New York Life Sued For Failing To Make A Timely Decision on Appeal

If your disability insurance claim has ever been denied you will have received a formal denial letter from your insurance carrier in which you are advised as to the basis of the denial as well as provided guidelines set forth by ERISA as to the filing of an administrative appeal to challenge the denial of benefits. The most important of these ERISA guidelines is the notification that you have 180 days from the date of the denial letter to submit your appeal. The deadline to file an appeal is a firm deadline and if you fail to submit your appeal within 180 days you could waive your rights to pursue legal action to secure your disability benefits.

Just as you as the insured have deadlines set forth by ERISA, so does your insurance carrier when it comes to rendering a decision on your appeal. Under ERISA, an insurance carrier is allotted 45 days with which to make a decision on your appeal, with the possibility of one 45 day extension for a total of 90 days. This 90 day deadline can be “tolled” (put on hold) due to a multitude of factors to include: if you provide additional information for review after the appeal has been submitted; or if your insurance carrier provides you copies of new medical reports from its doctors, which are adverse to your claim, to allow you an opportunity to respond to the new medical reports. If the insurance company goes beyond 90 days, inclusive of any periods of tolling, ERISA affords an insured the ability to consider the insurance company’s failure to provide a timely decision a de facto denial of benefits allowing the insured to file a lawsuit under ERISA in federal court. Such was the situation with our client.

Our client had been on long term disability with New York Life for two years after New York Life had determined he was unable to perform the material and substantial duties of his regular occupation, which New York Life had been deemed to be sedentary in nature. All too common with New York Life, and despite continued support from his doctors, our client’s claim for disability benefits was denied as his claim entered into the “any occupation” standard of disability. In rendering its decision New York Life argued our client may not be able to perform his own sedentary occupation, but would be able to perform alternate sedentary occupations. This of course begs the question as to how New York Life could deem our client unable to perform his own sedentary job while arguing he could perform an alternate sedentary occupation even though his medical records did not indicate a level of improvement that would reasonably ablow him to return to work in any capacity.

Attorney Jessup also knew that the denial by New York Life was predicated, in part, by the fact that our client was very young and New York Life was not inclined to pay disability benefits for multiple decades. Shielded by ERISA from any punitive damages for an arbitrary denial, New York Life had nothing to lose financially in denying our client’s claim. Working under and abiding by the 180 day deadline to submit our client’s appeal, Attorney Jessup worked with our client’s doctors to obtain additional statements and opinions to combat New York Life’s position that our client was able to work. Prior to the submission of the appeal our client, despite his young age, was advised by the Social Security Administration that his claim for Social Security Disability (SSDI) had been approved. Although an award of SSDI, in and of itself, does not mean a private disability insurance carrier has to approve disability benefits, an award of SSDI is to be considered as strong evidence in support of disability. This is especially the case when the award of SSDI benefits is contemporaneous to a denial of long term disability benefits by an insurance carrier. In order to have all relevant information prior to the submission of our client’s appeal, Attorney Jessup obtained a copy of the Social Security claim file to add as an exhibit to the appeal. 

Once the Social Security claim file was received the appeal was submitted and New York Life’s timeline to render a decision began. For almost the entirety of the initial 45 day review period New York Life did not contact Attorney Jessup with any update on the review with the exception of an initial letter confirming receipt of the appeal and the information as to the appeal claims manager assigned to the case. A few days prior to the expiration of the 45 day deadline, New York Life advised Attorney Jessup that it was exercising its right to a 45 day extension and in doing so indicated that a medical review was still pending. Attorney Jessup and our client were optimistic as to the outcome of the appeal given the factors surrounding our client’s case and the information contained in the appeal. Having provided no additional information for consideration following the submission of the initial appeal there were no grounds for New York Life to toll the decision beyond the 90 day period. This optimism turned to frustration shortly thereafter.

The 45 day extension deadline came and went and Attorney Jessup discussed with our client his right to bring a lawsuit under ERISA for New York Life’s failure to render a decision within the 90 days. Initially, our client wanted to avoid the filing of a lawsuit and opted to wait and see if New York Life would make a decision. Despite multiple letters and phone calls, New York Life never provided any substantive update on its review of the appeal and instead would send the same exact “form” letter indicating a decision would be made within 30 days. After several of these letters our client’s patience wore thin as his anger towards New York Life for its actions grew. Deciding he would no longer be at the mercy of New York Life’s waiting game he authorized Attorney Jessup to file the lawsuit.

The lawsuit is currently pending in federal court with outside counsel for New York Life having been retained. As for New York Life’s appeal review process, it is still pending according to yet another copy of the “form” letter advising us a decision would be made within 30 days.

Should you file a lawsuit if your insurance carrier has failed to render a timely decision on your appeal?

There are pros and cons to the filing of a lawsuit for an insurance carrier’s violation of ERISA for failure to render a timely decision on your appeal and it is best to consult with a disability insurance attorney to best determine a course of action. There are situations we have encountered where insureds who have submitted their own appeals have failed to provide any new information for consideration, which if a lawsuit were to be filed would bar them from the possibility of getting additional/new supportive information into their file. However, as was the case with our client, the pros far outweighed the cons as he can now argue to the court that he is entitled to a de novo standard of review, which is much more favorable to him than the arbitrary and capricious standard of review that would have been utilized by the court.

Delays by insurance companies are all too common. They require you to abide by strict deadlines, and it is important you hold their feet to the fire to make sure they abide by theirs, otherwise the insurance company will act with relative impunity while dragging its feet. If you have questions regarding the length of time it is taking for your insurance company to respond to your appeal or to approve your claim please contact our office to speak to one of our disability insurance attorneys.