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Tag Archives: Conflict of Interest

Insurance Company Bias in ERISA Cases: Hartford’s History of Bias and Discovery of an Insurer’s Biased Claims Administration Process

Posted in: Abuse of Discretion, Conflict of Interest, Disability Insurance, Discovery, ERISA, Health Insurance, Insurance Litigation Blog, Life Insurance September 26, 2018

The Employee Retirement Income Security Act (“ERISA”), a 1974 federal law, sets minimum standards for many employee benefit plans and serves to provide protection for individuals in these plans.  Discovery in ERISA cases is often limited because the statute’s primary goal is to provide inexpensive and expeditious resolution to employee benefit claims.  District courts are generally limited to the administrative record unless a so-called structural conflict of interest exists.  Considering that insurers make benefit determinations on life, health and disability insurance claims and profit when an adverse decision is made, this scenario creates an inherent conflict of interest whenever an insurer administers a claim.

Courts find that a conflict of interest exists where the “entity that administers the plan, such …

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When Guarding the Henhouse, Some Foxes Go Rogue: When an Insurer’s Conflict of Interest Factors into Administrating Group Long-Term Disability ERISA Plans

Posted in: Abuse of Discretion, Accidental Death or Dismemberment, Conflict of Interest, Disability Insurance, Disability Insurance News, ERISA, Health Insurance, Insurance Litigation Blog, Life Insurance, News July 25, 2018

Few Americans can retire on their savings alone.  Many workers participate in an employee benefits plans, which serve to provide financial security in case of disability or retirement.  In the case of insurers that decide who qualifies for life, health and disability insurance benefits, there exists a major concern about the significant conflict of interest that exists when these insurers make these decisions and also pay for these benefits.  Will these insurers exalt their own interests of bottom line profitability over the interests of ERISA plan participants and beneficiaries who file claims for life, health and disability benefits? It is not a leap of logic that this conflict of interest results in insurance companies wrongfully denying ERISA benefit claims.

In

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Insurer's General Reservation of Rights Does Not Entitle Insured to Cumis Counsel

Posted in: Commercial General Liability Insurance, Directors & Officers Insurance, Duty to Defend, Policy Interpretation, Property & Casualty Insurance September 05, 2013

In a recent ruling, the California Court of Appeal held that an insurer’s general reservation of rights to deny coverage of damages outside its policy does not create a conflict of interest with the insured, such that the insured in entitled to Cumis counsel.  The decision in Federal Insurance Co. v. MBL, Inc. __ Cal. App. 4th __,  2013 Cal. App. LEXIS 679, 2013 WL 4506149 (August 26, 2013) follows California precedent denying insureds the right to select independent counsel at the insurer’s expense absent an actual conflict of interest.…

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Ninth Circuit Emphasizes Need for an Insurer to Have a Meaningful Dialogue With the Claimant When Denying Benefits

Posted in: Abuse of Discretion, ERISA, Health Insurance April 15, 2013

A recent Ninth Circuit Court of Appeals decision reaffirmed the need for plan administrators to state the reasoning behind their denial of coverage.  In Lukas v. United Behavioral Health,  __ F.3d __, 2013 U.S. App. LEXIS 1230 (9th Cir. Jan. 17, 2013) the Ninth Circuit was faced with evaluating whether the district court properly weighed the factors necessary to determine if there was an abuse of discretion by the plan administrator in denying the benefits to the claimant.  On de novo review, the Ninth Circuit found that the lower court failed to properly weigh these factors and reversed the decision, remanding the case back to the district court for a benefit award and further necessary proceedings related to that …

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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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Ninth Circuit Rules that California's Mental Parity Act Requires Health Insurers to Pay for Certain "Medically Necessary" Treatment for Mental Illnesses

Posted in: Abuse of Discretion, Case Updates, ERISA, Health Insurance September 07, 2011

In an important decision, the Ninth Circuit Court of Appeals ruled that California’s Mental Health Parity Act (“Parity Act” ) requires that health insurers cover certain medically necessary treatment for certain mental illnesses, even if the insurance policy explicitly excludes such coverage.  In Harlick v. Blue Shield of Calif., __ F.3d __ (9th Cir.  August 26, 2011), the Ninth Circuit reversed the district court’s granting of Blue Shield of California’s motion of summary judgment, and held that under the Parity Act, Blue Shield was required to provide medically necessary health insurance benefits for mental illnesses on par with the treatment for physical illness covered under Harlick’s ERISA-governed health insurance plan.

The California legislature enacted the Parity Act in 1999 …

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Exhaustion of Administrative Remedies Under ERISA Not Required If Exhaustion Would Have Been Futile

Posted in: Conflict of Interest, Disability Insurance, Disability Insurance News, ERISA, Insurance Litigation Blog April 27, 2011

Terrance Burnett was eligible for short-term disability (“STD”) benefits and long-term disability (“LTD”) benefits through employee welfare benefit plans funded by his employer, The Raytheon Company, and administered by Metropolitan Life Insurance Company (“MetLife”).  After his doctors stated that Burnett’s psychiatric condition prevented him from performing his job duties, he filed a claim for STD benefits.  While, MetLife denied his claim for STD benefits, in Burnett v. Raytheon Co. Short Term Disability Basic Benefit Plan, 2011 U.S. Dist. LEXIS 40725 (C.D. Cal. Apr. 14, 2011), Judge Dolly Gee ruled that MetLife abused its discretion when it denied Burnett’s claim, and awarded him the STD benefits he sought.  In addition, the court held that Burnett was eligible for some LTD …

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Ninth Circuit Court of Appeals Applies Montour to the Conflict of Interest Analysis in ERISA Case

Posted in: Disability Insurance, Disability Insurance News, Insurance Litigation Blog, Legislation, News June 22, 2010

In the aftermath of the United States Supreme Court holding in Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 128 S.Ct. 2343, 2348 (2008), the courts have struggled to apply this holding. The Ninth Circuit did so in Montour v. Hartford Life & Accid. Ins. Co., 582 F.3d 933 (9th Cir. 2009). In turn, the District Courts have applied Montour in several decisions.

One of the latest is the unpublished opinion in Sterio v. HM Life, 2010 U.S. App. LEXIS 4615 (E.D. Cal., Mar. 4, 2010) which represents the first case out of the Ninth Circuit Court of Appeals to substantively discuss the application of the conflict of interest analysis set forth in Montour. …

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What Does a Deferential Standard of Review Mean in ERISA Cases? The U.S. Supreme Court Gives Some Clarification

Posted in: Abuse of Discretion, Case Updates, ERISA, News April 29, 2010

The federal courts have for a long time struggled with how to apply the deferential standard of review to actions taken by ERISA plan administrators in light of the United States Supreme Court holding in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989).  Firestone held that an ERISA plan administrator with discretionary authority to interpret a plan is entitled to deference in exercising that discretion.  Courts have reached different results on an important issue: is a plan administrator that incorrectly interprets a plan document still entitled to an abuse of discretion standard of review when courts review the administrator’s actions?  The Supreme Court answered that question in the affirmative in Conkright v. Frommert, __ …

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District Court Applies Abuse of Discretion Standard of Review After Montour

Posted in: Abuse of Discretion, Case Updates, Conflict of Interest, ERISA, Insurance Litigation Blog, News, Standard of Review January 14, 2010

Recently, in Montour v. Harford Life & Accident, 582 F.3d 933 (9th Cir. 2009), the Ninth Circuit Court of Appeals, in one of its most important cases, adopted a new standard of reviewing ERISA abuse of discretion cases where the insurer has a conflict of interest.  The court held that a “modicum of evidence in the record supporting the administrator’s decision will not alone suffice in the face of such a conflict, since this more traditional application of the abuse of discretion standard allowed no room for weighing the extent to which the administrator’s decision may have been motivated by improper considerations.”  Further, the court in Montour explained that a reviewing court must also take into account the administrator’s …

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