If you suffer an illness or injury that leaves you unable to work, disability insurance can be a crucial lifeline to help you survive financially. However, insurance companies deny a substantial portion of disability claims. A common tool insurance companies use to deny claims is the peer review report, or “paper review” report completed by doctors or nurses who do not examine or talk to the claimant and either directly work for the insurance company or they work for a company that hires such doctors to give opinions for insurance companies. Almost all the income from these latter companies is derived from insurers hiring them. That means that these medical consultants are almost always biased in favor of insurers and against disability insurance claimants.

Appealing a claim denial based on a peer review report can be challenging and understanding the process can be immensely helpful for you to be able to navigate through the disability claim appeals process, and possibly litigation, so you get the benefits to which you are entitled under your policy.

Understanding the Role of Peer Review Reports

Peer review reports are commonly used by insurance companies to evaluate disability claims. These reports are typically prepared by medical consultants who review your medical records and assess the validity of the disability, commenting on medical conditions and restrictions and limitations. The insurance company will provide your medical records to what they assert are “independent” medical consultants but as noted above, they are not. These consultants will review your records and provide a report to the insurance company. Most of the time, these reports are favorable to the insurance company and will assist them in denying legitimate disability claims.

However, peer review reports can contain inaccuracies, misinterpretations, or even biases that may lead to an unfair denial of your claim. It is vital that you address these issues with the insurance company in a timely manner. In ERISA (Employee Retirement Income Security Act) appeals matters, the insurer is required to give you an opportunity to review the report and comment on it before the insurer uses it to deny your disability claim. Properly addressing these issues means you will need to:

• Review Your Denial Letter

The first step in the appeals process is to carefully review the denial letter from your insurance company. This letter should outline the reasons for the denial and include a copy of the peer review report. Understanding the specific inaccuracies in the report is essential to building a strong case for your appeal.

• Gather All Relevant Documentation

Compile all the relevant documentation related to your disability, including your medical records, treatment history, and any communications with your healthcare providers. This information will help you and your attorney present a clear and comprehensive case.

• Consult with a Disability Insurance Attorney

Hiring an experienced disability insurance attorney is one of the most critical steps in this process. An attorney with expertise in disability insurance claims can help you navigate the complex appeal process, assess the inaccuracies in the peer review report, and build a compelling case to challenge the denial.

• Request an Internal Review

Most insurance policies require claimants to first go through an appeal with the insurance company, done internally, before pursuing external remedies such as suing in court. Your attorney can help you draft a well-documented and persuasive appeal highlighting any deficiencies in the peer review report. It is essential to follow the specific guidelines and deadlines set by your insurance policy during this process.

• Pursue External Remedies

If your appeal is unsuccessful, or if your policy does not require an appeal, you can sue the insurance company in court. The litigation process may provide opportunities for your case to be resolved outside of court, for example through mediation. Your disability insurance attorney will guide you through these steps and represent your interests throughout the process.

• Establish the Deficiencies in the Peer Review Report

Your attorney will work to pinpoint and highlight any inaccuracies and other deficiencies in the peer review report. This may include demonstrating that the reviewing physician misinterpreted your medical records, overlooked crucial details, rendered decisions without any evaluation and in a conclusory manner, or made biased assessments concerning your restrictions and limitations. Providing alternative expert opinions and medical evidence that counter the inaccuracies is significant to your case.

• Present a Strong Legal Argument

Your attorney will craft a compelling legal argument to demonstrate that the peer review report’s deficiencies were the primary basis for your claim denial. They will show how these inaccuracies directly led to an unfair decision and violated the terms of your insurance policy. Your attorney can also conduct legal research to find cases in which the same biased medical consultants hired in your matter were found to have defective reports or demonstrated clear bias.

• Demonstrate Your Disability

In addition to challenging the peer review report, it is important to reaffirm your disability and its impact on your ability to work. Your attorney will work with you to provide clear and convincing evidence of your condition, including medical records, statements from your healthcare providers, and any additional documentation that supports your case. The best way to demonstrate your disability is to have your physician or other medical professional comment on the report and attack it where necessary.

Conclusion

If your disability insurance claim has been denied based on a defective and/or biased peer review report, you do not have to accept this decision as final. With the assistance of an experienced disability insurance attorney like those at McKennon Law Group PC, you can navigate the complex appeals process and build a convincing case to challenge the denial. By following the steps outlined in this article and working closely with your attorney, you can increase your chances of securing the disability benefits you rightfully deserve. Remember, when faced with a wrongful denial, seeking professional legal assistance can make all the difference in your journey toward financial security and peace of mind. Reach out to McKennon Law Group PC to discuss your disability claim denial with an experienced disability insurance attorney.

The Western Kentucky District Court recently reviewed a long-term disability (“LTD”) claim denial de novo rather than using an abuse of discretion standard, despite the policy containing language authorizing the plan administrator to use discretion in interpreting the plan and making claims decisions. In Smith v. Reliance Std. Ins. Co., 2024 WL 647395 (W.D. Ky. 2024), the court entered judgment in favor of the plaintiff and granted her leave to request attorney’s fees after determining under a de novo standard of review that her inherently subjective pain symptoms rendered her disabled under the terms of the policy.

When a disability insurance policy contains language permitting the plan administrator to use discretion in interpreting the plan’s terms and deciding whether to approve or deny a claim for benefits, typically a court will determine the outcome of the case by deciding whether the administrator abused its discretion in denying a claim. Alternatively, where a policy does not grant discretion to the administrator, the court will review the decision de novo, which means the court reviews the evidence and decides whether the plaintiff is disabled under the policy without giving any deference to the plan administrator’s denial. In Smith, a third party reviewed and denied the plaintiff’s claim. The court found that despite the policy language granting the plan administrator discretion, the plan administrator had not actually exercised any discretion, but instead had contracted out to the third party, Matrix Absence Management, Inc., to interpret the plan and deny the plaintiff’s LTD claim and the third party “exercised ultimate decision-making responsibility for the policy determination.” The court cannot determine whether the plan administrator abused its discretion if the plan administrator did not exercise discretion. Therefore, the court held that it could review the LTD claims determination de novo. The court explained that:

Reliance Standard responds to [to the argument that it did in fact exercise discretion in denying the claim] by pointing out that the April 26, 2021 letter is written to Smith from Reliance Standard. [] Although that letter is on Reliance Standard letterhead, it is signed by Norden, and it does not change the fact that Norden was employed by Matrix and exercised ultimate decision-making responsibility for the policy determination. []. This alone is sufficient to show that Reliance Standard—although the policy clearly vested it with discretionary authority—did not actually exercise that discretionary authority itself. As a result, the Court must review the claims determination de novo. See, e.g., Davidson v. Liberty Mut. De novo. Co., 998 F. Supp. 1, 9 (D. Me. 1998) (applying de novo review where “[No portion] of the LTD plan … expressly permits delegation of the duties of the plan administrator” and “the Court cannot assume that the LTD plan permitted delegation of the duties of the plan administrator[.]”); Belheimer v. Fed. Express Corp. Long Term Disability Plan, 2012 U.S. Dist. LEXIS 168882, at *20 (D.S.C. De novo. 28, 2012) (“[A]s Federal Express delegated its final decision-making authority to Aetna, and the LTD Plan did not contemplate or authorize such a delegation, this Court will review the decision to deny Plaintiff’s long-term disability benefits claim de novo.”).

Id. at *4.

For a plaintiff, overcoming an abuse of discretion standard is usually more difficult than the court determining as a first impression whether the evidence favors the plaintiff’s disability claim under the de novo standard of review. Thus, for the court in Smith to review the LTD denial de novo rather than using an abuse of discretion standard could well have been the difference between receiving LTD benefits and the court upholding the denial. The court’s decision to review the LTD denial de novo was therefore a significant victory for the plaintiff.

Aside from having her LTD benefits reinstated, the court’s decision also meant that the plaintiff had achieved success on the merits. Had the court decided the case using an abuse of discretion standard, the plaintiff may not have succeeded on the merits and therefore would not have been given leave to request attorney’s fees. Because the court overturned the denial of LTD benefits and approved LTD claim, it gave the plaintiff the ability to recover significant attorney’s fees possibly based on the distinction between the plan administrator making a claims decision itself on one hand or contracting out with a third party on the other. This nuance illustrates the need for knowledgeable, experienced counsel when challenging an insurance company’s claim denial. Finding experienced ERISA disability insurance attorneys to handle your denied disability insurance claim is critical. The attorneys at McKennon Law Group PC have been immensely successful handling matters like Smith involving complex nuance.

An Oregon Federal District Court  recently issued a decision that helps illuminate the issues related to the requirement that a claimant exhaust administrative remedies prior to filing suit, specifically, when a long-term disability (“LTD”) claimant can consider a claim to be denied, when he exhausts his administrative remedies and when an insurer may properly extend deadlines and delay issuing a decision. In Witt v. Intel Corporation Long-Term Disability Plan, 2024 WL 687928, at *7, 10 (D. Or. Feb. 16, 2024), the claimant filed suit before the Plan had issued a decision on his appeal of his previously denied LTD claim. The Plan, who was the Defendant, hired ReedGroup to administrator the claims. The Plan moved to compel exhaustion of administrative remedies and argued that the claimant had filed suit prematurely because it had not issued a decision on the appeal of his LTD denial. Plaintiff responded that he had exhausted administrative remedies because the Plan had failed to issue a decision within the time required by the Employee Retirement Income Security Act of 1974 (ERISA). The court denied the Plan’s motion and concluded that plaintiff had exhausted his administrative remedies.

For disability plans, the claims regulations that govern ERISA allow a claimant to consider his administrative remedies to be exhausted if the plan violates its requirements. A plan generally has 45 days to issue a decision of a claimant’s appeal; it may take up to an additional 45 days, but it must provide plaintiff with written notice of the extension before the expiration of the 45-day period, and the extension must be warranted by “special circumstances.” In Witt, plaintiff had faxed his appeal, then also mailed it, so ReedGroup received it once by fax, then again in the mail several days later. ReedGroup acknowledged that it had received the earlier, faxed copy of the appeal. ReedGroup then sent plaintiff a letter stating that it required additional time to issue a decision because the medical reviews had to be corrected based on the Plan provisions for medical evidence. ReedGroup sent the letter after 45 days had passed since plaintiff’s faxed appeal but less than 45 days since it received the mailed appeal.

The Plan argued that because 45 days had not passed since it received plaintiff’s mailed appeal, its notice to plaintiff that it needed additional time to issue a decision did not violate the ERISA requirement. However, that argument failed because ReedGroup had previously acknowledged receipt of the earlier faxed appeal.

The Plan relied on Peck v. Aetna Life Insurance Company, 495 F.Supp.2d 271 (D. Conn. 2007), for the proposition that submission of additional materials to support an appeal tolls the appeal decision deadline. The court found the case distinguishable as it found that the defendant plan administrator’s request for an extension of time was a “special circumstance” because it requested the extension after plaintiff submitted additional materials that the plan had requested. Id. at 276-77. Although the appeal deadline may be tolled when an extension is requested “due to a claimant’s failure to submit information necessary to decide the claim,” or when a plan administrator requests additional information, that was not the case in Witt. 29 C.F.R. § 2560.503-1(i)(4). ReedGroup never requested additional information from plaintiff, nor did ReedGroup indicate that it needed the extension because plaintiff failed to submit necessary information. Plaintiff’s appeal was effectuated on May 25, 2023, making the 45-day determination deadline July 10, 2023. In turn, ReedGroup’s July 12, 2023 extension request was not timely. Therefore, the court concluded that ReedGroup committed a procedural violation by requesting an extension after the 45-day deadline to issue a determination had passed.

The Plan argued that there were “special circumstances” present because it needed time to correct the medical reports it had received. The court reviewed numerous cases and determined that there were no “special circumstances” present because medical reviews occur in almost all disability cases and ReedGroup engaged in a 29-day delay to initiate the medical review.  ReedGroup itself had created its need for more time to decide on plaintiff’s appeal and therefore, its need for more time did not meet the statute’s requirement of being warranted by “special circumstances.”

Next, the Plan argued that while it had waited longer than 45 days to send written notice to plaintiff of its need for more time, it was only two days and therefore was a de minimus violation of the claims regulations that should not impact plaintiff’s requirement to exhaust administrative remedies. The Plan also argued that it was required by ERISA to issue a decision on the proper evidence, so it needed to be sure that the medical records were correct. The court noted that 29 C.F.R. § 2560.503-1(l)(2)(ii) states that de minimis violations that do not prejudice or harm the claimant will not deem administrative remedies exhausted so long as the plan demonstrates that the violation was for good cause or due to matters beyond the control of the plan. The court explained that:

Read as a whole, this sentence indicates that, even if a violation does not prejudice or harm a claimant, the de minimis exception does not apply unless the plan demonstrates that the violation was for good cause or due to matters beyond its control.

Witt can serve as a reminder to insurers that ERISA time requirements are to be taken seriously and they may not get away with simply coming up with any feasible reason for extending the time it takes to issue an appeal decision on an LTD claim. For claimants and their attorneys, Witt is a reminder to be diligent and closely examine the insurer’s actions and motivations for an extension. In this case, diligence paid off and plaintiff’s case moved forward more quickly and efficiently than it otherwise might have. McKennon Law Group PC has made similar arguments in numerous disability and accidental death insurance cases to the great benefit of its clients.