California Insurance Lawyer Blog

In case you missed it Good Morning America did a segment in April (2008) on Susan Kristoff, from West Palm Beach, Fla., who suffered from potentially deadly form of breast cancer. (We blogged it earlier.) She applied to CIGNA for payment of her long term disability insurance benefits and was repeatedly denied. Click to watch the original video.

After ABC started investigating for its segment on TV, CIGNA paid the claim. As a result of the Good Monring America show, dozens of other people called or wrote to ABC to report similar stories. You can read about this, and even watch the follow-up video on the ABC website by clicking here.

We deal with these denials every day. And, it's not just CIGNA we battle with. We have similar cases against MetLife, Unum, Standard, Hartford, Aetna, and others. Hopefully, this ABC report will cause these insurance companies to think twice before denying claims without a full and fair investigation of the facts. AK

Last month we wrote how about MetLife v. Glenn had then recently been argued before the Supreme Court. Last week the decision was handed down. For the most part, it is a good step in the right direction...just not a very big step, at least as far as California and other insured’s (in the 9th Circuit) are concerned.

In Metropolitan Life Insurance Company v. Glenn, –U.S.–, 2008 WL 2444796 (June 19, 2008), the Supreme Court held that an insurance company which had the financial obligation to pay the claim, was not entitled to unfettered deference by the courts to its claim decision. This, even when the insurance policy gives the insurance company absolute discretion to make claims decisions. Rather, trial courts must factor in an insurer’s financial conflict of interest when reviewing the propriety of a claim decision.

For some time, the landscape in ERISA cases has been such that a trial court does not review the merits of the claim decision. Instead, when an employer granted “discretion” to an insurer, a trial court would only review whether the insurer acted “unreasonably” during the claim process. Oftentimes, the courts would never even get to the question of whether the claimant was disabled and entitled to benefits. Proving that an insurer acted “unreasonable” during the claim process was and is a very difficult burden for a claimant seeking to overturn a benefit denial.

In Ms. Glenn’s case, the Court was of the opinion that MetLife’s conflict of interest had influenced the claim decision and therefore, MetLife was not entitled to the full discretion it claimed. In its decision, the Court questioned claims practices we see all too often in benefit denials. For example, MetLife encouraged Ms. Glenn to apply for Social Security benefits, which would benefit MetLife financially since it could reduce its own liability by the amount of Ms. Glenn’s Social Security Award. Although MetLife took the financial benefit of the Award, it then virtually ignored the signficance of the Award and terminated Ms. Glenn’s disability benefits. The Court was also extremely critical of MetLife’s “selective review” of Ms. Glenn’s medical evidence. MetLife relied upon its own physician’s reports and discounted or ignored the evidence which supported Ms. Glenn’s disability.

Much of what the Glenn case represents had already been articulated by the 9th Circuit Court of Appeals in the matter of Alta Health v. Abatie. We believe the Glenn decision will reinforce Abatie, and help to further influence judges to more critically review insurer’s claim decisions on their merits, as opposed to abjectly deferring to the administrator’s decisions. All in all, we believe the Glenn decision will help us help our clients obtain the benefits to which they are entitled. CC & AK