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How Do ERISA Guidelines Impact Claimants?

Nearly six years ago, new ERISA regulations went into effect. Modifications included the requirement that a carrier make a claim decision for benefits within 45 days of receiving an Appeal. However, Insurers were provided the option of timely requesting two 30-day extensions via written statements which state the reasons why the extension(s) is needed. Timely means the request for an extension must be made prior to the initial 45-day deadline.

While this change is helpful, ERISA claims remain difficult to litigate and many areas of the country lack much-needed legislative action to ban discretionary ERISA clauses governed by disability insurance policies. Several months ago, proposed legislation would have made it more favorable for employees denied ERISA benefit claims. The bill would also make it easier for courts to overturn benefit denials. Lawsuits by claimants in certain states place a high burden of proof on them, mandating that they prove the decision was wrong and unreasonable.

Ongoing Adverse Decisions

While courts often make rulings that favor claimants, adverse decisions favoring insurance companies are not uncommon. What makes many ERISA claims a challenge to litigate is that a Court’s review is restricted to the facts in the administrative record at the time the Final Denial was issued. Simply put, new evidence cannot be submitted to prove a claimant’s case, requiring a thorough and a detailed Appeal.

It should be noted that carriers that miss certain deadlines, send extension letters post-deadline, or provide correspondence that does not explain the “special circumstances beyond its control” in justifying an extension may result in a determination that the claimant exhausted all administrative remedies and can file a lawsuit.

Options For Claimants

A claimant cannot file a lawsuit in an ERISA claim until the administrative remedies have been exhausted. As noted, an insurance company’s failure to timely make a determination or properly request an extension can trigger the end of the administrative process.  According to the courts, reviewing medical records is not considered a special circumstance beyond a carrier’s control, nor is it a valid extension justification.

Carriers are obligated to advise of the need for an extension or provide the claimant the opportunity to review and comment on medical opinions they requested in response to issues raised in the Appeal as soon as possible and with enough time to respond as close to the 45-day deadline as possible.

Failure to comply with the new Department of Labor regulations regarding the 45-day deadline may allow the claimant the option of filing a lawsuit, even if a Final Denial has not been issued. While still an uphill climb, claimants have an easier burden to meet and the opportunity to lessen the standard of review used by the Court to determine liability from “arbitrary and capricious” to “preponderance of the evidence.”

Call Our Attorneys Before Filing Your Claim

Planning is the key to a strong ERISA claim and a swift and favorable resolution. At Disability Insurance Law Group, our lawyers are experienced and know ERISA and disability laws. It is our goal to make sure you obtain all disability benefits to which you are entitled. To schedule a free consultation, please contact our office via email or call us at 954-546-7455.

Helpful links:
Read our blog
U.S. Department of Labor – ERISA 
Employee Retirement Income Security Act of 1974