Conflicts of interest in benefits decisions under the Employee Retirement Income Security Act (ERISA) have taken on a new life with extended risks for plan administrators. The Tenth Circuit recently established guidelines for plan administrators when a conflict exists between administering the plan and making benefits payment decisions.
Case Of Conflict
An employee was enrolled in her company's long-term disability plan in which the carrier was both the plan administrator and payor of claims. The carrier denied her claims for disability benefits because of a preexisting condition.
The employee appealed the benefit decision, supported by a formal request and letters from three doctors, but the carrier again denied the claim. She then sued the carrier for violating ERISA by denying her claim. A district court ruled that the carrier appropriately applied ERISA's "arbitrary and capricious standard of review"...(register to read more)