States Supreme Court attempted to clarify the standard of review by announcing the appropriate standard of review to be used for appeals arising from ERISA administrative reviews. In Firestone Tire & Rubber Co. v. Brunch, the Court held that the U.S. District Court shall perform a de novo review of benefit determinations made by plan administrators and fiduciaries in cases where the plan has given no discretionary authority to the plan administrators or fiduciaries to interpret the plan terms or to determine eligibility for benefits. Brunch, 489 U.S. 101 (1989). The Court went further held that when administrators and fiduciaries are given the authority to interpret the plan’s terms, the District Court must review the administrative finding for an abuse of discretion. Id. at 115. If no abuse of discretion is discovered then the administrative ruling must be upheld. Id. at 115. The Court additionally held that if the administrator or fiduciary is given discretionary authority, and is operating under a conflict of interest, that conflict is to be weighed as a factor in determining whether there has been an abuse of discretion. Id at 115. This holding is a dramatic change from the weight previously given to all administrative rulings.a. Facts of Firestone Tire & Rubber Co. v. BrunchThe facts of Firestone Tire & Rubber Co. v. Brunch are as follows: In 1980, Firestone sold its Plastics Division to Occidental Petroleum. Nearly all-former Firestone employees were re-hired by Occidental to work in the Plastics Division. Unknown to Firestone, their employee termination pay plan was governed by ERISA, and Firestone had failed to comply with the appropriate steps for establishing a claims procedure. Several former Firestone employees now working for Occidental, sought severance pay from Firestone under the termination pay plan. The plaintiffs claimed that when Firestone sold it’s Plastics Division to Occidental, Firestone...
