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Plaintiff Friendly Decision re Voided Discretionary Language: N.D. Ill.

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  • Plaintiff Friendly Decision re Voided Discretionary Language: N.D. Ill.

    In a recent case from Illinois in which the court ultimately rules in favor of the Plaintiff, the court applies Texas which voids he discretionary clause in the policy.

    The parties briefed whether a de novo standard applied or a standard that is deferential to Aetna. See R. 59, 67, 72, 77. The Court finds that a de novo standard
    applies because Texas law voids the discretionary clause in the Policy. Texas bans discretionary clauses from any “forms.” Tex. Admin. Code § 3.1203. A “form” includes any (a) policy, (b) contract, (c) certificate, (d) application attached or required to be attached to a policy, contract or certificate, or (e) rider or endorsement attached to or used in connection with the policy, contract, or certificate. Tex. Ins. Code § 1701.002. The Texas ban on discretionary clauses sets forth the
    specific circumstances in which it applies as follows:
    (b) Except as specified in subsections (c) and (d) of this section, this
    subchapter applies to forms offered, issued, renewed, or delivered on or
    after June 1, 2011, including forms that include premium waiver
    provisions based upon a disability determination.
    (c) For forms that include disability income protection coverage
    providing for periodic payments during disability due to sickness and/or
    accident, whether provided through a policy, certificate, or rider, this
    subchapter applies to forms offered, issued, renewed, or delivered on or
    after February 1, 2011.
    (d) For forms issued or delivered prior to the effective date of this
    subchapter that do not contain a renewal date, this subchapter applies
    on or after the effective date of any rate increase applicable to the form
    or any change, modification, or amendment of the form occurring on or
    after June 1, 2011.
    Under that standard of review, the court goes on to make two very Plaintiff friendly conclusions:

    Aetna argues that simply because Ferrin cannot perform sedentary work for six to eight hours a day does not mean that she cannot perform “any gainful activity” on a part-time basis. R. 91 at 12. The Court does not find that argument persuasive given the remaining medical records and evidence, which indicate Ferrin can sit or stand only for several hours at a time. Based on these records and evidence, the Court finds it more likely than not that Ferrin could not earn more than 50% of her predisability earnings to meet the criteria for a finding of no disability.

    The Court also finds the SSDI decision compelling because Aetna itself hired Allsup, a third-party social security claims advocator company, to help Ferrin recover
    benefits. Any benefit Ferrin received from the Social Security Act directly reduced Aetna’s liability to Ferrin, per the Policy terms. Accordingly, Aetna’s later denial of Ferrin’s disability, despite the SSDI decision and Aetna’s attempt to diminish its force, warrants some skepticism. See Ladd v. ITT Corp., 148 F.3d 753, 756 (7th Cir. 1998) (explaining that where insurer encourages claimant to apply for SSDI, provides her with legal representation, and financially benefits from the SSDI award, its subsequent denial of the claimant’s disability deserves skepticism). The Court is likewise skeptical of Aetna’s sudden denial of Ferrin’s benefits, despite no significant improvement in her condition. After the 24-month initial period, on October 18, 2013, Aetna approved Ferrin for LTD benefits based on the same “any reasonable occupation” standard applicable now. Aetna then denied Ferrin
    benefits on August 1, 2014. At that point, although Ferrin’s condition had improved somewhat from her condition immediately following her surgeries, Ferrin still reported pain, was taking pain medications, and her doctors had recommended additional surgery. In fact, in September 2014, Dr. Luken reported that Ferrin’s symptoms were largely unchanged from May 2014, just before Aetna’s denial. AR634. Ferrin contends that Aetna’s sudden denial was related to her loss of Workers’ Compensation benefits in May 2014, increasing Aetna’s monthly payments to Ferrin by $1,392.44. AR449-51; R. 91 ¶ 16. The Court need not delve into Aetna’s intent. But it finds that Aetna’s initial approval of benefits and then later denial without any significant change in her condition provides additional supporting evidence of her disability. See Juszynski, 2008 WL 877977, at *5-6 (explaining that “the fact that LINA had already approved LTD benefits may weigh in favor of Juszynski if LINA has failed to produce evidence that either the claimant’s medical condition improved or the information available to the insurer otherwise changed in some significant way”).
    The entire opinion is attached below.
    Attached Files