United States Supreme Court Rules That Courts Must Consider Disability Insurance Carrier’s Financial Conflict of Interest When Reviewing a Denied Disability Benefits Claim Under ERISA
The Supreme Court struck a blow against insurance companies and in favor of workers with its ruling in the case of Metropolitan Life Insurance Co. v. Glenn (June 2008). The ruling states that “courts reviewing an employee’s denial of ERISA benefits should consider an insurer’s conflict of interest in deciding claims and paying for benefits.”
When Sears Roebuck & Co. employee Wanda Glenn was diagnosed with a heart condition and applied for plan disability benefits, Met Life initially concluded that Glenn’s claim was valid, and encouraged her to also apply for Social Security benefits. However, Metlife later reneged on that decision, claiming that Glenn was indeed able to perform sedentary tasks, and was therefore ineligible for long term disability benefits.
Evan S. Schwartz and Michael Z. Hack of Quadrino Schwartz published an article in the New York Law Journal entitled “’Met Life v. Glenn’: Innovative Worker Benefits Decision. In their article, Schwartz and Hack point out that a prior Supreme Court decision, Firestone Tire and Rubber Co. v. Bruch, actually made it more difficult for employee plan beneficiaries to demonstrate a conflict of interest, or self-interest, in the administrative authority of an insurance company when determining the validity of an employee’s claim. Establishing a conflict allows a court to level the playing field and more closely scrutinize the claims decision of a long term disability insurance company.
Met Life v. Glenn removes much of that difficulty by stating that a court must, at a minimum, take into consideration the following elements, among many others, in determining the severity of the financial conflict of interest:
1. The insurance carrier’s history of biased claims administration;
2. The quality of the firewalls, if any, erected between the claims administrators and those interested in the carrier’s finances;
3. The carrier’s reliance on evidence favorable to it to the exclusion of evidence favorable to the claimant;
4. The carrier’s insistence that the claimant apply for Social Security Disability benefits and, in the same breath, denying the claimant is disabled; and
5. The failure to provide evaluators with all the relevant evidence.
Based upon the existence of evidence as to the scheme of Unum, Unumprovident and its subsidiaries, claimants suing those companies may be placed on a more equal footing. Claimants pursuing benefits against other insurers may now be allowed to investigate further, to uncover biased claim administration and other conduct that would allow more scrutiny of the insurer’s claim decisions.
