More than a few times, I have explained the unfairness of discretionary clauses. On the other hand, the benefits of a de novo review are well entrenched in the 11th Circuit law. A recent case, Harris v. The Lincoln National Life Insurance Company, No. 21-13186 (11th Cir. July 29, 2022), affirms and explains this. That case initially emerged from the Northern District of Georgia and involved a long-term disability policy governed by ERISA. That policy did not give Lincoln discretion as to its claim decisions. Lincoln denied the claim, and Mr. Harris filed a lawsuit.
During litigation, Mr. Harris wanted to provide additional evidence not submitted to Lincoln during the claim process. The court refused consideration of that additional evidence. That evidence was an affidavit and updated medical records, which postdated the denial of benefits. The court then went on to rule in favor of Lincoln.
Mr. Harris appealed to the 11th Circuit. Judge Jordan, who wrote the opinion, surveyed the law, and noted that as to the evidence to be considered by the trial court, some circuits found that there was no difference between de novo review and arbitrary and capricious review – either way, the court's review was still limited to the claim record. The 5th and 6th Circuits both use that approach.
Judge Jordan's opinion then noted that the 4th, 7th, 8th, 9th, and 10th Circuits permitted the introduction of new evidence under certain circumstances. Each Circuit was slightly different as to the circumstances that permitted additional evidence. However, there was no across-the-board rule precluding additional evidence.
The 11th Circuit took a different approach many years ago in several cases finding that under de novo review, additional evidence could be submitted which was not provided to the claims administrator during the claim process. The 11th Circuit adopted that approach because of Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101 (1989). In that case, Firestone declined to impose the arbitrary and capricious standard of review as the default standard. It did not because this would require imposing a standard that afforded less protection to employees and their beneficiaries than they enjoyed before ERISA was enacted. The point of the ERISA statute was to increase, not reduce, protection. Benefit claims previously proceeded as an ordinary breach of contract litigation, which is precisely how claims should proceed under ERISA when subject to de novo review. Such litigation had permitted discovery and development of the record during litigation inclusive of evidence not previously submitted to the insurance company.
That same year, only seven months later, in Moon v. American Home Assur. Co., 888 F.2d 86 (11th Cir. 1989), the 11th Circuit followed that approach permitting consideration of evidence outside of the claim record if de novo review was applicable. After another five years, the 11th Circuit again followed that approach in Kirwan v. Marriott Corp., 10 F.3d 784 (11th Cir. 1994).
Fourteen years after Kirwan, several other cases precluded evidence outside of the claim record. See, Glazer v. Reliance, 524 F.3d 1241 (11th Cir. 2008) and then Blankenship v. Metropolitan Life Ins. Co., 644 F.3d 1350 (11th Cir. 2011). Had these cases altered the prior 11th Circuit decisions? While these cases did not bar added evidence in all circumstances, in those circumstances where new evidence was to be considered, the proper course of action would be to remand the matter to the claims administrator for a decision on that. Many insurance companies and their defense counsel contended that the subsequent cases had modified the law. Some courts, not wanting to remand the case, further delaying the matter, simply precluded evidence not in the claim record assembled by the insurance company.
Judge Jordan and this panel in Harris, however, noted that the Supreme Court had not abrogated either Moon nor Kirwan, and they remained binding precedent. Further, the subsequent panels of Glazer and Blankenship could not alter those prior decisions as it would require an en banc determination to reverse an earlier panel. Accordingly, the 11th Circuit found that the district court erred with its decision in an evidentiary ruling excluding new evidence. The law in the 11th Circuit is that de novo review permits additional evidence to be added to the claim record. This may permit discovery as well. This is a significant benefit of de novo review in the 11th Circuit. De novo review does matter.
In my view, this is the correct decision. De novo is Latin, meaning “from the new.” Thus, a court deciding a case under the de novo standard of review should be doing so without relying on any legal conclusion or assumption made by the insurance company or claims administrator. It should be handled like an ordinary breach of insurance contract litigation. Even if additional evidence is not added to the claim record, deciding the case using the preponderance standard is fairer than deciding whether a wrong decision was unreasonable.
So yes, de novo review does matter.