What Can I Do When the Insurer Fails to Decide My Disability Appeal in Time?
This question is addressed in a recent case decided by the 10th Circuit Court of Appeals. More specifically, the case addresses what a claimant may NOT do when the insurer fails to render a decision on the claimant’s appeal within the time frame set out by ERISA—a claimant may not rely on the insurer’s said failure as a reason to not exhaust all administrative remedies required by the Long Term Disability Plan.
In this Tenth Circuit case, Union Security took 137 days to issue another denial letter on its first level of review. When it did issue that denial letter it advised the claimant, Ms. Holmes, that she “may request another review of the decision” and that the second level of review was the “final level of administrative review available”.
Ms. Holmes did not appeal again and, instead, filed a lawsuit two years later. The sole issue under review by the court of appeals was whether Ms. Holmes was excused from exhausting administrative remedies.
As in most cases where the plaintiff brings suit despite not having exhausted all required administrative remedies the lower court had dismissed Ms. Holmes’s case for her failure to exhaust. On appeal to the higher court, Ms. Holmes put forth two arguments in support of her position that she should be excused from exhausting administrative remedies. This article focuses on one of those arguments: that she should be deemed to have exhausted her administrative remedies due to Union Securities failure to comply with ERISA’s timing and notice requirements.
Union Security took 137 days to issue another denial letter on its first level of review.
Under ERISA regulations, a plan administrator has an initial 45-day deadline to issue a decision on an appeal. Additional time is allowed where the administrator properly requests an extension of time—although this is less of a “request” and more of a notice requirement whereby the administrator must notify the claimant that it is taking an extension of time of up to an additional 45 days for a total of 90 days.
In this case, Ms. Holmes sought an appeal of the initial denial of her claim for benefits on November 21, 2005. On the last day of its 45-day deadline, January 5, 2006, Union Security notified Ms. Holmes that due to “special circumstances,” it required an extension of time for processing her appeal. In the same letter Union Security explained that it was in need of a complete set of medical records from certain doctors prior to completing a determination and to “please forward a copy of Ms. Holmes’s medical records… as soon as possible.”
Ms. Holmes did not respond to the letter or to subsequent letters written by Union Security to Ms. Holmes on February 2, 2006 and on February 24, 2006 reiterating that “special circumstances exist that prevent [it] from rendering a decision on Ms. Holmes’s appeal,” and renewing its request for a complete set of medical records.
Union Security finally received the requested records on March 13, 2006.
As the court explained, Union Security’s notice to Ms. Holmes prior to the termination of the initial 45-day period tolled the running of the time for decision until Ms. Holmes responded. In other words the clock stopped ticking until Ms. Holmes submitted the requested information, at which time Union Security was required to render a decision on Ms. Holmes’s appeal within 45 days.
As the third-party claims administrator, Union Security had unilateral authority to begin tolling an extension period. Moreover, since the plan had given Union Security broad discretion its decision was entitled to judicial deference. Ms. Holmes pointed out nothing indicating Union Security’s decision that it needed her entire medical file to complete her claim evaluation was arbitrary or capricious. Additionally, as the court put it “Ms. Holmes had the power to end the tolling period and recommence the running of the time for decision simply by responding to Union Security’s request.”
Ms. Holmes’s argument therefore did not convince the court.
So what does this mean for other ERISA claimants?
It is important to remember that ERISA cases are usually very fact specific. This case reminds us that the requirements of exhausting administrative remedies under ERISA are very strict. The case also serves as a reminder that the administrator often gets the benefit of the doubt and broad discretion in determining if an extension of time is necessary to make a decision on an ERISA appeal, even if the administrator takes longer than the timeframe allowed by ERISA. At the very least, an administrator would be justified in extending the deadline where the claimant fails to provide information necessary for the administrator to make a decision.
However, this case does not suggest that plan administrators can extend their review for any reason and for any length of time. Whether an administrator has abused its discretion requires a complete analysis of all the surrounding circumstances and only an experienced ERISA attorney can sift through the facts to determine whether an administrator has exceeded its authority.
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Who are Dell Disability Lawyers?
We are disability insurance attorneys that know how to get your short or long term disability benefits paid. As a nationwide law firm we have helped thousands of disability insurance claimants throughout the United States to collect hundreds of millions of dollars of disability insurance benefits from every major disability insurance company.
Our attorneys have been able to either get our clients paid monthly disability benefits or obtain a one-time lump-sum settlement in more than 98% of our cases. Our disability insurance lawyers have seen it all when it comes to disability insurance claims and we know exactly what it takes for your disability claim to be approved.
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Our disability insurance attorneys help individuals that have either purchased a long term disability insurance policy from an insurance company or obtained short or long term disability insurance coverage as a benefit from their employer. We have helped individuals in almost every type of occupation with monthly disability benefit payments ranging from $1,500 to $50,000.
Our clients include all types of employees ranging from retail associates, sales representatives, government employees, police officers, teachers, janitors, nurses, pilots, truck drivers, financial advisors, doctors, dentists, veterinarians, lawyers, consultants, IT professionals, engineers, professional athletes, business owners, and high level executives.
A strong understanding and presentation of the duties of your occupation is essential for securing disability insurance benefits.
Do you work in my state?
Yes. We are a national disability insurance law firm that is available to represent you regardless of where you live in the United States. We have partner lawyers in every state and we have filed lawsuits in most federal courts nationwide. Our disability insurance lawyers represent disability claimants at all stages of a claim for disability insurance benefits. There is nothing that our lawyers have not seen in the disability insurance world.
What are your fees?
Since we represent disability insurance claimants at different stages of a disability insurance claim we offer a variety of different fee options. We understand that claimants living on disability insurance benefits have a limited source of income; therefore we always try to work with the claimant to make our attorney fees as affordable as possible.
The three available fee options are a contingency fee agreement (no attorney fee or cost unless we make a recovery), hourly fee or fixed flat rate.
In every case we provide each client with a written fee agreement detailing the terms and conditions. We always offer a free initial phone consultation and we appreciate the opportunity to work with you in obtaining payment of your disability insurance benefits.
Do I have to come to your office to work with your law firm?
No. For purposes of efficiency and to reduce expenses for our clients we have found that 99% of our clients prefer to communicate via phone, email, fax, or video conferencing sessions. If you prefer an initial in-person meeting please let us know. A disability company will never require you to come to their office and similarly we are set up so that we handle your entire claim without the need for you to come to our office.
How can I contact you?
When you call us during normal business hours you will immediately speak with a disability insurance attorney. We can be reached at 800-698-9159 or by email. Lawyers and staff must return all client calls same day. Client emails are usually replied to within the same business day and seem to be the preferred and most efficient method of communication for most clients.