction, and the issue was raised for the first time by the Fourth Circuit Court of Appeals sua sponte during oral argument.

Aetna contended that, although the district court’s order was an interlocutory one, it was among "that small class [of decisions] which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated." Cohen v. Beneficial Indus. Loan Corp. 337 U.S. 541, 546 (1949).

To qualify as an appealable collateral order, the district court decision must "[1] conclusively determine the disputed question, [2] resolve an important issue completely separate from the merits of the action, and [3] be effectively unreviewable on appeal from a final judgment." Will v. Hallock, 546 U.S. 345, 349 (2006).

The Fourth Circuit had not previously considered whether an order remanding a claim to an ERISA fiduciary is a collateral order. Other circuit courts of appeal have come to different conclusions, with the First, Sixth, Eighth, and Tenth Circuits holding that such orders are not appealable. The Seventh and Ninth Circuits, however, have recognized ERISA remand orders as constituting final appealable decisions.

The Fourth Circuit concluded that the order remanding Dickens’ claim satisfied two but not all of the three tests for a collateral order, and thus, it dismissed the appeal, because if an order "fails to satisfy any of [the three] requirements, it is not an immediately appealable collateral order," citing S.C. State Bd. of Dentistry v. FTC, 455 F.3d 436, 441 (4th Cir. 2006).

"[W]e are not convinced," the court said, "that the Order itself – or any subsequent award or denial of benefits by Aetna – would be effectively unreviewable, the third collateral order requirement." Aetna argued that the order requiring it give substantial weight to the Social Security decision effectively meant that it would have no choice but to award LTD benefits to Dickens. But the court noted that while Aetna was directed "to reweigh and reconsider the relevant evidence, Aetna was not, however, directed to render a finding of disability."

Even if LTD benefits were awarded to Dickens on remand, Aetna "will nonetheless be entitled to appeal from a final judgment," the court said, noting that other circuit courts have interpreted remand orders as having retained jurisdiction over the case. "This approach," the court said, "‘allow[s] either party to challenge the ensuing eligibility determination by motion before the same court,’" citing Bowers v. Sheet Metal Workers’ Nat’l Pension Fund, 365 F.3d 535, 537 (6th Cir. 2004).

Consequently, the Fourth Circuit concluded that "we are satisfied to construe the Order as retaining jurisdiction in the [district court] for appropriate further proceedings following disposition of the court’s remand to Aetna. We thus conclude that Aetna is unable to satisfy the third collateral order requirement."

Click here to view the full May 11, 2012 edition of the ERISA and Life Insurance News.

H. Sanders Carter
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F (404) 962-1220
Kenton J. Coppage
T (404) 962-1065
F (404) 962-1256
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