In light of the MetLife vs. Glenn decision, decided almost a year ago, which found that a reviewing court must consider the conflict of interest arising from the dual role of an insurance company as a plan administrator and payer of plan benefits as a factor in determining whether the plan administrator abused its discretion in denying benefits, several recent cases have interpreted Glenn as allowing for discoverable information regarding the potential conflict of interest created by the insurance company.

These cases may not create a tremendous trend toward the courts making discoverable information more accessible, but they certainly suggest that where there is an obvious conflict of interest on the part of the insured, a participant whose benefits have been denied has a right to know how and why the insurance company is operating under such a conflict.

In Santos v. Quebecor World Long Term Disability Plan, 254 F.R.D. 643 E.D.Cal., 2009, the court held that, in light of MetLife vs. Glenn, the employee whose long-term disability benefits were terminated by Hartford was entitled to obtain certain information related to conflict of interest in a Rule 30(b)(6) deposition of Hartford.  This information included, among other things:

Statistics regarding Hartford’s claims granting history of long-term disability claims, including the number of claims and appeals approved or denied by Hartford;

Information regarding steps to reduce potential bias of claims personnel, promote accuracy, walling off claims administrators from those interested in firm finances, management checks that penalized inaccurate decisions, level of experience of claims personnel, standards for claim staff accountability and whether there were separate compliance/accountability functions;

Any agreements between Hartford and Reliable Review Services or MES Solutions, the money Hartford paid to them, the number of times their doctors gave opinions regarding long term disability benefits claimants and whether Hartford holds any financial interest in the companies; and

Information regarding all rules, practices, procedures, guidelines, standards, criteria, and memoranda regarding compensation, bonuses, raises, evaluations, promotions and promotional opportunities and/or any other incentives applicable to benefits personnel relevant to deciding the employee’s appeal.

More specific information had even been sought in Pemberton v. Reliance Standard Life Ins. Co., 2009 WL 89696 (E.D.Ky. 2009), where the court permitted discovery regarding, among other things, the statistical data about the number of claims filed sent to Standard’s reviewers and the number of denials which resulted and the statistical data concerning the number of times Standard’s reviewers found claimants able to work in at least a sedentary occupation or found that the claimants were not disabled.

Other recent cases allowing a substantial amount of discovery regarding the insurance’s company’s operation under a conflict of interest, in light of Glenn, include: Wilcox v. Metropolitan Life Ins. Co., 2009 WL 57053 (D.Ariz. 2009), Kalp v. Life Ins. Co. of North America, 2009 WL 261189 (W.D.Pa. 2009), O’Bryan v. Consol Energy, Inc., 2009 WL 383401 (E.D.Ky. 2009), and McQueen v. Life Ins. Co. of North America, 595 F. Supp. 2d 752 (E.D.Ky. 2009).

One thing that is clear is that a substantial amount of recent case law exists to help those who have been denied or terminated benefits establish a concrete conflict of interest created by the company who abused its discretion in denying or terminating those benefits.  Hopefully, as the conflicts of interest among claims administrators become more and more exposed, the discovery standard will permanently shift in favor of Plaintiff’s whose benefits have been terminated or denied due to such a conflict.

The purpose of this blog is not only to provide current, up-to-date information regarding recent decisions in employee benefit cases, but also to comment upon past and current trends related to the fairness and enforcement of ERISA regulations, as well as the practices currently relied upon by insurance companies to justify a termination or denial of benefits.  I welcome any comments, and for those of you who have a story you would like to share, feel free to share it here.

For most disabled persons who eventually apply for and are awarded Social Security Disability Benefits, harsh reality sets in when they get a letter from the insurance company stating that their disability claim “has been overpaid” and that they now owe “x” amount of dollars, payable to the insurance company in one lump sum.  Sometimes this amount can be thousands of dollars!  However, by the time the disabled individual receives this letter from the insurance company, he or she has already spent this money to pay medical bills, pay for medications, and simply survive.  He or she no longer has the funds necessary to repay this amount due. 

The truth of the matter is that most private insurance policies contain a provision specifying Social Security Disability Benefits as a deductible source of income.  For example, if the insurance company was previously paying you $1,500 per month in disability benefits, and Social Security subsequently begins paying you $1,000 per month in SSDI, by contract, the insurance company can legally reduce its monthly disability payment to you down to $500 per month.