The “arbitrary and capricious” standard is a standard of review that applies to most ERISA long term disability claims. The court will review the disability plan or policy to determine whether the plan administrator has been given discretionary authority to administer the plan and make disability determinations under the plan. In other words, a plan is not required to use certain magic words to create discretionary authority for a plan administrator in administering the plan. What is required is a clear grant of discretion to the administrator. Where, for example, the insurance plan provides and insurance company with “full discretion to determine eligibility for benefits and to construe and interpret all terms and provisions of the Policy,” the arbitrary and capricious standard applies.
This standard does not require the Court to merely rubber stamp the administrator’s decision. Instead, according to the arbitrary and capricious standard, a plan administrator’s decision will not be deemed arbitrary and capricious so long as it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome. It is worth noting that the arbitrary and capricious standard is the least demanding form of judicial review. A court must therefore review the quantity and quality of the medical evidence and the opinions on both sides of the issues. Make no mistake. This does not bode well for the claimant. It is much more in favor of the plan administrator or insurance company. The Court will uphold a benefit denial determination the decision is rational in light of the plan’s provisions.