How Much Deference Should Insurers Get?

The latest addition to the website’s “miss” library is Brigham v. Sun Life of Canada, 317 F.3d 72 (1st Cir. 2003). You can find it here. It’s not so much that the decision tells a paraplegic that he can go out and get a job. Or that the court effectively ignores uncontested affidavits from friends and family that Bradley Brigham couldn’t work in a full time position despite heroic efforts to overcome his physical limitations. It isn’t even so much that the court ignores the determination of the Social Security Administration that Brigham was disabled using a more stringent definition of disability than Sun Life’s insurance policy contained. It’s not even that the decision allows Sun Life to bootstrap itself into a deferential standard of review by boilerplate language requiring Brigham to prove his disability in a way “satisfactory” to Sun Life. All that is bad enough. The really terrible thing about this decision is the U.S Court of Appeals for the First Circuit’s refusal to provide any meaningful scrutiny to Sun Life’s denial in light of the insurer’s significant, inherent conflict of interest. Brigham concludes that if the insurer can provide any rationale explanation whatsoever to support its actions, the denial must be upheld. For a better analytical model for an insurer’s claim denials, take a look at Fought v. UNUM, 379 F.3d 997 (10th Cir. 2004). Fought is not alone in stating that an insurer’s conflict of interest requires courts to take a harder look at claim denials than they might in dealing with a truly impartial decision-maker. Indeed, the First Circuit is in the minority on this issue. If the judicial standard for reviewing an insurer’s claim denials is, for all practical purposes, nothing more than a rubber stamp, we’re all pretty much at the mercy of the whims of claims adjusters at a few of the largest corporations in the world when misfortune strikes. I’d like to think we can expect more protection than that from the judicial branch.