Supreme Court Rejects “Treating Physician Rule” for ERISA Determinations

Ronald L. Scott
Research Professor
Health Law & Policy Institute
University of Houston Law Center

On May 27, 2003 the U.S. Supreme Court rejected the notion that private benefit plan administrators must defer to treating physician’s opinions in deciding whether an individual is entitled to disability benefits.  The Court held that the “treating physician rule” is not applicable to such private benefit plans.  See Black & Decker v. Nord, 123 Sup. Ct. 1965 (2003).

Employee Kenneth Nord sued Black and Decker’s disability plan under the federal Employee Retirement Income Security Act (ERISA) after Nord was denied disability benefits against the recommendations of his two treating physicians.  The U.S. District Court granted summary judgment in favor of the plan, and Nord appealed. The Ninth Circuit Court of Appeals reversed.  The Supreme Court granted certiorari, reversed and remanded the decision, unanimously holding that ERISA does not adopt the “treating physician rule” used in Social Security benefit determinations.  Therefore, ERISA plan administrators are not required to accord special deference to treating physicians’ opinions, nor are plan administrators required to particularly explain their decisions when the rely on credible evidence that conflicts with a treating physician’s opinion.  Id.

The “treating physician rule” was developed by case law and subsequently codified in regulations adopted by the Social Security Administration (SSA).  The current rule provides that SSA will “give more weight to opinions from…treating sources,” and “will always give good reasons in our notice of determination or decision for the weight we give your treating source’s opinion.”  Id. at 1969, quoting 20 C.F.R. §§404.1527(d)(2), 416.927(d)(2) (2002).  The Ninth Circuit Court concluded in another recent case that the treating physician rule should apply to ERISA plan determinations for reasons of “common sense” and “consistency in [judicial] review of disability determinations where benefits are protected by federal law.”  Id.

Some courts have adopted the treating physician rule outside the Social Security context.  The rule has been used in disability determinations under the Longshore and Harbor Workers’ Compensation Act and for benefit determinations under the Black Lung Benefits Act.  Application of the rule has been refused in cases related to veterans’ disability benefits and disability determinations under the Railroad Retirement Act.  Some states adopt the treating physician rule in state workers’ compensation statutes.  Id. at 1970, footnote 3.

The Supreme Court addressed the issue of whether the treating physician rule would increase the accuracy of ERISA plans’ disability determinations (as the Ninth Circuit believed), but the Court felt the issue should more properly be decided by the Legislature or administrative agency.  The Court agreed that treating physicians generally have a better chance to observe and evaluate patients than consultants retained by benefit plans.  The Court also recognized the incentives for plan consultants to deny benefits, but countered that treating physicians may be inclined to favor a disability determination in close cases.  Id. at 1971.

Finally, the Court found “critical differences” between Social Security disability programs and ERISA benefit plans.  The Social Security Act established a federally funded nationwide benefits program that must process more than 2.5 million disability claims annually.  Such a system must operate efficiently and with uniformity.  By contrast, ERISA does not mandate that employers provide any benefits plans or the kinds of benefits offered by plans, allowing employers great flexibility in plan design.  Also, disability determinations under ERISA plans must consider the interpretation of terms in the ERISA plan rather than the uniform criteria used in Social Security cases. Id. at 1971.

The Courts’ opinion was well explained but perhaps not well reasoned.  As the American Medical Association pointed out in its “friend of the court” brief, a treating physician is simply in a better position that an insurance plan consultant to evaluate her patient. The treating physician will generally have spent more time with the patient than the consultant.   Further, the treating physician rule does not require the plan administrator to always agree with the treating physician’s determination.  Rather, the administrator is simply required to explain specifically why she is rejecting a treating physician’s determination and to provide credible evidence for her rejection of the treating physician’s opinion.