In countless articles that our law firm has published we have talked about how unfair discretionary clauses are for short and term and long term disability claimants. In the state of Michigan it is crystal clear that any policy issued after July 1, 2007 cannot contain a discretionary clause. This means that a claimant who needs to file a lawsuit will be entitled to have a judge review their claim without any deference to the insurance company. There are approximately 20 states that have passed similar laws. Insurance companies have been arguing that any amendments to disability policies after July 2007 should not count as newly issued policies as they are simply changes in policy language. Fortunately the Michigan courts have not bought this argument and in a recent case against National Union and Fire Insurance Company a Michigan federal Judge confirmed that any revision to a disability policy after July 2007 requires a court to conduct a de novo review of a claims denial.
In the case against National Union and Fire an employee attempted to collect benefits under the Voluntary Group Accident Insurance Policy offered by Dow Chemical. The insurance company argued that the court could not conduct a de novo review of the claim denial. The court stated:
The Dow Chemical Company’s Voluntary Group Insurance Policy and Summary Plan Description (“the Plan”) is an ERISA-governed Plan. The Plan language states that it was “Amended and Restated: October 19, 2009 – Effective January 1, 2010 and thereafter until superseded.” ECF No. 10, Ex. 1. The Plan was amended after July 1, 2007, and is therefore governed by Rule 500.2202. The fact that the discretionary language included in the Plan has been in place since 1999 is, of course, of no consequence. Because the Court finds that the policy was revised after July 1, 2007, a de novo standard of review applies.
This case is one step closer to a victory for this claimant. The insurance company fought hard against a de novo review as they did not want the claimant to be on a level playing field. The judge will now be able to make a fair and reasonable decision. The question remains as to whether this de novo review applies to Michigan residents only or to Dow Chemical employees nationwide.