The discretionary proof clause means "the insurer will only pay the claim if Sun Life Canada is satisfied that you have a disability that prevents you from working," explains Conway. The discretionary proof clause contained in the Sun Life Canada disability insurance contracts not only puts the company in a conflict of interest position, it also essentially gives insurers "licence to steal."
"They are not only deciding the claim, they are insuring the claim," says Conway. "It comes out of their assets—every dollar they pay out to claimants is a dollar lost to them."
In June 2007, the state of Michigan outlawed discretionary proof clauses in disability contracts, yet Sun Life Canada has continued to impose the clause on claims like the one filed by the lead plaintiff in the class action, Reyna Allen.
Allen worked on an assembly line in pharmaceutical manufacturing plant in Detroit and was required to stand for long periods of time. A back injury combined with spinal defect made it impossible to continue in her job.
"All the doctors say she is disabled," says Conway. "All the documents say she has this medical condition." But Sun Life adjudicators told Allen that they did not believe she had provided them with satisfactory proof that she was unable to work.
It is safe to say that Allen is not the only Sun Life Canada policyholder whose claim was rejected under the discretionary proof clause since 2007. Potential class members include any Sun Life Canada policyholder whose contract was written in the state of Michigan and whose claim was denied under the discretionary proof clause.
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"The only thing claimants can hope for is to get their benefits plus interest, which is now at a point and half," says Conway. "I think only the under threat that all of their claims are going to have to re-adjusted or compensated is Sun Life Canada going to pay.
"This claim going to clean up the industry a little. At least, that's what we hope."
John J. Conway is a solo practice in Detroit, Michigan. He is a hold a JD from the University of Detroit Mercy School of Law and BA from Marquette University in Milwaukee. He has been an attorney for more than a decade and deals in a wide variety of litigation.