In Daic v. Metropolitan Life Insurance Co., 458 F. Supp. 2d 1167 (D. Haw. 2006) the district court rejected each of plaintiff’s arguments challenging the validity of the plan’s reservation of discretionary authority. The court concluded that the plan’s discretionary language was clear and found it inconsequential that such language was in the certificate was delivered to the insured. The court also held that the insurer did not have to delegate its fiduciary responsibilities to a third party to preserve its discretionary authority and found that the insurer’s inherent conflict of interest was merely a factor to be considered in applying the abuse of discretion standard of review. Finally, the court held that the state insurance commissioner’s memorandum, although purporting to state that a discretionary clause was “deceptive” and “was not to be used in health insurance contracts or plans,” had no legal effect as it did not purport to retroactively invalidate such clauses and provided for no private right of action.

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This entry was posted by Adam V. Russo on Tuesday, July 28th, 2009 at 8:52 am and is filed under Plan Language. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.