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Court sides with employee in benefits case
Court Issues | 2008/06/19 17:11
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.



ACLU files suit against Texas juvenile prison system
Court Issues | 2008/06/17 14:51

The American Civil Liberties Union (ACLU) filed a class action lawsuit Thursday against the Texas Youth Commission (TYC), alleging that five girls imprisoned at the Ron Jackson State Juvenile Correctional Complex were subjected to punitive solitary confinement, physical abuse and invasive strip searches. The ACLU alleged that the treatment violated the girls' rights under the US Constitution and international law, including the Convention on the Rights of the Child. TYC officials responded that the agency is working to address the issues raised in the lawsuit.

In May 2007, TYC announced it would release 226 inmates after an investigation revealed that their sentences had been improperly extended in retaliation for filing grievances. In June 2007, Congress passed a bill to reform the Texas juvenile prison system, creating the Office of Inspector General to internally police the system. The Ron Jackson girls' facility is estimated to hold about 190 inmates.



Ginsburg Reverses FOIA Denial
Court Issues | 2008/06/16 14:45
An airplane enthusiast has the right to seek documents from the Federal Aviation Administration, though the lower court had denied his friend the same documents.

Greg Herrick was denied access to the documents, due to an exemption covering trade secrets. When his friend filed a similar lawsuit, the lower court said the lawsuit was precluded by the first ruling. The D.C. Circuit upheld, but Justice Ginsburg reversed, shooting down the Circuit's 5-point test for "virtual representation."

"Extending the preclusive effect of a judgment to a non-party runs up against the deep-rooted historic tradition that everyone should have his own day in court," Ginsburg wrote.

For a lawsuit to be precluded, the two parties must have "pre-existing substantive legal relationship" or one party must have assumed control over the previous litigation, according to the unanimous opinion.


Class Claims Steak House Knowingly Hires Illegals
Court Issues | 2008/06/11 14:46
Ruth's Chris Steak House systematically hired undocumented workers and lets them use the Social Security numbers of previous workers, and harassed and threatened a legal worker who complained of it, a RICO class action claims in Federal Court.

The lawsuit claims that after an INS sweep of Ruth's Chris Steak House in Birmingham, many undocumented workers returned "wearing different name tags." It claims the restaurant hires undocumented workers on a "large scale," pays them in cash, knowingly accepts I-9 immigration forms containing false information, and otherwise knowingly violates immigration and employment laws.

Plaintiffs also accuse Ruth's Chris of "stealing" 20% to 25% of its workers' tips.


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