Tenth Circuit Finds that Policy Terms in an ERISA Plan Did Not Unequivocally Grant an ERISA Administrator Discretion to Interpret Plan Terms, Applies De Novo Review

Posted in: Disability Insurance, ERISA, Insurance Litigation Blog, Policy Interpretation, Standard of Review May 17, 2019

Insurance companies acting as ERISA plan administrators often are guilty of abusing their discretion to interpret policy language related to the level of benefits payable to a claimant under a long-term disability (“LTD”) policy in a manner most beneficial to them, rather than the claimant.  In a recent decision by the Tenth Circuit Court of Appeals, Hodges v. Life Insurance Company of North America, 920 F.3d 669 (10th Cir. 2019), the court addressed the ability of insurance companies such as Life Insurance Company of North America (“LINA”) from interpreting policy language that may determine the level of benefits payable to a claimant.

In Hodges, the Tenth Circuit Court of Appeals affirmed the ruling of the district court that …

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Ninth Circuit Grants a Small Reprieve to the Abuse of Discretion Standard of Review, Ruling That Discretionary Language Provisions in Self-Funded ERISA Will Apply

Posted in: Abuse of Discretion, De Novo Review, Disability Insurance News, ERISA, Insurance Litigation Blog, Standard of Review August 24, 2017

When litigating ERISA-governed short-term disability, long-term disability, life and medical insurance claims, a major consideration is which “standard of review” will apply to the Court’s review of the insurer’s decision – abuse of discretion or de novo.  The de novo standard of review is more claimant friendly.  When applying the abuse of discretion standard of review, the Court is required to give some deference to the insurer’s decision.  Under the de novo standard of review, the Court does not give any deference to the insurer’s decision, but simply makes a determination as to whether available evidence establishes that the insured was disabled under the terms of the Plan.

The abuse of discretion standard of review, which is friendlier to insurers, …

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9th Circuit puts final nail in coffin for discretionary clauses in insurer-funded ERISA plans

Posted in: Abuse of Discretion, Case Updates, De Novo Review, Disability Insurance, Disability Insurance News, ERISA, Health Insurance, Insurance Litigation Blog, Life Insurance, Policy Interpretation, Preemption, Standard of Review May 24, 2017

Disability and life insurers frequently include clauses in their insurance policies affording them complete discretion to decide whether a claim has merit.  The clauses usually state the insurer has total discretion to decide whether the claimant is eligible for the policy’s benefits, to decide the amount, if any, of benefits to which they are entitled, to interpret the policy’s terms how they see fit, or something similar.  Employers regularly include these same types of “discretionary clauses” in their employee welfare benefit plan documents, and if a group insurance policy is the funding source of the plan’s benefits, they then delegate that discretion to decide the merits of claims to the insurer.

Employee benefit plans and the corresponding group insurance policies …

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Robert McKennon Publishes Article: Ninth Circuit: 'Independent' Physicians may Favor Insurers

Posted in: Abuse of Discretion, ERISA, Insurance Litigation Blog, Legal Articles, News Blog, Standard of Review September 08, 2016

In the September 8, 2016 edition of the Los Angeles Daily Journal, Robert McKennon of the McKennon Law Group published an article regarding the use of so-called “independent” physicians used by insurance companies as a pretense to deny valid claims.  In the article entitled “9th: ‘Independent’ Physicians may Favor Insurers,” Mr. McKennon summarized the recent U.S. Court of Appeals for the Ninth Circuit case, Demer v. IBM Corporation LTD Pan, 2016 DJDAR 8929 (9th Cir. Aug. 29, 2016), in which the Court noted that insurance companies frequently pay doctors a substantial amount of money to review files, and therefore their opinions are likely biased in favor of the insurance company that pays them.

The article is posted below with …

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With Discretionary Language Even Barred in Self-Funded ERISA Plans, is This the Death of The Abuse of Discretion Standard of Review In California?

Posted in: Abuse of Discretion, De Novo Review, Disability Insurance News, ERISA, Standard of Review October 12, 2015

Recently, we explained that District Courts within the state of California, applying California Insurance Code section 10110.6, ruled that, even if an insurance Plan contains language giving discretion to a claim administrator, that language is unenforceable, and de novo is the proper standard of review.  See The Death of the Abuse of Discretion Standard of Review in ERISA Disability Insurance Cases in CaliforniaA recent ruling expanded the application of California’s anti-discretionary language statute to self-funded plans, further signaling the end of the abuse of discretion standard of review in California Federal Courts.…

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ERISA Disability Insurance Claimants Take Note – Discovery Is Allowed In De Novo Review Cases

Posted in: Abuse of Discretion, De Novo Review, Disability Insurance News, ERISA, Standard of Review September 14, 2015

Well-intentioned policymakers enacted the Employee Retirement Income Security Act of 1974 (“ERISA”) over forty years ago to provide for the protection of participants’ employee benefits in part by establishing a uniform set of rules to ensure efficient proceedings.  One of these notable rules limits the scope of permissible evidence for actions commenced under ERISA section 502(a)(1)(B).  This scope of evidence further depends on whether the reviewing federal court employs an abuse of discretion, or de novo, standard of review.  Because discovery can be an expensive and time consuming process, insurers and claims administrators often take the position that discovery is irrelevant and not permitted under ERISA.  As the cases below show, although limited, discovery is not forbidden in de novo …

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Insurers Do Not Have Discretionary Authority, Absent Clear Language in Official Plan Documents

Posted in: Abuse of Discretion, Administrative Record, Case Updates, De Novo Review, Disability Insurance, Disability Insurance News, ERISA, Insurance Litigation Blog, Insurance Questions and Concepts, Policy Interpretation, Standard of Review April 30, 2015

In actions brought under the Employee Retirement Income Security Act of 1974 (“ERISA”), two roads diverge in federal court—and the court’s choice regarding the applicable standard of review can make all the difference in the scope of permissible evidence.  If the court applies the abuse of discretion standard of review, the court more typically (but not always) only considers evidence received by the insurer in time for its decision and limits its review to the “administrative record” to determine whether the insurer’s denial was an abuse of discretion.  Alternatively, the court may review a case “de novo,” and may consider documents not previously provided to the insurer to determine whether the insured is entitled to benefits. …

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Third-Party ERISA Administrator Abused Discretion by Denying Medical Coverage: A Tale of What Not to Do

Posted in: Abuse of Discretion, Administrative Record, Conflict of Interest, ERISA, Fiduciary Duty, Health Insurance, Standard of Review September 16, 2014

Sometimes an administrator so unashamedly abuses its discretion in handling an insurance claim that its actions constitute a textbook example of “what not to do” for other administrators and the ensuing decision provides a clear illustration of how courts apply an abuse of discretion standard of review under the Employee Retirement Income Security Act (“ERISA”).  Indeed, a recent case clarified that plan administrators and third-party claims administrators alike are held to comparable standards when issuing claims decisions.  In Pacific Shores Hospital v. United Behavioral Health, 2014 WL 4086784; 2014 U.S. App. LEXIS 16062 (9th Cir. Cal. Aug. 20, 2014) (“Pacific Shores”) the Ninth Circuit Court of Appeal reversed the district court, finding the third-party administrator acted improperly by denying …

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California District Court Rules That a Treating Physician's Observations are "More Persuasive" Than a Paper Reviewer's Contrary Opinions

Posted in: Case Updates, Disability Insurance, Disability Insurance News, ERISA, Insurance Litigation Blog, Standard of Review February 13, 2014

When reviewing a claim for disability insurance, insurers and other claim administrators often rely on the opinions of paid physicians to support their improper denial decisions.  For example, a disability insurance company will hire a doctor to conduct a “paper review” – that is, reviewing an insured’s medical records, without actually examining the insured – and then offer an opinion on the insured’s ability to return to work.  If the “paper reviewer” opines that the insured is capable of returning to work, the insurance company will then rely on that opinion to deny the claim for benefits; even if the insured’s own treating physicians repeatedly state that the insured is disabled.  However, in Oldoerp v. Wells Fargo & Co. Long

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McKennon Law Group Wins Disability Insurance Lawsuit Against Sun Life And Health Insurance Company Following Trial

Posted in: Abuse of Discretion, Conflict of Interest, Disability Insurance, Disability Insurance News, ERISA, Insurance Litigation Blog, News, Standard of Review December 11, 2012

On November 27, 2012, following a trial before Judge Cormac J. Carney of the United States Federal District Court for the Central District of California, Robert J. McKennon and Scott E. Calvert of the McKennon Law Group secured a victory for their client in a lawsuit against Sun Life and Health Insurance Company.  Representing the claimant, Mr. Evans, the McKennon Law Group convinced the District Court that Sun Life abused its discretion in denying Mr. Evans’ claim for long-term disability benefits and that Mr. Evans is entitled to receive his disability benefits that Sun Life denied him.…

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