Conflict of Interest?
Is There a Conflict of Interest If the Party Paying Benefits Is The Same Party Who Decides Eligibility?
On Thursday, the Supreme Court answered this question with a resounding YES! The Court found, what every plaintiff ERISA practitioner already knew, that when a company determines eligibility and pay benefits out of its own pocket there is an inherent conflict of interest.
Recognizing this conflict of interest, the Court went on to state that a reviewing court should consider an insurance company's conflict of interest when reviewing the denial of an employee's health or disability benefits claim.
While the court did not provide much guidance on how much weight should be given to the conflict, it provides that the reviewing court must take the conflict into account as a factor in determining whether the plan abused its discretion in denying a claim. The case is Metropolitan Life v. Glenn.
So I guess the issue of whether or not a conflict of interest influenced an insurance company's decision to deny a claim will be judged based on the pornography standard... "I'll know it when I see it."
For more on the case click here (PDF)