One of the most difficult things in any ERISA governed long term disability claim is dealing with a discretionary clause. A discretionary clause is language found in most ERISA disability policies which gives a plan administrator the ability to choose who will make decisions to approve or deny claims. If a disability policy has a discretionary clause then usually a court must apply an abuse of discretion standard when a case is litigated. The abuse of discretion standard is very bad for disability claimants and the courts have stated, “Under the abuse of discretion standard, the denial of a benefits claim will not be reversed “if reasonable, even if the court itself would have reached a different conclusion. Thus, as long as the denial of benefits is the result of “a deliberate, principled reasoning process and… is supported by substantial evidence,” it will not be disturbed.” There have been more than 18 states that have abolished discretionary clauses and made them illegal.
In every case an experienced disability insurance attorney must verify whether or not the insurance company has discretion. If the insurance company does not have discretion, then the claimant will receive a “de novo” review of their claim. A “de novo” review means that a Judge can review the administrative record and make determination regardless of how the insurance company ruled. In a recent case against Federal Express, they argued that they had discretion and therefore the court could not conduct a de novo review. The South Carolina Federal Judge disagreed with Fedex and ruled that since the FedEx LTD Plan did properly delegate final decision making authority to Aetna, then the court will review the decision to deny pursuant to a de novo standard. This is a great victory for any Fedex employee that is subject to the same disability policy that applied to this case. We are sure that Fedex will be making some changes to their LTD plan after the ruling in this case.
Our disability attorneys have handled numerous cases against FedEx and Aetna insurance company. Contact us for a free consultation to discuss your disability claim.
A copy of the South Carolina court’s decision against FedEx can be read by clicking here.