Most ERISA disability policies state that the insurer has “discretionary authority” to make all decisions regarding whether to award or deny disability benefits. If the policy contains this “discretionary authority” provision then the disability claimant can usually only overcome a denial if we are able to prove that the denial was: 1) wrong; and 2) the decision was arbitrary and capricious. This is an extremely difficult burden to meet. “Wrong” is not enough. It has to be wrong, and arbitrary and capricious.
In a disability case we have been handling against Life Insurance Company of North America, the policy stated that LINA had “discretionary authority” to make all decisions regarding whether an insured was disabled. However, yesterday we were able to convince a federal judge that this reservation of “discretionary authority” was invalid under state law. Thus, instead of an arbitrary and capricious standard, the standard was much lower.
This is the first time in the country that any lawyer has been able to convince a court to strike the entire discretionary review provision from an ERISA LTD policy.
The Judge then went on to overturn LINA’s denial of LTD benefits for a complete victory for our client.
Obviously, this was a huge victory for our client in this individual case. But, importantly, this was also a huge victory for all insureds who have LINA policies.
I would like to congratulate my law partner Greg Swartwood on this tremendous victory for our well deserving client. This case will make a huge difference in the live of many people in the future.