Court to hear case that could help workers claim benefits

Supreme Court to weigh if insurers that pay and administer benefits have conflict of interest

When Wanda Glenn first sought disability benefits from MetLife Inc. in 2000, she “never in a million years” expected it would end up as a Supreme Court case.

But on Wednesday, the justices will hear oral arguments in a dispute that is being closely watched by insurance companies and business groups. Depending on how the justices rule, the case could make it easier for employees to win health and disability benefit payments in court.

Disability benefits are a big business. Disability insurance plans cover 28 million Americans, and insurers paid more than $7.2 billion in long-term disability claims to more than 500,000 people in 2006, according to court papers filed by the U.S. Chamber of Commerce, America’s Health Insurance Plans and the American Benefits Council.

But it’s a claim that didn’t get paid that led Glenn, a 55-year-old resident of Columbus, Ohio, to sue MetLife.

Glenn, who suffered a heart attack in 1989, says her doctor in 2000 told her to stop working “or die.” While she loved her job as a sales manager at Sears, Roebuck & Co., where she had worked for 14 years, Glenn left and applied for disability benefits.

“I am not asking for a handout,” she said in an interview. “I’d rather be working.”

MetLife, which administered Sears’ disability plan, paid benefits for two years but in 2002 said her condition had improved and refused to continue the benefit payments. Sears, now owned by Sears Holdings Corp., is not involved in the case.

Glenn’s lawyers argue that MetLife had a conflict of interest, because it both decided whether employees should receive benefits under Sears’ plan and it paid the benefits. That gives MetLife a financial incentive to deny her claim, they argue.

“Every time they deny a claim, they pocket the money,” said Joshua Rosenkranz, who is representing Glenn before the Supreme Court.

MetLife saved $180,000 by denying Glenn disability benefits until retirement, her lawyers said in court filings.

A spokesman for New York-based MetLife wouldn’t comment on the details of the case. “We’re confident we’re right on the law,” John Calagna said.

Most federal appeals courts consider companies in MetLife’s position - so-called “dual role insurers” – to have some conflict of interest. But, the question of how much weight to give that conflict when individuals challenge a denial of benefits has “befuddled the lower courts,” the Legal Aid Society said in a friend of the court brief.

The dual arrangements are allowed under ERISA, the Employee Retirement Income Security Act. Approximately 45 percent of all employer health, disability and life insurance plans are administered by such arrangements, Rosenkranz said.

The 6th U.S. Circuit Court of Appeals ordered Glenn’s benefits reinstated in September 2006, ruling that MetLife “acted under a conflict of interest” and made a decision that “was not the product of a principled and deliberative reasoning process.”

MetLife appealed that ruling to the Supreme Court, arguing that the standard used by the 6th Circuit would “encourage participants with dubious claims to file suit,” which in turn would raise the costs of benefit plans to both companies and employers.

It is also more efficient to have a single company perform both functions, MetLife said, and the resulting cost savings to employers allows them to offer better benefit plans.

Unless there is actual evidence that a company’s conflict of interest influenced its decision, MetLife said, the conflict shouldn’t carry much weight in the courts.

The Bush administration weighed in on Glenn’s side. Solicitor General Paul Clement wrote that MetLife “benefits financially if it denies an employee’s claim,” which is a “commonsense understanding of what constitutes a conflict of interest.”

MetLife hasn’t resumed paying benefits to Glenn, she said, pending the outcome of the Supreme Court case. She primarily lives off Social Security disability benefits, which MetLife helped her obtain only a month before removing her from its own rolls.

The 6th Circuit said MetLife’s failure to address Social Security’s determination that Glenn was disabled when the company denied her further benefits was another reason it ruled against the insurer.

The case is MetLife v. Glenn, 06-923.

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Steve Dell has done an exceptional job with my disability application process. The firm is extremely well managed. They have acquired an incredible amount of experience over many years. I recommend them for disability insurance claims without reservation. 

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I called this firm a few months ago completely disparaged due to a company cutting off disability benefits at a time that nearly caused me to lose everything.

Attorney Alex Palmera and Danielle worked hard to reach an amicable settlement and my case was settled a few months later. This is a good firm and the specific expertise in disability claims saved me countless hours of hassle at a time when an already fragile state existed.

Thank you Mr. Palamara and Danielle.

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I have nothing but good things to say about how my buyout was handled with my disability claim. The level of professionalism was amazing. All of my questions and concerns were answered either by Danielle L. or Alex P. in such a timely manner and with such care I would recommend them in a heartbeat to anyone needing to approach their provider with buyout options.

They did a fantastic job communicating between the provider and me, always keeping my best interest at heart and always answering my many many questions. They really did take most of the stress out of this whole situation. I would give them a 10 out of 10 for every step of this crazy journey. Thank you so much for helping me through this.

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