Dell Disability Lawyers 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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Standard insurance just dropped me with no communication with me.
I was put on Standard insurance by my employer in 2019. I was told by them when I was first on disability that I would be on this for the rest of my life. After 2 years of... read more >
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Standard
Standard is one of, if not the worse, company in the industry now
The Standard changed after the company was acquired by Japanese based Meiji Yasuda Life Insurance Company in 2016 and subsequently being delisted from the US stock exchang... read more >
Standard
Standard is one of, if not the worse, company in the industry Standard hasn't approved or denied my claim in over a year. They keep promising to look at it 'next week'
My husband is covered by a Standard STD/LTD non-ERISA plan. He has a very rare neuromuscular disorder and was hospitalized in intensive care, was off work for 6 weeks (wai... read more >
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Standard
I waited 5 weeks just to be told I can't receive benefits
After working overtime and stressing behind my job for the past 5 years, it resulted in me being diagnosed with retinopathy hypertension, at the age of 29, on 12/10/2018. ... read more >
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Standard
The Standard will threaten to withhold your pay until you sign every document that they send you. The worst part is when they consider back payment for SSDI benefits
First of all, the worst thing that could ever happen to a hard-working person is a permanent disability. Fighting to secure payment is hard enough when you are well. Let a... read more >
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Standard's sudden denial was inexplicable
I was placed on disability by my doctor with a diagnosis of Cognitive Impairment (supported by both a neurologist and a neuropsychologist) which severely affects my abilit... read more >
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Standard has keep me jumping through hoops for years
I have been on LTD with The Standard since September 2011. The have had me jumping through hoops for all these years. Very rude if I call and ask a question. They say they... read more >
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Standard
Mental health LTD should be covered under the Mental Health Parity Act
My company contracted with Standard for our short and long term disability policies. In Jan 2014 I was on STD, which turned into LTD with a waiting period, which was tough... read more >
Answered Questions by Our Lawyers
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Showing 8 of 28 Answered Questions
Q: Do I have to pay back LTD after receiving SSDI?
A: Hello. In most group disability policies there is offset language which states you must pay back any LTD that ... Read More >
Q: Non-taxable benefits have become taxable.
A: I am sorry to hear what you are going through. We have seen you exact fact pattern with tax on ssdi when you w... Read More >
Q: How do I ensure Standard makes a timely decision with regard to my claim?
A: Matthew, we are sorry to hear that you are having difficulty with your claim. While the insurance company does... Read More >
Q: Why can my employer hold my disability check after The Standard sends it to them? Can I file a grievance with them?
A: Lucas, it sounds like your claim for STD benefits is under a policy that is self-funded by your employer. Thus... Read More >
Q: Should I contact you before submitting my application for a private disability benefit?
A: It is in your best interest to contact us as early as possible if you think you are going to need to file a lo... Read More >
Q: Is there any case law in which a state government employee LTD plan decided to drop the 24 month mental health limitation? Has there been any success against a state government and Standard using ADA Title I (employee) and 3 (insurance company) from a discrimination basis?
A: Marie, thank you for your compliments on our website. We strive very hard to get as much information out there... Read More >
Q: How can Standard deny my claim and expect me to work when I am disabled?
A: Debbie, unfortunately this situation occurs often as there are two different departments reviewing your claim ... Read More >
Q: I'm waiting to hear back about my appeal. Should I hire an attorney?
A: Pam, if an appeal has already been submitted there may be very little an attorney could do at this point until... Read More >
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Dentist and doctors: beware of the Standard Insurance Company Group's long-term disability policy
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Disability Benefit Denial Reason #5 – Your Medical Evidence is Weak
If you're seeking long term disability benefits from an insurance company, you may be concerned that you're facing an uphill battle. Fortunately, the stronger your medical evidence, the greater the odds that your claim will be approved. On the other side of the coin, one of the most common reasons for denial of long term disability benefits involves too-weak med... Read More >
Disability Benefit Denial Reason #4 - Your Doctor Is Misled By the Disability Company
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After Two Appeals The Standard Insurance Approves Short & Long Term Disability Benefits for Nurse
Prior to filing for disability, our client was a Registered Nurse employed as a Senior Case Manager for United Healthcare. Our client was a dedicated employee who enjoyed her work until chronic pain, frequent headaches, and resulting cognitive dysfunction forced her to stop working in July of 2018. Fortunately, her employer provided disability insurance coverage under two policies: UnitedHealth Group’s ... Read More >
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Fibromyalgia is a multifaceted illness that can affect every aspect of one’s life. While most people are aware of the debilitating pain and fatigue associated with Fibromyalgia there is a less known symptom of the condition that has as great an impact- memory problems known as “Fibro Fog.” Prior to filing a claim for disability benefits our client was a shareholding partner for a large national law firm ... Read More >
Standard overturns decision to deny disabled Project Manager long-term disability insurance benefits after first Appeal
Terry had worked as a project manager for a large national health group earning over $85,000 annually, until type 2 diabetes left him disabled and suffering from peripheral diabetic neuropathy, severe chronic pain, fatigue and depression.In addition to health insurance and other employee benefits his employer provided long-term disability insurance through Standard Insurance Company, based out of Portland,... Read More >
Another long term disability claim is reinstated after Disability Attorney Alexander Palamara successfully argues The Standard mishandled preexisting condition investigation
Insurance companies often deny benefits based on an inability to complete a preexisting condition investigation without any consideration to the merits of the disability claim. Unfortunately, an insurance company’s inability to complete a preexisting investigation is often due to its own mismanagement of the claim file and lack of due diligence.Prior to becoming disabled, our client worked as a Police Of... Read More >
Standard Overturns Denial of Benefits to Shareholder of Major Law Firm
When Mr. L contacted us he had recently left a major law firm where he had been working for 27 years. Mr. L, a commercial finance and real estate transaction attorney, was forced to stop working due to debilitating symptoms from several medical conditions. He had been suffering from these conditions for several years but his symptoms had gradually worsened over time and eventually reached the point where he wa... Read More >
Disability Attorney Alex Palamara wins LTD Benefits for Police Officer Denied by Standard
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