UPDATE 1-US court rules against MetLife in benefits case

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By James Vicini

WASHINGTON, June 19 (Reuters) - The Supreme Court sided against MetLife Inc (MET.N: Quote, Profile, Research, Stock Buzz) on Thursday, ruling that insurance companies or employers have a conflict of interest when they both decide claims under employee benefit plans and pay the benefits.

The justices ruled that federal courts should consider that conflict in deciding whether the plan administrator has abused its discretion in denying benefits under an employee's health or disability claim.

The Employee Retirement Income Security Act permits a person denied benefits under an employee benefit plan to challenge the denial in federal court.

The high court concluded the plan's administrator, such as an insurance company like MetLife or an employer, has a conflict when it performs the dual role of determining whether an employee is eligible for benefits and then pays the benefits.

Justice Stephen Breyer wrote for the court majority that a reviewing federal court should consider that conflict in determining whether the plan administrator abused its discretion in denying benefits.

He said the significance of the conflict will depend on the circumstances of the particular case.

The case before the court began in 2000 when Wanda Glenn, who worked at the company now called Sears Holdings Corp (SHLD.O: Quote, Profile, Research, Stock Buzz) for 14 years, sought disability benefits because of a heart condition.