1 –OPINION AND ORDER

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

PORTLAND DIVISION

CHRISTEEN OSBORN, by 

and through her Conservator 

Charles Petit, 

No. 3:15-cv-00605-MO

Plaintiff, 

OPINION AND ORDER

v. 

METROPOLITAN LIFE INSURANCE COMPANY,

 Defendant.

MOSMAN, J., 

The issue is the appropriate standard of review to apply in review of Defendant MetLife’s 

decision to deny coverage for Plaintiff Christeen Osborn’s claim for Accidental Death and 

Dismemberment insurance. The parties have filed motions for partial summary judgment on this issue. 

Specifically, Plaintiff Osborn moves for an order that de novo review will be applied while Defendant 

MetLife contends that the standard of review is abuse of discretion. I find the appropriate standard of 

review in this case is abuse of discretion. I DENY Plaintiff Osborn’s Motion [14] and GRANT 

Defendant MetLife’s Motion [15]. 

I. FACTS

This is an ERISA benefits case in which Plaintiff Christeen Osborn, M.D., claims that MetLife 

wrongfully denied her claim for $1.25 million in accidental death and dismemberment (“AD&D”) 

benefits under the Providence Health & Services Welfare Benefit Plan (the Program). The Program is an 

ERISA-governed welfare benefit plan which consists of several component plans, including a 

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Participating Life and AD&D Insurance Plan. Documents like the Program are typically prepared by 

employers in order to provide an overall structure to the menu of benefits available to its employees. 

This type of document often incorporates by reference the various group health, life, and disability 

insurance policies that provide the actual coverage for the employees. Benefits under the Program’s 

Participating Life and Insurance Plan are funded through a group life and AD&D insurance policy that 

MetLife issued to Dr. Osborn’s employer, Providence Health & Services (PHS), the Program’s sponsor 

and administrator. 

In July 2012, Dr. Osborn was involved in a bicycling accident. In January 2013, she applied for 

AD&D benefits, claiming to be entitled under the Program’s brain damage provision. In November 

2013, MetLife determined that Dr. Osborn was not entitled to AD&D benefits because her brain injury 

did not result in a complete inability to perform the substantial and material activities of everyday life. 

Dr. Osborn appealed MetLife’s denial of benefits, and in January 2015, MetLife denied Dr. Osborn’s 

appeal. Dr. Osborn then brought this action under ERISA’s civil enforcement provision, 29 U.S.C. § 

1132(a)(1)(B). 

II. DISCUSSION

For claims brought under ERISA’s civil enforcement provision, 29 U.S.C. § 1132(a)(1)(B), a 

threshold issue is whether the standard of review is de novo or abuse of discretion. Unless the ERISA 

plan documents contain an unambiguous grant of discretionary authority, the default standard for 

reviewing the denial of benefits under an ERISA plan is de novo. Firestone Tire & Rubber Co. v. Bruch,

489 U.S. 101, 115 (1989). Dr. Osborn asserts three independent reasons why the standard of review 

should be de novo in this case: 1) the relevant plan documents do not contain the unambiguous grant of 

discretionary authority required to overcome the de novo presumption; 2) there is a conflict between the 

Certificate of Insurance and the Program and therefore the terms of the Certificate of Insurance, which 

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does not contain an unambiguous grant of discretion, controls; and 3) any conveyance of discretionary 

authority is void under Washington law. I find these arguments are unpersuasive under the present 

circumstances. For the following reasons, I hold that MetLife’s denial of benefits will be reviewed for 

abuse of discretion. 

A. Unambiguous Grant of Discretion to the Plan Administrator 

Dr. Osborn first argues MetLife does not carry its burden to demonstrate that the language of the 

Program plainly and unambiguously grants discretionary authority to the plan administrator to construe 

the terms of the Program’s Participating Life and AD&D Insurance Plan and make benefit 

determinations. “The default is that the administrator has no discretion, and the administrator has to 

show that the plan gives it discretionary authority in order to get any judicial deference to its decision.”

Kearney v. Standard Ins. Co., 175 F.3d 1084, 1089 (9th Cir. 1999) (en banc). When a court assesses the 

applicable standard of review, “the starting point is the wording of the plan.” Abatie v. Alta Health & 

Life Ins. Co., 458 F.3d 955, 962–63 (9th Cir. 2006) (en banc). No magic words need appear in the plan 

document to confer discretion. See id. at 963 (citations omitted). Ultimately, however, the grant of 

discretionary authority to the plan administrator must be unambiguous. Sandy v. Reliance Standard Life 

Ins. Co., 222 F.3d 1202, 1207 (9th Cir. 2000) (“[U]nless plan documents unambiguously say in sum or 

substance that the Plan Administrator or fiduciary has authority, power, or discretion to determine 

eligibility or to construe the terms of the Plan, the standard of review will be de novo.”). An 

unambiguous grant of discretionary authority is one that is so clear it cannot be interpreted to have any 

other meaning. Kearney, 175 F.3d at 1090. Plan terms which merely identify the administrator's tasks 

but bestow no power to interpret the plan are insufficient to confer discretionary authority. Ingram v. 

Martin Marietta Long Term Disability Income Plan for Salaried Employees of Transferred GE 

Operations, 244 F.3d 1109, 1113 (9th Cir. 2001). 

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MetLife contends that both Section 9.2 and Supplement E of the Program plainly and 

unambiguously grant discretionary authority to the plan administrator sufficient to trigger abuse of 

discretion review. Section 9.2 of the Program, entitled “Claims Procedure for ERISA Participating 

Plans,” provides that “[b]enefits shall be paid under the Program only if the Program Administrator or 

Claims Administrator determines in its discretion that the applicant is entitled to them.” (The Program, 

Doc. 18, Ex. A at 38 (emphasis added).) Dr. Osborn argues that while Section 9.2 may constitute a grant 

of discretionary authority to determine eligibility for benefits, it does not grant the administrator 

discretion to construe the terms of the plan, and the latter is what is necessary to overcome the default de 

novo review. In support of this argument, Dr. Osborn relies on Abatie, in which the Ninth Circuit stated 

that “ERISA plans are insufficient to confer discretionary authority on the administrator when they do 

not grant any power to construe the terms of the plan.” 458 F.3d at 964. While at first blush this 

language appears to support Dr. Osborn’s argument that a grant of discretion must necessarily include 

authority to interpret the terms of the plan, a closer review of Abatie and other cases reveal that a grant 

of discretionary authority to determine eligibility of benefits is sufficient to trigger abuse of discretion

review. 

In stating that the power to construe the terms of the plan is necessary to confer discretionary 

authority on the plan administrator, the Abatie court relied exclusively on Ingram, 244 F.3d 1109. See

Abatie, 458 F.3d at 964. In Ingram, the Ninth Circuit had held that de novo review applied because the 

insurance plan provisions at issue merely identified the plan administrator’s tasks but did not bestow any 

power to interpret the plan. Id. at 1113. This holding does not appear to be based on any absence of 

authority to specifically interpret the terms of the plan, but rather it was because the plan said “nothing 

about the merits of MetLife’s substantive claims decisions, and nothing about whether those decisions 

are discretionary.” Id. Here, unlike in Ingram, MetLife’s authority to determine eligibility for benefits 

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5 –OPINION AND ORDER

constitutes “substantive claims decisions” and, according to the terms of Section 9.2, those decisions are 

at MetLife’s discretion. 

Although Dr. Osborn is correct in asserting that Section 9.2 does not grant MetLife discretion to 

interpret the terms of the plan, she is incorrect to assert such a grant is necessary. In Firestone Tire & 

Rubber Co v. Bruch, the seminal case on the standard of review in 29 U.S.C. § 1132(a)(1)(B) actions 

such as this one, the Supreme Court held: 

[T]he validity of a claim to benefits under an ERISA plan is likely to turn 

on the interpretation of terms in the plan at issue. Consistent with 

established principles of trust law, we hold that a denial of benefits 

challenged under § 1132(a)(1)(B) is to be reviewed under a de novo

standard unless the benefit plan gives the administrator or fiduciary 

discretionary authority to determine eligibility for benefits or to construe 

the terms of the plan. 

Firestone, 489 U.S. at 115 (emphasis added); see also Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111 

(where an ERISA plan grants “the administrator or fiduciary discretionary authority to determine 

eligibility for benefits, trust principles make a deferential standard of review appropriate”) (quoting 

Firestone) (emphasis added) (citations omitted). Firestone’s use of the disjunctive “or” compels me to 

hold that either the discretion to determine eligibility for benefits or the discretion to interpret the terms 

of the plan are sufficient grants of discretionary authority. 

The Ninth Circuit has so held on numerous occasions. See Muniz v. Amec Const. Manage., Inc., 

623 F.3d 1290, 1295 (9th Cir. 2010) (“The abuse-of-discretion standard is used to review a benefits 

decision when . . . ‘the benefit plan gives the administrator or fiduciary discretionary authority to 

determine eligibility for benefits or to construe the terms of the plan.’”) (quoting Firestone, 489 U.S. at 

115); Prichard v. Metro. Life Ins. Co., 783 F.3d 1166, 1171 (9th Cir. 2015); Feibusch v. Integrated 

Device Tech., Inc. Emp. Benefits Plan, 463 F.3d 880, 884 (9th Cir. 2006) (“The administrator’s burden 

to demonstrate insulation from de novo review requires either language stating the award of benefits is 

within the discretion of the plan administrator or language that is plainly the functional equivalent of 

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6 –OPINION AND ORDER

such wording.”) (emphasis added) (internal quotes omitted). So have other district courts in the Ninth 

Circuit. See, e.g., Bledsoe v. Metro. Life Ins., 90 F. Supp. 3d 901, 909 (C.D. Cal. 2015) (“A court 

reviews the benefit plan de novo unless the benefit plan gives the administrator or fiduciary 

discretionary authority to determine eligibility for benefits; if the plan does grant such discretionary 

authority, the Court reviews the administrator’s decision for abuse of discretion.”) (emphasis added) 

(internal quotation omitted). 

The Supreme Court and Ninth Circuit case law support MetLife’s position that there are two 

ways an ERISA plan document will trigger abuse of discretion review in a § 1132(a)(1)(B) case: (1) 

when the plan grants the administrator discretionary authority to determine eligibility for benefits; or (2) 

when the plan grants the administrator discretion to construe the terms of the plan. Here, Section 9.2 

clearly grants MetLife discretion to determine eligibility for benefits under the Participating Life and 

AD&D Insurance Plan. Therefore, Section 9.2 constitutes an unambiguous grant of discretion that 

triggers abuse of discretion review. Furthermore, because I hold that Section 9.2 contains unambiguous 

discretionary language, it is unnecessary for me to determine whether such a grant of discretionary 

authority also exists in Supplement E. 

B. Conflict between Section 9.2 of the Program and the Certificate of Insurance 

Dr. Osborn argues even if Section 9.2 of the Program contains an unambiguous grant of 

discretionary authority, such a grant of discretion creates a direct conflict between the Program and the 

Certificate of Insurance and triggers Supplement E’s “Resolution of Conflicts” provision. Paragraph E-7 

of Supplement E says: 

E-7. Resolution of Conflicts. If there is a conflict between the Program 

document, this SUPPLEMENT E, the insurance policy and certificate of 

insurance, or the applicable Summary Plan Description, the terms of the 

insurance policy and certificate of insurance control to the extent they do 

not conflict with applicable law. . . . 

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(The Program, Doc. 18, Ex. A at 68 (emphasis added).) While Section 9.2 contains an unambiguous 

grant of discretion, Dr. Osborn contends that the Certificate of Insurance does not, thus creating a 

conflict between the two documents. And, according to Paragraph E-7, if there is a conflict between 

these two documents, the terms of the Certificate of Insurance control.

While MetLife concedes that the Certificate of Insurance does not contain a discretionary clause, 

it argues there is no conflict with Section 9.2 because the Certificate of Insurance is silent as to whether 

there is a grant of discretion. The Ninth Circuit and other courts have held a conflict does not exist when 

one ERISA Plan document is silent on a topic that is addressed in another Plan document. Atwood v. 

Newmont Gold Co., 45 F.3d 1317, 1321 (9th Cir. 1995) (holding that even though the summary plan 

description (SPD) did not include discretionary language, the grant of discretionary authority in the plan 

controlled) overruled on other grounds, Abatie, 458 F.3d 955; Lafferty v. Providence Health Plans, 706 

F. Supp. 2d 1104, 1111 (D. Or. 2010) (“The Ninth Circuit, and the majority of other jurisdictions which 

have considered this issue, have concluded that silence in the SPD regarding language contained within 

the plan is not necessarily a conflict.”) reversed on other grounds, 436 Fed. Appx. 780 (9th Cir. 2011); 

Lee v. Kaiser Found. Health LTD Plan, 812 F. Supp. 2d 1027, 1035 (N.D. Cal. 2011) (“[T]he court 

concludes that the [SDP] and the Flexible Benefits Plan’s silence does not create a conflict with the 

Welfare Benefits Plan and Certificate of Insurance.”); see also Shaw v. Prudential Ins. Co. of America, 

566 Fed. Appx. 536, 538–39 (8th Cir. 2014) (holding that abuse of discretion standard applied even 

though the AD&D policy at issue did not contain discretion-granting language since other plan 

documents unambiguously granted such authority, including a wrap-plan document that provided a clear 

and explicit grant of discretion). If the Certificate of Insurance expressly stated MetLife did not have 

discretion, then perhaps there would be a direct conflict and the Certificate of Insurance would control 

per Paragraph E-7. But it does not. The Certificate of Insurance’s lack of a discretionary clause does not 

Case 3:15-cv-00605-MO Document 31 Filed 02/11/16 Page 7 of 17
8 –OPINION AND ORDER

create a conflict with Section 9.2. Therefore, Paragraph E-7 does not apply, and the Certificate of 

Insurance does not control over Section 9.2. 

C. Washington’s Ban on Discretionary Clauses 

Finally, Dr. Osborn argues that even if Section 9.2 contains discretionary language, Washington 

has banned discretionary clauses and therefore de novo review applies. Many states have either banned 

or restricted the use of discretionary clauses in insurance contracts. Under these restrictions, if an 

insurance contract contains a discretionary clause, the discretionary clause is simply void. See, e.g., 

Cerone v. Reliance Standard Life Ins. Co., 9 F. Supp. 3d 1145, 1149 (S.D. Cal. 2014) (holding that a 

policy’s discretionary clause was void and unenforceable as a result of California’s statutory ban on 

discretionary clauses). The Ninth Circuit has held that such state laws are enforceable in ERISA lawsuits 

because the laws are not preempted by ERISA. See Standard Ins. Co. v. Morrison, 584 F.3d 837, 849 

(9th Cir. 2009). 

Section 12.5 of the Program dictates that Washington law controls “in all matters relating to the 

Program and the Participating Plans.” (The Program, Doc. 18, Ex. A at 49.) Dr. Osborn advances two 

theories to support her argument that Washington law bans discretionary clauses. First, Dr. Osborn 

argues Washington has banned discretionary clauses in all insurance related contracts issued in 

Washington under WAC 284-44-015. Second, Dr. Osborn argues that Washington has specifically 

banned discretionary clauses in all disability insurance policies issued in Washington under WAC 284-

96-012. 

1. Whether WAC 284-44-015 Bans Discretionary Clauses in All Insurance Related 

Contracts 

Dr. Osborn argues that WAC 284-44-015 bans discretionary clauses in all insurance related 

contracts issued in Washington. However, when looked at in context, WAC 284-44 only applies to 

health care service contractors. The regulation states:

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WAC 284-44-010 Title and application. (1) This regulation, WAC 284-

44-010 through 284-44-070, is promulgated pursuant to RCW 48.44.050 

and 48.44.020, and may be cited as the “Washington state health care 

service contractor regulation.” 

(2) This regulation, chapter 284-44 WAC, shall apply to every health care 

service contractor (hereinafter referred to as “contractor“) registered 

pursuant to RCW 48.44.015. 

WAC 284-44-015 Discretionary clause prohibited. (1) No contract may 

contain a discretionary clause. “Discretionary clause” means a provision 

that purports to reserve discretion to a carrier, its agents, officers, 

employees, or designees in interpreting the terms of a contract or deciding 

eligibility for benefits . . . . 

WASH. ADMIN. CODE 284-44-010 through 015 (italics added). For purposes of WAC 284-44, “health 

care services” means “medical, surgical, dental, chiropractic, hospital, optometric, podiatric, 

pharmaceutical, ambulance, custodial, mental health, and other therapeutic services.” REV. CODE OF 

WASH. ANN. 48.44.010 (10) (West). MetLife asserts that it is not a health care service contractor and the 

Participating Life and AD&D Insurance Plan is not a health care service contract, therefore Dr. Osborn’s 

reliance on WAC 284-44-015 is misplaced. I agree. While WAC 284-44-015 clearly prohibits 

discretionary clauses in the health care services context, it does not ban discretionary clauses such as the 

one in Section 9.2. 

2. Whether the WAC 284-96-012 Ban on Discretionary Clauses in all Disability 

Insurance Policies Applies to Section 9.2 

WAC 284-96-012 states “[n]o disability insurance policy may contain a discretionary clause.” 

Dr. Osborn argues that the Program’s Participating Life and AD&D Insurance Plan is disability 

insurance, and therefore the discretionary clause contained in Section 9.2 is void. MetLife responds that 

WAC 284-96-012 does not apply to the Program’s Participating Life and AD&D Insurance Plan for four 

reasons: (1) the regulation only applies to insurance policies; (2) the Washington Insurance 

Commissioner does not have authority to regulate non-insurance ERISA plan documents such as the 

Program; (3) the regulation is preempted by ERISA; and (4) even if the regulation applied, this 

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10 –OPINION AND ORDER

regulation only applies to disability insurance policies and the Participating Life and AD&D Insurance 

Plan is not disability insurance. Each of MetLife’s arguments is discussed below. 

i) Whether WAC 284-96-012 applies to employee benefit plans

MetLife’s first argument is that, on its face, WAC 284-96-012 only applies to insurance policies, 

not to employee benefit plans like the one at issue here. The Seventh Circuit rejected MetLife’s exact

argument in Fontaine v. Metropolitan Life Insurance Company, 800 F.3d 883 (7th Cir. 2015). In 

Fontaine, MetLife argued “the discretionary clause . . . is not actually in an insurance policy but in an 

ERISA plan document,” therefore the ban on discretionary clauses does not apply. Id. at 887. I agree 

with the Seventh Circuit in characterizing this argument as “hyper-technical” and in noting that 

“[w]hether a provision for discretionary interpretation is placed in an insurance policy or in a different 

document is arbitrary and should make no legal difference.” Id. at 888. If I were to accept MetLife’s 

argument, “then states ‘would be powerless to alter the terms of the insurance relationship in ERISA 

plans; insurers could displace any state regulation simply by inserting a contrary term in plan 

documents.’” Id. (quoting UNUM Life Ins. Co. v. Ward, 526 U.S. 358, 376 (1999)). Furthermore, “the 

artificial distinction that MetLife draws between ERISA plan documents and insurance policies, which 

are linked together so closely, has no basis in either law or common sense.” Fontaine, 800 F.3d at 888; 

see also Snyder v. Unum Life Ins. Co. of Am., 2014 WL 7734715, *8–9 (C.D. Cal. 2014) (rejecting the 

argument that state prohibitions of discretionary authority provisions cannot indirectly reach ERISA 

plan documents); Novak v. Life Ins. Co. of N. Am., 956 F. Supp. 2d 900, 906 (N.D. Ill. 2013) (“[P]lacing 

the discretionary clause in a plan document rather than in the insurance policy would ‘elevate form over 

substance.’”) (internal citation omitted). Accordingly, I adopt the reasoning of the Seventh Circuit in 

Fontaine and reject MetLife’s first argument that WAC 284-96-012 only applies to insurance policies, 

not plan documents such as the Program. 

Case 3:15-cv-00605-MO Document 31 Filed 02/11/16 Page 10 of 17
11 –OPINION AND ORDER

ii) Whether the Washington Insurance Commissioner has authority to regulate noninsurance plan documents 

MetLife’s second argument is that although the Washington Insurance Commissioner may have 

authority to regulate certain insurance policies, he has no authority to regulate non-insurance plan 

documents. MetLife contends that ERISA plan documents, such as the Program, are exclusively subject 

to federal regulation and any ban on discretionary clauses issued by a state insurance commissioner is 

invalid. Once again, I find this distinction between insurance policies and other plan documents 

unpersuasive. See Fontaine, 800 F.3d at 888 (“[T]he artificial distinction . . . between ERISA plan 

documents and insurance policies . . . has no basis in law or common sense.”). Furthermore, if the 

Washington Insurance Commissioner has authority to regulate insurance policies as MetLife concedes 

the Commissioner does, then the Commissioner also has the authority to regulate non-insurance plan 

documents. See, e.g., Jahn-Derian v. Metro. Life Ins. Co., 2015 WL 900717 at *3–4 (C.D. Cal. March 3, 

2015) (rejecting the defendants’ argument that a California statute’s limitation on discretionary authority 

extends only to insurance policies and contracts, and that ERISA plan documents are not insurance 

contracts, stating that “Defendants’ argument that the ERISA documents are subject only to federal 

regulation . . . is unpersuasive. ERISA plans can be indirectly regulated by the State”) (citing Ward, 526 

U.S. at 376). Therefore, I reject MetLife’s second argument as to why WAC 284-96-012 only applies to 

insurance policies and not to plan documents such as the Program. 

iii) Whether WAC 284-96-012 is preempted by ERISA 

Third, MetLife argues that even if the WAC 284-96-012 ban on discretionary clauses applies to 

the Program, it is preempted by ERISA. MetLife cites ERISA’s express preemption provision, 29 U.S.C. 

§1144(a), which provides that ERISA “shall supersede any and all State laws insofar as they . . . relate to 

any employee benefit plan.” However, the following provision, 29 U.S.C. § 1144(b)(2)(A), contains 

what is commonly called the savings clause, saving from preemption any state law “which regulates 

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12 –OPINION AND ORDER

insurance.” Dr. Osborn and MetLife agree that WAC 284-96-012 is a state law that relates an employee 

benefit plan; however, they disagree on whether WAC 284-96-012 is a state law that “regulates 

insurance.”

To be deemed a law that “regulates insurance” and thus avoid preemption, a state law must 

satisfy two requirements. “First, the state law must be specifically directed toward entities engaged in 

insurance. . . . Second, . . . the state law must substantially affect the risk pooling arrangement between 

the insurer and the insured.” Kentucky Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329, 342 (2003). 

Because WAC 284-96-012 meets both of these Miller requirements, it avoids ERISA preemption. 

a) “Directed Toward Entities Engaged in Insurance” 

MetLife argues that the Program is not directed towards insurers because plan sponsors and 

administrators (i.e. Providence) are not insurers and plan documents are not insurance contracts. The 

Seventh Circuit rejected a virtually identical argument in Fontaine and I adopt its reasoning here. The 

Fontaine court held that the regulation at issue was specifically directed toward entities engaged in 

insurance “because it is ‘grounded in policy concerns specific to the insurance industry.’” Fontaine, 800 

F.3d at 887 (quoting Ward, 526 U.S. at 372). The Seventh Circuit reasoned that the provision “regulates, 

indeed prohibits, discretionary clauses in health and disability insurance policies, so it regulates insurers 

‘with respect to their insurance practices.’” Fontaine, 800 F.3d at 887 (quoting Miller, 538 U.S. at 334). 

Furthermore, in Miller, the Supreme Court rejected a similar argument to the one that MetLife is making 

here: “Regulations ‘directed toward’ certain entities will almost always disable other entities from doing, 

with the regulated entities, what the regulations forbid; this does not suffice to place such regulation 

outside the scope of ERISA’s saving clause.” 538 U.S. at 335–36 (footnote omitted). 

Furthermore, although no Washington state court has construed WAC 284-96-012 in terms of the 

two prong Miller test, the U.S. District Court for the Western District of Washington has done so and 

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13 –OPINION AND ORDER

has determined that the regulation is directed at entities engaged in insurance. See Murray v. Anderson 

Bjornstad Kane Jacobs, Inc., 2011 WL 617384 at *5 (W.D. Wash, Feb. 10, 2010); Landree v. 

Prudential Ins. Co. of America, 833 F. Supp. 2d 1266, 1274 (2011). I agree with those decisions and 

likewise hold that WAC 284-96-012 meets the first Miller requirement. 

b) “Affects Risk Pooling Between the Insurer and the Insured” 

 A law “substantially affect[s] the risk pooling arrangement between the insurer and the insured” 

when it alters “the scope of permissible bargains between insurers and insureds.” Miller, 538 U.S. at 

341–42, 338–39. Discretionary bans affect the risk pooling arrangement because they likely “lead to a 

greater number of claims being paid . . . increasing the benefit of risk pooling for consumers.” Standard 

Ins. Co, 584 F.3d at 845; see also Fontaine, 800 F.3d at 888 (“By prohibiting discretionary clauses in 

insurance policies, [the regulation] alters the scope of permissible bargains and dictates the conditions 

under which risk is assumed in the insurance market.”). WAC 284-96-012 satisfies the second prong of 

the Miller test because the prohibition on discretionary clauses will remove the deferential standard of 

review, which will in turn likely “lead to a greater number of claims being paid. More losses will thus be 

covered, increasing the benefit of risk pooling for consumers.” Murray, 2011 WL 617384, at *4; see 

also Landree, 833 F. Supp. 2d at 1274. Accordingly, I reject MetLife’s third argument against applying 

WAC 284-96-012’s ban on discretionary clauses to the Program. 

iv) Whether the policy at issue is “disability insurance” such that WAC 284-96-012 

applies 

Finally, MetLife argues that even if WAC 284-96-012 is applied to the Program, the group life 

and AD&D policy that funds the Participating Life and AD&D Insurance Plan would not fall under the 

definition of “disability insurance” in the Washington Insurance Code, rather the policy would more 

accurately be defined as “life insurance.” As life insurance, MetLife argues, the WAC 284-96-012 ban 

on discretionary clauses would not apply. The issue, therefore, is whether to classify the group life and 

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14 –OPINION AND ORDER

AD&D policy as disability insurance or as life insurance. If the policy is disability insurance, then the 

WAC 284-96-012 ban on discretionary clauses in disability insurance policies would void the grant of 

discretion to MetLife found in Section 9.2, and the standard of review would be de novo. However, if 

the Plan is life insurance, then the WAC 284-96-012 ban would not apply, the grant of discretion would 

remain intact, and the standard of review would be abuse of discretion. 

 The Washington Insurance Code defines disability insurance as “insurance against bodily injury, 

disablement or death by accident, against disablement resulting from sickness, and every insurance 

appertaining thereto . . . .” WASH. REV. CODE. ANN. § 48.11.030 (West). MetLife argues that the 

Participating Life and AD&D Insurance Plan, including the group life and AD&D policy, would more 

appropriately fall under the Code’s definition of life insurance, which is “insurance on human lives and 

insurances appertaining thereto or connected therewith. . . . [including] additional benefits in event of 

death by accident [and] additional benefits in event of the total and permanent disability of the 

insured . . . .” WASH. REV. CODE. ANN. § 48.11.020 (West). 

Both MetLife and Dr. Osborn rely on Gomez v. Life Insurance Company of North America, 84 

Wash. App. 562, 928 P.2d 1153 (Wash. Ct. App. 1997). One of the issues before the court in Gomez was 

whether the plaintiff’s accident policy qualified as life insurance under RCW 48.11.020 or disability 

insurance under RCW 48.11.030. See id. at 1155. Gomez ultimately held that the accident policy at issue 

was disability insurance because it more appropriately fit under the definition set forth in RCW 

48.11.030. Id. In reaching its decision, the court explained that it was appropriate to “determine the 

nature of the insurance by the dominant purpose of the policy as reflected by the risk or contingency 

insured against[.]” Id. (“[I]f the risk insured against is accidents, the inclusion of accidental death 

benefits does not make a policy one of life insurance.”). Importantly, the court stated that “if there is a 

life insurance policy that also has additional benefits in the case of death by accident, the provisions 

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15 –OPINION AND ORDER

governing individual disability insurance do not apply; rather, the life insurance statutes govern. The 

predicate is that general life insurance is already provided in the policy.” Id. at 1156 (emphasis added). 

Here, the group life and AD&D policy provides both supplemental life insurance coverage as well as 

AD&D coverage to PHS employees. However, the policy’s dominant purpose is to protect against the 

loss of life, even though the policy also provides additional benefits of dismemberment. This is 

evidenced by the language of the Participating Life and AD&D Insurance Plan itself, which is 

characterized as a “life insurance” plan that provides “additional benefit[s]” in the form of accidental 

death and dismemberment insurance. (The Program, Doc. 18, Ex. A at 66, ¶ E-1; Minor Decl., Doc. 18, 

Ex. C at 1, 23–31.) The fact that a policy provides disability benefits does not preclude the policy from 

being classified as predominately a life insurance policy. See Gomez, at 1155–56. Furthermore, the 

Participating Life and AD&D Insurance Plan fits squarely within the RCW 48.11.020 definition of a life 

insurance plan. WASH. REV. CODE. ANN. § 48.11.020 (West) (defining life insurance to include those 

policies that contain “additional benefits in event of death by accident [and] additional benefits in event 

of the total and permanent disability of the insured”). 

Dr. Osborn argues that this court can label the policy as both disability insurance and life 

insurance. In doing so, Dr. Osborn argues, the court should apply the WAC 284-96-012 discretionary 

clause ban to those aspects of the policy that constitute disability benefits, including the Participating 

Life and AD&D Insurance Plan. However, as noted above, when there is an insurance regulation that is 

applied to one type of insurance policy but not the other, as is the case here, the court must “determine 

the nature of the insurance by the dominant purpose of the policy as reflected by the risk or contingency 

insured against.” Gomez, 928 P.2d at 1155. Even though a policy may fit the definition of both disability 

insurance and life insurance, Gomez did not leave available the option of applying an insurance 

regulation to one part of the policy and not the other part. See id. Instead, the court in Gomez determined 

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what the dominate purpose of the policy was and applied the appropriate Washington law that governed 

that type of policy. I will do the same here. The group life and AD&D policy at issue is a life insurance 

policy that includes “additional benefits in the case of death by accident.” Id. at 1156. The group policy 

provides basic and supplemental life insurance coverage as well as basic AD&D coverage to eligible

PHS employees and their dependents. Thus, the Participating Life and AD&D Insurance Plan is life 

insurance, rather than disability insurance, under Washington law. Id. (“[I]f there is a life insurance 

policy that also has additional benefits in the case of death by accident . . . the life insurance statutes 

govern.”); see also WASH. REV. CODE. ANN. § 48.11.020 (West) (“For the purposes of this code, the 

transacting of life insurance includes . . . additional benefits in event of death by accident; [and] 

additional benefits in event of the total and permanent disability of the insured . . . .”) (emphasis added).

Therefore, the discretionary clause ban in WAC 284-96-012, which applies only to disability insurance 

policies, does not apply to Section 9.2 and abuse of discretion review applies. 

Dr. Osborn contends such a holding is contrary to statements made by the Washington Insurance 

Commissioner relating to the adoption of WAC 284-96-012 and other statutes. In connection with the 

adoption of WAC 284-96-012, the Commissioner made several statements that Dr. Osborn contends are 

evidence that the Commissioner’s intention was to be very broad in banning discretionary clauses in 

ERISA policies. (Consise [sic] Expanatory [sic] Statement, Doc. 26, Ex. A.) Notably, many other states’ 

insurance regulations contain a ban on discretionary clauses that is much broader than Washington’s 

ban. For example, the California ban on discretionary clauses broadly applies to any “policy, contract, 

certificate or agreement . . . that provides or funds life insurance or disability insurance coverage for any 

California resident.” CAL. INS. CODE §10110.6(a). In contrast, Washington’s ban on discretionary 

clauses only applies to (a) health care service contracts, (b) HMO contracts, and (c) individual and group 

disability insurance policies. See WASH. ADMIN. CODE 284-44-015, 284-46-015, 284-50-321, 284-96-

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012. If the Washington Insurance Commissioner wished to ban discretionary clauses as broadly as Dr. 

Osborn purports, then the Commissioner should have issued a more sweeping regulation like 

California’s that included both disability and life insurance policies. I will not infer, based on policy 

statements and little else, that such a sweeping regulation implicitly exists. 

III. CONCLUSION

As explained above, I reject each one of Plaintiff Osborn’s three theories for de novo review and 

find that abuse of discretion review is appropriate in this case. Accordingly, I DENY Plaintiff’s Motion 

for Partial Summary Judgment on Standard of Review [14] and GRANT Defendant MetLife’s Motion 

for Partial Summary Judgement on Standard of Review [15]. 

DATED this 11th day of February, 2016. 

/s/ Michael W. Mosman__ ______ 

MICHAEL W. MOSMAN

Chief United States District Judge

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