The U.S. Supreme Court recently ruled in favor of extending employees’ rights to sue, no matter what’s written in the plan document.  

The reason: Third-part administrator conflicts of interest. Employers hire TPAs to help cut claim costs, yet the adminstrator must also review claims – and appeals – fairly.

Disability offered, then denied

The court ruled 6-3 in favor of an Sears employee in Ohio. The woman had been diagnosed in 2000 with heart disease. She took a leave of absence, providing documentation from her doctor that she couldn’t return to work.

Sears offered employees long-term disability benefits, but the TPA ruled the 14-year employee didn’t qualify. She sued. A trial court rejected the complaint because she couldn’t prove the TPA violated the review process.

But an appeals court ruled that while the TPA followed the plan’s written claim-review procedures, the denial itself was unfair. The U.S. Supreme Court upheld the second ruling. What it means to you: Your current plan documents may now provide less lawsuit protection.