By J.J. Conway
Nearly 25 years ago, the Sixth Circuit issued Wilkins v. Baptist Healthcare Sys., 150 F.3d 609 (6th Cir. 1998). The decision included an innocuous concurring opinion joined by a fellow panelist that led to the complete overhaul of the way ERISA benefit claims are litigated. The Wilkins "framework," as it is called, requires participants in employee benefit plans to litigate their most commonly brought claims using a process that bears little resemblance to anything under the Federal Rules of Civil Procedure.
Wilkins dispensed with many of the requirements of Fed. R. Civ. P. 26 and, to a degree, Fed. R. Civ. P. 16 and, instead, proposed "suggested guidelines" for resolving ERISA benefit claims, brought under ERISA Section 502(a)(1)(B), 29 U.S.C. §1132(a)(1)(B). The guidelines recommended that cases be resolved by filing cross-motions for "judgment on the administrative record."
Although labeled a "concurrence," the opinion written by Judge Ronald Lee Gilman is recognized as the opinion of the court because another judge signed on to it. Eventually and in response, district courts began to craft their own unique pretrial orders with special procedures for the orderly disposition of ERISA disputes seeking the payment or recovery of benefits.
Within the Eastern District of Michigan, district courts began using a so-called "Wilkins" ERISA Scheduling Order. Although the order varies slightly among judges, the Wilkins order provides for a multistage process with deadlines for exchanging the administrative record of a claim and filing position statements on the standard of review. The order also requires a plaintiff to formally request limited discovery through the use of a "Procedural Challenge Statement." It appears the first use of this type of Wilkins case management order was by the Hon. Robert H. Cleland. Other courts soon followed, and some version of this scheduling order appears as part of the standard practice guidelines for at least six judges in addition to Judge Cleland, according to their websites.
The Wilkins Order offers some efficiencies to be sure. It promises a speedier resolution than other civil actions since the litigation calendar is condensed. It requires almost no actual in-person involvement by the parties, or even their lawyers. With everything before a reviewing court presented on cross-motions along with an administrative record, the cases themselves are typically decided on the briefs.
But two decades of experience has taught that there are some heightened risks to the due process rights of ERISA plan members by what has become an uncritical and reflexive use of these orders. This is especially true when a plan member's retirement benefits are on the line.
Under ERISA, benefits are divided into two groups: welfare benefits and retirement benefits. Welfare benefits are things like healthcare, disability, and severance benefits. Retirement benefits include 401(k) plans, defined benefit plans, and some profit-sharing plans. Each benefit category has different rules, though retirement benefits are much more heavily regulated given the overlap with labor, securities, and tax laws. And this is where the Wilkins Order can fall short, sometimes well short, of the ideal of a full and fair resolution of a benefit dispute.
Under a standard Wilkins Order, a plan member must file a "Notice of Procedural Challenge" citing support for the notice using the complaint, answer, and the administrative record of the claim as compiled by the plan. Within that statement, a plan member is required to make a prima facie case that a due process violation has occurred. This often involves alleging that the plan violated a plan-based rule, or a rule promulgated by the U.S. Department of Labor or other government agency. It also involves alleging that a claim review was biased or the decisionmaker was laboring under a conflict of interest.
In the context of welfare benefit disputes, this case can be presented rather easily since a claim is often being brought against an insurance company where a party can claim bias by citing the repeated use of unfriendly experts or point to arbitrary exclusions of evidence favorable to a claimant.
But what about the case where a pensioner is missing information about her pension accumulated over decades of service to a company? That individual may have been missing pension credits she earned, or there may be some problem with the computerized record of her 401(k) contributions or some other issue dating back years, and discovery may be necessary to figure what exactly went wrong. Here, a Procedural Challenge Statement offers little to no protection. Yet, almost without exception, district courts use these orders and force a plan member through the procedural challenge morass without any relief. Here, these restrictions are completely unsuited to this type of dispute.
Under a procedural due process challenge currently the only recognized way to seek limited discovery within the Eastern District a plan member is forced to allege that they have suffered some due process violation. What if there was not a "due process violation" in the strictest sense? Perhaps, the case requires some discovery, but not because the plan is biased against the member. Here, again, these Wilkins scheduling orders fall short, way short. To complicate matters, procedural challenges are often referred off to magistrates who often are able to conduct only a limited review of a discovery request based on allegations of bias or due process violations. The magistrates, too, have few rules to help them navigate a complex retirement dispute.
So, an employee with a denied retirement claim, and who has worked years for a company, is really fighting an uphill battle over one of the single most important aspects of their work life a secure and dignified retirement. As the Baby Boom generation retires and more retirement issues emerge in ERISA disputes, this may become an untenable situation. Eventually, the Sixth Circuit may need to step in and start scrutinizing these scheduling orders and may even need to consider putting a stop to them altogether in any case involving a claim for retirement benefits.
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John Joseph (J.J.) Conway is an employee benefits and ERISA attorney and founder of J.J. Conway Law in Royal Oak.
