Faragi

ORDER **

On October 14, 2005, the Court heard oral argument in the cases of Wessman v. Provident Life Insurance Co., No. 04-55406, and Faragi v. Provident Life Insurance Co., No. 04-55156. In each case the District Court upheld a denial of long-term disability benefits utilizing an abuse of discretion standard. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 , 109 S.Ct. 948 , 103 L.Ed.2d 80 (1989). In each case Appellants argue for the first time on appeal that discretionary clauses in disability insurance policies (clauses that purport to give the insurer, as claims administrator, “sole and exclusive discretion” to determine eligibility for benefits or to construe the terms of the plan) are unconscionable and therefore unenforceable under California law. We take judicial notice of the recent decisions of the California Department of Insurance (“CDI”) interpreting California Insurance Code § 10291.5 and withdrawing approval of policies containing such clauses. ***

*651 We do not believe that the possible implications of the CDI’s withdrawal of approval of discretionary policy terms should be addressed and resolved for the first time on appeal. We are concerned, however, that…