ERISA Gives the Insurer Discretion to Make Benefits Decision
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Carol Stewart sued Hartford Insurance Company to obtain two insurance benefits that she believes it owes her: longterm disability payments and a waiver of life-insurance premiums.
In Carol H. Stewart v. Hartford Life And Accident Insurance Company, No. 21-11919, United States Court of Appeals, Eleventh Circuit (August 10, 2022) the Eleventh Circuit found itself compelled to follow the statute rather than its own conclusions regarding the availability of coverage to Ms. Stewart.
Hartford contended that although she was insured it concluded that she was ineligible for the benefits she sought.
Hartford’s policy, in accordance with the statutory ERISA statute indisputably granted it discretion to make benefits determinations.
In 2010, Burr Forman cancelled its policy with Sun Life and switched the administration of its ERISA health plan over to Hartford Insurance.
Hartford determined that Stewart wasn’t “Disabled” within the meaning of its policy and that she therefore had to pay life-insurance premiums.
Stewart sued only to have the district court grant Hartford’s summary judgment.
ANALYSIS
Since the Burr Forman’s plan vested Hartford with discretion in reviewing claims Did Hartford’s policy vest it with discretion when reviewing benefits claims.
The policy expressly states that Hartford has “full discretion and authority to determine eligibility for benefits and to construe and interpret all terms and provisions of The Policy.”
The Eleventh Circuit affirmed the district court’s decision rejecting Stewart’s claim to disability benefits.
Did Hartford Correctly Denied Stewart A Waiver Of Life-Insurance Premiums.
It did. The record shows that Stewart could do "any" work. The word “any,” expresses a lack of restriction. Because Hartford’s interpretation was not wrong, the Eleventh Circuit ended the inquiry at Step 1 and affirm the decision.
To summarize, Stewart was not entitled to disability payments because Hartford’s interpretation of the disability exclusion was reasonable, and its conflict of interest didn’t lead it to make an arbitrary or capricious decision.
ZALMA OPINION
ERISA is a special statute that allows employers to create a thorough and relatively inexpensive series of benefits for its employees. The result may seem unfair but the decision fits the requirements of the statute.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., is available at http://www.zalma.com and [email protected].
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When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.
On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...
