Prudential Insurance Company Stripped of Discretionary Authority – The Rock Gets Rolled

Prudential Insurance Company of America has been stripped by the Federal Courts of a weapon it has used to deprive thousands of hard-working Americans their long term disability benefits. The courts have ruled that the language appearing in Prudential’s policies does not give Prudential “discretionary authority” to determine whether to pay benefits. Under a federal law known as ERISA, a long term disability insurance company possesses “discretionary authority” to pay or deny benefits if its policy contains language such as the following: “Prudential Insurance Company of America has the sole discretion to interpret the terms of the Group Contract, to make factual findings and to determine eligibility for benefits.” If language like this is in your policy, it ordinarily means that a claimant will have to show a court that the insurance company’s decision not to pay benefits was “an abuse of discretion.” This standard is incredibly difficult because disabled claimants in their lawsuit will have to prove to a court that the insurance company’s decision was “without reason, unsupported by substantial evidence or erroneous as a matter of law.” The courts have to give the insurance company the benefit the doubt if the company came up with any plausible reason to deny or terminate your benefits. So, if the insurance company finds a physician to write that you are not disabled, it has a pretty good chance of prevailing in court and never having to pay you. Indeed, there are many court decisions out there where courts actually agree that a claimant is “disabled,” but have to side with the insurance company because of this draconian rule. For years, Prudential Insurance Company of America has been placing the “discretionary authority” language in the benefits “Summary Plan Description,” rather than in the actual policies themselves. In light of recent decision made by the United States Supreme Court, federal courts across the United States are now uniformly holding that Prudential’s placement of the discretionary language provision in the Summary Plan Description does not give them the legal right to rely on the abuse of discretion standard. Federal courts are now actually trying ERISA long term disability claims like any other breach of contract claim (without a jury) and claimants are enjoying far greater success in the courts. If you have a question on whether your group long term disability policy gives your insurance company (whether it be Unum, CIGNA, Hartford, Aetna, Principal, Prudential, Lincoln Life, Standard or Reliance Standard) discretionary authority, and to know steps you can take to avoid an insurance company from denying or terminating your long term disability claim, you should contact us for a free consultation.