California’s Discretionary Ban Statute Saved from Preemption by ERISA
California Insurance Code § 10110.6 reads as follows:
The statute is significant because it is a broad discretionary ban that effectively eliminates the possibility of courts deferentially reviewing claims administrators’ determinations on group benefit claims governed by ERISA.
In Orzechowski v. Boeing Company Non-Union Long-Term Disabilty Plan, the Ninth Circuit Court of Appeals 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) since the statute is directed toward entities engaged in insurance, and it substantially affects the risk-pooling arrangement between the insurer and the insured.
This is HUGE for plaintiffs who can argue this statute applies, as the case should then be reviewed de novo. This is why, in any case, I first analyze the prospective forum. If you can litigate in California, even though you no longer live there, that’s an option you’ll certainly want to consider.
Here’s a link to the opinion.