If you have an insurance plan covered under ERISA law – and you do if your long term disability insurance comes through your employer – then there’s a “standard of review” that courts have to use when they look at the internal review decisions made by plan administrators. This review is something that you’re entitled to if you’ve gone through the internal review process and you don’t agree with the results, and typically there are three ways that courts go about reviewing administrators.
The Three Approaches in Standard of Review
De novo review. This type of review is undertaken when the plan administrator is not given discretionary authority to decide whether or not someone’s covered for a particular incident or issue or the leeway to interpret the terms of the policy. In this case, the review’s limited to looking at the same internal record that the “plan decision maker” used.
Deferential review. When the insurance plan does give discretionary authority to the administrator, the court typically defers to his or her decisions because they have already been entrusted to interpret the plan. Because of this, a deferential review can only focus on whether or not the administrator acted in a way they find to be capricious or arbitrary.
“Modified abuse-of-discretion standard” review. This third type of review’s relatively new and was created to deal with situations in which the administrator does have discretionary power but also has a conflict of interest and their decision benefits the fiduciary. Courts believe this constitutes an abuse of discretion unless the standards are clearly applied to all people on the plan.
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Know Which Standard of Review Will Be Applied
If you want to win your medical disability claim, knowing which standard of review will be applied is very important. This information can affect the type of evidence that your lawyer decides to present and allow him or her to focus the case in a specific way.
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