In Brake v. Hutchinson Tech. Inc. Grp. Disability Income Ins. Plan, 774 F.3d 1193 (8th Cir. 2014), the court determined that, where a policy insuring a South Dakota resident was issued in Minnesota to a Minnesota employer, and provided that it was governed by Minnesota law, then a South Dakota regulation precluding discretionary clauses could not apply.
The court then turned to the primary issue, which is whether the administrator reasonably interpreted the plan’s pre-existing condition clause. Along the way to deciding that the interpretation was reasonable, the court summarized the elements to be considered: “Our analysis of the reasonability of Hartford’s plan interpretation is informed by the following factors: whether the decision is consistent with plan goals; whether it renders plan terms meaningless or is internally inconsistent; whether the decision complies with ERISA; whether the plan has previously interpreted the terms at issue consistently; and whether the interpretation was contrary to the clear language of the plan.” Here, the court held that the interpretation was compelled by the clear language of the plan.