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  • Writer's pictureLedbetter Parisi LLC

The First Circuit Finds a Claims Administrator Did Not Have Discretionary Authority

The First Circuit Court of Appeals recently ruled that the language in a health plan certificate of coverage was too vague to give the claims administrator clear-cut discretion over benefit eligibility decisions. The Court determined that a grant of discretionary decision making authority must be in terms that unambiguously indicate that the claims administrator has the discretion to construe the terms of the plan and determine what benefits are due in a particular instance. The certificate at issue stated that “no benefits will be paid if BCBS determines they are not due.” The court believed that the “BCBS decides” language fell short of what was required for an unambiguous grant of discretionary authority. The case was ultimately remanded back to the district court in light of the First Circuit’s interpretation of ERISA.

Plans should heed the First Circuit’s ruling regarding granting discretionary authority to claims administrators and ensure that a plan contains extremely clear language if the plan intends to grant discretionary authority.

Stephanie C. v. Blue Cross Blue Shield of Massachusetts HMO Blue, Inc., 2016 U.S. App. LEXIS 2693 (1st Cir. 2016)

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