Earlier this week in Miller v. Monumental Life Ins. Co., ___ F.3d ___, 2007 U.S. App. LEXIS 22746, the U.S. Court of Appeals for the Tenth Circuit ruled that under a de novo standard of review, courts must use the doctrine of contra proferentem to interpret ambiguous ERISA plan language. Roy Harmon has a more complete summary of the case here at his Health Plan Blog. Contra proferentem is an old legal doctrine and is used by every state when courts face ambiguous insurancy policy language. The idea that such language should be interpreted against the drafter of the policy, the insurer, makes perfect sense. What is surprising to me is that most federal courts accept the idea that by inserting a bit of boilerplate language to the policy (e.g., "the insurer shall have complete discretion to interpret the terms of this policy"), insurers can completely circumvent contra proferentem in ERISA cases. With magic language, courts will defer to any "reasonable" interpretation an insurer attaches to unclear language the insurer itself inserts in the policy. I can't think of a better way to encourage sloppy drafting of an insurance policy, or the intentional insertion of mushy language, than to abandon the doctrine of contra proferentem. But, so long as discretionary language is unilaterally included in the policy by the insurer and a deferential standard of review is in place, that is exactly what most federal courts do. It's yet another way in which ERISA betrays its goal of protecting the individuals it was supposedly designed to protect.
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