The Seventh Circuit Court of Appeals finds MetLife wrongfully denied long-term disability benefits for Chicago lawyer suffering from vision impairments. An Illinois district court first ruled in Ms. Fontaine’s favor after finding MetLife’s denial of long-term disability benefits was wrong. MetLife appealed to the Seventh Circuit arguing the district court applied the wrong standard of review. The Seventh Circuit disagreed with MetLife and found the correct standard of review was applied and affirmed the District Court’s decision.
The Standard of Review in Long-Term Disability Insurance Cases
Most lawsuits for long-term disability benefits are governed by the Employee Retirement Income Security Act of 1974 (ERISA). This is especially true if someone receives disability coverage through their employment.
Most long-term disability policies contain discretionary language. This gives the insurance company reviewing a claim for long-term disability benefit the sole authority to decide who will receive disability benefits. Generally, if an insurance company is given discretion under a long-term disability policy, an arbitrary and capricious standard of review is applied. This means a court can only rule against the insurance company if:
- The denial of benefits was wrong; and
- There was no reasonable basis for the denial of benefits
In other words, a judge could disagree with the insurance company’s decision, but still rule in favor of the insurance company if the judge believes it was reasonable.
However, a number of states have passed laws banning discretionary language in policies. If a state has passed a discretionary ban, a de novo standard of review is applied. This means a judge will only look to the medical evidence and decide whether the person meets the definition of disability. Under this standard, the judge need not give the insurance company’s decision deference.
A person’s chances of winning a lawsuit against a disability insurance company is much greater when a de novo review is applied.
Illinois Law and its Effect on Ms. Fontaine’s Claim for Long-Term Disability Benefits
The long-term disability policy issued to Ms. Fontaine was governed by Illinois law. In 2015, Illinois passed a law banning discretionary clauses. Therefore, Ms. Fontaine argued that her case should be reviewed de novo and the sole question before the judge was whether MetLife’s decision was wrong.
MetLife made several arguments as to why Illinois’ discretionary ban should not apply to Ms. Fontaine’s case. Primarily, MetLife argued that ERISA preempts any state laws governing insurance. The district court disagreed with MetLife’s position. The Seventh Circuit Court of Appeals affirmed the District Court’s finding and ruled the state law banning discretionary clauses applied to Ms. Fontaine’s claim. Because the de novo standard of review was applied, Ms. Fontaine was successful in her lawsuit against MetLife and was awarded her long-term disability benefits.
Attorneys That Specialize in Handling Your Disability Insurance Claims
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Because federal law applies to most disability insurance claims, your disability lawyer does not have to be located in your state to help.