Termination of disability benefits under ERISA; The correct legal standard for plaintiff’s contract claim; 29 USC § 1132(a)(1)(B); Effect of the decision being made by a subsidiary; Griffin v. Hartford Life & Accident Ins. Co. (4th Cir.); Zurndorfer v. Unum Life Ins. Co. of Am. (SD NY); Whether the decision was arbitrary & capricious; McClain v. Eaton Corp. Disability Plan; Jackson v. Blue Cross Blue Shield of MI Long Term Disability Program (Unpub. 6th Cir.); Substantial evidence; General Med., P.C. v. Azar; Equitable claims for breach of fiduciary duty & disgorgement; § 1132(a)(3); Rochow v. Life Ins. Co. of N. Am.; CIGNA Corp. v. Amara

The court affirmed the district court’s application of the arbitrary and capricious standard to plaintiff-Davis’s contract claim, holding that defendant-Hartford Life, and not one of its subsidiaries, made the discretionary decision that he was no longer disabled. Further, the termination decision was not arbitrary and capricious. The court also affirmed the grant of Hartford Life’s motion for judgment on the pleadings as to his breach of fiduciary duty and disgorgement claims. Hartford Life provided disability benefits to Davis under an ERISA-regulated plan. After it determined that he was no longer disabled and terminated the benefits, he sued for contract breach, breach of fiduciary duty, and disgorgement. On appeal, Davis first argued that the district court applied the wrong standard of review to his contract claim. The district court applied the arbitrary and capricious standard instead of the de novo standard because if found that Hartford Life exercised its discretionary authority in terminating Davis’s benefits. He argued that a separate subsidiary of Hartford Life actually made the determination and thus, the de novo standard should have been applied. But the court noted that the subsidiary was only involved in the decision for administrative purposes, and that Hartford Life actually exercised the discretion as to benefit termination. It also noted that other courts had “rejected this exact argument with respect to benefits determinations involving Hartford Life” as well as other insurers. Further, the court held that it was “reasonable for Hartford Life to determine that Davis no longer qualified as disabled under the policy[,]” and that “substantial evidence” supported this decision. Lastly, as to his equitable claims for breach of fiduciary duty and disgorgement, the court held that Davis failed to show that they were based on “an injury distinct from his contract claim” or that § 1132(a)(1)(B)’s remedies were inadequate.