Class Action Charges Prudential Disability Claims Reviews Violated ERISA

A proposed class-action lawsuit claims Prudential Insurance Company of America violated the federal Employee Retirement Income Security Act with how it conducted long-term disability claims appeal reviews.

Filed in the U.S. District Court for the Eastern District of New York, the suit concerns "potentially thousands" of long-term disability claimants who filed a "secondary/voluntary" appeal after Nov. 14, 2005, but the appeal was denied by the same Prudential employee who denied the claimant's first appeal.

Under ERISA, a decision maker on a second appeal must be an independent person who wasn't involved with any previous denial of a disability claim, according to a statement from Dell & Schaefer, the law firm representing the plaintiffs.

The suit seeks an order requiring Prudential to re-evaluate thousands of voluntary appeals that it allegedly denied after Nov. 14, 2005. The reassessment of denied claims could result in "millions of dollars" of past due benefits, the law firm said.

Bob DeFillippo, a spokesman for Prudential Financial Inc. (NYSE: PRU), declined to comment.

The suit, which alleges breach of fiduciary duty, charges Prudential used an undisclosed cost-saving method of appeals review that violates the federal ERISA law.

"The whole point of the ERISA-governed appeals process is to substantially reduce lawsuit expenses and create an environment where claim denials will be objectively evaluated," said attorney Gregory Dell, in a statement.

Prudential is one of the largest group long-term disability insurers in the United States, with coverage in-force for more than 2 million people, the firm said.

Prudential Insurance Company of America currently has a Best's Financial Strength Rating of A+ (Superior).

(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)