Good News if Your Claim for Long-Term Disability Insurance Has Been Rejected
If your application for long-term disability insurance is denied, discuss your rights at once with a California life and disability insurance claims lawyer. That lawyer will take legal action to help you obtain the disability benefits you need and deserve.
In some cases, the denial of a claim for disability insurance may constitute an abuse of discretion by the insurance company, according to a recent ruling handed down by the U.S. District Court for the Central District of California entitled McGuire v. Life Insurance Company of North America, a case that McKennon Law Group PC handled for its client, Brenda McGuire.
The case was heard in federal rather than state court because the plaintiff’s insurance plan was purchased through her employer, and employer-provided group insurance plans are governed by ERISA, the federal Employee Retirement Income Security Act of 1974.
What Are the Two Standards of Review?
If you sue an insurance company that rejects your ERISA governed disability claim, and your California life and disability insurance claims attorney persuades the court that the company’s decision was wrong, even then, your lawsuit may not succeed, depending on the review standard.
Two review standards are used by the courts that hear these cases. A court may use the “abuse of discretion” standard of review or the “de novo” standard of review:
To win a lawsuit under the abuse of discretion review standard, a court must determine that an insurance company’s rejection of your claim abused that company’s discretion. This standard, in which courts must give some deference to disability insurers, is a more difficult standard for a disability insurance claimant to prove under ERISA.
Under the de novo standard of review, a judge only decides whether an insurance company’s rejection of your claim was wrong or right. The de novo standard provides neither side with an advantage going to trial.
What Was Decided in McGuire v. Life Insurance Company of North America?
The District Court determined that Life Insurance Company of North America (LINA) abused its discretion by denying long-term disability benefits to a former community relations manager at Republic Services, a firm that provides waste disposal services across the United States.
The case was decided under the abuse of discretion standard, which is uncommon in ERISA cases pending in California because of a California statute that makes most ERISA cases subject to the de novo standard of review. The court clarified under what circumstances an insurer who denies a disability insurance claim has abused its discretion.
When a court reviews a decision to reject benefits in an ERISA case, it often does so under the de novo standard, which gives no advantage to the insurance company.
Most policies, however, give an insurance company the discretion to determine eligibility for benefits and to construe the policy’s conditions and terms. In these types of cases, the abuse of discretion standard applies if the claimant is from a state that does not have an anti-discretion statute, such as California’s anti-discretion statute.
What Were the Issues in McGuire v. LINA and Why is this Decision Important?
LINA contended that ERISA did not require them to have particular specialists review McGuire’s medical records. The judge Carmac Carney disagreed and found LINA’s failure to use specialists was a procedural irregularity indicating an abuse of discretion.
LINA contended that ERISA does not require that an insurance company have a claimant examined in-person by one of its health professionals and that by not doing so, it did not matter and had no effect on whether it abused its discretion. However, in deciding whether LINA abused its discretion, Judge Carney ruled that this decision to do so does matter.
LINA additionally contended that McGuire’s medical records did not precisely explain how her medical condition prevented her from working. The judge noted that LINA never contacted the doctors to seek clarification and ignored other evidence that verified McGuire’s reports of pain.
LINA also insisted that because McGuire declined surgery and pain medication, she was not disabled. The judge stated that McGuire could not be faulted because pain medications and surgery both carry considerable risk.
The judge found no evidence that McGuire was a malingerer, but he determined that LINA had abused its discretion. The court ruled in McGuire’s favor and awarded her the long-term disability benefits.
Read from the full case file here.
What Should You Know About Disability Insurance Claims?
If you file a disability insurance claim and your claim has been denied – you need the advice that a California life and disability insurance claims lawyer can provide.
Your first legal consultation is provided without cost or obligation. It is your chance to receive the advice you may need and to find out more about how the law may apply to your own situation.
If you need ERISA disability or life insurance benefits and your claim has been rejected, act now, and promptly schedule a consultation with an ERISA claims lawyer such as highly successful and experienced team at McKennon Law Group PC.