Exhaustion of Administrative Remedies

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Good morning, ERISA Watchers!  I hope this finds you well and in good spirits.  This week’s notable decision, Wallace v. Oakwood Healthcare, Inc., No. 18-2316, __F.3d__, 2020 WL 1522833 (6th Cir. Mar. 31, 2020), involves something we might all be feeling these days: exhaustion.  

Wallace involves a challenge to a denied long-term disability benefit claim.  Plaintiff was a registered nurse who was a participant in an ERISA-governed employee welfare benefit plan sponsored by her employer (“the Plan”). She stopped working in 2012 while the Plan was insured by Hartford Life & Accident Insurance Company. On January 1, 2013, the Plan shifted its contract to Reliance Standard. Plaintiff tried to return to work in 2013, but quickly went back on medical leave. She subsequently submitted a claim for benefits to Reliance, who denied it on the ground that she had a pre-existing condition that barred coverage. Plaintiff also submitted a claim to Hartford, who denied that as well. She appealed the Hartford denial, but did not appeal the Reliance denial before filing suit against Reliance.
Continue Reading Sixth Circuit Holds Exhaustion of Administrative Remedies Not Required Where Plan Document Is Silent on Claims Review Process

This week’s notable decision is Fortier v. Hartford Life & Accident Ins. Co., No. 18-1752, __F.3d__, 2019 WL 697989 (1st Cir. Feb. 20, 2019), where the First Circuit dealt a blow to ERISA plan participants when it comes to exhausting administrative remedies.  The bottom line:  An insurer may strictly enforce the 180-day appeal deadline against a plan participant.

The facts:  Fortier received long-term disability benefits under a group disability plan insured by Hartford Life & Accident Insurance Company (“the Plan”).  The Plan only pays 24 months of benefits for disabilities caused by mental illnesses.  Hartford approved and paid Fortier’s LTD benefits before sending her notice on September 13, 2011 that her benefits would terminate in the future on November 1, 2011 due to the Plan’s Mental Illness Limitation.  The letter informed Fortier of her right to appeal within 180 days of the date that she received the letter.  Fortier retained an attorney who submitted a timely appeal and was able to get her benefits reinstated.  Shortly after reinstating her claim, Hartford explained that since it did not give Fortier prior notice of the application of the Mental Illness Limitation, it was starting the 24-month period as of September 13, 2011 and no benefits will be payable beyond September 12, 2013.  
Continue Reading First Circuit Holds that Substantial Compliance Doctrine Does Not Save Participant’s Untimely ERISA Administrative Appeal

This week’s notable decision is a Ninth Circuit decision in the matter of Cuaresma, Jr. v. Farmers Group Disability Income Plan, et al., No. 16-16946, __F.App’x__, 2018 WL 2439529 (9th Cir. May 31, 2018).  Although it is an unpublished decision, the fact pattern is a novel one and it presents a good roadmap for how an unwary claimant can get around the strictly applied exhaustion requirement. 

In this case, Liberty Life denied Plaintiff’s claim for long-term disability (“LTD”) benefits prior to the expiration of his time to provide proof of claim and a date earlier than the date Liberty Life told him it would make a decision.  Specifically, prior to the end of the policy’s elimination period (while he was receiving short-term disability benefits), Liberty Life wrote to Plaintiff on September 19, 2014 and advised him that it would begin reviewing his LTD benefit claim.  Liberty Life gave Plaintiff until November 2, 2014 to return claim forms and submit medical records. 
Continue Reading Premature Denial of Long-Term Disability Benefit Claim Mitigates Claimant’s Failure to Exhaust Administrative Remedies