Texas Ban on MetLife’s Discretionary Clause is Great for Long Term Disability Claimants

In Curtis v. Metropolitan Life Insurance Company, a Texas District court focused only on the standard of review it will use when it evaluates MetLife’s denial of plaintiff’s long term disability benefits. Three issues were raised: 1) Did MetLife’s plan contain a discretionary clause; 2) Was the clause banned under Texas law applicable to insurance policies; and, 3) Was the Texas law banning the clause preempted by ERISA.

In 1989, the U.S. Supreme Court decided, in Firestone Tire & Rubber Co. v Bruch, that in evaluating a denial of benefits under ERISA, courts should use the de novo standard unless the plan contained a clause granting discretion to the plan administrator, then review should be for abuse of discretion. This is known as the Bruch rule. The standard of review used by a court can make a major difference in whether the court upholds a denial of benefits on the grounds that the administrator did not abuse his/her discretion or whether the court reviews the denial according to law without any deference given to the administrator’s denial.

MetLife’s Plan Contained a Discretionary Clause

The Texas court analyzed several parts of the particular disability policy and concluded that the language met the Bruch rule and did in fact include a discretionary clause, meaning that the court would give deference to the administrator’s decision when evaluating the termination of benefits.

Texas Law Bans Discretionary Clauses

The Texas Insurance Code as well as the Texas Administrative Code ban discretionary clauses in disability insurance policies “offered, issued, renewed, or delivered on or after February 1, 2011.” There was no question that this particular policy was issued after that date so the ban on such clauses applied unless preempted by ERISA.

ERISA Does Not Preempt the Texas Ban on Discretionary Clauses

The court began its analysis by noting that a majority of circuit courts “have sustained such state law prohibitions, despite ERISA.” Although ERISA “expressly preempts all State laws that relate to any employee benefit plan,” it also has “a savings clause that excepts ‘any law of any State which regulates insurance, banking, or securities’ from preemption.”

The court relied on a 2003 Supreme Court case, Kentucky Association of Health Plans, Inc. v. Miller, which established a two-prong test to determine if the State law under discussion regulated insurance so as not to be preempted by ERISA:
1. The law must specifically be aimed “toward entities engaged in insurance,” and
2. Substantially affect the risk pooling arrangement between insurer and the insured.

The district court engaged in a detailed analysis of each prong of the Miller test as well as referencing each circuit that has, to date, been faced with a similar issue. It then concluded: “Texas laws prohibiting discretionary clauses affect the benefits an insured has access to, alter the scope of permissible bargains between insurers and insured, and thus substantially affects their risk pooling arrangement. As a result, the Texas laws satisfy both Miller prongs, and fall within ERISA’s Savings Clause.” Since the Texas ban on discretionary clauses was upheld, the court ruled that “under Bruch, the appropriate standard of review for the denial of benefits determination is de novo, not abuse of discretion.”

This case was not handled by our office, but we feel it is instructive to those who live in a state that has banned discretionary clauses. This case demonstrates the way to establish the standard of review before the court begins its examination of the adverse administrative ruling. If you have any questions about your disability case, call one of our attorneys for a free case evaluation.

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Questions About Hiring Us

Do you help MetLife claimants nationwide?

We represent MetLife clients nationwide and we encourage you to contact us for a FREE immediate phone consultation with one of our experienced disability insurance attorneys.

Can you help with a MetLife disability insurance policy?

Our disability insurance lawyers help policy holders seeking short or long term disability insurance benefits from MetLife. We have helped thousands of disability insurance claimants nationwide with monthly disability benefits. With more than 40 years of disability insurance experience we have helped individuals in almost every occupation and we are familiar with the disability income policies offered by MetLife.

How do you help MetLife claimants?

Our lawyers help individuals that have either purchased a MetLife long term disability insurance policy from an insurance company or obtained short or long term disability insurance coverage as a benefit from their employer.

Our experienced lawyers can assist with MetLife:

  • ERISA and Non-ERISA Appeals of Disability Benefit Denials
  • ERISA and Non-ERISA Disability Benefit Lawsuits
  • Applying For Short or Long Term Disability Benefits
  • Daily Handling & Management of Your Disability Claim
  • Disability Insurance Lump-Sum Buyout or Settlement Negotiations

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.

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