Fifth Circuit Court of Appeals Rules for Insured in ERISA Matter

October 19, 2009

The Fifth Circuit Court of Appeals recently found that an insurance company abused its discretion in denying an insured disability benefits.  Alexander v. Hartford Life & Acc. Ins. Co., No. 09-10072 (5th Cir. Oct. 5, 2009), available at http://www.ca5.uscourts.gov/opinions/unpub/09/09-10072.0.wpd.pdf. 

Alexander contended that she was unable to perform her job because of severe pain and sought long-term disability benefits through her employer-sponsored insurance plan with Hartford.  Hartford denied the disability claim, and Alexander sued.  The district court granted summary judgment for Hartford.

In an ERISA matter, if the benefit plan’s administrator had discretionary authority (which Hartford had), a court reviews the administrator’s denial of benefits for an abuse of discretion.  An administrator’s decision constitutes an abuse of discretion if it is made without a rational connection between the known facts and the decision.  Here, the Court found that Hartford abused its discretion because it misstated information contained in Alexander’s file; Hartford’s denial letter was factually incorrect, both about the findings of a doctor hired by Hartford to review Alexander’s medical information and about other medical records.  Thus, no rational connection between the known information and the conclusion existed.  The Court reversed the summary judgment for Hartford and rendered judgment for Alexander.

To speak with an employment law attorney about a denial of benefits or another employment law matter, please contact the employment lawyers at Clouse Dunn Khoshbin LLP at info@cdklawyers.com.

KEITH A. CLOUSE

Clouse Dunn
Khoshbin LLP

214.220.2722
214.220.3833 ( fax)
keith@cdklawyers.com