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Michigan Long Term Disability Insurance Lawyer Blog

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On June 19 the Supreme Court issued its much anticipated decision in Metlife v Glenn regarding the conflict of interest created by a long term disability insurer who both determines whether an insured is eligible for benefits and pays benefits out of its own pockets.

Justice Breyer authored the majority opinion confirming that when a plan administrator both evaluates claims for benefits and pays those benefits a conflict of interest is created which requires the reviewing court to weigh that conflict as a factor in determining whether there was an abuse of discretion.

The majority opinion reaffirms the principles first identified in the Firestone decision. Any practitioners who were hoping this decision might change the landscape are sure to be dissapointed as the Court specfically recognized that it was not providing any detailed set of instructions on determining the effect of the insurer’s conflict on its ultimate decision to deny benefits.

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Patrick Derkacz, an attorney and partner with the firm attended the 11th National Advanced Forum on Litigating Disability Insurance Claims which was held in Boston. The conference provided an opportunity to hear from industry insiders on the latest trends involving Long Term Disability Insurance Claims.

The three day conference included presentations from various respected advocates on a range of topics including developing discovery strategies to expand the record and an in-depth discussion about the pending Supreme Court opinion in Metlife v Glenn.

Counsel were able to share various litigation tips and strategies that have proven effective in an effort to increase the likelihood of a favorable outcome and increase the amount of each recovery.

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In a recent study by the University of Chicago School of Law, the Michigan Supreme Court was ranked dead last in Independence. The academic study determined that the justices on this court (including Taylor, Markman, Young and Corrigan) demonstrated the least ability of the hundreds of state supreme court judges to withstand partisan pressures.

The results of this study come as no surprise to attorneys actively practicing in Michigan. These justices have consistently ruled in favor of the insurance companies, the chamber of commerce and the corporations who fund their reelection campaigns. This Court has overturned more cases faster than any other court in memory.

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Most Long Term Disability policies only provide benefits for a limited time while the insured is disabled from his or her own occupation. This time period is known as the “own-occupation” period. Typically, it is easier for a policy holder to meet this definition of disability because he or she only need establish that they cannot perform the duties of a single occupation-their own. For instance, in a recent case we handled, a registered nurse who was in a serious car accident and suffered a back injury was found disabled because she could not stand on her feet for eight hours and had lifting restrictions that prevented her from assisting patients in and out of bed.

However, after a limited time, usually 24 months, the typical policy provides that benefits are only payable if the insured is disabled from performing any occupation. The Long Term Disability insurance companies normally perform a complete review of every claim when the definition changes and will often use this change to terminate benefits finding that the insured can perform some job. Frequently some nonexistant job for some nonexistant company.

Accordingly, anyone looking to purchase Long Term Disability Insurance should be aware of this important issue.

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Long Term Disability Insurer, Unum Provident, appears to be complying with the terms of the Multi-State Regulatory Settlement Agreement according to Eric Dinallo, the New York Insurance Superintendant.

In November 2004 Unum, the Department of Labor and a number of states entered into a settlement agreement requiring Unum to pay a $15 Million dollar fine and reassess thousands of claims as a result of Unum’s unfair claims handling practices.

Recently, an examination of Unum’s reassessment practices determined that Unum appeared to be complying with the terms of the Regulatory Settlement Agreement. More than 23,000 claims have been reassessed with 41.7 % resulting in reversal with a payout of over $676 million dollars in additional long term disability benefits.

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Not all long term disability policies provide the same quality, type, degree and level of coverage.
The Consumer Federation of America has a nice article discussing various aspects to consider before purchasing a Long Term Disability Insurance Policy. 

Related Posts: “Own” vs “Any” Occupation in Long Term Disability Insurance Plans, The misleading nature of “Own Occupation”, SUPREME COURT SIDES WITH LTD INSURERS, SMDA Partner-Patrick Derkacz attends ACI Long Term Disability Insurance Conference

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Recently, the US District Court (Judge Richard Enslen) upheld the Michigan Insurance Commissioner’s right to prevent any Long Term Disability Insurer from including discretionary clauses in their insurance contracts in the case American Council of Life Insurer’s v Waters.

This could be a tremendously important decision for anyone with a long term disability claim. For years now the insurance companies have included clauses giving themselves the discretionary authority to interpret and enforce the provisions of their own insurance policies. The natural result of this power grab was to restrict the Court’s ability to review the appropriateness of the insurance companies decisions. As a result countless otherwise meritorious claims were denied. The insurance companies racked up huge profits while the individuals who filed claims lost their homes and were forced into poverty.

It remains to be seen whether this well reasoned decision is upheld on appeal. The AARP filed an amicus brief in support of the Michigan Insurance Commissioner.

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“That Smells Bad” said Justice Scalia as he described disability insurer-MetLife’s conflict of interest.

The US Supreme Court heard Oral arguments last week in Glenn v. Metlife. This is an important decision for all disability claims governed by ERISA. The Supreme Court examined how Metlife’s inherent conflict of interest–as both the entity which determines eligibility and then must pay those claims–should affect a reviewing court’s analysis.

The Justices clearly recognize the problem. Metlife had to determine whether Wanda Glenn was disabled. Metlife helped Wanda Glenn get social security disability. Metlife got repaid most of its money when Wanda Glenn was paid social security disability. Then Metlife decided Wanda Glenn was no longer disabled and cut off her long term disability benefits. The lower Courts determined Metlife’s decision was not supported by the evidence and Metlife’s inherent conflict of interest was a factor.

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