Fourth Circuit Endorses Rule 52 for Resolving ERISA Benefit Claim Cases with Factual Disputes

This article originally appeared in the March 2023 edition of The Brief Case, DRI's monthly newsletter.

Amid a circuit split, the U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit) has firmly taken a side as to its treatment of benefit claim denials brought under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132(a)(1)(B). In Tekmen v. Reliance Standard Life Insurance Company, 55 F.4th 951 (4th Cir. 2022), the Fourth Circuit endorsed seeking judgment, not via summary judgment or a quasi-summary judgment procedure, but through Federal Rule of Civil Procedure 52 if the case involves de novo review of a benefit claim with factual disputes. Rule 52 allows a court to conduct a “trial on the papers” and thus issue findings of fact and conclusions of law.

In reaching its conclusion, the Fourth Circuit acknowledged that different jurisdictions employ various methods for adjudicating ERISA denial-of-benefits cases: some utilize a version of Rule 56 summary judgment standards, some conduct bench trials, and some create their own methodology. In Tekmen, Reliance Standard asked the Fourth Circuit to adopt a quasi-summary-judgment procedure, where summary judgment was simply a vehicle for deciding the benefit claim on the administrative record, and the non-moving party was not entitled to the usual inferences in its favor. Rejecting this argument, the Fourth Circuit explained that it had never endorsed such an ERISA-specific quasi-summary-judgment procedure and declined to do so now. The court recognized that the problem with employing summary judgment in ERISA denial-of-benefits cases is that the parties often disagree over key facts about the individual’s impairment, thus resolution of competing factual contentions is required before the court can render a decision. However, Rule 56 summary judgment standards do not permit a court to resolve disputed questions of fact.

This was precisely the issue in Tekmen. The panel noted that competing factual contentions in the administrative record about the plaintiff’s claimed impairment failed to make the case a candidate for summary judgment at the trial level, especially on de novo review. A district court’s de novo review of an ERISA benefit denial involves the careful examination of the administrative record, as well as credibility determinations and the weighing of evidence presented. In such instances, a district court acts as a finder of fact. The Fourth Circuit explained that such a review procedure is already outlined and endorsed by the Federal Rules of Civil Procedure as a “trial on the papers” under Rule 52. Moreover, the Fourth Circuit saw no reason to deviate from this well-established formula by designing a new procedural hack for ERISA that would yield the same result.

The Fourth Circuit further reasoned that there was nothing unique about de novo review of ERISA benefit cases — as in any other context, district courts should employ the proper procedure under the Federal Rules of Civil Procedure depending on the circumstances of the case. Summary judgment under Rule 56 may be appropriate if there are no genuine disputes of material fact. But where disputed facts do exist — as they did in Tekmen — a Rule 52 trial on the record would be the appropriate mechanism to allow the court to resolve disputes and make factual findings.

The panel also confirmed that findings of facts under Rule 52(a) are reviewed by the appellate court for clear error. Fed. R. Civ. P. 52(a)(6). Reliance Standard argued that the clear error standard was directly at odds with precedent holding that, absent language granting discretionary authority to a fiduciary, courts must review ERISA benefit decisions under a de novo standard of review. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). The panel explained there was no contradiction — former precedent established only that legal conclusions (i.e. the benefit decision) would be reviewed de novo; it did not suggest that factual findings should be reviewed de novo. Accordingly, maintaining the Rule 52 clear error standard of review for factual findings was not inherently incompatible with Firestone.

Tekmen is no outlier. Recently, in Avenoso v. Reliance Standard Life Ins. Co., 19 F.4th 1020 (8th Cir. 2021), the U.S. Court of Appeals for the Eighth Circuit (Eighth Circuit) reversed the district court’s grant of summary judgment, finding the trial court engaged in improper fact finding on disputed claims and credibility determinations on key issues, including the severity of the plaintiff’s medical condition. The Eighth Circuit warned against using motions for summary judgment as though a court was ruling in a bench trial.

Avenoso and Tekmen serve as an important reminder to avoid going through the proverbial motions in litigating ERISA benefit claims. Under Avenoso and Tekmen, plans that lack a delegation of discretionary authority should not automatically be resolved on summary judgment. As the Avenoso court reminded, on de novo review, evidence outside the administrative record may be submitted, and the court may need to weigh that evidence, or otherwise make credibility determinations based on conflicting medical opinions in the administrative record, in order to resolve the case. Even if deferential review applies, some cases involving factual disputes around medical and vocational evidence and opinions will also not be candidates for summary judgment.

The impact of both Avenoso and Tekmen is clear and we will likely see similar outcomes in the future. ERISA litigants must carefully consider the appropriate civil procedure mechanism for reaching resolution of their denial-of-benefits cases, as courts are less inclined to force a case under Rule 56 summary judgment procedures when the record is replete with disputed material facts.