Which states have laws or regulations abolishing discretionary clauses in erisa disability insurance policies?
As of August 2014 there are 20 states that have either passed laws or department of insurance regulations which abolish discretionary clauses. Our attorneys continue to fight on a daily basis to abolish discretionary clauses in all 50 states. We have provided below a listing of the laws in each of the states that have abolished discretionary clauses.
- CALIFORNIA – Cal. Ins. Code § 10110.6;
- CONNECTICUT – Bulletin HC-67; (March 19, 2008), available here (last visited Oct. 18, 2011);
- HAWAII – Commissioner’s Memorandum 2004-13H (Dec. 8, 2004), available here (last visited Oct. 18, 2011);
- IDAHO – Idaho Administrative Code § 18.01.29.011, available here (last visited Oct. 18, 2011);
- ILLINOIS – Ill. Admin. Code 50 § 2001.3 (2005); see also Company Bulletin 2010-05 (June 28, 2010), available here (last visited Oct. 18, 2011);
- INDIANA – Bulletin 103 (May 8, 2001), available here (last visited Oct. 18, 2011);
- KENTUCKY – Advisory Opinion 2010-01 (March 9, 2010), available here (last visited Oct. 18, 2011);
- MAINE – 24-A M.R.S.A. § 4303(11);
- MARYLAND – MD Code, Insurance, § 12-211;
- MICHIGAN – Mi. Admin. Code §500.2201 et seq., available here (last visited Oct. 18, 2011), Mi. Admin. Code § 550.111 et seq., available here (last visited Oct. 18, 2011), Mi. Admin. Code § 550.301 et seq., available here (last visited Oct. 18, 2011);
- MINNESOTA – M.S.A. § 62Q.107;
- NEW JERSEY – N.J. Admin. Code § 11:4-58.1 et seq.;
- NEW YORK – Circular Letter No. 14 (June 29, 2006), available here (last visited Oct. 18, 2011);
- OREGON – O.R.S. § 742.005 (see also Form 3172b – Standard Provisions for . . . Policies at p. 5, available here (last visited Oct. 18, 2011)) (Form 3631 – Standards for Accidental Death and Dismemberment . . . Policies at p. 7, available here (last visited Oct. 18, 2011));
- SOUTH DAKOTA – S.D. Admin. Rules § 20:06:52:01, et seq., available here (last visited Oct. 18, 2011);
- TEXAS – 28 Tex. Admin. Code § 3.1202 et seq.;
- UTAH – Utah Admin. Code R590-218; See also Bulletin 2002-7, available here (last visited Oct. 18, 2011);
- VERMONT: Sec. 31. 8 V.S.A. § 4062f, see here;
- WASHINGTON – WAC 284-44-015, available here (last visited Oct. 18, 2011), WAC 284-46-015, available here (last visited Oct. 18, 2011), WAC 284-50-321, available here (last visited Oct. 18, 2011), and WAC 284-96-012, available here (last visited Oct. 18, 2011);
- WYOMING – W.S. 1977 § 26-13-301 et seq.
The NAIC (Nat’l Assoc of Insurance Commissioners) many years ago encouraged all Insurance Commissioners to adopt a ban on Discretionary Authority. Only a few states at first adopted it. As of today 20 states have banned these clauses. More states will eventually follow suit.
The only bad thing about the NAIC is that they have no authority to enforce. They will only encourage or make suggestions. The NAIC is made up of former insurance commissioners. Guess who contributes most money to the commission? Guess who sponsors and entertains the NAIC? The answer is the Insurance companies and Lobbyists working for the insurance companies. The NAIC is a joke.
I live in Texas, which is one of the states that abolished the discretionary clause on policies. My ERISA policy is pre abolishment and clearly contains the discretionary clause. In another section in your site, discussing the 2 year mental health limitations clause, you mentioned that certain states have corresponding federal circuit court cases which have upheld that a ban in discretionary language is not pre-empted by ERISA (I barely understand what this means) and this is helpful to claimants needing legal action. Is Texas one of these states? If so, if an issue is physical, not mental health, does this mean it would help claimants in the event legal action is needed? Thank you for all the valuable information that you provide on this site, it is much appreciated.
Patty,
The issue of discretionary clauses and limitations for mental health conditions are two separate issues. The discretionary clause (and the abolishment/lack of same) is most relevant at trial with respects to how a judge will review a denial of benefits. The dis-cretionary clause/abolishment of same does not affect the existence of a 2 year limitation for mental health conditions. (Meaning it doesn’t void these limitations). If your claim is caused by a physical condition you will have to proffer proof of same (be it during the course of your claim or during the appeal process). Regardless of a discretionary clause, you would still have right to bring legal action for a denial of benefits based on a termination of benefits following the 2 year mental health period. One thing to also keep in mind is each carrier/policy can define mental illness differently, so a review of the language in your policy is crucial to understanding your legal rights.
I have been disabled, ANY OCCUPATION for 6 years due to a severe leg injury. After years of healing, heavy pain medications and physical rehabilitation etc., I have improved. During my incapacity I was diagnosed with PTSD, Depression, Anxiety disorder, Bi-polar and constant pain. Since these are considered Mental issues developed AFTER my physical disability, how would the 2 year limitation clause affect my claim status? The pain meds made me addicted to their use. Last year I was admitted to a mental facility 2 times for the mental issues and addiction. The injury cost me my job/income, my new home, health insurance, and eventually my marriage / children. Haven’t worked in over 6 years. Any opinions? I need help. I know that Standard will eventually deny my claim for what ever reason they desire. I would strongly consider a buyout. As you would anticipate I am receiving SSA disability. The SSA check would be great if it weren’t subject to offsets.
Tommy,
Standard may not apply a two year limitation to your claim due to a Mental Health condition as the history of your claim seems to be predicated upon your physical disability. However, Standard may at some point determine that your physical condition is no longer preventing you from working and determine that you are only disabled due to your mental health conditions and then apply the 2 year limitation. Please note, that if Standard were to do this, it would not preclude you from fighting for continued entitlement to benefits due to a physical medical condition. Please feel free to contact our office to determine how we may be able to assist you with negotiating a potential buyout of your claim
I just settled my ERISA case. But I’m worried about what happened. In all fairness to me I feel something is wrong. The attorney offsetted my claim before I was approved for SSDI. Now I was denied. After the offsets the amount was 54,600 I only received 8,500. How is this possible? Now I’m left with a foreclosure and no money. I have to go to the appliate council for another decision. I had three strokes and have brain damage. Please advise.
Tammie,
You would need to consult with your attorney. As you have settled your case there is unfortunately nothing we can do to assist you.
My benefits from MetLife were recently stopped because they want me to repay them from my SSDI lump sum payment that was spent because of federal debts, and other outstanding bills I owed while waiting for my worker’s comp claim to be approved. Are federal employees exempt from ERISA law?
Cynthia,
Your policy may not be subject to ERISA under an exception provided to governmental employees. However, that would not waive any obligation you have under the terms and conditions of the policy to repay any applicable overpayment.
Today (Aug 2016) your site posted an article on Texas Ban on MetLife’s Discretionary Clause is Great for Long Term Disability Claimants In Curtis v. Metropolitan Life Insurance Company. It states: “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.” ”
Do Erisa LTD plans renew annually?
I live in Texas and because my Erisa LTD date of disability is a few yrs prior to 2-2-11, I assumed the Texas ban would not help me. Prior to 2-2-11, my employer switched LTD providers. Given I was already on claim, I stayed with the prior carrier although I remain on leave of absence with my employer. I am trying to determine if needed, will I be able to benefit from the Curtis vs Metlife case? To me, it looks like my plan was offered, issued and delivered before 2-1-11 — but perhaps it renews annually and that would qualify me?
Anon, your claim is governed by the plan in effect as of the date of your disability. Any subsequent changes to it after that date would not be applicable to your claim.
A couple of things. 1) The insurance commissioner does have the power to ban these clauses. It rests in the form approval/disapproval authority. I know because I was the insurance commissioner of Montana and started this whole thing. See Standard Insurance v Morrison, 9th Cir. I also led creation of the NAIC model. 2) you need to add Montana to your list. 3) the commissioner also has the power to ban retroactively, which is what we did. This is done by withdrawing approval of forms with the clauses that have already been approved.