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Texas Court Allows Second Review of Disability Benefit Claim

Posted by Gregory Paul | Jan 31, 2017 | 0 Comments

ERISA protects employees with employer-provided disability benefit plans. As a federal law, ERISA preempts many state laws which relate to these plans, to prevent conflicting statutes. However, a recent federal case in Texas found that ERISA does not prohibit a state from regulating insurance contract rules.

Wilfred Brasseur was a computer engineer in Texas. After Brasseur was no longer able to work, he filed for long-term disability benefits. After the insurance company denied Brasseur's claim, he sought a review of the decision. However, the insurance company claimed that under ERISA, their discretionary decision was only reviewable based on an abuse of discretion.

The legal standard for reviewing an insurance policy decision can have a major impact on whether the individual will get a meaningful review of that decision. The standards of review in ERISA cases are generally the “arbitrary or capricious” standard or the de novo standard.

The arbitrary and capricious standard is very high and gives deference to the insurance company's decision. In order to win, the insured would have to show that the company abused their discretion in denying the claim. Alternatively, the de novo standard gives the decision a full review. The court could review the evidence available and make their own decision based on a new review.

Generally, ERISA disability benefit claims are reviewed de novo; however, when the insurance plan gives the administrator discretion to determine eligibility, the arbitrary and capricious standard would apply.

The insurance plan in Brasseur's case was provided by Life Insurance Company of North America and originated in Illinois. The plan gave discretion to the administrator's factual determinations, which decided Brasseur was not disabled. The insurance company argued for an abuse of discretion standard of review.

However, under Illinois state law, insurance policies are prohibited from having a discretionary standard that gives the insurance company discretion to deny claims. The insurance company argued that ERISA preempts any state laws, and therefore, any review of their decision must be based on the abuse of discretion standard.

In their decision, the court evaluated whether ERISA would preempt Illinois' state insurance law. The preemption clause provides that ERISA will supersede state laws that relate to employee benefit plans, but does not preempt certain state laws that regulate insurance. Regulation of insurance is left to the states.

Illinois state law prohibits discretionary clauses, which “reserve the discretion to the health carrier to interpret the terms of the contract, or to provide standards of interpretation or review that are inconsistent with the laws of” the state.

The court found that nothing in ERISA prohibits the state from regulating insurance contracts, in this case, prohibiting discretionary clauses. As a result, Brasseur will be able to get a new review of his disability benefits claim.

Greg Paul has 18 years of experience fighting for his clients to make sure they get the disability benefits they deserve. We represent individuals and families who have been denied benefits by their insurance company or plan administrator. You have a limited time to appeal your disability denial, so do not delay. If you have been denied short-term or long-term disability benefits, contact our office for a free consultation.

About the Author

Gregory Paul

Gregory G. Paul is a trial lawyer who practices in the areas of disability, employment and toxic tort injury law. He is admitted to practice law in California, Maryland, Missouri, Ohio, Pennsylvania, Texas and West Virginia with additional admissions in federal courts nationwide. Greg is a graduate of the University of Pittsburgh and the University of the Pacific, McGeorge School of Law in Sacramento where he was on the Dean's List and Law Review.  He is a graduate of Gerry Spence's Trial Lawyers College.                        In addition to litigating cases on behalf of people denied benefits and rights, Greg has been a speaker at PBI: Employment Law West: Americans With Disabilities Act , Pittsburgh, PA (2012-2015); National Employment Lawyers Association: Breaking Down the Barriers in the Workplace, Oakland, CA (2010); NBI: Litigating ERISA Cases, Pittsburgh, PA (2008); ADA: Fighting for Fairness, Atlanta, GA (2006) and Chicago, IL (2008). He is a member of American Association for Justice, National Employment Law Association and the Million Dollar Advocates Forum. Greg is the Vice-Chair of the National Legal Advocacy Committee for the American Diabetes Association and recipient of the ADA 2008 National Service Award for Outstanding Advocacy.  LIST OF ADMISSIONS AND BAR ASSOCIATIONS Pennsylvania, 1999 West Virginia, 1999 Maryland, 2000 California, 2004 Ohio, 2005 Texas, 2006 U.S. District Court, Western District of Pennsylvania U.S. District Court, Eastern District of Pennsylvania U.S. District Court, Middle District of Pennsylvania U.S. District Court, Southern District of West Virginia U.S. District Court, Northern District of West Virginia U.S. District Court, District of Maryland U.S. District Court, District of Colorado U.S. District Court, Northern District of Ohio U.S. District Court, Southern District of Ohio U.S. District Court, Eastern District of Texas U.S. District Court, Northern District of Texas U.S. District Court, Southern District of Texas U.S. District Court, Northern District of California U.S. District Court, Eastern District of California U.S. District Court, Central District of California U.S. District Court, Eastern District of Michigan U.S. District Court, Eastern District of Arkansas U.S. District Court, Northern District of Illinois U.S. Court of Appeals, 3rd Circuit U.S. Court of Appeals, 4th Circuit U.S. Court of Appeals, 5th Circuit U.S. Court of Appeals, 6th Circuit U.S. Court of Appeals, 9th Circuit U.S. Court of Appeals, 11th Circuit Supreme Court of the United States Allegheny Bar Association Federal Bar Association American Bar Association The American Association for Justice Million Dollar Advocates Forum National Employment Lawyers Association Sonoma County Bar Association


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Litigation Experience

Greg Paul has over 20 years experience litigating in state and federal courts: 1) Fighting for long-term disability benefits against insurance companies such as Aetna, CIGNA, Guardian,Hartford, Liberty Mutual, Mutual of Omaha, Principal, Prudential, Reliance Standard, Standard, Sun Life, and Unum.