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The Supreme Court said Thursday that courts should consider an insurance company's potential conflict of interest when reviewing the denial of an employee's health or disability benefits claim. The court ruled 6-3 in the case of an Ohio woman who sued MetLife Inc. over a disability claim. She contended insurance companies have a financial incentive to deny claims and that conflict of interest should weigh heavily in employees' favor when they challenge benefit claims in court.

A federal appeals court ordered Wanda Glenn's benefits reinstated. The Supreme Court upheld that ruling.

Writing for the majority, Justice Stephen Breyer said federal law imposes a special standard of care on insurers requiring full and fair review of claim denials. Breyer noted that MetLife had emphasized a medical report that favored denial, de-emphasized other reports suggesting benefits should be granted and failed to provide MetLife's vocational and medical experts with all relevant evidence.

Dissenting, Justice Antonin Scalia said the court is using the wrong standard in dealing with potential conflicts of interest. Scalia said there must be evidence that a conflict improperly motivated a denial of benefits. In the MetLife case, there was no such evidence, Scalia said. Justices Clarence Thomas and Anthony Kennedy also dissented.

MetLife administered a disability plan for Sears, where Glenn worked for 14 years. The insurance company paid benefits for two years but in 2002 said her condition had improved and refused to continue the benefit payments. MetLife saved $180,000 by denying Glenn disability benefits until retirement, her lawyers said in court filings.

The 6th U.S. Circuit Court of Appeals ordered Glenn's benefits reinstated in September 2006, ruling that MetLife acted under a conflict of interest and made a decision that was not the product of a principled and deliberative reasoning process. MetLife argued that the standard used by the 6th Circuit would encourage participants with dubious claims to file suit, which in turn would raise the costs of benefit plans to both companies and employers.


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