Many employees of companies in Chicago and elsewhere receive long term disability insurance coverage through their employers. The disability insurance is most often both underwritten by an insurance company, and the claims for eligibility are determined by that same insurance company. Courts refer to this as a structural conflict of interest because the insurer is supposed to act as a fiduciary in making determinations, but is conflicted in the sense that denying claims is in the insurer’s financial interest. In 2008, the Supreme Court, in Metropolitan Life Insurance Co. v. Glenn, instructed that this structural conflict of interest does not alter the standard of review of a given case, but must be weighed as a factor to determine if the insurer’s decision was arbitrary and capricious where the long term disability insurance plan confers discretion on the insurer to make eligibility determinations.
Since Glenn, courts have been wrestling with exactly how to weigh that conflict of interest. A recent case in the Ninth Circuit Court of Appeals demonstrated it is to be weighed pretty heavily when evaluating the insurer’s method of denying a claim. In Salz v. Standard Insurance Co., the district court upheld an insurer’s denial of a claim. The appellate court then reversed and remanded with instructions to consider the insurer’s failure to consider the employee’s receipt of Social Security Disability benefits, and the manner in which the employee performed his job, rather than just the generic Dictionary of Occupational Titles description of the occupation.
When the district court reviewed the case again, it concluded that the insurer’s failure to mention the receipt of Social Security Disability was not significant enough to overturn its benefit determination. The district court also concluded that the insurer was not required to consider how the employee performed his job and it was sufficient for the insurer to rely on just the Dictionary of Occupational Titles description.
Salz again appealed, and the Ninth Circuit Court of Appeals reversed, and ordered Salz’s benefits reinstated. It ruled the district court erred in determining the failure to address the Social Security award was not reversible error, and the court erred in determining the insurer could disregard the manner in which the employee performed his job. This appellate opinion represents that while the standard of review is not legally different when there is a conflict of interest, the presence of the conflict does create more obstacles an insurer must overcome when denying a claim for long term disability benefits.
Only a skilled ERISA lawyer can help you recover your benefits where the insurer has not reviewed your claim in accordance with its requirements. If your claim for long term disability benefits has been denied by an insurer, call an experienced ERISA lawyer to determine if the insurer failed to fulfill its burden in denying your claim.