Last time, I talked a lot about discretionary clauses and how they can hurt your ability to effectively challenge your insurance company on a denied claim and win. These clauses basically allow insurers to “construe” the language of your policy however they see fit when deciding whether or not to award your claim, which gives them quite a bit of wiggle room to deny benefits unless they are very clearly and expressly offered in your specific situation – and sometimes even when they are!
I mentioned how states are trying to fight back against these clauses, but also how – in legal battles with insurance companies –they’re currently losing. The courts are siding with insurance companies because the Employee Retirement Income Security Act has a “saving clause” that it’s hard to get around. Rules were laid down in the 2003 Supreme Court Case Kentucky Association of Health Plans v. Miller, and courts have continued to abide by the “Miller Test.”
What Exactly Is the “Miller Test”?
In deciding the outcome in Miller, the Supreme Court created a two-pronged test that defendants had to meet in order to remove discretionary clauses and have a better chance at getting benefits from their disability claim. It’s a test that’s so far proven difficult to beat. What are the two prongs?
- The state law being violated by the discretionary clause needs to be “specifically directed” towards insurance companies and self-insured plans.
- The state law has to greatly impact the “risk pooling arrangement” that exists between the insurance company and those they insure.
By far, the second part of the law is the one that’s causing the most hang-ups. In order for the state law to affect the “risk pooling arrangement,” the argument seems to be, it would need to be addressed when the contract’s created and not after someone makes a claim. At that point, it comes down to “administrative factors” and doesn’t affect risk pooling at all.
What this means for you is that it’s pretty useless for claimants to fight against discretionary clauses. However unfair they might be, that was a battle that needed to be undertaken when the plan was being drawn up. Essentially, you’re too late to do anything about it.
Luckily, there are other ways to get the benefits you need from your ERISA plan, and if you’re unsure how to go about it, you should contact a firm experienced in these kinds of cases.