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Illinois Insurance Law Gives Claimant A Fighting Chance Against Disability Insurance Company

An Illinois district court refused to let Hartford, a disability insurance company, evade an Illinois law, which was enacted to protect consumers. The law was passed to basically “level the playing field” for insurance companies and the consumers that rarely have a fighting chance against these corporate giants.

Disability insurance policies often contain a contractual term called a discretionary clause that grants the insurance company the authority to decide if, when, and what benefits are to be paid under the insurance policy. These terms can be very harmful to a claimant whose policy is governed by ERISA. Such a clause limits the way a court can review a claim denial and makes it very difficult for a claimant to receive a fair review once denied.

That’s why a number of states – including Illinois – have passed laws that prohibit disability insurance companies from selling disability insurance policies that contain such clauses. Hartford recently tried to dodge the law in Illinois after being sued by a claimant whose Long-Term Disability benefits it had terminated. The Illinois court refused to allow Hartford get away with it.

Cindy worked at Children’s Memorial Hospital and was a participant in her employer’s Long-Term Disability Benefits Plan which was administered by Hartford. When she became disabled and had to stop working she applied for disability benefits. After exhausting her short-term disability benefits she applied and was approved for Long-Term Disability benefits.

Unfortunately, after paying Cindy Long-Term Disability payments for more than 2 years, Hartford decided Cindy was no longer disabled and terminated her claim. After exhausting her administrative appeals, Cindy and her disability lawyer filed suit.

A battle ensued over how much evidence Cindy would be allowed to show the judge to prove Hartford unreasonably denied her claim. The Illinois law banning discretionary clauses was intended to allow claimants, such as Cindy, to introduce evidence to support their claims. In spite of this, Hartford fought to convince the judge that the law didn’t apply to its disability policy.

The court rejected Hartford’s arguments and refused to allow it to circumvent the Illinois law.



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