When you have exhausted your internal or administrative appeals for the denial of ERISA-governed long-term disability benefits through your insurance company, your next step for seeking review of the lawsuit may be to file a lawsuit in federal district court. When you are in this position, you may find it helpful to understand the standard of review applicable to your case or the level of scrutiny that the court will use to decide the case. This standard is essential because it can impact the decisions that a court makes in your case.

In long-term disability benefits appeals, one of two standards applies:

·         De novo, which means that the court decides the case without any deference to the previous decisions of the insurance company in denying benefits

·         Abuse of discretion, which means that the court only will reverse the denial of benefits by the insurance company if its decision was clearly in error or arbitrary and capricious

Generally, because of recent new caselaw, courts must review these cases de novo, which is a benefit to the individuals appealing the denial of benefits. This standard ensures that a court will consider a case without regard to the insurance company’s position on eligibility for benefits.

Some insurance policies, however, have a “discretionary clause,” which gives the discretion to the insurance plan administrator to determine if claimants are eligible for benefits or to interpret the plan. When an insurance policy contains a discretionary clause, which insurance companies increasingly have put into their policies, then the court must review the case under the abuse of discretion standard.  

In the state of California, however, state law prohibits the inclusion of these discretionary clauses in life and disability insurance policies. On appeal, the Ninth Circuit Court of Appeals upheld the California law, meaning that discretionary terms in policies that impact California residents are null and void. In other words, claimants of these benefits in California will receive a de novo review of their claims in court if they must appeal the denial of benefits.

It can benefit you greatly to get legal advice about the most effective means of building and maintaining the most successful ERISA long-term disability claim possible what to if an appeal becomes necessary. Bonnici Law Group provides skilled, aggressive legal representation regularly for individuals who are seeking long-term disability benefits under insurance policies governed by ERISA. Our priority is to represent your interests and protect your rights to the benefits that you deserve. Call us at 858-261-5454 and schedule an appointment to meet with us about your case today.