The dependent sued the plan administrator under ERISA to challenge the benefits denial, and the applicable standard of review was an issue in light of Texas's prohibition on discretionary clauses (see Practice Note, ERISA Litigation: Causes of Action Under ERISA Section 502).

As background, the Supreme Court held in Firestone that challenges to benefit denials under ERISA Section 502(a)(1)(B), for plans that do not have a valid delegation clause, are reviewed under the de novo standard of review (489 U.S. 101, 115 (1989); see Checklist, Significant Employee Benefits Developments Since the Enactment of ERISA Timeline). The Fifth Circuit, unlike all the other circuit courts that have decided the question, held that challenges to a plan administrator's factual determination that a claimant is not eligible are reviewed using the same abuse-of-discretion standard that applies for plans that have delegated discretion (see Pierre v. Conn. Gen. Life Ins. Co., 932 F.2d 1552, 1562 (5th Cir. 1991)). (This review, referred to as "Pierre deference," applied regardless of whether the plan at issue included a discretionary clause.) In other words, the Fifth Circuit limited Firestone's de novo review to benefit denials based on the interpretation of plan terms.

Regarding the applicable standard of review in this litigation, the dependent argued that Texas's anti-delegation statute invalidated the plan's discretionary clause (meaning that the less deferential de novo standard of review would apply; see Practice Note, ERISA Litigation: Standard of Review). Although the plan administrator agreed not to rely on the delegation clause, it nonetheless asserted that Pierre deference applied to its factual determinations.

The district court, applying Pierre deference, held that the plan administrator did not abuse its discretion in concluding that the dependent's ongoing partial hospitalization was not medically necessary. A panel of the Fifth Circuit affirmed, but expressed reservations about Pierre's continued validity – given the circuit split that had since emerged. The Fifth Circuit granted en banc review to address this issue.

Overruling Pierre, the Fifth Circuit held that Firestone's default de novo standard of review applies to benefit denials based on factual determinations.

In reaching this conclusion, the Fifth Circuit reasoned that:

In addition, the Fifth Circuit acknowledged that being on the "lonely side of the lopsided split" meant that ERISA denials for plans in Texas, Louisiana, and Mississippi that lack discretionary language would be reviewed with greater deference than they would everywhere else. This undercut ERISA's strong policy interests in national uniformity.

Regarding the dependent's case, the district court had concluded that the plan administrator did not abuse its discretion in finding that the dependent's continued treatment was no longer medically necessary. The Fifth Circuit concluded that this determination was now subject to de novo review. The Fifth Circuit therefore vacated and remanded the district court's decision for further proceedings consistent with its opinion.

The Fifth Circuit concluded that overruling Pierre did not affect its precedent concerning the scope of the administrative record in ERISA cases. The Fifth Circuit stated that its leading decision on scope of review (Vega v. Nat'l Life Ins. Servs., Inc., 188 F.3d 287 (5th Cir. 1999), overruled on other grounds by Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008)) would apply where de novo review is applied to fact-based benefit denials.

Six dissenting judges argued that Firestone only addressed de novo review of legal questions. In the dissenting judges' view, a holistic reading of Firestone indicated that the Supreme Court did not intend for de novo review to apply to benefit denials based on factual determinations.