Texas Disability Insurance Attorney Regularly Fight ERISA Disability Denials

In Texas, a claimant’s ability to challenge a denial of disability benefits depends on many factors, not the least of which is whether the disability insurance policy is governed by ERISA. Another critical factor is having a good lawyer: a Texas disability attorney must have considerable experience in handling ERISA disability denials to have any chance of either winning an Appeal or convincing a judge to reverse a disability claim denial. While not every disability policy is governed by ERISA, the majority are and being prepared is critical.

Texas Passes Law Banning Discretionary Clauses in Disability Policies

Every ERISA disability denial lawsuit begins with consideration of whether the disability insurance policy contains a “discretionary clause,” which is nothing more than insurance company language written to give them the right to interpret certain terms of the disability policy and make a final claim decision. Many insurance companies try to build this kind of language into policies to limit claims and to restrict a court’s ability to overturn insurance company decisions. With a discretionary clause, the court must defer to the insurance company and can only reverse the denial if it is “arbitrary and capricious.” However, if a disability policy does not contain a discretionary clause, then a court is not restricted in their review of a disability claim denial.

“As of January 1, 2012, the State of Texas passed a law which prohibits any insurance company from issuing or selling a disability policy which contains a discretionary clause. The Texas law banning discretionary clauses only applies to disability policies issued or renewed after Janaury 1, 2012″.

A Texas Court’s Review of a Claim Denial

The Fifth Circuit Court of Appeals – Texas’ highest federal court – explained the “arbitrary and capricious” standard of review in the case of Firman v. Life Insurance Company of North America. That case involved a dispute over insurance benefits. The plaintiff’s husband died in single-vehicle accident. The police report indicated that his truck veered off the street when entering a curve and then he overcorrected, causing the truck to rollover. Without a seatbelt, he was partially ejected out of the passenger window and crushed by the truck. He died instantly. Toxicology tests showed he had alcohol in his system at the time of the crash.

The widow filed a claim for insurance benefits under two Group Accident Policies. Although both policies were accidental death policies, neither defined the term “accident.” While the policies excluded coverage for injuries from certain activities, they didn’t contain any exclusion for deaths resulting from intoxication or the use of controlled substances. But both policies gave LINA (also known as CIGNA) “full discretionary authority to administer and interpret” the policies.

LINA denied the claim on the ground that the incident was not an accident. In its view, the deceased would have been aware of the risks involved in operating a vehicle under the influence and, for this reason, his death was a foreseeable result of his actions and not an accident. In fact, LINA announced a rule that driving while intoxicated automatically precludes a finding of an accident under any circumstance.

The Texas Court’s Basis for Overruling Cigna’s Denial of an Accidental Death Benefit Claim

The Fifth Circuit Court of Appeals found that LINA / CIGNA had improperly denied coverage. Even though the policy gave LINA the right to make some decisions, the Fifth Circuit Court of Appeals determined that the decision to deny coverage could not stand. The court said that LINA could not assume that all alcohol-related deaths are automatically foreseeable and therefore non-accidental. Some alcohol-related incidents may be foreseeable, while others may not. LINA’s categorical approach was fundamentally unreasonable. The court’s decision was bolstered by the way LINA handled the claim including:

Ultimately, the court characterized LINA’s actions as arbitrary and capricious, which resulted in an order requiring LINA to pay the insurance benefits to the widow.

Firman v. Life Insurance Company of North America, No. 11-20451, 2012 WL 2161135 (5th Cir. June 15, 2012)

Leave a comment or ask us a question

There are 4 comments

  • Elizabeth,

    I would strongly caution you in drafting an appeal on your own. Please review the multiple resources we have on our site that provide detailed information regarding the importance of an appeal. Please feel free to contact our office to discuss how we can assist in appealing MetLife’s denial.

    Stephen JessupApr 16, 2015  #4

  • My husband is on long term disability with Met Life. He has four spinal surgeries and is unable to work any longer. We have always provided them what they have asked for. My husband’s last appointment with his doctor was in January 2015. In March his doctor received a call demanding that they speak with him. He does not take calls from insurance people, so his nurse was dictated a letter to go to Met Life. We received a letter on the 16th of March from an Rn with Met Life threatening that if they did not get something from the doctor, my husband would lose his benefits. I called the doctor and she told me that she faxed them the letter on March 12, 2015 and she mailed it to them. My husband called his metlife rep and left him a voice mail, trying to make sure they had what they needed. The rep never returned his call. Yesterday the rep calls and says they have cut off his benefits and that he can appeal it. He has paid these premiums for 38 years and now they don’t want to pay him. He has fusions in his neck and back, along with titanium rods in his spine (a cage) and cannot work. Can he just write out a letter of appeal or would we be taking the risk of them denying him again?

    ElizabethApr 15, 2015  #3

  • Diane,

    Yes, our office also handles Private Disability policy disputes.

    Stephen JessupFeb 15, 2015  #2

  • Does this only apply to non-ERISA disability policies?

    DianeFeb 14, 2015  #1

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