Pinto v. Reliance Standard Life Insur. Co., 214 F.3d 377 (3^rd Cir. 2000)-The court clarified for the Third Circuit the issue of the standard of review where there is a conflict of interest on the part of the plan decision-maker.  Specifically, the court addressed the situation where an employer contracts management of its plan to an insurance company which in turn both determines eligibility for benefits and pays those benefits out of its own funds.  Here, Reliance Standard Life discontinued benefits for Pinto on the basis that she was no longer "totally disabled."

            Noting that the Supreme Court decision Firestone Tire & Rubber Co. v. Bruch, 489 U.S. (1989) gave only a vague instruction that a court should consider conflict of interest as a "factor" in determining whether there was abuse of discretion, this court turned to the other circuits for guidance.

            Following the Fourth, Fifth, Eighth, Tenth and Eleventh Circuits, the Third Circuit found that heightened scrutiny is warranted simply by the potential for self-dealing when an insurance company is both the plan administrator and funder.  In contrast, the Seventh Circuit requires a specific demonstration that bias affected a decision before modifying the arbitrary and capricious standard.

            Of the three methods of dealing with a conflict of interest—burden shifting, de novo review, and the sliding scale—this court chose the "sliding scale".  Courts should consider the "nature and degree of apparent conflicts" when shaping their arbitrary and capricious review.  "The court may take into account the sophistication of the parties, the information accessible to the parties, and the exact financial arrangement between the insurer and the company."  The object of the inquiry, apparently, is the existence of structural incentives or disincentives to self-deal, not necessarily actual evidence of self-dealing.

            For Pinto, the above discussion of the standard of review enabled this court to reverse and remand the district court's summary judgment in favor of Reliance Standard.  It stated that applying a heightened arbitrary and capricious review meant that it should "look not only at the result [of the administrator's decision]—whether it is supported by reason—but at the process by which the result was achieved."  In this case, the court cited "procedural anomalies" which cast doubt on the decision.  Specifically, Reliance cited the Social Security Administration's denial of benefits, but ignored a later granting of the same. Similarly, it cited one doctor's negative language, but ignored his later clarification in favor of Pinto.  "This inconsistent treatment of the same authority in two separate instances raises the likelihood of self-dealing."