Raybourne v. CIGNA Life Ins.Co. of New York, 2009 U.S.App.LEXIS 17480 (7th Cir. August 6, 2009)(Issue: Standard of Review, Scope of Review).  The plaintiff, Edward Raybourne, suffered from a variety of impairments in his right foot that caused pain so severe that he had to cease working in 2003.  Although CIGNA initially approved Raybourne’s claim for benefits, the insurer discontinued benefit payments after two years.  The two key issues before the court were whether the district court properly applied a deferential standard of review; and if so, whether the lower court properly accounted for CIGNA’s structural conflict of interest.

With respect to the first issue, CIGNA asserted it was entitled to discretion based on a document entitled “Employee Welfare Benefit Plan Appointment of Claim Fiduciary” which contained language stating the plan sponsor delegated to CIGNA the discretionary authority to determine claim eligibility.  The summary plan description also advised that CIGNA had discretionary authority even though the policy contained no such language.  The court ruled, however, that the claim fiduciary document constituted a plan document that was sufficient to trigger the abuse of discretion standard. 

Turning then, to the scope of review, the court explained that under the arbitrary and capricious standard, which it equated to abuse of discretion, it would “overturn an administrator's denial of benefits only if it lacks any rational support in the record.” *12.  However, the court acknowledged Raybourne’s strongest argument was that the district court failed to appropriately take Metropolitan Life Insurance Company v. Glenn, 128 S.Ct. 2343 (2008) into consideration in view of “Cigna's inherent conflict of interest (as a plan administrator that both adjudicates claims and pays awarded benefits).” Id. Finding the district court furnished an inadequate explanation of how Glenn was considered, the court of appeals stated:

we cannot determine whether it engaged in the balancing analysis that Glenn requires with respect to a plan administrator's conflict of interest. For instance, the district court did not mention Cigna's structural conflict in evaluating and paying for claims, or explain how the conflict weighed in the abuse-of-discretion balance. Moreover, the court had little to say beyond acknowledging that it was "disturbed" by the discrepancy it saw between Cigna's hiring of a consultant group to advocate on Raybourne's behalf before the SSA, and Cigna's subsequent denial of his claim for benefits despite the SSA's finding of disability…But after Glenn, Cigna's advocacy of a disability finding before the SSA should have been treated as a "serious concern" for the court to consider in weighing whether Cigna's structural conflict rendered its denial of benefits arbitrary. See DeLisle v. Sun Life Assurance Co. Of Canada, 558 F.3d 440, 446 (6th Cir. 2009). *13-*14.

Accordingly, the court remanded to the district court to perform “the balancing analysis that Glenn requires.”  *15.  Although the court of appeals left the determination to the district court, the Seventh Circuit instructed that “ultimately Cigna's conflict will tip the balance only if the district court concludes that this is a borderline case,” and hinted that “after weighing Cigna's conflict together with factors such as its pursuit of the social security award and its willingness to discount Raybourne's subjective pain complaints, the court might view Raybourne's case as borderline.” Id.

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