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Appealing denials and terminations of disability benefits is absolutely crucial to having disability benefits reinstated.
If your disability insurance is governed by the federal ERISA statute then failing to appeal a denial of benefits is fatal to your claim. You have to appeal any denial or termination to the administrator of the claim (typically the insurer that denied it) and they must issue a final determination before you can go to court. If you try to go to court before there has been a final determination the court will not hear your case because you have not yet ‘exhausted your administrative remedies.’ If your policy states that you must apply within 180 days (and virtually all such policies do) and you have failed to submit a timely appeal, then the administrator will not accept a late appeal and will not issue a final determination. You claim for benefits is at that point dead.
You must file a timely appeal. But you must also submit any and all documentation necessary to establish your disability as part of your appeal. This is absolutely vital to wining an appeal. Here is why: If your appeal is denied and you go to court a judge, with few exceptions, will decide the case based on a review of the information the administrator had when it made its determination. There will be no trial. You will not be allowed to submit additional medical records or other evidence later. You must do it during the appeal.
The administrator of your claim is almost invariably the insurer that has to pay your benefits if you are found disabled. They lose money if you win your claim. It is your burden to establish your right to benefits. Even if the administrator and its ‘representative’ tells you it is gathering medical records and requesting that your providers complete disability forms, it is ultimately your responsibility to submit evidence to support your claim. An argument to a judge after the fact that “they were supposed to gather medical records” will not succeed.
Lawyers often obtain and submit many documents and reports in addition to medical records. Narrative reports from physicians, specialized forms, affidavits from claimants and others, functional capacity examinations, neuropsychological exams, vocational assessments. This article is not legal advice and you should consult an attorney who understands ERISA disability claims litigation as soon as possible if you have been denied disability benefits and are appealing that denial.
The Background provided in the Supplementary Information section of the new regulations, which you can find here, paints a stark picture of the systemic unfairness to claimants in the administration of disability benefit claims. It recounts that the ERISA statute as enacted (in 1974) requires a “full and fair review” of a claims denial; the DOL promulgated rules in 1977 establishing minimum requirements for claims procedures; and that it revised and updated those rules in 2000 to strengthen the minimum requirements, in order to reduce lawsuits, promote consistency and provide a non-adversarial method for claims reviews. Despite all of this, the DOL found that disability lawsuits dominated the ERISA litigation landscape based on a study of the years 2006 – 2010.
The reasons for this – which are the reasons for the recent changes – are not hard to find. First, “[i]nsurers and plans looking to contain disability costs may be motivated to aggressively dispute disability claims.” The DOL cited numerous court cases in which judges had found just that. See here.
Second, the DOL’s independent ERISA advisory group conducted a study in 2012 in which it received public input that “[n]ot all results have been positive for the participant…even though these rules were intended to protect [them].” It is hard not to be cynical at a finding that insurers that adjudicate claims might find reasons to deny meritorious claims rather than pay benefits. The DOL summed up the systemic problem this way: “The Department’s determination to revise the claims procedures was additionally affected by the aggressive posture insurers and plans can take to disability claims as described above coupled with the judicially recognized conflicts of interest insurers and plans often have in deciding benefit claims.”
To sum up: to protect disability benefits for those who need them, i.e. some of our most vulnerable citizens, those citizens must apply for benefits to companies that both evaluate and pay claims. After 40 years and many revisions, the companies were found still to be aggressively disputing claims in order to “contain costs,” i.e. increase profits. Next we’ll look at why this is particularly problematic given the way that these claims are litigated when they go to federal court.
Disclaimer: The information you obtain in this article is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship.
The Statute: 29 U.S.C. §1133. Claims procedure
In accordance with regulations of the Secretary, every employee benefit plan shall—
(1) provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and
(2) afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.In accordance with regulations of the Secretary, every employee benefit plan shall—(1)provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and(2)afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.
(h)Appeal of adverse benefit determinations -
(1)In general. Every employee benefit plan shall establish and maintain a procedure by which a claimant shall have a reasonable opportunity to appeal an adverse benefit determination to an appropriate named fiduciary of the plan, and under which there will be a full and fair review of the claim and the adverse benefit determination.
(2)Full and fair review. Except as provided in paragraphs (h)(3) and (h)(4) of this section, the claims procedures of a plan will not be deemed to provide a claimant with a reasonable opportunity for a full and fair review of a claim and adverse benefit determination unless the claims procedures -
(i) Provide claimants at least 60 days following receipt of a notification of an adverse benefit determination within which to appeal the determination;
(ii) Provide claimants the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits;
(iii) Provide that a claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant's claim for benefits. Whether a document, record, or other information is relevant to a claim for benefits shall be determined by reference to paragraph (m)(8) of this section;
(iv) Provide for a review that takes into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
(4)Plans providing disability benefits. The claims procedures of a plan providing disability benefits will not, with respect to claims for such benefits, be deemed to provide a claimant with a reasonable opportunity for a full and fair review of a claim and adverse benefit determination unless, in addition to complying with the requirements of paragraphs (h)(2)(ii) through (iv) and (h)(3)(i) through (v) of this section, the claims procedures -
(i) Provide that before the plan can issue an adverse benefit determination on review on a disability benefit claim, the plan administrator shall provide the claimant, free of charge, with any new or additional evidence considered, relied upon, or generated by the plan, insurer, or other person making the benefit determination (or at the direction of the plan, insurer or such other person) in connection with the claim; such evidence must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided under paragraph (i) of this section to give the claimant a reasonable opportunity to respond prior to that date; and
(ii) Provide that, before the plan can issue an adverse benefit determination on review on a disability benefit claim based on a new or additional rationale, the plan administrator shall provide the claimant, free of charge, with the rationale; the rationale must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided under paragraph (i)of this section to give the claimant a reasonable opportunity to respond prior to that date.
(p) Applicability dates and temporarily applicable provisions.
(3) Paragraphs (b)(7), (g)(1)(vii) and (viii), (j)(4)(ii), (j)(6) and (7), (l)(2), (m)(4)(ii), and (o) of this section shall apply to claims for disability benefits filed under a plan on or after January 1, 2018, in addition to the other paragraphs in this rule applicable to such claims.
(4) With respect to claims for disability benefits filed under a plan from January 18, 2017 through December 31, 2017, this paragraph (p)(4) shall apply instead of paragraphs (g)(1)(vii), (g)(1)(viii), (h)(4), (j)(6) and (j)(7).
(i) In the case of a notification of benefit determination and a notification of benefit determination on review by a plan providing disability benefits, the notification shall set forth, in a manner calculated to be understood by the claimant -
(A) If an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either the specific rule, guideline, protocol, or other similar criterion; or a statement that such a rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of such rule, guideline, protocol, or other criterion will be provided free of charge to the claimant upon request; and
(B) If the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the claimant's medical circumstances, or a statement that such explanation will be provided free of charge upon request.
(ii) The claims procedures of a plan providing disability benefits will not, with respect to claims for such benefits, be deemed to provide a claimant with a reasonable opportunity for a full and fair review of a claim and adverse benefit determination unless the claims procedures comply with the requirements of paragraphs (h)(2)(ii) through (iv) and (h)(3)(i) through (v) of this section.
Want to get an insurer to overturn your denial on appeal? Start here.
If the administrator denies an initial claim, what follows is an ERISA appeal process. The administrator’s notice of denial must provide information to assist the applicant in appealing the denial, including the reasons for its decision and the steps that can be taken to address these deficiencies.
The ERISA claims process is about as forgiving as a cement floor.
Once the administrator makes a final determination and the claimant has ‘exhausted’ all remedies available under the policy, the claimant can bring an action in federal court to challenge the administrator’s decision.
The reporting and disclosure provisions of the ERISA statute appear at §§ 1021 – 1031. These sections –
Create the reporting and disclosure duties of administrators ( 1021);
Describe the summary plan description ( 1022) and annual report (§ 1023) that are the two most important parts of the reporting and disclosure scheme; and
Set forth the timing and details of furnishings and filings (§ 1025 and 1026).
Individuals who become disabled and then run into insurance company resistance to paying benefits under their group plans often feel shock and disbelief. They may ask: Why have I been paying premiums all this time only to have my valid claim denied?
A person who is denied benefits after an initial application will receive a notice of denial explaining that she has 180 days to appeal the decision to the administrator who made the initial decision.