ERISA guarantees claimants a “full and fair review” as well as an appeal of any denial by the insurance company. Can a disability claims insurer deny a claim too quickly and thus violate its duty to provide a full and fair review? A recent decision answered “yes” to this question. In Speca v. Aetna Life Ins. Co., 2019 WL 3754210 (D. Nev. August 8, 2019), the court ruled that Aetna Life Insurance Company (“Aetna”) did not provide a “full and fair review” and effectively cut off any meaningful access to an appeal when it denied a claim in just 14 days (without even waiting to receive any medical records).
Plaintiff, Paul Speca, worked at Home Depot until November 6, 2015 and suffered from narcolepsy (falling asleep unpredictably and uncontrollably). On November 7, 2015, he filed a claim for short-term-disability (“STD”) benefits with Aetna. That STD Policy contained a standard 45-day claim-determination period that could be extended twice, by 30 days each, for a total of 105 days, within which Aetna had to decide Mr. Speca’s STD claim. Although Aetna made several calls to Mr. Speca and his doctors, and sent at least one letter requesting medical records, after only 14 days (on November 20, 2015), Aetna denied Mr. Speca’s STD claim on the procedural ground that he had produced no medical records to support his claim. The Policy and 29 CFR § 2560.503-1 require that a claimant be given 45 days to provide requested records.
The district court reviewed this denial and remanded Mr. Speca’s claim back to Aetna. The judge wrote:
Considering that “ERISA was enacted to promote the interests of employees” [citation omitted], Defendant should have—at a minimum—waited a few more days to gather medical records before denying Plaintiff’s initial claim. There can be no question that denying Plaintiff’s initial claim on arbitrary procedural grounds not grounded in the Policy did not promote Plaintiff’s interests here. Of course, Plaintiff’s interest was to receive STD benefits, and he has not received them to date. But even if Defendant ultimately made the right decision on the merits during Plaintiff’s appeal, it never reached the merits of his claim until that appeal. And that deprived Plaintiff of an important right— the right to an appeal. Because of the way Defendant handled this claim, Plaintiff essentially received his initial claim review during his appeal with Defendant, and is now pursuing his appeal in this Court.
Defendant’s decision to essentially collapse its review of Plaintiff’s claim from two levels into one violates the spirit of both ERISA and the [STD] Policy. First, ERISA requires that Defendant “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.ˮ 29 U.S.C. § 1133(2). Plaintiff effectively presented his evidence for the first time on appeal, which did not allow for a full and fair review of his claim. Second, the Policy clearly provides for an appeal right. (ECF No. 17-7 at 2-3.) As noted, Plaintiff was denied meaningful access to an appeal. Thus, Defendant’s decision to deny Plaintiff’s initial claim on procedural grounds less than 45 days after he submitted it violated the spirit of both ERISA and the Policy—and was thus incorrect.
Id. at *5.
Since ERISA requires a “full and fair review” as well as a meaningful access to an appeal, Aetna clearly violated those rights when it denied this claim in just 14 days (without even waiting to receive any medical records). Because the Court found that Plaintiff is ineligible for long-term-disability benefits where, as here, his STD benefits claim has been denied —and the Court remanded Plaintiff’s STD-benefits claim to Defendant for further consideration —the Court also ordered Defendant (Aetna) to consider Plaintiff’s eligibility for long-term-disability benefits as well. Aetna’s “rush to judgment,” after just 14 days, failed. We often see long-term disability claims denied without a full and fair review provided. If you believe your long-term disability claim was denied without a full and fair review, please contact us.
The McKennon Law Group PC periodically publishes articles on its Insurance Litigation and Disability Insurance News blogs that deal with frequently asked questions in insurance bad faith, life insurance, long-term disability insurance, annuities, accidental death insurance, ERISA and other areas of law. To speak with a highly skilled California/Nationwide disability insurance lawyer or ERISA lawyer at the McKennon Law Group PC, call (714)274-6322 for a free consultation or go to our website at www.mckennonlawgroup.com and complete our free consultation form today.