Quadrino Schwartz and Others Press New York’s Insurance Commissioner to Abolish Discretionary Clauses in Group Long Term Disability Policies
Quadrino Schwartz has urged the New York Insurance Commissioner to act as quickly as possible to proceed with a rulemaking process to create a rule outlawing discretionary clauses in group long term disability policies. A series of regional law firms were asked to join with Quadrino Schwartz in sending a letter to the Insurance Commissioner. The response was impressive, and a formal letter signing ceremony was conducted at Quadrino Schwartz’ New York Offices.
Discretionary clauses have been used by group disability insurers as a way of shielding the insurance company from court scrutiny if a lawsuit is filed challenging the decision on an insurance claim. The clauses say, essentially, that a court must respect and defer to an insurance company’s decision to deny or terminate a disability claim. Disability lawyers have been fighting against the use of these clauses for years, and several States acted to ban the clauses, including New York, after the National Association of Insurance Commissioners urged action. New York pulled back from its original approach and decided to revoke its informal Circulation Letter and proceed instead with formal rulemaking, the process used to issue formal regulations.
Since the shift in approach by the New York State, however, no action was forthcoming. Led by attorney Michail Z. Hack, Quadrino Schwartz forged ahead with an effort to convince the Commissioner that with each passing month, the number of victims of these clauses mounts and thus this matter should be given priority within the Insurance Department. In recent weeks there has been additional momentum after the United States Supreme Court decision in the case of Metlife v. Glenn. It was hoped that the Court would abolish the use of these clauses. While the Court modified some of the rules and allowed disability claimants to obtain additional information in litigation to increases their chances of success, the clauses still remain in use, providing insurers with an effective obstacle to a claimant’s fair hearing on an ERISA governed disability lawsuit.
