Health Insurance Archives - Page 2 of 12

According to the Centers for Disease Control and Prevention (“CDC”), around 7.5 percent of American adults have long COVID. This condition refers to a variety of symptoms that can last more than three months after someone gets COVID-19.

In some cases, long COVID symptoms can be debilitating enough that they keep an individual from enjoying life normally. They may also keep someone from working or earning enough income to support their lifestyle. In these cases, individuals suffering from long COVID symptoms might wonder if they have the option to file a disability claim with their insurer.

If you are experiencing such symptoms, learn more about whether long COVID is recognized as a potential disability and what options you have for applying for benefits in California, as well as learning how a life and disability insurance claims lawyer can help.

What Is Long COVID?

The CDC notes that people with long COVID can experience a wide range of symptoms, and not everyone with this condition has the same severity of symptoms.

To be considered long COVID symptoms, the conditions must have started when someone contracted the COVID-19 virus or after that. If symptoms were present before someone contracted COVID, they would likely be considered part of another condition or disease process.

Some symptoms associated with long COVID include:

Brain fog, which refers to challenges with concentration, focus, or memory
Headaches
Trouble breathing or experiencing random shortness of breath
Fatigue or tiredness that does not have other obvious causes
Dizziness, especially when standing
Unexplained cough
Aches or soreness in joints and muscles that cannot be explained
Pain in the chest that is not associated with another condition
Heart palpitations, which are fast or irregular beatings of the heart
A loss of taste or smell that may come and go
Anxiety or depression

Is Long COVID Recognized as a Disability?

Yes, long COVID is recognized as a potential disability under the Americans with Disabilities Act (“ADA”). The ADA includes provisions to protect people with disabilities.

Guidance from federal agencies notes that long COVID can be considered a protected disability under the ADA when it “substantially limits one or more major life activities.”

Some activities considered under this umbrella include:

Caring for oneself, such as bathing, dressing, and preparing and eating meals
Using natural senses, including seeing and hearing
Breathing in a manner that supports normal activity
Reading and writing
Speaking, communicating and interacting with others
Working

But, just because it is a recognized disability under the ADA does not necessarily mean you will qualify as totally or partially disabled under a long-term or short-term disability policy, as we discuss below.

Can You Apply for Short or Long Term Disability Benefits Through Your Insurance Company Because of Long COVID in California?

If you have disability insurance provided through an employer or purchased separately from an insurance company, the answer is yes.

Depending on the definition of disability under your short-term disability policy or long-term disability policy, you may be able to apply for benefits through your individual or group disability insurance company based on long COVID. However, not every case of long COVID is considered a disability by insurance companies. An assessment is required for each case to determine whether the symptoms associated with the condition impact your ability to perform your job or some other job for which you are qualified by education, training and experience.

Insurance policies define “disabled” differently. Generally speaking, an insurance policy may provide short-term or long-term disability benefits if a claimant is unable to perform the material duties of their regular job because of an injury or sickness. Insurance companies typically look at how that type of job is performed across the country instead of with the specific employer. Long-term disability policies may also provide benefits on this basis for a limited time, such as two years. After two years, long-term disability policies usually changes the definition of disability such that the claimant is disabled if he or she is unable to perform any job when considering the claimant’s education, training and experience.

For example, if someone has brain fog and fatigue related to long COVID that is annoying and unpleasant but does not impact the performance of their job duties, they would be not be approved for disability benefits. However, if someone has cognitive long COVID symptoms that are impacting memory to the degree they are unable to perform their job, they may qualify for benefits.

In another example, someone who experiences minor shortness of breath every few weeks due to long COVID may not see a substantial impact on their ability to work. In comparison, someone who experiences trouble breathing on a daily basis due to lung damage associated with COVID may be unable to work and go about their regular daily activities. This may enable them to receive disability benefits.

How Can the McKennon Law Group Help?

To qualify for disability benefits from a disability insurance company due to long COVID symptoms, you must demonstrate that your symptoms impact your ability to work. To do this, you must undergo an evaluation and may need to present medical records and other documents in support of your claim.

Applying for disability benefits through an insurance company can be a long and frustrating process, especially if your claim is denied. The nature of long COVID symptoms can make it easier for insurance companies to deny disability claims—just as they can increase the chance of insurance bad faith disability denials.

Having an experienced disability and life insurance claims attorney on your side can help you make your case for a short-term or long-term disability claim. At McKennon Law Group PC, we offer guidance and support that helps you get through the disability application or appeals process if your claim gets denied. Our team has over seven decades of experience in dealing with disability insurance claims, and we are not afraid to face off against large insurance companies to fight for your rights.

To find out more about how we can help with your long COVID disability claim, call McKennon Law Group PC today and request a free consultation.

Private sector, employer-sponsored insurance plans are regulated by the Employee Retirement Income Security Act of 1974 – ERISA. ERISA is the federal law that establishes the minimum standards for group insurance plans that are offered through private-sector employers. Should your claim for ERISA disability benefits be denied, you will need to have a California ERISA claims attorney challenge that denial on your behalf.

However, under ERISA, before you may bring a lawsuit against an insurance company for denying your claim, you are required to pursue one or more “administrative” appeals through the company. If the appeals fail, only then may you bring a lawsuit challenging the claim denial.

If your own ERISA life, health or disability insurance claim has been denied, and if your administrative appeal does not succeed, what happens when you file a lawsuit to overturn the denial and to obtain your disability insurance benefits?

As we discuss below, there are different review standards used by the courts in these cases, and you will also learn where to turn for the legal help you may need if your own ERISA life, health or disability claim is rejected.

What Is a Standard of Review?

When a lawsuit against an employer or insurance company for denying an ERISA life, health or disability claim gets to court, there is no jury, and even if you can convince the judge that the insurance company was wrong, in some states, your lawsuit still may not prevail – because of the “standard of review.”

Two standards of review may be used by a court in these cases: the “de novo” standard and the “abuse-of-discretion” standard. A court will use one of these review standards when it hears your lawsuit:

To succeed with a lawsuit in a court that uses the abuse-of-discretion review standard, a judge must determine that the insurer was wrong to deny your claim, and the judge also must determine that the company abused its discretion by denying your claim.
To succeed with a lawsuit in a court that uses the de novo standard, the judge, reviewing the administrative record with “fresh eyes,” essentially determines if the insurance company was right or wrong to deny the claim for disability insurance benefits.

In other words, to win under the abuse-of-discretion standard of review, the judge must find that the insurance company’s denial of your life, health or disability claim was so unreasonable that it constituted an abuse of the company’s discretion. This standard of review gives a decided advantage to employers or insurers who deny life, health or disability claims.

But under the de novo review standard, a judge simply decides if the company was right or wrong to deny your claim. This standard of review gives neither party any advantage going into the courtroom. But, a life, health or disability claimant always has the burden of proof.

Why Do Insurance Companies Prefer the Abuse-of-Discretion Standard?

Under the abuse-of-discretion review standard, a court must agree with the employer’s or the insurance company’s denial of your disability claim and its denial of your administrative appeal – unless the company actually “abused” its discretion when it rejected your claim or your appeal.

In recent years, fewer states are allowing insurance companies to hide behind the abuse-of-discretion standard. California and other states now have laws that require courts to use only the de novo standard of review.

If you are seeking ERISA disability or life insurance benefits in California, and if your claim was denied and your appeal also failed, you will in most instances receive a de novo review of your claim if you and your attorney file a lawsuit against your employer or insurance company.

What Does the De Novo Standard Mean?

Even under a de novo review standard, if you have a California life, health or disability ERISA claim, you and your California ERISA claims lawyer still must prove that you are entitled to the ERISA life, health or disability insurance benefits you were denied. The de novo standard, however, lets the court make its determination more fairly and independently than if the abuse-of-discretion review standard applied.

In other words, under a de novo review, the court may consider both the legal and the factual issues about your entitlement to life, health or disability insurance benefits, and the court is not required to give any deference to the plan administrator’s or insurance company’s decision to deny benefits.

This all means that states that have required a de novo review through legislation, such as California, allow courts to make their own decisions in these cases, thus allowing the courts to substitute their own discretion rather than giving deference to the decision of an insurance company or plan administrator who have obvious biases toward denying life, health or disability insurance claims that negatively affect their financial interest.

What is the “Default” Standard of Review and What Standard is Now Used in Most Courts?

The de novo standard of review is the “default” national standard, and it has been since 1989, when the United States Supreme Court held (in Firestone Tire & Rubber Co. v. Bruch) that, by default, claimants are entitled to de novo reviews of ERISA life, health or disability insurance benefit denials.

However, the court also held that the abuse-of-discretion standard may apply if the language of the ERISA-governed plan unambiguously grants the plan administrator or insurance company full “discretionary authority” to determine benefits or to fully interpret the plan’s terms and conditions.

How Does the De Novo Standard Benefit California Consumers?

As explained above, California law prohibits the inclusion of discretionary authority clauses in life, health, and disability plans. The effect of that prohibition is to require California courts to use only the de novo standard of review in all cases that involve fully-insured plans.

Thus, in the words of the Ninth Circuit Court of Appeals (in Abatie v. Alta Health Life Insurance, 2006), the court “must conduct an independent, thorough analysis of the entire administrative record” and “evaluate the persuasiveness of conflicting testimony.”

In fact, to conduct an adequate de novo review, the court may take additional evidence into account by allowing the parties to augment the administrative record to evaluate the credibility of medical opinions or to hear claims that the medical reports in the case are inaccurate. For example, if a disability claimant received a favorable disability opinion from Social Security Administration, courts will typically allow disability claimants to augment the record to include them.

When Do You Need an ERISA Attorney’s Advice and Services?

Would you go to a knee surgeon if you had cancer? Of course not. You need to consult with an experienced ERISA attorney who knows ERISA life, health or disability insurance inside and out. A workers’ comp or personal injury attorney will almost certainly not be familiar with ERISA. You must be represented by a California ERISA life, health or disability insurance claims attorney who has considerable experience advocating for clients who are seeking ERISA insurance benefits.

If you are applying for ERISA life, health or disability insurance benefits – or if your claim has been rejected – you should have the specific and personalized advice that only a lawyer who is familiar with ERISA can provide.

ERISA lawyers usually provide your initial legal consultation at no cost and with no obligation. Your first consultation is your opportunity to obtain the personalized advice you need and to learn how the law applies to your own case and circumstances.

If you are disabled and you are applying for ERISA life, health or disability insurance benefits, or if your claim has been denied, act now. To initiate legal action – or if you need to learn more – contact California ERISA claims lawyers McKennon Law Group PC as quickly as possible.

Claimants who have sued insurance companies for wrongful denial of their claims –including health insurance claims – occasionally find themselves faced with a defendant’s motion to dismiss or transfer their case to a different court. This request to transfer the case could be based on a number of factors, but typically the defendant insurance company argues that it would be more convenient to litigate the case in the alternative forum. In California, the doctrine of forum non conveniens permits a court to dismiss an action when it believes the case may be more appropriately and justly tried elsewhere. Stangvik v. Shiley Inc., 54 Cal.3d 744, 751 (1991). The doctrine of forum non conveniens is codified in Code of Civil Procedure Section 410.30(a), which provides, “When a court upon a motion of a party . . . finds that in the interest of substantial justice an action should be heard in a forum outside this state, the court shall stay or dismiss the action in whole or in part on any conditions that may be just.” In determining whether to grant a motion based on forum non conveniens, a court first decides whether the alternative forum is a “suitable place for trial” and, if so, the court then balances the private interests of the litigants and the interests of the public to decide whether the action should remain in California or be prosecuted in the alternative forum. Stangvik, supra, 54 Cal.3d at 751.

In the matter of Miriam Abu Sharkh, et al. v. Continentale Krankenversicherung A.G., et al., (May 17, 2021, B303219), the McKennon Law Group PC secured a reversal of the trial court’s decision granting such a motion and dismissing our clients’ case in favor of a German forum. The lawsuit arose from the defendant health insurance company’s wrongful and egregious termination of our clients’ health insurance coverage without sufficient explanation or reasoning at the time of the family’s greatest need – when our client’s son was hospitalized due to complications from a rare, terminal illness. Our clients were living in California at the time of the wrongful conduct but, due to the termination of their health coverage, were forced to leave the state to seek affordable healthcare abroad. The health insurance company filed a motion to transfer the case to Germany and dismiss the case, arguing that California was an inconvenient forum and that the case should be filed in Germany, where the insurance company was based. The trial court, focusing primarily on the residence of the parties, granted the motion. On appeal, the McKennon Law Group PC argued that the private and public factors weighed heavily in favor of a California forum and that the trial court had abused its discretion in dismissing the case based on forum non conveniens.

The Court of Appeal agreed that California had a substantial interest in this case, finding that “where Continentale issued insurance policies to three California residents, evaluated claims arising in California, paid claims to California providers and terminated coverage while the insureds resided in California, the ‘substantial interest of California in these transactions is obvious.’” (Citing People v. United National Life Ins. Co., 66 Cal.2d 577, 593 (1967)). The Court of Appeal also agreed that the lower court had placed too much emphasis on the parties’ residence. The Court recognized that while location of the parties at the time of the litigation is relevant to the court’s analysis, it cannot be the exclusive factor on which a court relies. See Stangvik, supra, 54 Cal.3d at 753, fn. 4 (“An undue emphasis on a single factor is especially threatening to a balanced analysis because some of the matters to be weighed will by their nature point to a grant or denial of the motion.”). Lastly, the Court of Appeal agreed that the lower court’s finding that California had no interest in the dispute was unreasonable given the facts of the case. After extensive briefing and oral argument, the Court of Appeal ruled that the Superior Court abused its discretion when it granted the defendant health insurance company’s motion to transfer the case to Germany and dismiss our clients’ bad faith health insurance lawsuit on the basis of forum non conveniens. The Court of Appeal remanded the case and ordered the trial court to weigh the interests of both forums, as well as all pertinent public and private factors.

This was a significant victory for our clients because they will now be able to again pursue their bad faith case against the German insurer and its third-party administrator in a California court. In situations such as this, it is imperative that claimants have retained experienced bad faith insurance attorneys such as the McKennon Law Group PC to ensure access to their chosen forum and pursue insurance bad faith remedies in a local court concerning their wrongly-denied health insurance benefits.

If your claim for health insurance benefits has been wrongly denied, or if you are disputing some other action taken by your health insurance company, a California health insurance claims attorney such as McKennon Law Group PC may be able to help.

When you purchase health insurance, privately or through your employer, you trust that your medical expenses – except for co-payments and deductibles – will be paid by the insurance company.

But what can you do if a claim submitted to your health insurance provider is rejected or if the insurance company offers you an amount that is far below what the claim is actually worth? We discuss this below. But first, what are the most common types of denials by health insurers? They are:

denied payment for care already provided based upon an exclusion in the policy;
your care was not medically necessary or required;
you are ineligible for the benefit;
your treatment is “experimental;”
you have a pre-existing condition;
another insurer is primarily liable to pay for the medical procedure; and
prior consent for the treatment was not obtained.

What Can Happen If Your Health Insurance Claim Is Denied?

If your claim is denied or if the insurance company offers to pay a lesser amount than what the claim is worth, you may be responsible for paying these medical expenses out-of-pocket. This could mean serious financial hardship – even bankruptcy – for far too many people.

Disputes between policyholders and health insurance providers are becoming more frequent. Disagreements may arise over a denial of coverage for services already provided, a refusal to approve a procedure or a visit to a specialist, or an incorrect charge for services or office visits.

It is important to know exactly what steps to take when you dispute a charge or disagree with a decision made by your health insurance provider. If you continue reading, you will learn what steps to take should this happen to you, and you will also learn more about your rights as a health insurance policyholder.

What Should You Do When Faced With a Health Insurance Dispute ?

The first step you should take is to make certain that you know what your health insurance policy covers and does not cover. You should make sure that you fully understand what procedures you must follow in order to comply with your policy and retain your coverage.

If you are familiar with your policy’s details, you will know if your health insurance complaint will be considered legitimate, and if it is, you will be able to point to the policy language that demonstrates that you are right and the insurance company is wrong.

To dispute a charge or a coverage decision, you may want to start by contacting the claims representative who denied the claim or the insurance company’s customer service department. You may even ask for intervention by a company supervisor. The company may simply have made a mistake. Insurance company personnel may be able to reverse mistaken charges or approve services that were initially denied.

If you cannot obtain reversal of its decision, ask the insurer for a precise written explanation of the reasons why the claimed services were not authorized or why the coverage was denied.

If your denied health insurance claim cannot be resolved by working with the insurer informally, then it is time to contact a California health insurance claims lawyer such as the McKennon Law Group PC. The attorneys at McKennon Law Group PC can help you by appealing the insurance company’s decision to deny your insurance claim. We can also file litigation to request a court to reverse the insurer’s decision.

When May You Appeal Directly to the Insurance Company?

Federal law establishes the following deadlines for insurance companies to review and decide formal appeals:

sixty days for denials of services that have already been provided
thirty days for denials of nonurgent care that has not yet been provided
seventy-two hours for denials of urgent care services

What Steps Can You Take If Your Appeal Is Denied?

If your appeal is denied, you are entitled to a full explanation, and you have the right to take legal action. If the company made a mistake or violated the terms of your policy, a California health insurance claims attorney such as McKennon Law Group PC can fight for your rights and help you recover your wrongly denied insurance benefits.

If your policy was obtained through a private employer, it is likely governed by the Employee Retirement Income Security Act of 1974 (ERISA). Under ERISA’s restrictions, you may sue only for the policy benefits, attorneys’ fees, and interest on past-due benefits.

If your policy is not governed by ERISA, and if your health insurance company was operating in “bad faith” when it rejected your claim, you may sue for the policy benefits, the “consequential damages” caused by the insurance company’s bad faith conduct, punitive damages, attorneys’ fees, emotional distress, and interest on past-due benefits.

How Will an Insurance Claims Lawyer Help You?

Do not accept an offer from the insurance company for an amount that does not compensate you fully, fairly, and reasonably. When you have reached the point that you should no longer deal with the insurance company on your own, it is best to have a California health insurance claims lawyer such as McKennon Law Group PC working for you from the moment you learn your claim has been denied and informal attempts at resolution do not work. Your claims lawyer can help you appeal directly to the insurance company, negotiate with the company on your behalf, and if necessary, file a lawsuit against the insurance company.

You may be tempted to take a quick offer from the insurance company, especially if you cannot yet return to work and you need money, but settling for less than your claim is worth also means that you will be ineligible to take further legal action or seek additional compensation for your claims.

It Costs Nothing to Begin the Legal Process with McKennon Law Group PC

We will review your claim during a no-cost, no-obligation first legal consultation. As your insurance claims attorneys, you pay us nothing unless and until we recover health insurance benefits on your behalf.

Every health insurance dispute is unique. Take advantage of that free first legal consultation to receive the personalized legal advice you need and to learn how the law applies to your own circumstances.

The important thing to remember is that you should not let the insurance company have the last word regarding your health insurance claim. If you cannot resolve your dispute informally and your case goes to court, a court of law will have the last word.

It is imperative that you are represented by an insurance claims attorney who will effectively and aggressively fight on your behalf, who knows what it takes to prevail, and who will bring the case to its best possible outcome. You should contact us as soon as possible.

Many people acquire life insurance in order to guarantee that their loved ones are provided for in the event of their death. For most people, the policy is acquired, and it just becomes another monthly bill they rarely think about. However, on occasion, life takes a tragic turn and the insured who just applied for a life insurance policy but before the policy is issued, dies. Such a scenario calls into question when a temporary life insurance policy can be created which would cover an insured applicant’s beneficiaries. Paying death benefits under these types of temporary policies can be complicated and insurers love to fight paying beneficiaries in the situations. One of our clients had this very situation occur.

In State Farm Insurance Co. v. Landfried, No. 5:19-cv-01845, (C.D. Cal. June 25, 2020) (Slip op.), our client’s uncle applied for life insurance. He completed the insurance application over the phone with an insurance agent. When completing the application, he designated his nephew, our client, as the beneficiary. The insurance agent offered the uncle the opportunity to “bind” the policy. This meant that our client’s uncle could pay the initial month’s premium while he was still undergoing the application process and, should he die before the insurance company had completed the underwriting process, his family would still be entitled to the death benefits he was applying for. Insurance companies in California offer the opportunity to bind a policy because California law, both by California statute and case law, provides for the creation of a temporary policy under certain circumstances. The insurance agent informed the uncle that he needed to provide a payment of $217 to bind the policy. The uncle placed the money in his bank account and gave the agent his debit card information to pay the premium. The agent did not immediately process the payment. In fact, she waited three days before even attempting to process the payment. During the intervening three days, the uncle died.

State Farm denied the claim and filed a declaratory relief action against our client in federal court, seeking a court order declaring that the insurer did not owe our client the death benefits under the life insurance policy. Our client brought a counterclaim, seeking the death benefits as well as bad-faith damages above and beyond the face value of the policy. The insurer was sufficiently confident that it did not owe our client the death benefits that it brought a motion to dismiss the claims under Federal Rule of Civil Procedure 12(b)(6). The motion argued that, even if everything our client asserted was true, the insurer still would not owe our client any death benefits. After requesting additional briefing on the matter, the court denied the motion.

Whereas under California Insurance Code Section 11015 two parties can create a temporary insurance policy under certain enumerated circumstances, the court focused on a different manner of creating a temporary policy that covers the insured during the application process. The court stated in an order dated June 25, 2020 that:

The Court previously raised this issue with the parties at the February 10, 2020 hearing on these motions, and requested additional briefing on the application of State Farm Mut. Auto. Ins. Co. v. Khoe, 884 F.2d 401, 405 (9th Cir. 1989) and Metro. Life Ins. Co. v. Wood, 302 F.2d 802, 802–03 (9th Cir. 1962). Dkt. 28. As the Court stated at the hearing, these cases focus their inquiry on the possibility that a temporary insurance contract may be formed if a party completes an application, makes a payment of a first premium, and “the language of the application would lead an ordinary layperson to conclude that coverage was immediate.” State Farm Mut. Auto. Ins. Co. v. Khoe, 884 F.2d 401, 405 (9th Cir. 1989). This possibility for coverage exists entirely outside of the statutory conditions which create temporary insurance coverage under Cal. Ins. Code § 11015. See, e.g. Hodgson v. Banner Life Ins. Co., 124 Cal. App. 4th 1358, 1372-73 (Ct. App. 2004) (distinguishing between Section 11015’s statutory obligations and formation of a temporary insurance contract under California law based on the reasonable expectation of the parties and relevant language in any conditional receipt provided).
[. . .]
The Court finds that the Counterclaim’s factual allegations regarding (1) [the uncle’s] submission of a written application for life insurance, and (2) his express attempt to bind the policy by having a payment processed, as State Farm’s agent Jones allegedly told him he was able to, may plausibly have resulted in the creation of a temporary insurance contract under California law, dependent upon the language of the application itself, which is not before this Court. See State Farm v. Khoe, 884 F.2d at 405.

Id. The district court’s ruling relied heavily on State Farm Mutual Automobile Insurance Co. v. Khoe, 884 F.2d 401 (9th Cir. 1989) and Metropolitan Life Insurance Co. v. Wood, 302 F.2d 802 (9th Cir. 1962). These cases address the creation of temporary insurance policies via avenues that are different from those listed in the California Insurance Code. Given the significance of these cases, they each warrant at least a brief discussion.

In Wood, the insurance applicant delivered an application and a check for the first premium to the insurer’s agent. The applicant was examined by the insurer’s physician, but he died later that same day. The court held that an insurer’s obligation to pay had matured before the applicant died. See Wood, 302 F.2d at 803. The court relied upon jurisprudence that established that, when the application is ambiguous, the receipt of the application and initial premium payment results in the creation of a temporary insurance policy. The Wood court also explained that the insurability of the applicant did not matter. If the insurance company determines that the applicant is uninsurable, then it can merely refund the premiums and inform the applicant that it is not interested in providing insurance. It loses that right the moment the applicant dies.

The other case, Khoe, addressed a separate important issue relevant to the creation of temporary insurance policies: the insurance agent’s obligation to address limitations on temporary insurance during the application process. In Khoe, the Khoes applied for health insurance, and the application contained a conditional receipt “which stated that no insurance would be effective unless a policy was issued. The clause also stated that if a policy was issued, coverage would date back to the day the application was signed.” Khoe, 884 F.2d at 403. The parties disputed whether the insurance agent had explained the clause to the applicant. The applicant also contended that he was informed by the agent that, if he paid right away, he would receive immediate coverage. Subsequent to signing the application and submitting the required premium, the applicant was hospitalized, and the insurer attempted to avoid paying the medical bills. See id. at 404. It claimed that the parties never entered into an insurance contract. Litigation ensued.

The Khoe court first concluded that the application clause that limited temporary insurance was not ambiguous and, therefore, a contract for temporary insurance could not have arisen under the clause. See id. at 405-07. However, the Khoe court then addressed whether the clause had been explained to the insured. As the Khoe court stated, “In Young v. Metropolitan Life Ins. Co., 272 Cal.App.2d 453 (1969), a California Court of Appeal imposed an obligation on the insurer to call an unambiguous conditional receipt clause to the insured’s attention and explain it to the insured.” Id. Applying this principle, the Khoe court held that “the conditional receipt clause is unambiguous and thus the language of the clause would not give rise to a contract of temporary insurance. Triable issues of fact exist, however, as to whether the clause adequately was read and explained to the Khoes. If the clause was not explained adequately to Nena Khoe, a contract for temporary insurance did arise on April 21, 1986.” Id. at 408‑09.

Temporary insurance contracts in California are very complicated. There are multiple avenues to create one. Temporary insurance policies are also often the policies that are most intensely contested by insurance companies because the insurers are now obligated to pay a significant sum of money even though they barely collected any premiums. However, one thing that the case law makes clear is: even if a policy has not been issued, if the application was completed and the initial premium was paid, then there is a chance that a temporary insurance contract was created.

If you have a life insurance question, our firm specializes in handling these types of insurance claims and we can help you. Call us for a free consultation today or complete the contact form on our website.

In this several-part blog series titled The Basics of an ERISA Life, Health and Disability Insurance Claim, we discuss the basics of an ERISA life, health, accidental death and dismemberment and disability claim, from navigating a claim to handling a claim denial and through preparing a case for litigation. In Part Twelve of this series, we discuss the standard of review. The standard of review can greatly affect the outcome of any litigation for insurance benefits.

As we previously noted in this series, before suing an insurer over denial of benefits under a policy governed by ERISA, an insured must usually file an administrative appeal. In theory, this gives the insurer and insured a chance to “have a meaningful dialogue” regarding the disability, life, health, or accidental death and dismemberment claim over the benefits and gives the insurer another opportunity to make the correct decision. In reality, more often than not, insurers just use this time to create as compelling a case as possible to deny the claim for benefits and to set themselves up to win in litigation. If the claim is denied and the insured has pursued all mandatory appeals, the insured can sue the insurer. In the resulting ERISA litigation, the federal court will examine the insurer’s decision, records and reasoning to determine whether to affirm the denial.

The standard of review is a measure of how much discretion the insurer has to deny a claim. This applies during any litigation arising from the denial of an ERISA claim. If the claim for benefits is approved, then the standard of review is irrelevant.

Generally speaking, there are two standards of review: “abuse of discretion/arbitrary and capricious” and “de novo.” The terms “abuse of discretion” and “arbitrary and capricious” tend to be used interchangeably. Under the abuse-of-discretion standard, the court should overturn a ruling when it is “without reason, unsupported by substantial evidence or erroneous as a matter of law.” Miller v. Am. Airlines, Inc., 632 F.3d 837, 845 (3d Cir. 2011). Under the de novo standard of review, “the burden of proof is placed on the claimant” to establish entitlement to plan benefits. Muniz v. Amec Const. Mgmt., Inc., 623 F.3d 1290, 1294 (9th Cir. 2010). “When conducting a de novo review of the record, the court does not give deference to the claim administrator’s decision, but rather determines in the first instance if the claimant has adequately established that he or she [qualified for benefits] under the terms of the plan.” Id. at 1295-96. The trial court performs an “independent and thorough inspection” of the plan administrator’s decision in order to determine if the plan administrator correctly or incorrectly denied benefits. Silver v. Executive Car Leasing Long–Term Disability Plan, 466 F.3d 727, 733 (9th Cir. 2006). De novo review permits the trial court to “evaluate the persuasiveness of conflicting testimony and decide which is more likely true.” Kearney v. Standard Ins. Co., 175 F.3d 1084, 1095 (9th Cir.1999).

The easiest way to think of the standard of review is to think of a meter measuring how much an insured has convinced the court that he or she is entitled to benefits. Under de novo review, the insured need only establish 50.01% on the meter. Under the abuse-of-discretion standard, that number is much higher. With that standard, it helps to think of that number perhaps being 60% or even higher. An ERISA claimant/insured wants the de novo review standard to apply. Under the abuse-of-discretion standard, an insurer may be able to deny claims that, to a layman, are clearly meritorious. For example, a court may uphold an insurer’s decision where the insured’s treating physician stated that the claimant is disabled, but the insurer hired a doctor to conduct a “paper review” of the insured’s file without examining the insured and then denying the claim based on the resulting report. Because the hired paper reviewing doctor concluded that the person did not have a serious medical condition or did not have sufficiently disabling restrictions and limitations, the insurer’s resulting decision was not “without reason, unsupported by substantial evidence or erroneous as a matter of law.” Miller, 632 F.3d at 845. In short, the standard of review is critically important in most cases and may be outcome determinative.

The standard of review exists because insurance policies/ERISA plans have language that gives discretion to the claims administrator or employer in determining coverage and benefits issues. The standard of review is based on such a grant of discretion clause. If there is no such clause, then the default standard of review is de novo. Most ERISA plans in the United States include a discretionary clause if the applicable law permits the clause’s inclusion. Insurers and employers like these clauses because it makes their determinations more likely to be affirmed by the courts.

We all know that insurance companies generally seek profit over making claims decisions that result in paying claims and thus readily deny many valid claims merely to avoid paying benefits under the plan. Because of this, many states have banned clauses that grant discretion to insurance companies. These states want the courts to review the evidence and decide whether a person is entitled to the benefits without a presumption in favor of the insurer’s or employer’s claim decision. For example, such clauses are banned in California. California Insurance Code Section 10110.6 invalidates discretionary clauses for all life insurance and disability insurance plans. As a result, for a disability plan that insures an individual residing in California, an insurer’s decision will almost always be subjected to de novo review. Furthermore, some courts in California have interpreted Section 10110.6’s language as applying to medical insurance plans as well. See Ticconi v. Blue Shield of California Life & Health Ins. Co., 160 Cal.App.4th 528, 540, n.7 (2008); Mahlon D. v. Cigna Health and Life Ins. Co., 291 F.Supp.3d 1029, 1031-32 (N.D. Cal. 2018).

Even though ERISA is federal law, many of these state laws still apply to contracts governed by ERISA. In many circumstances, ERISA preempts state law. However, laws such as California’s Section 10110.6 are not preempted by ERISA because of ERISA’s “saving clause that saves from preemption ‘any law of any State which regulates insurance, banking, or securities.’” See, e.g., Orzechowski v. Boeing Co. Non-Union Long-Term Disability Plan, Plan Number 625, 856 F.3d 686, 692-695 (9th Cir. 2017). Furthermore, this applies to all ERISA plans and insurance policies. See id. at 695. As such, in California, there is little dispute that, for a disability, life insurance or accidental death claim, the standard of review will be de novo. In many other states, there are similar laws that alter the standard of review for many types of policies.

Another temperance on the abuse-of-discretion standard lies in the fact that courts have ruled that discretionary clauses are disfavored as a matter of public policy. This means that an insurer must be careful about how the clause is worded. If the court concludes that the clause is less than clear or has any a defect that the court can locate, the clause will be deemed invalid, and the standard of review will be de novo.

Ultimately, the standard of review is a critical aspect of any ERISA lawsuit for pension or insurance benefits. Even when filing a mandatory administrative appeal, a claimant, or his or her attorneys, must always keep in mind how the standard of review will influence the court’s decision on a claimant’s entitlement to benefits. Such considerations are paramount in pursuing a claim.

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