Supreme Court Helps LTD Claimants

The Supreme Court’s decision in Metropolitan Life Ins. Co. v. Glenn should result in more favorable rulings for long term disability (“LTD”) benefits. Insurance companies have routinely denied or terminated LTD benefits despite strong and even overwhelming evidence that the claimant is unable to work because of a federal law called Employee Retirement Income Security Act (“ERISA”).

Under ERISA, courts reviewing LTD claims would usually apply an “arbitrary and capricious” standard of review. Under that standard, even if the court believed the insurance company made the wrong decision in finding the claimant unable to work the court could rule in favor of the insurance company. The Supreme Court’s decision in Glenn should be interpreted as abandoning the arbitrary and capricious standard of review in favor of an “abuse of discretion” standard of review. This change in the standard of review should level the playing field to a significant extent.

Most LTD Plans are administered by insurance companies that decide if the claimant gets paid benefits, which it then has to pay. A court must now weight that conflict of interest when deciding whether the decision to deny or terminate LTD benefits was proper. The court’s evaluation should result in additional discovery, which the insurance companies have vigorously opposed because discovery usually sheds light on the impropriety of their decisions.

Significantly, the Supreme Court held that compelling the claimant apply for Social Security Disability benefits, let alone offsetting those benefits from LTD benefits, while denying or terminating LTD benefits is evidence of conflicted decision making. The insurance companies’ acceptance of the opinions of industry medical reviewers like University Disability Consortium and MES etc., and disregard of treating physician opinion, should also provide evidence of a conflicted decision making process.