Most long-term disability claims governed by ERISA contain a provision that gives the insurance company the final discretion whether to approve or deny a claim for benefits. This provision requires courts who are reviewing these decisions in deference to the decision of the insurance company, which typically is referred to as “arbitrary and capricious” or “abuse of discretion” standard. Under this legal standard of review, the court must accept any rational basis that the insurance uses for reaching its decision on the claim. The only circumstances in which the court can overturn the insurance company decision is if it finds that the insurance company had no rational basis for making the decision. This is an extremely high standard when appealing the denial of a claim for long-term disability benefits in federal court.

In some states, however, including the state of California, discretionary provisions in long-term disability benefits plans are void and unenforceable by the insurer. The Ninth Circuit Court of Appeals has upheld the legal validity of California’s statute addressing this issue. As a result, when a California federal judge reviews the denial of a long-term disability benefits claim, he or she may not be required to utilize the arbitrary and capricious standard of review.

As a result, a federal judge in this situation can use the de novo standard of review. Under this standard, the judge is not required to exhibit any level of deference to the decision of the insurance company, even if the plan contains a discretionary clause. Instead, the judge can review the evidence in the administrative record and any other relevant evidence to determine whether the denial of benefits was legally valid.

Long-term disability claims are complex matters that require intensive knowledge of ERISA laws and regulations. As a result, you will need experienced legal representation and advice to pursue an ERISA-governed disability claim. Bonnici Law Group is a law firm focusing on ERISA long-term disability benefits and bicycle injury cases in San Diego, CA. When you need effective legal representation, contact Bonnici Law Group at 858-261-5454 or email us at help@bonnicilawgroup.com.