Justices to decide employee benefits case

WASHINGTON (AP) — The Supreme Court struggled Wednesday with how much weight to give an insurance company’s potential conflict of interest when it denies an employee’s health or disability benefits claim.

The lawyer representing the Ohio woman who sued MetLife Inc. over a disability claim argued that insurance companies have a financial incentive to deny claims. That conflict of interest should weigh heavily in employees’ favor when they challenge benefit claims in court, Joshua Rosenkranz said in court papers.

The dispute is being closely watched by insurance companies and business groups. Depending on how the justices rule, the dispute could make it easier for employees to win benefit payments in court.

Disability benefits are a big business. Disability insurance plans cover 28 million Americans, and insurers paid more than $7.2 billion in long-term disability claims to more than 500,000 people in 2006, according to court papers filed by the U.S. Chamber of Commerce, America’s Health Insurance Plans and the American Benefits Council.

But many health and disability claims are denied, which can lead to lawsuits. The justices’ questions during oral argument echoed the confusion that plagues the issue in lower courts.

Most federal appeals courts consider so-called “dual role insurers” — those that both pay benefits and decide eligible to receive them — to have some conflict of interest. But, the question of how much weight to give that conflict has “befuddled the lower courts,” the Legal Aid Society said in a friend of the court brief.