May 26, 2017
The federal judiciary is not monolithic. While the Fifth Circuit recently remanded a case it shouldn’t have in Lafleur, yesterday the Eighth Circuit issued a decision in which it, properly, puts an end to the insurer’s game playing and requires the insurer to pay the claim.
The decision is Chronister v. Unum Life Ins. Co. involving denied disability benefits. Unum denied Sandra Chronister’s disability benefits after two years of "own occupation" coverage under the policy because it asserted her she was not disabled from "any occupation" as the policy required after the initial 24 month period. The trial court affirmed Unum’s decision under an arbitrary and capricious standard of review. When Chronister appealed the Fifth Circuit reversed.
First, the court ruled that MetLife v. Glenn establishes an insurer’s inherent conflict of interest and requires something less that unadulterated deference to the insurer’s denial. That’s a change in the law in the claimant’s favor in the Eighth Circuit. How much deference the insurer is entitled to depends on the facts of the specific case.
The court then identifies several reasons that Unum abused its discretion. First, Unum has the same conflict of interest that every insurer has as identified in Glenn. But in addition, Chronister discusses Unum’s "disturbing pattern of erroneous and arbitrary benefit denials, bad faith contract interpretations, and other unscrupulous tactics" (quoting Radford Trust v. First Unum Life Ins. Co., 321 F.Supp.2d 226, 247 (D. Mass. 2006)). The specific facts of Chronister’s claim history suggested to the court that Unum hadn’t changed its ways. It failed to follow its own claims procedure guidelines that required it to give substantial weight to a claimant’s social security disability award if one existed. But nothing in Chronister’s file indicated that Unum gave her social security disability award any weight at all.
The conclusion? Unum’s denial was an abuse of discretion. Then this: "Chronister urges us not to remand this matter for further proceedings, given that her benefits claims have been pending for more than a decade, and we agree that such a remand would needlessly delay the already long-delayed benefits payments."
We need more courts that hold insurer’s accountable for their wrongful denials.
UPDATE: The LEXIS cite for Chronister is 2009 U.S. App. LEXIS 9033.
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