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New York Outlaws "Discretionary Clauses" in ERISA Long Term Disability Policies

New York ERISA long term disability claimants just received a big assist from New York State Insurance Superintendent Howard Mills . Following the lead of California’s Insurance Department, Superintendent Mills issued 2006 Circular Letter # 8 invalidating all “discretionary clauses” in existing group long term disability policies. All insurance companies must comply by May 31, 2006.
Insurance companies frequently used discretionary clauses to unfairly deny legitimate long term disability claims by claiming their policy gave them “discretion” to decide what is and is not a disability. Discretionary clauses also handcuffed federal court judges who reviewed the unfair denials. An often heard statement by Judges might be “if I were deciding this myself, I would find the claimant disabled. But since the policy grants the insurance company discretion to decide what is disabling, and their doctor says the claimant is not disabled, I cannot say their decision was ‚Äòarbitrary and capricious‚Äô.
Now РNew York residents with ERISA group long term disability policies will have greater success challenging disability claim denials or terminations. Federal Judges will have far greater leeway in deciding who is disabled from their ‘own occupation’ or ‘any occupation’. Essentially, the playing field for long term disability claims just got a lot fairer. Sure – the insurance companies still have the big bucks to hire large law firms to fight your claim, but you just won a significant battle. Bottom Line – Turley Redmond & Rosasco will be fighting and winning more LTD claims in the future. Have a great Memorial Day weekend!

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