Orzechowski v. The Boeing Company Non-Union Long-Term Disability Plan, No. 14-55919 (9th Cir. 2017)
Annotate this CaseCalifornia Insurance Code 10110.6(a) has voided provisions conferring discretionary authority to Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., plan administrators such as Aetna. Plaintiff challenged Aetna's decision to terminate her long-term disability benefits under a plan created by Boeing. The Ninth Circuit reversed and remanded the district court's holding that California's statute did not apply to Boeing's plan and upholding Aetna's denial of benefits to plaintiff. The Ninth Circuit held that section 10110.6(a) was saved from ERISA preemption because the statute is directed toward entities engaged in insurance and substantially affects the risk-pooling arrangement between the insurer and the insured. The Ninth Circuit also held that section 10110.6 applied in this case because Boeing's policy renewed after section 10110.6's effective date.
Court Description: Employee Retirement Income Security Act. The panel reversed the district court’s judgment, after a bench trial, in favor of the defendants in an ERISA action challenging a decision to terminate the plaintiff’s long-term disability benefits. The district court reviewed the benefits decision for an abuse of discretion because the ERISA plan gave defendants discretionary authority. The panel held that de novo review was required under California Insurance Code § 10110.6, which voided the discretionary clause contained in the plan. The panel held that § 10110.6 is not preempted by ERISA because it falls within the savings clause set forth in 29 U.S.C. § 1144(b)(2)(A). Agreeing with the Seventh Circuit, the panel concluded that § 10110.6 is directed toward entities engaged in insurance, and it substantially affects the risk-pooling arrangement between the insurer and the insured. The panel held that § 10110.6 applied to the plaintiff’s claim because the relevant insurance policy renewed after the statute’s effective date. The panel remanded the case to the district court. ORZECHOWSKI V. BOEING CO. NON-UNION 3 LONG-TERM DISABILITY PLAN
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