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Court holds that Life Insurance of North America is not required to disgorge illegal profits after arbitrary denial of disability benefits

The Estate of Daniel Rochow  has a continuing action against Rochow's disability insurer, after it denied him benefits. The insurer repeatedly rejected his disability claim, arguing that he was no longer employed by the time he became medically disabled by a rare and severely debilitating brain infection called HSV-Encephalitis. Ultimately, the appellate court held that Life Insurance of North America (LINA) was arbitrary and capricious and dead wrong in its dealings with Rochow, and the insurer was ordered by the trial judge to disgorge the profits it earned by its illegal denial of benefits for 11 years.

The insurer appealed and this month the Court of Appeals ruled that the ERISA law did not require the insurer to disgorge its mis-begotten gains.  The Court of Appeals majority ruled that Rochow was "made whole" simply by forcing the insurer to pay the benefits--a decade late--with certain statutory interest.  Who says crime doesn't pay?

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