Under ERISA, if a court determines that a plan contains a proper grant of discretion to the decision-maker, then it reviews the decision under an arbitrary and capricious standard of review. However, while the arbitrary and capricious standard is deferential, “it is not, however, without some teeth.” McDonald v. Western-Southern Life Ins. Co., 347 F.3d 161, 172 (6th Cir. 2003). “Deferential review is not no review,” and “deference need not be abject.” Id. The court is obligated to make a review of both the quality and quantity of the medical evidence and the opinions on both sides of the issues. Id. Courts should not be mere rubber stamps who uphold an administrator’s decision whenever the plan was able to find a single piece of evidence – no matter how obscure or untrustworthy – to support a denial of a claim for ERISA benefits. Id. Furthermore, the court should not uphold a denial when there is an absence of reasoning in the record to support it. Id.
“Indicia of arbitrary and capricious decisions include lack of substantial evidence, mistake of law, bad faith, and conflict of interest by the fiduciary. Substantiality of the evidence is based on the record as a whole. In determining whether the evidence in support of the administrator’s decision is substantial, [a court] must take into account whatever in the record fairly detracts from its weight. [A court should] give less deference if a plan administrator fails to gather or examine relevant evidence.” Caldwell v. Life Insurance Co. of North America, 287 F.3d 1276, 1282 (10th Cir. 2002) (internal citations omitted).
Moreover, any application of the arbitrary and capricious standard must take into account conflicts of interest held by the decision-maker. A Defendant decision-maker, in determining whether benefits are to be paid, would have a natural reluctance to grant requests for benefits because those benefits would be paid out of the Defendant’s own assets. See Firestone Tire & Rubber Co., 489 U.S. at 115;Metropolitan Life Ins. Co. v. Glenn, 128 S. Ct. 2343, 171 L.Ed.2d 299 (June 19, 2008). Where the same entity “both funds and administers the plan . . . it incurs a direct expense as a result of the allowance of benefits, and it benefits directly from the denial or discontinuation of benefits.” Killian v. Healthsource Provident Administrators, Inc., 152 F.3d 514, 521 (6th Cir. 1998). This is “an actual, readily apparent conflict here, not a mere potential for one.” Darland v. Fortis Benefits Ins. Co., 317 F.3d 516, 527 (6th Cir. 2003).” The conflict of interest applies not only to the plan administrator itself, but also to those consultants and experts hired by the plan administrator. Id. (noting a “clear incentive” to contract with a company whose medical experts were inclined to find in its favor that the claimant was not entitled to continued LTD benefits, and further that “these experts have a clear incentive to make a finding of ‘not disabled’ in order to save their employers money and to preserve their own consulting arrangements”).