District Court Enforces Massachusetts Choice-of-Law Clause in ERISA Case, Rejects California Ban on Discretionary Clauses

In Hildebrandt v. Unum Life Insurance Company of America, No. 8:23-CV-02297-ODW (JDEX), 2026 WL 413748 (C.D. Cal. Feb. 13, 2026), the Central District of California enforced a Massachusetts choice-of-law provision in an ERISA long-term disability policy and held that abuse-of-discretion review applies to the insurer’s denial of benefits. The decision squarely addresses the increasingly litigated intersection between contractual governing-law clauses and California Insurance Code § 10110.6, which voids discretionary clauses in disability policies covering California residents.

The plaintiff, a California-based partner at The Boston Consulting Group (BCG), sought long-term disability benefits under BCG’s ERISA-governed LTD plan. BCG established the plan decades earlier and purchased a group policy from Unum to insure the benefits. The policy granted Unum discretionary authority to determine eligibility for benefits and to construe the terms of the plan. The policy also included an express provision selecting Massachusetts law to govern the agreement.

After Unum denied the claim and upheld the denial on internal appeal, the plaintiff filed suit under ERISA § 502(a)(1)(B). Rather than immediately litigate the merits, the parties filed cross-motions asking the court to determine the applicable standard of review. The plaintiff argued that California Insurance Code § 10110.6 rendered the discretionary clause void and required de novo review. Unum argued that the Massachusetts choice-of-law clause controlled and preserved deferential review under Firestone.

The court began with first principles. ERISA does not specify a standard of review for benefit denials. Under Firestone Tire & Rubber Co. v. Bruch, courts review denials de novo unless the plan grants discretionary authority to the administrator or fiduciary. When a plan confers discretion in clear and unambiguous terms, courts apply abuse-of-discretion review.

California Insurance Code § 10110.6 complicates that framework. The statute prohibits disability insurers from issuing policies that reserve discretionary authority and directs courts to treat such clauses as void and unenforceable when they govern California residents. In many cases, courts in California apply § 10110.6 and revert to de novo review even where the policy contains an express grant of discretion.

The district court did not accept the plaintiff’s invitation to apply § 10110.6 as the starting point. Instead, the court treated the case as presenting a threshold choice-of-law question. Because ERISA claims arise under federal law, federal common-law choice-of-law principles govern. Ninth Circuit precedent instructs courts to enforce a contractual choice-of-law provision in an ERISA plan unless the provision proves unreasonable or fundamentally unfair. The party challenging the clause bears the burden.

The court concluded that Massachusetts had a substantial relationship to the plan and that enforcement of the clause did not produce unfairness. BCG maintains its headquarters and principal place of business in Massachusetts. The company employs thousands of individuals across the United States and abroad, and it employs more domestic workers in Massachusetts than in any other state. The plan covers employees in multiple jurisdictions. In that context, the drafters’ selection of a single governing law promotes uniform administration, predictability, and efficiency.

The court rejected the plaintiff’s contention that California’s public policy against discretionary clauses rendered the Massachusetts provision unfair. The plaintiff emphasized his California residence and argued that application of Massachusetts law deprived him of the protection California affords insureds. The court responded that federal common-law rules require courts to determine which state’s law applies before examining the substance of that state’s law. Courts do not bypass a valid governing-law clause simply because another state’s law would produce a different standard of review.

The court also declined to treat § 10110.6 as a mandatory implied term that attaches to any disability policy covering a California resident. Such an approach would undermine the express contractual objective of uniform administration and would effectively nullify governing-law provisions in multistate plans whenever a participant resides in California. The court emphasized ERISA’s focus on the written terms of the plan and its reliance on those written terms as the foundation of participants’ rights and administrators’ obligations.

Because Massachusetts law governs and Massachusetts does not prohibit discretionary clauses in disability policies, the court upheld the validity of the plan’s grant of discretion. The court therefore applied abuse-of-discretion review and granted Unum’s motion for partial summary judgment on the standard-of-review issue while denying the plaintiff’s motion.