Are Courts Finally Getting It?

A ”hot-off-the-presses” decision from the Illinois Federal District Court finally lays out, without all of the obfuscating folderol, the true basis for getting to the truth of the ERISA-SSDI tug of war:   See Raybourne v. Cigna, No. 07C3205, (N.D. Ill., September 23. 2010).

Did an LTD insurance administrator, in denying a policy claim, meet the burden of establishing a credible basis for rejecting an SSDI finding of disability?


Long-standing LTD insurance company strategy has been to insist that claimants must pursue SSDI claims to be eligible for their LTD disability benefits. There is nothing wrong with this, as LTD insurance policies usually provide that third party payments to a claimant (including SSDI) have to be used to offset payment of benefits by the insurer.

The problem is that after forcing the claimant to make a disability claim to SSDI so as to receive benefits which go straight into the pocket of the LTD insurance carrier, the carrier then completely ignores the SSDI decision in its own determination of its own liability under its disability policy.

LTD insurance companies were getting away with this ploy for years, until MetLife v. Glenn, 554 U.S. 105 (2008), when the U.S. Supreme Court woke up to the fact that there is an inherent conflict of interest in a situation where an insurance company which has to pay the claim is the entity which makes the initial decision as to whether the claim is actually covered. Add to this already conflicted siutation the added insult that in ERISA cases, the LTD insurance company’s decision must be given deference, Firestone v. Bruch, 489 U.S. 101 (1989) , and you have a stew which smells bad right from the start.

Why the courts seemed to be blind for so long to the unfairness of putting such extreme power in the hands of one party to a controversy, is hard to fathom, particularly when that party is an insurance company, a class of entities not known for being overgenerous. Firestone was decided in 1989 and Glenn in 2008.

Those who represent disability claimants have been afflicted by the free ride the Firestone decision has given insurance companies for almost 25 years. No court so clearly took them to task on the SSDI issue as did the District Court in the Raybourne decision. Hopefully, now the shoe is on the other foot, where it actually belongs.

Why should an LTD insurer be able to force a claimant to obtain an SSDI ruling that finds the claimant disabled so that the SSDI benefits go into the insurer’s pocket, and then ignore the SSDI decision in the claimant’s claim against the insurer?

Hopefully, the inherent conflict so clearly defined in Raybourne, as a result of Glenn, will give otherFederal courts the gumption to reexamine the unfair body of ERISA law which has grown in the wake of Firestone. They should examine closely evidence of the LTD insurance company system of hiring and maintaining stables of supposedly “independent” medical examiners and financially rewarding employees on the basis of their record of denial of claims.

LTD insurance companies should, as do all other litigants, have to meet the burden of proof once it has shifted to them. If a party shows a court that an expert witness might have a prejudice for or against a party, the court must scrutinize that evidence closely. It should not give that evidence “deference” as otherwise suggested by Firestone.

Glenn gives attorneys the tools to show the conflict of interest and how it might affect the insurer’s decision. We only hope that having this tool, judges are as straightforward and skeptical as Judge Gettleman was in deciding Raybourne.

Claimants have the duty of proving they are disabled. Once they do, LTD insurance companies should have the duty of proving that they are not.



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