AT&T maintained a self-funded benefits plan that provided short-term and long-term disability benefits. AT&T was the Plan Administrator but delegated decision-making authority to a third-party claims and appeals administrator, Sedgwick Claims Management Service.
The plan provided that the "Claims Administrator has been delegated authority by the Plan Administrator to determine whether a particular Eligible Employee ... is entitled to benefits ...." The plan similarly provided that the "Appeals Administrator has been delegated authority by the Plan Administrator to determine whether a claim was properly decided by the Claims Administrator."
Finally, the plan provided that the "Plan Administrator (or, in matters delegated to third parties, the third party that has been so delegated) will have sole discretion to interpret the Program, including, but not limited to, interpretation of the terms of the Program, determinations of coverage and eligibility for benefits, and determination of all relevant factual matters."
In Brooks's action to recover benefits, the parties disagreed as to the applicable standard of review. Brooks asserted that the grant of discretion was inapplicable "because the entity which made both the claim and appeals decisions, Sedgwick, is not the properly designated Appeals Administrator." That argument, in turn, was based on language in the summary plan description which advised claimants to send claims and appeals to the "AT&T Integrated Disability Service Center." Additionally, Brooks appeared to rely on "the absence of any express identification of Sedgwick in the Plan documents."
The court disagreed with Brooks's argument. "First," the court wrote, "while the Plan documents may not refer expressly to Sedgwick, they clearly delegate the Plan Administrator's discretion to a third-party Claims and Appeals Administrator." Moreover, it was also "abundantly clear from the record that Sedgwick, in fact, served as the designated Claims and Appeals Administrator, acting through the AT&T Integrated Disability Service Center."
Brooks had presented no contrary evidence nor cited any authority to support the proposition that the company was "required to name its third-party Claims and Appeals Administrator within the SPD or other specific Plan document in order to delegate discretion to this third party." As a result, the court concluded that the claims determination was subject to an abuse of discretion standard of review.
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