In Brasseur v. Life Insurance Company of America (LINA), Plaintiff Wilfred Brasseur, a computer engineer, worked in the Houston office of Chicago Bridge & Iron Company when he became disabled. LINA denied his application for long term disability benefits on the grounds that he “was not disabled as defined by the Plan’s terms.” Ultimately, Brasseur filed an ERISA lawsuit in Houston. He filed a motion for summary judgment limited to the issue of what standard of review should apply to the court’s evaluation of his claim. He argued that since the Plan was issued in Chicago, Illinois, Illinois law should apply. This would subject his claim to do novo review instead of the abuse of discretion standard. The Texas District Court agreed with the plaintiff, holding that it would review Brasseur’s claim using the plaintiff preferred de novo standard instead of the defendant preferred abuse of discretion standard.

ERISA Generally Preempts State Law

The preemption clause applicable to ERISA lawsuits provides “that ERISA will ‘supersede any and all State laws’ to the extent that those laws ‘relate to’ any employee benefit plan that is subject to ERISA.” ERISA has a savings clause that will exempt a law from preemption when the state law “regulates insurance” and “clearly ‘relates to’ employee benefit plans. Even so, such a law may still be “subject to preemption if it conflicts directly with the congressional polices behind ERISA by supplementing or supplanting ERISA’s remedial enforcement provisions.” In analyzing the Illinois statute, the District Court held that ERISA did not preempt its application.

The Illinois Statute is Exempt from Preemption Under ERISA’s Savings Clause

The Court noted that the Illinois statute, “Section 2001.3 is specifically directed toward the insurance industry, and this is an insurance regulation under the common sense view.”

  • It transfers or spreads the policyholder’s risk by limiting the discretionary power of the policyholder.
  • Its discretionary prohibition requires an “independent review when there is a disagreement concerning the terms of the policy.”
  • It is “limited to entities within the insurance industry.”

The section also has a “substantial effect on the risk pooling arrangement between the insurer and the insured.” It dictates the conditions under which an insurance company must pay for the risk it has assumed.” Since the Illinois statute in question satisfied the criteria required by ERISA’s savings clause, the Court concluded “that section 2001.3 does not run afoul of Congress’ policies intended by ERISA legislation.” It “simply alters the standard of review, which is permissible under ERISA.” Accordingly, the plaintiff won this argument, and the District Court will review de novo his claim for disability benefits.

This case was not handled by our office, but can be instructive for those litigating in one state when the plan was issued in another state that may laws more favorable to disabled plaintiffs. For questions about this case, or any question relevant to your disability claim, call one of our attorneys at Dell & Schaefer for a free consultation.