Montana Files Brief with Supreme Court in Insurance Lawsuit

April 3, 2008

Montana State Insurance Commissioner John Morrison has filed a friend-of-the-court brief in a legal dispute before the U.S. Supreme Court over an insurance company’s dual role of paying disability benefits and deciding whether employees are eligible for them.

Morrison filed the brief on behalf of the National Association of Insurance Commissioners, in a lawsuit filed by an Ohio woman against MetLife Inc. The brief says a federal appeals court panel was correct in finding that MetLife acted under a conflict of interest when it denied long-term disability benefits to Wanda Glenn, a former employee of Sears, Roebuck and Co.

The dispute centers on whether MetLife and other insurance companies have a conflict of interest when they both administer employee disability plans — which involves deciding whether employees are eligible for benefits — and pay benefits under them. The dual arrangements are allowed under ERISA, the Employee Retirement Income Security Act.

“Our position is that insurance companies evaluating claims that they will have to pay always have a conflict of interest,” said Morrison, who is listed as co-counsel in the brief. “Their denials definitely should not be given more weight than the evidence of workers and their employers that claims should be paid.”

Morrison said he became involved in the case “because I’ve worked on the issue for many years,” including as an attorney and as chairman of the association’s Health Insurance Committee.

Lawyers for MetLife say that if the high court determines handling both functions creates a conflict, employers could decide to hire separate companies for each function, potentially increasing the plans’ costs.

The case began in 2000 when Glenn, who worked at Sears for 14 years, sought disability benefits because of a heart condition.

MetLife gave her short-term disability, but in 2003 rejected her request for benefits under a long-term disability plan, claiming she no longer was totally disabled. MetLife also paid benefits under the plan, using premiums provided by the company.

Glenn filed suit, but a federal District Court decided not to overturn MetLife’s decision. Following an appeal, a three-judge panel of the 6th U.S. Circuit Court of Appeals ruled in Glenn’s favor. The panel said MetLife’s decision “was not the product of a principled and deliberative reasoning process,” and the company “acted under a conflict of interest.”

However, other appeals courts have determined judges don’t have to weigh the potential conflict of interest in benefit disputes. MetLife asked the U.S. Supreme Court to take the case to resolve the differences between the appeals courts. Oral arguments are scheduled to begin April 23.

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