Can an ERISA plan’s “choice of law” provision trump a state’s insurance regulation banning discretionary review? Sometimes yes, this time no.

Here’s the case of Curtis v. Hartford Life and Accident Insurance Company, [PDF], No. 11 C 24489 (N.D. Illinois, January 18, 2012)(Magistrate Judge Jeffrey Gilbert)(Opinion attached)(Plan’s choice of law provision, applying another state’s law which does not ban discretionary language was found to be contrary to public policy).

FACTS: Illinois resident Curtis sought ERISA disability benefits under a plan administered by Hartford. Hartford determined that Curtis was not disabled, and terminated the benefits. Curtis sued. The plan had discretionary language, but Illinois has an insurance regulation banning discretionary language. Noteworthy: the plan included a choice of law provision requiring application of Delaware law.

ISSUE: Does the Illinois Insurance regulation banning discretionary language apply when the ERISA Plan’s choice of law provision requires application of Delaware law?

HELD: The ERISA Plan’s Choice of Law Provision Did Not Trump the Insurance Regulation Banning Discretionary Language

  1. The Illinois insurance regulation applies to this ERISA plan and de novo standard of review controls. Op. at 17. ERISA does not preempt the Illinois insurance regulation. Op. at 19.
  2. The Plan’s choice of law provision (requiring application of Delaware law which does not have a regulation banning discretionary language) does not control. Delaware allows inclusion of discretionary clauses in policies. This is clearly contrary to the Illinois regulation “and the public policy of Illinois.” Accordingly the Illinois regulation is not displaced by the Plan’s choice of law provision. Op. at 19.
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Photo of Mike Reilly Mike Reilly

Mike Reilly is a nationally recognized labor, employment and employee benefits attorney, named one of the “Top 100 Most Powerful Employment Attorneys in the Nation” for the past five consecutive years by Human Resource Executive®. He has decades of experience providing strategic employment…

Mike Reilly is a nationally recognized labor, employment and employee benefits attorney, named one of the “Top 100 Most Powerful Employment Attorneys in the Nation” for the past five consecutive years by Human Resource Executive®. He has decades of experience providing strategic employment advice, and has represented clients in more than 75 jury trials, arbitrations, bench trials and claims before the EEOC and Washington State Human Rights Commission.

Small and large employers retain Mike for his strategic advice and decades of experience in employment issues and litigation, business decisions and litigation avoidance. Mike provides advice in claims involving discrimination, retaliation, wrongful discharge, disability accommodation, ERISA and non-ERISA employee benefit claims, and wage/hour claims. He served as lead counsel in an employee raiding/trade secret case as reported in the Wall Street Journal, and defends employers in class action claims.

Mike’s remarks on employment issues have been quoted in NewsweekCorporate Legal TimesSeattle TimesEmployee Relations Law JournalPuget Sound Business JournalCFO.com, and other professional journals and management publications. Chambers USA’s Guide to America’s Leading Lawyers for Businessrates Mike in the top ranking (band one) for his work in labor and employment law, and has described him as “one of Seattle’s top-rate attorneys” who is “truly phenomenal [with] superb legal instincts” and “an amazingly assertive litigator.” His clients include Nordstrom, Seattle Seahawks, Home Depot, KeyBank, Starbucks, Fred Hutchinson Cancer Research Center, Red Robin and Seattle Chamber of Commerce, among others.