The U.S. Supreme Court recently issued an important decision
that renewed its endorsement of the deferential treatment of plan
fiduciary and administrators' interpretations of ERISA governed
pension plans. Conkright v Frommert, 2010 U.S. LEXIS 3479
(April 21, 2010). After the 2008 decision in Metropolitan Life
v. Glenn, concerning the effect of a financial conflict of
interest on the judicial standard of review to be applied to a plan
fiduciary's decisions, there has been uncertainty as to the
level of discretion that a fiduciary was entitled to exercise, even
where the plan documents expressly allow such discretionary
authority. However, the Court in Conkright reaffirmed the
core principles of ERISA – efficiency, predictability and
uniformity – and found that deference to a plan
fiduciary's decision is vital to the implementation of those
The dispute in Conkright concerned the method of
accounting for the distribution of past pension benefits in the
calculation of current benefits. The issue before the Court was
whether the lower court owed deference to the plan
administrator's interpretation of the plan terms on remand. The
Court traced its consideration of the deference issue beginning
with its seminal 1989 decision, Firestone Tire & Rubber Co.
v. Bruch, and focused on principles of trust law, the terms of
the plan at issue, and the governing principles of ERISA. Because
the Court held in Glenn that a financial conflict of
interest does not necessarily eliminate deference to the plan
administrator's decision, the Court reasoned here that "a
single honest mistake" in plan interpretation does not warrant
stripping an administrator of its discretion for subsequent
The Court explained that, by enacting ERISA, Congress intended
to create a system that would encourage employers to provide plans
without being subject to excessive administrative or legal costs or
other burdens in administering a national plan. Deference serves
the principles of uniformity, efficiency and predictability by
avoiding differing interpretations of plans across jurisdictional
lines, by allowing plan fiduciaries to develop a process for
resolving claims before litigation, and by ensuring that plans will
be interpreted by experienced administrators rather than
It remains to be seen whether such a hearty endorsement of
deference would also apply in a case concerning a factual
determination of a benefit claim decision, as opposed to
interpretation of plan terms. Further, the Court's focus on a
"single, honest mistake" here raises the question of
whether the outcome might be different in another case involving
compelling evidence of bad faith. For now, plan administrators and
fiduciaries, and employer sponsors can take comfort in the High
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