Disability insurance Attorneys Dell & Schaefer hope Governor Schwarzenegger will sign bill banning discretionary clauses in long term disability policies

California Governor Arnold Schwarzenegger has the opportunity to sign California Assembly Bill 1868 (“AB 1868”) and put an end to unreasonable discretionary clauses contained in ERISA governed long term disability policies. Discretionary clauses provides authority to the insurer to determine eligibility for benefits or coverage, interpret the terms of the policy, or interpret the terms of the contract in a manner inconsistent with state law. In my opinion discretionary clauses tie the hands of courts and allow disability insurance companies to wrongfully deny disability claims. The proposed AB 1868 bill that needs Governor Schwarzenegger’s approval would prohibit any insurance company from issuing any insurance policy in the state of California that contains a discretionary clause.

In the recent case of Morrison v. Standard Insurance Company, the 9th Circuit U.S. Court of Appeals ruled that the California Insurance Commissioner does not need to approve any disability insurance policies that contain discretionary clauses. For a summary of the Morrison case, please see our article titled The Standard Insurance Company Loses Their Battle To Enforce Discretionary Clauses In Long-Term Disability Policies.

The elimination of discretionary clauses in California is a great start, but a bill similar to AB 1868 should be on the books in every state. The discretionary clauses allow disability insurance companies to hide behind the wall of ERISA and its arbitrary and capricious standard of review. The elimination of the discretionary clause will give every claimant who has a denied disability claim the opportunity to have an independent judge review their claim denial.

Disability Attorneys Dell & Schaefer support AB 1868 and urge you to send a message to Governor Schwarzenegger by clicking here. In the “Choose Your Subject” box, please select insurance issues. You can cut and paste the following message to the Governor in order to show your support for AB 1868:

Please support Assembly Bill 1868 which bans discretionary clauses in insurance policies. As a result of the Federal Courts’ interpretation of the ERISA statute, when insurance companies insert language into the policies vesting themselves with discretion to decide claims, the Federal judges who review denials will give substantial deference to the insurer’s decision. This means the judge will not be determining if the claimant is entitled to benefits, but will rather be looking to see if the denial was “arbitrary or capricious,” and will ignore the merits of the claim. The insured essential has no right to their day in court. Any standard of review that ignores the merits of an individual’s claim is inherently unjust. Such a standard leaves an already vulnerable group of individuals less able to obtain the disability benefits they both desperately need and rightfully deserve. It is an exceedingly unfair and unreasonable interpretation of a statute, which does not align with the concepts of fairness and justice.

AB 1868, which bans discretionary clauses in group long-term disability policies, would create an even playing field for insurance claimants and could help dissuade insurance companies from unfairly denying claims. This, in turn, would help many people with disabling conditions rely on disability benefits to pay their bills when they cannot work.

Without these protections against discretionary clauses, insurance companies who deny valid disability claims have a completely unfair advantage, and thus, will more often than not succeed in denying valid claims. With the protection in AB 1868, insurers will be incentivized to review claims more thoroughly, which will even the playing field somewhat and reduce the need for an employee to resort to the legal system. Here in California, prohibiting discretionary clauses will make the standard of court review for group policies purchased by an employer the same as it already is for individual policies.

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Do you work in my state?

Yes. We are a national disability insurance law firm that is available to represent you regardless of where you live in the United States. We have partner lawyers in every state and we have filed lawsuits in most federal courts nationwide. Our disability lawyers represent disability claimants at all stages of a claim for disability insurance benefits. There is nothing that our lawyers have not seen in the disability insurance world.

What are your fees?

Since we represent disability insurance claimants at different stages of a disability insurance claim we offer a variety of different fee options. We understand that claimants living on disability insurance benefits have a limited source of income; therefore we always try to work with the claimant to make our attorney fees as affordable as possible.

The three available fee options are a contingency fee agreement (no attorney fee or cost unless we make a recovery), hourly fee or fixed flat rate.

In every case we provide each client with a written fee agreement detailing the terms and conditions. We always offer a free initial phone consultation and we appreciate the opportunity to work with you in obtaining payment of your disability insurance benefits.

Do I have to come to your office to work with your law firm?

No. For purposes of efficiency and to reduce expenses for our clients we have found that 99% of our clients prefer to communicate via telephone, e-mail, fax, GoToMeeting.com sessions, or Skype. If you prefer an initial in-person meeting please let us know. A disability company will never require you to come to their office and similarly we are set up so that we handle your entire claim without the need for you to come to our office.

How can I contact you?

When you call us during normal business hours you will immediately speak with a disability attorney. We can be reached at 800-682-8331 or by email. Lawyer and staff must return all client calls same day. Client emails are usually replied to within the same business day and seem to be the preferred and most efficient method of communication for most clients.

Reviews

Bruce R. (Arizona)

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. 

Don (Florida)

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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