Daily Archives: May 24, 2017

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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